A new higher education proposal in the U.S. Senate seeks to improve student aid options, keep tuition increases low, improve accountability and provide greater incentives for states to continue investing in higher education.

The bill, introduced by Sen. Edward Kennedy (D-Mass.), would increase the maximum Pell Grant by $500 to $4,500 and would increase the maximum Supplemental Educational Opportunity Grant (SEOG) by $250 to $1,050. It also includes a provision requiring states to maintain 90 percent of their higher education funding from the previous fiscal year in order to receive new federal funds.

Kennedy's proposal is the second of two outlining ways to update the Higher Education Act by 2005. Another proposal was submitted by Rep. Buck McKeon (R-Calif.) last month.

Jim Manley, spokesman for Kennedy, said the proposal attempts to remedy a trend of states cutting back on higher education funding.

"There appears to be a trend for states to use higher education funding as a piggybank to pay for other programs," Manley said.

This year, there was a 2.9 percent decrease in general funds for higher education in Illinois from fiscal year 2003, according to the 2004 budget report. That led to a 7.7 percent decrease in funding for public universities.

Rick Schoell, executive director of governmental relations, said while state support has been declining for some time, it still accounted for a significant portion of university budgets, and he said it would be interesting to see how states respond to the provision.

"The economic strains are a function of larger economic problems," Schoell said. "States will have a difficult time responding to that, and it seems extraordinarily punitive for the federal government to restrict federal assistance in tough economic times."

In addition to the aid and funding provisions, the proposal also attempts to halt rising tuition rates by creating a higher education price index, which would require states to list true costs without inflation. The proposal would also provide $5 million to create a college consortia group and by creating a college summit for universities to discuss ways to keep rates down.

Schoell said the bill takes a different approach to the reauthorization of the Higher Education Act than McKeon's, which would place a cap on the rate of tuition increases at universities.

He said the final reauthorization will most likely include elements from both proposals.

Angela Benander, spokeswoman for Sen. Dick Durbin (D-Ill.), said Durbin had not yet taken a stance on the issue, but in a statement Durbin said he was particularly concerned with "the amount of student loan debt that recent graduates are saddled with."

"(The higher education reauthorization) will be an opportunity to deal with some of the problems confronting so many college students and their families by expanding federal grant opportunities, exploring efficient tax incentives for college and increasing the maximum amount for Pell grants," Durbin said.