A Year in Review: The Biggest Financial Aid News and Events of 2015
By Allie Bidwell, Communications Staff
The past 12 months have been significant for higher education policy, and specifically news and events surrounding the financial aid profession.
President Barack Obama started the year with a call to provide two years of tuition-free community college, shining a spotlight on the perennial issues of college affordability and student debt. A long-standing federal loan program expired after facing fierce opposition from some lawmakers, and Congress continues on its journey to identify issues to tackle in reauthorizing the Higher Education Act.
Here is some of the biggest financial aid news from 2015:
- President Obama Announces Plan for Two Years of Tuition-Free Community College:
Just days before his 2015 State of the Union address, President Obama unveiled a proposal to make the first two years of community college tuition-free for “everybody who's willing to work for it.” The plan was inspired by a similar proposal out of Tennessee, which Gov. Bill Haslam announced the previous year. Under the White House proposal, the federal government would cover 75 percent of the average cost of community college tuition, while states that chose to participate in the program would pitch in the remaining funds. The proposal was praised by some, and roundly criticized by others who worried how the plan would be funded, and whether it would be targeted toward the neediest students.
- White House Announces Move to Prior-Prior Year Income Data on FAFSA:
Perhaps one of the most significant financial aid-related policy changes to come about in 2015 was the president’s executive action in September to allow the use of prior-prior year income data on the FAFSA application, beginning with the 2017-18 award year. The change will make the FAFSA application available earlier – on October 1, rather than January 1. NASFAA has long advocated for the change, and urged the Obama administration to take action.
- Federal Perkins Loan Program Expires:
Despite strong bipartisan support to pass a one-year extension for the program, the Federal Perkins Loan program expired at the end of September after Sen. Lamar Alexander (R-TN) blocked the proposal. As the program winds down, schools across the country are now facing complex questions and procedures around grandfathering in certain students, and returning funds to the Department of Education (ED).
- Gainful Employment Regulations Take Effect:
After years of writing, challenging, and revising, ED’s gainful employment regulations took effect in July 2015. The rule makes non-degree-granting programs at colleges and universities subject to certain metrics – including debt-to-income ratios and default rates – ED said are intended to measure how well the schools serve students. A federal judge in June rejected the last of several lawsuits brought against the rule, which mainly affects for-profit institutions. But as NASFAA has pointed out, the department’s guidance to institutions on gainful employment data reporting was delayed. At the same time, ED began sending threatening letters to institutional leaders, claiming they had been noncompliant with the regulations. Moving forward, more gainful employment deadlines loom, aside from data reporting.
- Corinthian Colleges Collapses, ED Begins Debt Relief Process:
After months of turmoil, the for-profit college chain Corinthian Colleges closed the doors of its final 28 campuses in April, leaving thousands of students in the lurch. Corinthian shortly thereafter applied for bankruptcy, and thousands of Corinthian students began pressuring ED to discharge their federal student loans. In June 2015 NASFAA, the Western Association of Student Financial Aid Administrators (WASFAA), the California Association of Student Financial Aid Administrators (CASFAA), and Beyond 12 formed a partnership to connect Corinthian students and those who felt they were victims of fraud with volunteers who were knowledgeable about higher education, academic planning and financial aid, ultimately assisting more than 1,300 students displaced by the closure of Corinthian Colleges. Also in June, ED announced a multi-track process for some Corinthian students to receive debt relief, and in August, ED announced it had begun the process to develop regulations to streamline the loan forgiveness process for students who file defense to repayment claims on their federal student loans. Since then, the Special Master appointed to oversee the debt relief process, Joseph Smith, has released two reports with updates on the progress toward establishing a longstanding process.
- Federal College Rating System Dissipates, College Scorecard Updated:
After months of anticipation, and several delays, the Obama administration released a trove of data in the form of an updated College Scorecard in September. The data came after officials announced in June they would step away from attempting to rate colleges – an initiative Obama announced more than two years ago that faced fierce opposition from college and university presidents, as well as lawmakers on both sides of the aisle – and rather release a tool to help students decide for themselves what school would be the best fit for their college education. Before ED abandoned its plan to move forward with a ratings system, NASFAA submitted comments (p. 17) on the proposed ratings framework, saying that from a philosophical standpoint, a ratings system would “erode and commoditize the diversity of America’s higher education system – the facet that makes it so unique and valuable.”
- REPAYE Student Loan Repayment Plan Takes Effect:
In June 2014, President Obama issued a memorandum to expand access to the income-driven student loan repayment plan known as “Pay As You Earn.” The expansion would include an additional 5 million borrowers who were previously ineligible to enroll in the repayment plan. At the end of October, ED released the final rules establishing the Revised Pay As You Earn plan, dubbed REPAYE. ED is expected to make REPAYE available in December 2015.
- Institutional Risk-Sharing, Skin-in-the-Game Became Buzz Words:
As Congress continues on its path to reauthorize the Higher Education Act, lawmakers, higher education leaders, and think tanks are toying with the idea of creating institutional risk-sharing models to hold colleges more accountable for how their students fare after leaving school. The most-discussed form of risk-sharing would require colleges and universities to be at least partly on the hook financially when graduates default on their student loans. But as the idea gains traction in Congress, policymakers have also raised concerns with how to implement a model that doesn’t unintentionally harm college access.
Publication Date: 12/14/2015