Governor’s Council Advocates for Better Data, Elimination of Maintenance of Effort in HEA Reauthorization

By Brittany Hackett, Communications Staff

As Congress prepares to reauthorize the Higher Education Act, policymakers should focus on promoting better data and transparency, fostering innovative learning models, and eliminating “maintenance of effort” provisions, according to a paper from the Bipartisan Policy Center’s (BPC) Governor’s Council.

Students and families need better data about institutions, tuition, student debt, and post-college earning potential. And despite several databases that currently offer some of this information, none of them gives all the information students need to make decisions about college, according to the BPC paper. BPC calls for a “comprehensive solution … that provides students with the full suite of data” needed to make informed decisions without compromising student privacy.

BPC also called for greater transparency in the student loan process by requiring that financial counseling be conducted before students sign their loan agreements, rather than after a signature is obtained under the current law. Counseling should also be provided annually throughout students’ college career and should include “ample guidance” on where to locate information on post-college earnings potential, BPC said.

Institutions should also share some of the risk in student loan repayment, particularly when the repayment levels are low, BPC said. To that end, the cohort default rate (CDR) should be replaced with a repayment rate that measures the percentage of new graduates that are able to make a principal reduction of at least $1 over a given period of time.

“By tying accountability to loan repayment rates, institutions could be held partly accountable for the thousands of students who are unable to put a dent in their student loan balances, but have been able to avoid technical default by enrolling in an income driven plan, or by going into deferment or forbearance,” BPC stated in the report.

The group also recommended that institutions with low repayment rates be given a financial penalty rather than lose their financial aid eligibility, which will “incent” institutions to ensure students are graduating with skills that are marketable after college. The new penalties should be “phased in” to allow institutions with high non-payment rates time to address those rates, according to BPC. In addition, the revenue from the penalties could be awarded to universities with high rates of repayment or high enrollment of Pell-eligible students, which could ensure that admissions are not limited on factors like ability to repay.

BPC also recommended that “maintenance of effort” (MOE) provisions related to higher education be eliminated, as they “represent an unnecessary federal intrusion into state budgetary decisions and are inconsistent with the federalist principles that underlie the U.S. Constitution.” Instead, the group advocates for an incentive like the State Student Aid Incentive Grant (SSIG).

Finally, BPC recommended that policymakers provide incentives for competency-based education (CBE) and adopt policies that would allow for more innovative learning models. Among their suggestions is to “unlink” financial aid and the credit hour, to redefine credit hour to include – and give greater weight to – skill development in and out of the classroom, and to allow accreditation to certify CBE programs for Title IV eligibility rather than secretarial approval.

 

Publication Date: 9/30/2015


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