The Power of the Presidency and Its Impact on Financial Aid
By Craig Munier
Throughout history, U.S. presidents have had significant impact on the shape, structure, and funding of the student aid programs. The most obvious legislative tool the president uses to influence student aid is the presidential veto. The threat of a presidential veto can significantly influence the progress and shape of student aid legislation. But the president’s most important tool may be the power of ideas—that is, the ability to propose plans and influence decisions from the highest office. A presidential administration can set issues such as student aid and higher education as major platforms and develop those ideas into policy proposals. The administration can then tout the ideas publicly while working behind the scenes to involve the Department of Education and court allies in Congress.
As the country’s leader, the president also has the public eye and the attention of the media, which has influenced public opinion throughout U.S. history. The president also has the ability to call a commission to study a specific area of interest, generating data that draw attention to issues of priority to the administration.
As we move toward the 2012 presidential elections, it is timely to reflect on the evolution of financial aid policy through the presidential perspective. A review of history offers a glimpse into the pivotal role of the president in shaping the future of financial aid.
Lessons from History
Financial aid is no stranger to the ebb and flow of changing presidential administrations. Each presidential era has yielded contrasting results for students across the nation. President Thomas Jefferson (1801-1809) was convinced that an “experiment” in democracy would only be successful if there were a well-educated electorate. Jefferson wrote that the state should “avail [to itself] of those talents which nature has sown as liberally among the poor as among the rich, which perish without use, if not sought for and cultivated.”
It is fair to say that as president, Jefferson established the initial American ideal of education for all economic groups. Sixty years later, President Abraham Lincoln (1861-1865) furthered Jefferson’s vision by signing the Morrill Land-Grant Act 1862, which allowed the creation of land-grant colleges whose purpose was to promote education for those in the industrial class.
The presidencies of Calvin Coolidge (1923-1929) and Herbert Hoover (1929-1933) tested the foundation for U.S. government-supported public education. The World War Adjustment Act of 1924 was proposed to create supplemental income for veterans for the purpose of educational grants, a cash bonus, or beginning a farm. The bill was vetoed by both presidents and ultimately overridden by Congress, only to remain unfunded for a number of years. Thousands of WWI veterans camped outside Washington, D.C., still armed with their service rifles, to advocate for their promised benefits. Ultimately, the U.S. Army was called to drive the veterans from Washington.
When faced with a similar challenge in re-assimilating thousands of World War II veterans, President Roosevelt (1933-1945), understood from the experiences of Coolidge/Hoover what could happen if he did nothing. He signed the Serviceman’s Readjustment Act (the GI Bill) into law in 1944, creating educational benefits for returning veterans to aid them in the transition to civilian life. These benefits included tuition, books, supplies, equipment, and a stipend. The law made financial assistance more accessible to the military population, boosted the post-war economy, and provided broad access to higher education for the first time.
When President Harry Truman (1945-1953) appointed the President’s Commission on Higher Education in 1946, he wrote that “Among the more specific questions with which I hope the Commission will concern itself are: the ways and means of expanding educational opportunities for all able young people.” Recommendations that emerged included creating grants for undergraduates based on financial need; low- or no-tuition institutions (i.e., community colleges); and expanded financial assistance through student loans, grants, and sponsored employment. Unfortunately, Congress chose not to enact any of the recommendations at the time.
October 4, 1957, changed everything. On that date, the Soviet Union launched Sputnik, the first man-made satellite to be placed in orbit around the Earth. Frightened at the prospect of losing the “race for space,” Congress turned to the Truman Commission report for ideas of how to quickly catch up with the Soviet Union, especially in the areas of math and science. The National Defense Act of 1958, which created National Defense Student Loans (now known as Federal Perkins Loans), was the first of many of the earlier Truman Commission ideas to be implemented.
President John F Kennedy (1961-1963) later advocated for the Higher Education Facilities Act of 1963 to provide federal funds for academic facilities to institutions of higher education. That Act flowed into the presidency of Lyndon B Johnson (1963-1969), which saw great strides in advancing access to education and financial aid. Johnson’s “Great Society” gave birth to two critical pieces of legislation: the Economic Opportunity Act of 1964, which created the College Work-Study Program, and the Higher Education Act of 1965, which introduced educational opportunity grants and guaranteed student loan programs and is the foundation of many of the Title IV programs we work with today.
President Jimmy Carter (1977-1981) signed the Middle Income Assistance Act into law, expanding for the Basic Education Opportunity Grant (now Federal Pell Grant) and providing interest subsidies on guaranteed student loans.
In more recent years, student financial assistance has been a rapidly changing policy issue. President George H.W. Bush (1989-1993) first suggested the concept of the Federal Direct Student Loan program, creating a pilot program beginning with 104 colleges and universities in the fall of 1994.
President Bill Clinton (1993-2001) supported an income sensitive student loan repayment option that would help make it possible for new college graduates to participate in his new public service program, AmeriCorps. It was also under the Clinton administration that Congress created the Hope & Lifetime Learning Tax Credits, thus implementing the last of the Truman Commission recommendations almost 50 years later.
President George W. Bush’s administration (2002-2008) continued to promote educational access and affordability by introducing the Academic Competitiveness Grants, National SMART Grants, and the TEACH grant.
President Barack Obama (2009 to present) has made higher education and financial aid a priority in his presidency, increasing maximum Pell Grants in an attempt to fully fund college-bound students. He also supported full implementation of the Federal Direct Loan program, transferring billions of federal dollars from leveraging private capital to students in the form of additional Pell Grant funding, funding for community colleges, and deficit reduction. In addition, he has sought greater transparency in college pricing and created the Consumer Financial Protection Bureau (CFPB).
A Critical Choice
While presidential power is not limitless, it is clear presidential policies have driven some of the key changes in financial aid policies over the years. Both candidates have included higher education in their platforms, and will likely pursue their proposals should they be elected to office. NASFAA has posted on its website an insightful summary of the candidates’ positions relating to student aid.
Presidential Nominee Mitt Romney and President Barack Obama agree on several financial aid issues. Perhaps most important of these is maintaining the 3.4 percent subsidized Stafford Loan interest rates and access to consumer information. Both of these initiatives attempt to aid students in reducing indebtedness upon graduation. Romney and Obama also support incentives to keep postsecondary tuition and fees as low as possible.
The candidates disagree on several key factors regarding educational access. The most critical of these is student aid funding. Romney has proposed returning federal student loans to private lenders which presumably would require greater subsidies from taxpayers, higher interest rates for students, or both. The higher cost to taxpayers could come at the expense of other Title IV programs. Obama continues to support using savings derived from loaning money from the U.S. Treasury in Direct Loans for other Title IV programs. The determination of where financial aid funds are derived will result in changes in funding amounts, as well as adjusting other portions of the budget.
In addition, Mitt Romney desires to remove regulations from for-profit institutions to expand affordable education. Barack Obama believes that these regulations are in place to protect students from aggressive marketing, indebtedness, and unscrupulous practices.
The DREAM Act is another area of disagreement between Obama and Romney. Obama supports the DREAM Act, which would allow qualifying undocumented youth, who may have been brought into the United States as infants, to attend college or serve in the military as a conditional step toward U.S. citizenship. Romney does not believe the DREAM Act should be considered independently of broader immigration reform.
Historically, the president has influenced higher education policy in many important ways. Given the priority that the American people give to higher education, it is clear that the next president will play a significant role in the future of financial aid policy.
Craig Munier is Director of Scholarships and Financial Aid for the University of Nebraska – Lincoln.
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