Growing concern over the complexity of the federal financial aid system and a push toward simplification has led to increased attention toward streamlining the federal student aid programs. Specifically, several proposals and policy papers have recommended consolidating the federal aid programs into one grant program and one loan program, commonly referred to as "one grant, one loan." In some cases these proposals include the addition of one work-study program.
With that in mind, NASFAA convened a task force of financial aid professionals to examine the concept of “one grant, one loan” in October 2015.
Considerations and Recommendations
The task forced developed several considerations of a "one grant, one loan" system for policymakers, including the following, among others fully outlined in the report.
- Will federal program consolidation truly make the financial aid process simpler for students and families, given the existence of other sources of financial aid?
- Will the Federal Work-Study (FWS) Program survive simplification efforts?
- What would happen to the other Title IV grant programs and their federal funding?
- Would some students be awarded less funding under a one grant model than under the current model?
- Would there be a federal commitment to make up for that net loss in grant dollars?
- Will more borrowers be pushed into the private loan market?
- How will interest rates fare in a "one loan" system?
In addition, the task force identified several recommendations for policymakers in the event that education leaders reached a consensus on moving forward with a "one grant, one loan" system.
- Retain the Federal Work-Study (FWS) Program.
- Maintain the Administrative Cost Allowance (ACA).
- Implement a "Pell Well" or "Flex Pell" model of delivery.
- Shift administration of IASG to the U.S. Department of Defense or U.S. Department of Veterans Affairs.
- If a "one grant, one loan" model is adopted, Congress must commit to this model.
- Convert the TEACH Grant Program into a loan program, with forgiveness options.
- Make the Pell Grant Program a true entitlement with 100% mandatory funding.
- Create a simplified federal loan with identical terms for undergraduate students, graduate and professional students, and parents of enrolled students.
- Eliminate origination fees.
- Allow institutional authority to set loan limits for certain categories of borrowers.
- Establish aggregate loan limits based on academic credential.