Late in March, a task force of 17 NASFAA members forwarded an initial list of 61 recommendations for changes to the Higher Education Act in the upcoming Reauthorization to the NASFAA Board of Directors. The Board accepted most of those recommendations, although it requested that some be further developed. This is the fourth in a series of articles that highlight those recommendations. NASFAA encourages members to suggest additional areas where legislative change is needed in the campus-based programs (Federal Work-Study, FSEOG, and Perkins Loans). To do so, you may comment publicly below or send your concerns privately to Reauth@nasfaa.org. For comprehensive coverage of all reauthorization topics, please refer to NASFAA’s HEA Reauthorization Web Center.
Transfer of Allocations
NASFAA’s Reauthorization Task Force (RTF) proposes that the limit on transferring allocations between programs be increased, and that institutions also be allowed to transfer a portion of their Perkins Loan level of spending.
Currently, the law allows an institution to transfer up to 25% of its campus-based allotments as follows:
The RTF propose to allow transfers of up to:
The RTF proposes no changes to current carry forward and carry back provisions.
FWS Community Service Requirement
On-campus Child Care Facilities
The RTF recommends an amendment to clarify the definition of community service with regard on on-campus child care facilities that, while open to the community at large, give preference to students and faculty, and, due to limited resources, are filled by their children. At the heart of this recommendation is the belief that college faculty and staff, as well students residing off campus, are in fact members of the surrounding community. Faculty and staff in particular are often long-term residents, indistinguishable from other members of the community who happen to work for an employer other than the college.
Current statute includes “child care services provided on campus that are open and accessible to the community” in the definition of community service. Under this recommendation, institutions would be allowed to count, for community services purposes, FWS employment in on-campus child care facilities provided no formal rule denies child care to the community at large other than a preference to serve the institution’s faculty/staff/student community needs first due to limited space/staffing resources. In addition, the definition of community service would be revised to acknowledge that the “community” includes faculty, staff, and students residing off-campus.
This recommendation has been made in the past, and still is of concern to NASFAA members.
Set-Aside for Community Service
The RTF recommends replacing the current community service requirement with a voluntary approach where 7 percent of the annual appropriation is put into a community service component program under FWS, for institutions to compete for separately. This approach would create a another sub-program under FWS (like Work-Colleges) with a portion of the FWS pot of money to be distributed by schools that apply specifically for it, on the same basis as supplemental reallocations are currently allocated.
Many schools already had strong, broad-based commitments to community service before it was incorporated as a requirement under community service. Other schools are located in areas where they find placement in qualifying community service positions difficult. Under the recommended approach, the bulk of the FWS appropriation would go to schools with no community service strings attached. Schools would have the option of applying for as much additional community service FWS as they think they could use, with no minimum percentage of their overall allocation required.
Private Sector Cap
The RTF recommends eliminating the 25% cap on private sector employment on the premise that schools should be able to place students wherever jobs are available and reasonable. This recommendation would not change any of the current caveats surrounding private sector placement, including the requirement that private sector jobs be academically relevant to the student’s program.
Pell Component of FSEOG Eligibility
Effective July 1, 2012, a lifetime eligibility limit (LEU) of 6 scheduled awards has been imposed on Pell Grant recipients. Due to the very limited nature of FSEOG funding, the requirement that FSEOG be awarded first to Pell Grant recipients effectively causes a loss of FSEOG funding once a student reaches his or her Pell LEU limit.
The RTF recommends that FSEOG be awarded to students whose EFCs fall into the Pell Grant range, regardless of whether the student actually receives a Pell Grant, and that the “lowest EF” order of awarding be eliminated. Students whose EFC would enable them to receive Pell Grants are in fact the neediest students. Further defining an order within that range seems unnecessarily redundant. Schools should be able to establish their own packaging policies within the EFC eligibility range.
Perkins Fund: Distribution of Assets if Program Ends
In the event that the Federal Perkins Loan Program ceases to exist, the law specifies how to distribute the assets of the Fund between the school and the federal government (which has an investment through federal capital contributions—FCC—over the years). The RTF recommends that this process should include an offset for the aggregate amount of unfunded reimbursement for required loan cancellations. In addition, the process should take into account any institutional contributions made in excess of the FCC or made when there was no new FCC.
Pending: Allocation Formulas
The RTF believes that the current allocation formulas are inequitable due to the fact that, over time, the campus based funding formula has not been adequately adjusted to reflect the demographic redistribution of needy students that has occurred across the nation. Consequently, institutions that have seen increases in needy students are not necessarily provided with additional campus based funding. Conversely, other institutions continue to receive campus based funding at the same level year to year despite the fact that their proportion of needy students has declined.
NASFAA has in past reauthorizations unsuccessfully advocated for a gradual elimination of the base guarantee with eventual reliance on the fair share component of the current allocation formulas. The RTF believes that an allocation formula should take into consideration the number of high need students attending the institution as well as the cost of attendance of similar sector institutions (2-year, 4 year, public, private, proprietary) within a given geographic region. However, the ramifications of changes to the formulas need careful investigation. The RTF now has a tool that it can use to model the effects of various changes, and will discuss this issue further before making a formal recommendation to the Board.
Publication Date: 5/28/2013