State and College Leaders Testify on Innovative College Affordability Measures

College and university leaders testified before a Senate committee this week about their efforts to improve college affordability and access through the implementation of financial literacy courses, a more holistic approach to award letters, applying a means test for merit aid and continued support for the federal Pell Grant program.

"Big challenges confront our nation’s institutions of higher education, but the different approaches schools employ in response to these challenges reveal a lot about their priorities," Senate Committee on Health, Education, Labor, & Pensions Chairman Tom Harkin (D-IA) said. "Our aim is to shine a spotlight on institutions that have expressly made affordability an organizational priority, and have done so without compromising, in fact while improving, the quality of the education they provide, as measured by student outcomes."

While the Pell Grant program received high praise as a valuable resource for low-income students, most panelists also acknowledge growth in the number of students eligible for support and the concern in Congress for the sustainability of the rapidly growing program. But reliance on Pell cannot alone help reduce college costs, and the represented institutions have each taken innovative approaches to addressing the issue.

Michigan State University College of Education Dean Dr. Donald Heller argued that schools need to place stronger emphasis on the difference between sticker price -- the posted price on college websites or admissions materials -- and the net price -- what students are actually charged after financial aid is taken into account.

"The world of higher education finance is a complex and mysterious place, particularly for these low- and moderate-income students, and for those who are the first in their family to attend college," Heller said. 

According to Heller’s research, students base their college-going decisions primarily on the posted sticker price, so schools need to ensure the financial aid programs are simple to understand, easily accessible, and provide information early.

Iowa State University President Steven Leath said his school has worked to improve transparency in its financial aid award letters. 

"Our financial award notice letters to students now include -- very prominently -- their current indebtedness and how much their payments will be after graduation based upon their borrowing trends," Leath said. "The notice also emphasizes that the loans are optional and encourages the use of other methods to pay for their education."

Sen. Al Franken (D-MN), who has recently introduced legislation to mandate a standardized award letter, asked Leath whether students would benefit from a standardized award letter.

"We’ve put a huge emphasis on it and we’ve seen results, but our students who take our financial literacy program are still sometimes confused comparing obligations or possibilities at Iowa State to other schools, because not everybody uses the same language or the same terms," Leath said. "I think it’s unfortunate we would have to legislate it, but it would be valuable."

Leath also noted Iowa State’s full-service Financial Counseling Clinic, which offers individual counseling, workshops and courses on personal finance -- such as budgeting and the responsible use of credit. 

"Participation in these courses and programs has more than doubled in recent years, but the number is still too low, so we are stepping up our efforts to attract more students," Leath said.

Sen. Jeff Merkley (D-OR) questioned whether financial literacy preparation should begin in high school.

Heller also noted that too often merit-based aid disproportionately benefits wealthier families, and more of this kind of aid should be subject to some kind of means test. Almost 30 percent of the grants awarded by states to undergraduate students, and 55 percent of those awarded by institutions, were awarded without means testing.  

"The most effective grants are those that are targeted on the poorest students, as federal Pell Grants are, so we need to encourage states and institutions to refocus their efforts on supporting students with financial need," Heller said.

For Tallahassee Community College President Jim Murdaugh, establishing a system of accountability to state lawmakers and providing evidence of return on investment has allowed for an efficient and beneficial relationship with the state legislature.

"We enjoy a very positive relationship with lawmakers and the results we are able to document continue to provide an atmosphere of cooperation in even the most difficult budget times," Murdaugh states in his prepared remarks. "This year, following the Legislature’s decision to fund colleges at a continuation level we were able to review our financial condition and make the decision to hold tuition constant, despite given the authority to increase tuition by up to 5 percent."

Murdaugh noted that in the event of tuition increases, the institution is committed to improving and documenting quality and efficiency to improve completion and job placement rates. For example, the school requires students borrowing $13,000 or more, to meet with financial aid staff to ensure they understand their aggregate loan limits before new awards are issued. 

"While we cannot deny the loan, we can keep the student advised of the consequences of borrowing," Murdaugh said.

Ivy Tech Community College President Thomas J. Snyder said his college has worked to simplify the registration and financial aid process for students.  

"Perhaps like your experience, students currently go to six or seven offices to enroll, receive their financial aid and register for classes," Snyder said. "To respond to this, we are building a one-stop system that allows our students to go to one place to accomplish all of this.  This saves money for Ivy Tech, but also makes it easier for students to get on with their studies."

Ivy Tech has also launched the Associate Accelerated Program, or ASAP, to allow low-income students to earn a transferable degree in one year instead of the traditional two-year track.  ASAP students attend as a cohort, enabling them to form a learning community and provide peer support to each other. Snyder said the program has shown a completion rate of 75 percent, three times the national average of community colleges.

In the House Subcommittee on Higher Education and the Workforce meeting Wednesday, Subcommittee Chairwoman Virginia Foxx (R-NC) convened state leaders to evaluate what states are doing to effectively support higher education amid budget cuts and rising costs.

"As our economy continues to falter, it’s no secret many states are hard-pressed to match the levels of support they’ve invested in higher education in previous years," Rep. Foxx said. "Despite these challenging circumstances, some state officials are developing inventive programs and policies that provide students more affordable options on the path to a postsecondary degree."

Louisiana and Florida, for example successfully implemented comprehensive articulation agreements, allowing students to more easily transfer between institutions. Other states have taken up performance-based funding structures. Indiana and Pennsylvania offer additional state resources to postsecondary institutions with the best retention, completion and placement rates. 

"Funding for our state’s colleges and universities should be tied to key values and needs, especially higher graduation rates and credentials that lead to greater economic opportunity for students and the state," Indiana Commissioner for Higher Education Teresa Lubbers said.  

Rep. Ruben Hinojosa (D-TX) noted that state investment in higher education is crucial to the economic development of not only the state but to provide job training skills for a changing workforce.

"I am confident that state leaders and institutions, as are being represented today by our panelists, can do more to reign in college costs without sacrificing quality, without sacrificing equity and diversity," Rep. Hinojosa said.