2014: A Year In Review For Financial Aid

2014 was quite a year for higher education, especially for student aid! Here’s a look back at some of the biggest events, issues, and news stories in the financial aid community. As always, NASFAA will continue to cover these and other ongoing stories in the new year through Today’s News.

1. Higher Education Act: Congress introduced several bills related to the reauthorization of the Higher Education Act this year – and each included policies advocated for by NASFAA.

The Senate introduced two bills, the Higher Education Affordability Act (HEAA) and the Financial Aid Simplification and Transparency (FAST) Act. Both would require a switch to prior-prior year (PPY) tax information on the FAFSA and a return to some form of year-round Pell Grants – two policy changes NASFAA supports. The HEAA would eliminate student loan origination fees, a policy change that NASFAA publicly supported this year in an opinion piece with Rep. Susan Davis (D-CA). 

The House introduced and passed, with broad bipartisan support, three pieces of legislation: the Empowering Students Through Enhanced Financial Counseling Act (H.R. 4984), the Strengthening Transparency in Higher Education Act (H.R. 4983), and the Advancing Competency-Based Education Demonstration Project Act of 2013 (H.R. 3136). The House additionally introduced, but did not advance, a PPY bill called the Simplifying the Application for Student Aid Act (H.R. 4982). 

For full details on the bills, review NASFAA’s legislation comparison chart and explore the Higher Education Act Reauthorization Center

2. Gainful Employment: The Department of Education (ED) released final rules for gainful employment programs this year – and was sued by the Association of Private Sector Colleges and Universities shortly thereafter. The final rules eliminated the program level cohort default rates metric. Read NASFAA’s detailed summary of the rules and explore the Gainful Employment Center for past coverage. 

3. Program Integrity Negotiated Rulemaking: ED explored Program Integrity in three sessions with a panel of negotiators. The group reached tentative consensus on proposed regulations for six issues, including clock-to-credit hour conversion; state authorization of foreign locations of domestic institutions; retaking coursework; and the definition of adverse credit under the PLUS Loan Program. The group failed, however to reach consensus on the overall package of proposed regulations, disagreeing on proposed regulations on state authorization of distance education and cash management. 

ED issued proposed and final rules on the PLUS Loan Program. They have not yet issued proposed rules on the other negotiated topics.

4. PAYE Expansion: President Obama continued his focus on higher education policy improvements this year, which included a planned extension of eligibility for the Pay As You Earn (PAYE) repayment plan to an additional 5 million borrowers by December 31, 2015. 

ED also announced that the program expansion will be its next negotiated rulemaking topic. NASFAA testified at both of ED’s public hearings, applauding the expansion and making recommendations for additional issues to be considered during the negotiations. Stay tuned for coverage in 2015.

5. College Ratings System: Another idea from President Obama, the college ratings system, continued in 2014. ED solicited comments and hosted four public forums across the country for feedback on the plan. 

NASFAA released a policy report, “Peers In PIRS: Challenges & Considerations For Rating Groups Of Postsecondary Institutions,” to identify the issues associated with grouping and comparing institutions by mission. NASFAA cited that information, among other recommendations, in written comments to ED on the proposed ratings system. A draft framework was released on Dec. 19, 2014.

6. Perkins Loan Program: The fate of Perkins remains uncertain, as NASFAA reported in “Seriously, What Is Up With Perkins for 2015-16?” ED offered contingent guidance on how schools could disburse Perkins Loan funds if the program ends next year. NASFAA will continue to advocate for program funding and will keep members updated through Today’s News

7. Student loan interest rates: Federal student loan interest rates stayed relatively low this year, rising to 4.66 percent on the Federal Direct Stafford Loan (Subsidized and Unsubsidized) for undergraduate students; 6.21 percent on the Federal Direct Unsubsidized Stafford Loan for graduate or professional students; and 7.21 percent on the Federal Direct PLUS Loan for parents and graduate or professional students. These rates were projected by NASFAA and confirmed by ED in May. 

8. Student debt: Student indebtedness remained a hot topic in both education and consumer news circles. The Brookings Institution garnered attention with a controversial report that student debt is not in quite as disastrous a state as many news headlines make it out to be. Politicians still featured student debt prominently in midterm election campaigns, however – perhaps most notably with Sen. Elizabeth Warren’s (D-MA) call for student loan refinancing.

For NASFAA’s part, we continued to work on indebtedness in two new reports through the Gates Foundation’s Reimagining Aid Design and Discovery (RADD) project. In phase two of our RADD work, NASFAA joined several other organizations to study Income-Based Repayment (IBR) in “Automatic for the Borrower: How Repayment Based on Income Can Reduce Loan Defaults and Manage Risk.”

In phase three, NASFAA joined with New America and Young Invincibles to dig deeper into IBR and employer withholding. The subsequent report, “The Case For Payroll Withholding,” was released in mid-December. 

9. Research: 2014 welcomed a number of research reports from other organizations as well. Data from Trends In Student Aid, released annually by the College Board, indicated that higher education finance has largely recovered from the recession, with a decline in student borrowing of federal and nonfederal education loans of 13 percent between 2010-11 and 2013-14. 

“Higher education data from the last few years point to recessionary anomalies, which are not the basis for sound long-term policy decisions,” NASFAA President Justin Draeger suggested at the release of the report.

Other research in 2014 included “Pell Grants as Performance-Based Aid? An Examination of Satisfactory Academic Progress Requirements in the Nation’s Largest Need-Based Aid Program,” which argued that failure to meet Satisfactory Academic Progress (SAP) requirements puts a significant number of community college Pell Grant recipients at risk of being ineligible for the Pell Grant. 

10. Midterm elections: Congressional power shifted to the Republicans in the midterm elections, as the GOP took control of both the House and Senate. At least one news outlet, The Wall Street Journal, credited the loss for Democrats to an inability to break “partisan gridlock” on student loans. 

Sen. Lamar Alexander (R-TN), an outspoken advocate for simplifying the Free Application For Federal Student Aid, will now head the Senate Health, Education, Labor, and Pensions Committee. Watch NASFAA’s The Policy Brief for more on what the 114th Congress might mean for education policy. 

11. Omnibus bill: Nearly at year’s end, Congress averted a government shutdown in mid-December by releasing an omnibus appropriations bill to fund the federal government for the remainder of fiscal year (FY) 2015. The bill funds most of the federal student aid programs for award year 2015-16 and includes a provision to partially reinstate a limited Ability to Benefit.


Publication Date: 12/19/2014

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