On September 26, the Senate approved a three-month extension for the Higher Education Act (HEA), the law that provides $73 billion for postsecondary schools and students, providing more time for the House and Senate to resolve their differing approaches to reauthorizing the law. The House already approved the extension (H.R. 3784) on September 20. The one-year extension Congress approved in 2004 will expire on September 30.
Reauthorization bills cleared the House Education and the Workforce Committee (H.R. 609) on July 22 and the Senate Health, Education, Labor and Pensions (HELP) Committee (S. 1614) on September 8. Advocates point out that the Senate version, which was sponsored by Chairman Enzi (R-WY) and cosponsored by ranking Democrat Senator Kennedy (D-MA) is far more helpful to low-income and nontraditional students. Generally, both bills increase the amount authorized (but not appropriated) for Pell Grants, offer up to two Pell Grants a year for those studying year-round, and increase TRIO grants for supportive services. The House bill, however, does not increase the Income Protection Allowance for independent students whereas the Senate version does, meaning the House version leaves a work disincentive in place. The House version also fails to include a Senate provision that helps part-time students by counting their room and board costs in determining their eligibility for Pell Grants. Further, the Senate bill includes new mandatory funding of $4.5 billion over five years for supplemental Pell Grants targeted at low-income students as well as $1 billion for grants to low-income students specializing in math and science.

The House version also restricts consolidation of Direct Loans and limits extended repayment to those with debt of more than $30,000. The Senate version retains a provision of existing law that will lower the interest rate cap on consolidated subsidized loans from 8.25 percent to 6.25 percent next year, while the House changes the law to keep the cap at 8.25 percent and allows consolidation with a variable rate formula.

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