House Hearing Focuses on Improvements to Federal Student Aid

By Allie Bidwell, Communications Staff

In a wide-ranging discussion focusing on simplification, streamlining, and targeting federal financial aid, the House Subcommittee on Higher Education & Workforce Development set out to identify ways Congress can work to make the federal financial aid system better serve students and families. NASFAA members JoEllen Soucier of the Houston Community College System, and Youlonda Copeland-Morgan of the University of California–Los Angeles testified during the hearing.

The hearing comes less than one week after President Donald Trump proposed slashing billions of dollars from federal student aid programs – largely through eliminating the Supplemental Educational Opportunity Grant program and significantly cutting from the Federal Work-Study program. Several of the witnesses said during the hearing that cutting from these types of programs could harm the students most likely to benefit from getting a college education.

“Over the years, the federal student aid system has become too complex,” said subcommittee Chairman Rep. Brett Guthrie (R-KY), referencing the complicated web of options just within the federal student loan program. “Faced with all of these choices and decisions, some individuals don’t even know where to begin. Others simply give up. We need to get rid of the complexity. We need to eliminate the confusion students face. And there a number of ways we can do both.”

Both lawmakers and the witnesses discussed the potential benefits and challenges associated with implementing a “one grant, one loan” system for aid, bringing back the year-round Pell Grant, expanding authority for financial aid offices to counsel students and in some cases limit their borrowing or stagger aid disbursement, and implementing income-share agreements more broadly as an alternative funding mechanism.

Soucier discussed her institution’s experience with delivering “aid like a paycheck,” saying she has seen improvements in retention “not for the reason you might have guessed.”

Distributing aid more incrementally, rather than all at once at the beginning of the semester, reduces challenges with the Return of Title IV aid. When students withdraw, they sometimes cannot come back to school because they owe money, Soucier said.

“As long as that balance is due they can’t come back to school, which is a problem. Many drop out for personal reasons. They want to come back but they can’t until that debt is paid,” she said. “Aid like a paycheck has spread out the disbursements over the entire semester. … Those who have had to withdraw, they no longer owe money. Recalculating their aid is causing them to basically break even.”

At times during the hearing there were points of contention discussing a “one grant, one loan” system because some fear that the consolidation of programs could result in an overall decrease in aid.

Guthrie mentioned the idea in his opening remarks, noting that “streamlining” is the operative word.

“It’s not about cutting,” he said. It’s about cleaning things up — making it easier for individuals to explore their options, find the right school, figure out how to pay for their education, and determine the best way to repay their loans.”

In her testimony, Soucier explained the challenges that exist in the application for financial aid, in communicating with students, navigating the different types of aid programs, and repaying loans.

“I have seen the complexity of the student aid process increase greatly over the past 25 years. The entire process from application to repayment has become an intricate puzzle that only a seasoned professional can navigate and understand,” Soucier said. “There are numerous opportunities for improvement, simplification, and consolidation.”

Copeland-Morgan emphasized the importance of providing support for the Pell Grant program, noting the success the University of California system has seen among its Pell Grant recipients – UC Pell Grant recipients’ 6-year graduation rates are “nearly identical to those of their middle- and upper-income peers,” she said. She also urged Congress to continue supporting and strengthening the Pell Grant program and other federal aid programs, following Trump’s proposed cuts.

“Especially at a time when a growing number of jobs is expected to require some postsecondary education and training, Congress must reject these cuts and reaffirm its commitment to invest in higher education,” she said. “Congress must recognize college success and completion as a public good that benefits society by preparing students from families across the socio-economic spectrum to compete and succeed in a global economy.”

Kristin Conklin, a founding partner at HCM Strategists, in her testimony focused on improving the federal financial aid system to serve today’s students.

“The nation’s financial aid system was built for a different age, when access and choice were sufficient programmatic objectives,” she said. “In 1965, when the first significant federal financial aid program began, 23 percent of Americans had a college degree. That attainment level was sufficient to support a vibrant middle class. That economy and those times are no more.”

In a “one grant, one loan” system, Conklin said all existing grant programs should be rolled into the Pell Grant program, which she said should also be available year-round. She added that tying aid to a more intensive enrollment (15 credits as opposed to 12) could also help accelerate completion.

“Pell Grants could then serve more of today’s students, provide them for assistance year-round and offer flexibility in disbursement and other rules so students juggling work and children could access flexible, accelerated learning options and earn credentials,” she said.

The “one loan” system, she said, would “end the various distinctions” among current loans, and end the Grad PLUS, Parent PLUS and Perkins Loan programs. The new loan program would set one borrowing limit for undergraduate students and one for graduate students, and all borrowers would repay “under a hybrid version” of two existing income-based repayment programs.

Matthew Chingos, a senior fellow at the Urban Institute, also mentioned consolidating loan programs, but would limit it to undergraduate students and eliminate federal loan programs for graduate students and parents. Chingos also suggested eliminating the in-school interest subsidy and redirecting those funds to the Pell Grant program.

“The idea of eliminating the in school interest subsidy isn’t to take resources away from anyone, but to deploy them in the way that they’ll most impact behavior,” Chingos said during a question-and-answer period. “If we’re going to give a subsidy, it’s better to give as an upfront grant.”

Chingos also suggested eliminating the Public Service Loan Forgiveness (PSLF) program, which Rep. Adriano Espaillat (D-NY) later said was a “heavy-handed approach.”

“Policymakers seeking to subsidize employment in certain sectors should do so directly, such as through targeted grant programs, rather than through loan forgiveness,” Chingos said in his testimony. “Eliminating PSLF and reducing the generosity of other forgiveness provisions for future borrowers is not only a matter of ensuring that subsidies are delivered fairly. It is also critical to the fiscal sustainability of the student loan programs.”

Although all witnesses suggested in some way strengthening and expanding the Pell Grant program, as well as other federal aid programs, several lawmakers questioned whether increases to federal student aid have contributed to rising tuition prices – an idea known as the Bennett Hypothesis. Evidence on whether that theory is true has been mixed, at best.

“More importantly, we need to take a step back and reject the cynicism that this idea implies,” said Rep. Mark Takano (D-CA). “By all means, let’s look for ways to make tuition more affordable, but let’s not throw up our hands and say we shouldn’t increase aid because of the misleading indications of this theory.”

 

Publication Date: 3/22/2017


Kim J | 3/22/2017 2:59:36 PM

Kudos to JoEllen and Youlanda for representing our profession with grace and being able to effectively communicate the expertise ... thank you, NASFAA, for continuing to fight the good fight on behalf of the membership, and ultimately students and families ....

KJ

David S | 3/22/2017 1:25:14 PM

High-five to Congressman Tanako for calling out the Bennett Hypothesis for what it is...fake news. And shaking my head at Congressman Grothman's remarks that financial aid eligibility drives matrimony decisions and that students use financial aid to buy themselves electronic gizmos, because I guess he heard it from somebody who knew a guy who read that on The Internet. Legislating by rumors...just what we need.

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