Financial Aid Administrators Advocate Lawmakers to Resist Standardization of Award Letters
Financial aid administrators (FAAs) took to Capitol Hill Tuesday to advocate against the standardization of award letters and for support of Federal Student Aid funding.
FAAs lobby Congress at the Committee on Education and the Workforce in DC Tuesday. From left to right: NASFAA Policy Director Megan McClean, University Financial Aid at University of Chicago Executive Director Amanda Fijal and Montclair State University Associate Director of Student Financial Aid Lucy Candal-Fernandez
The congressional meetings were part of NASFAA's Leadership and Legislative Conference, which provides intensive preparation for state and regional association members in leadership positions or about to assume such positions. Leaders representing financial aid offices throughout the country took the time Tuesday morning to seek out their area representatives and express the dire need for long-term solutions - versus short-term Band-Aids - for federal student financial aid programs that are critical to ensuring U.S. competitiveness and college access and affordability for low-income students.
Though most lawmakers and their staff were well aware of the more pertinent financial aid issues dominating the agenda, ears perked at news of how a certain proposal to standardize award letters might affect institutions and students. This past fall, the Consumer Financial Protection Bureau, in partnership with ED, collected consumer feedback on a standardized "shopping sheet" to help students and their families compare cost of attendance, student aid packages and possibly even estimated student loan debt and repayment rates.
FAAs told lawmakers that improvements to award notifications are of course desirable and a certain level of defined terminology would be welcome, but the regulation of award letters could interfere with an institution’s ability to meet the specific needs of its unique student body.
Some FAAs noted that schools need the flexibility to provide a cost estimate that allows for students and parents to make adjustments based on cost of living choices. Standardization in such cases could result in cost estimates that are too high and subsequently lead students to take on bigger debt loads.
Administrators said their concerns seemed to resonate with most lawmakers.
July 2012 Interest Rate Hike
Financial aid administrators also discussed with lawmakers the President’s proposal that Congress stop the Federal Direct Subsidized loan interest rate for undergraduates from doubling in July 2012.
The current 3.4 percent interest rate is set to return to 6.8 percent, as stipulated in the 2007 College Cost Reduction and Access Act. The bill was designed to relieve some of the burden of student loan debt on borrowers, but the plan was too costly, so lawmakers decided to phase in the cuts from 6 percent in 2008-09, to 5.6 percent in 2009-10, 4.5 percent in 2010-11 and 3.4 percent in 2011-12. Unsubsidized Stafford loans and all graduate level Stafford loans have remained at a fixed 6.8 percent rate.
While lawmakers expressed support for a low federal interest rate, many told FAAs that to temporarily prevent the interest rate from doubling would cost an estimated $4 billion, a price tag that would likely come at the expense of other student aid programs. Others congressional members and staff noted that it was unlikely Congress would act quickly enough to pass such a provision before July 2012.
Pell Grant Support
Though some Republicans expressed to FAAs their concerns over the rising cost of the Pell Grant program, nearly all lawmakers agreed that support for Pell was a vital investment in the nation’s students and the economy.
Of seemingly growing concern to some lawmakers, however, was the intermittent practice of administering Pell and other financial aid in multiple disbursements, or as a “paycheck.” Lawmakers expressed concern over the propensity for fraud in these scenarios.
Some financial aid administrators pointed out that their schools used certain software programs that aggregate and divide financial aid disbursements (grants, scholarship and loans) between education-related expenses and the leftover funds often disbursed to students for living expenses.
Financial aid administrators from different states, such as Michigan and Illinois, said how the funds are disbursed varies by institution and by software program. Some schools also struggle with a lack of resources to bring their software programs up-to-date.