Advisory Committee on Student Financial Assistance Burdensome Regs Study

Former, current and future leaders of the National Association of Student Financial Aid Administrators (NASFAA) testified about challenges in implementing certain Higher Education Act (HEA) regulations at a hearing held by the Advisory Committee on Student Financial Assistance, an independent panel that provides expertise to Congress and the Department of Education.  

In their testimony, the financial aid administrators highlighted issues they've encountered while implementing the new year-round Pell Grant and new reporting and disclosure requirements. They also highlighted issues with the Free Application for Federal Student Aid (FAFSA) and requirements to verify information on the FAFSA. They also testified about private loan certification and gainful employment.  

The Advisory Committee began the hearing by releasing its latest report, The Rising Price of Inequality: How Inadequate Grant Aid Limits College Access and Persistence. The report predicts that, even if persistence is assumed to be constant, bachelor's degree loss rates among low- and moderate-income 2004 high school graduates who took at least Algebra II are projected to be 69 percent and 55 percent, respectively. Total losses among high school graduates from 2000 through 2009 attributable to finances may exceed 3 million. Bachelor's degree losses this decade may be substantially higher.  

To increase bachelor's degree attainment rates of qualified low-and moderate-income high school graduates (22 percent and 36 percent, respectively) to those of their middle-income peers (55 percent), the report contends that partial solutions will not work.  

"The bottom line from a federal policy perspective is that achieving the goal of increasing bachelor's degree attainment requires that the nation adequately address income-related inequalities in academic preparation, access, and persistence simultaneously," the report states.  

School Certification of Private Loans 

Justin Draeger, NASFAA's president and CEO beginning July 1, testified on private student loan certification and asserted that sometimes well-intentioned regulations are so burdensome that they do more harm than good.  

"Despite these steps forward in student protections, regulations issued within the last year have made the [private loan certification] process more burdensome and complicated than need be, and in some instances, have created more confusion than clarity for students," Draeger said.  

He advocated for full school certification of private student loans to replace the self-certification that is currently required. He also recommended that certification should not be required for certain federal loans -- Health Professions Student Loan (HPSL), Nursing Student Loan Program (NSL), Loans for Disadvantaged Students (LDS), Primary Care Loan (PCL).  

Verification 

Dr. Barry Simmons, director of scholarships and financial aid at Virginia Polytechnic Institute & State University, and current NASFAA national chair, testified on verification of data on student aid applications, which he described as a double edged sword that can reduce fraud and abuse, but can also increase the complexity of the student aid system.  

"We must ask ourselves how much is enough in terms of accuracy and precision in administering broad-based public policy initiatives such as student financial aid," Simmons said. "Surely the distribution of federal student aid dollars is more accurate in comparison to cost overruns in our department of defense."  

Simmons emphasized the need for further study and cost benefit analysis of the unintended consequences of verification on college access and success in order to provide college access and success and accountability.  

Year-Round Pell 

Bonnie Joerschke, director of student financial aid at the University of Georgia, and 2009-10 Chair of the NASFAA Federal Issues Committee, testified on the new year-round Pell Grant and said that financial aid administrators appreciate the additional funding to help their students, but also expressed deep concerns about the administrative burden and the complexity of understanding and communicating the requirements of this program.  

"The addition of Year-Round Pell regulations, however, has literally slowed summer aid awarding to a snail's pace in aid offices across the country," she said. "The new requirements have significantly increased staff workload across the country in the busiest time of the processing cycle -- a time when financial aid offices can least afford additional work. Limitations in software products and homegrown systems alike are causing us to implement manual work arounds -- a workload that is unreasonable."  

Joerschke recommended aligning year-round Pell Grant regulations with current regulations to eliminate redundancy and unnecessary administrative burden.  

David Page, director of financial aid at Philander Smith College and former NASFAA Board Member, also testified on the new year-round Pell Grant regulations and reaffirmed that the additional funds have had a positive impact on his students. He also testified that the current regulations are extremely labor intensive to implement. He offered a simple suggestion to simplify year-round Pell Grant implementation.  

"If the intent is to make additional funds available to students to assist them in completing their undergraduate degree than simply treat summer as another semester equal to fall or spring," he said. "The eligibility should not be based on what they earned during the previous semesters (excluding the normal institutional SAP policy) and the value or calculation of the grant would be adjusted accordingly."  

Gainful Employment 

Dr. Laurie Wolf, Executive Dean of Student Services at Des Moines Area Community College and incoming 2010-11 NASFAA national chair, and Elaine Neely, Senior Vice President of Regulatory Affairs and Compliance for Kaplan Higher Education and former member of NASFAA's HEA Reauthorization Task Force, testified on gainful employment. Although the Department of Education has not yet released most of their proposed rules on gainful employment, Wolf and Neely commented on ED's suggested proposals brought forth during negotiating rulemaking this spring.  

They stated that ED is using the gainful employment provision as a method to solve two perceived problems: overborrowing by students, and an attempt by certain schools to increase enrollment at the expense of federal funds. Both perceived problems can and should be tackled through other means, they stated. They also expressed concern that under ED's last proposal discussed during negotiated rulemaking, student loan debt incurred at a prior institution would be included in the gainful employment debt to income ratio.