NASFAA's Reauthorization Task Force seeks your expedited reaction to four additional preliminary recommendations for changes to the Higher Education Act (HEA). Your comments are needed by November 8, 2002. The additional proposals are as follows:
- A change in the Title I definition of postsecondary education conforming the practice between non-profit and proprietary schools;
- A substantial retargeting of campus-based programs on needy students by reform of the institutional funding allocation formula;
- A recommendation about continuance and expansion of the Guaranty Agency Voluntary Flexible Agreement (VFA) law; and
- A grant of authority for NASFAA staff to work with other higher education associations to develop recommendations liberalizing federal financial aid requirements as they affect distance education or non-traditional education delivery systems.
The Task Force appreciates your enthusiastic response to our initial posting of preliminary reauthorization recommendations. Using these responses, we are working through conference calls to retain, modify, or eliminate issues, with the results to be released soon. We are under a tight deadline now to finish our work for submission to the Board in time for consideration at its mid-November meeting. As you know, after Board action, these recommendations will become NASFAA's official reauthorization proposals for presentation to the Congress, Administration, and other interested parties.
We regret that the response time is so short for these four recommendations (as well as for the earlier massive document containing the bulk of the Task Force's work). Nevertheless, your input is critical on these additional four recommendations. Please send your comments on the following four issues to reauth@nasfaa.org no later than close of business Friday November 8.
We thank you for your participation in this process. With your help, we will meet the House committee's December 31 deadline for submission of reauthorization changes.
Issue 1: Recognized Occupation Requirement for Proprietary Institutions [Title I]
Recommendation: ED and Congress should modify the regulations and laws to provide for the following:
- All programs should be reviewed for eligibility for the purpose of this provision, based on the nature of the degree. Programs that are at the associate, bachelor's, or graduate level should be exempt from the requirement that the program lead to a specific occupation.
- Programs that do not lead to an associate, bachelor's, or graduate degree could be eligible if they met the following criteria:
- The program is at least two years in length and the credits are fully acceptable towards a bachelor's program, OR
- The program leads to a recognized occupation and meets the following minimums:
- It is an undergraduate program that provides at least 15 weeks of instruction and 600 clock hours, 16 semester or trimester hours, or 24-quarter hours. The program may admit students without an associate degree or equivalent.
- It is a graduate/professional program, or admits only students with an associate degree, and provides at least 10 weeks of instruction and 300 clock hours, 8 semester or trimester hours, or 12-quarter hours.
- It is a program that admits some students who do not have an associate degree or equivalent, and must meet specific qualitative standards. (These programs are only eligible for FFEL and Direct Loans.) The program provides at least 10 weeks of undergraduate instruction and 300-599 clock hours. The program may admit students without an associate degree or equivalent.
Rationale: The regulations currently have different definitions for determining program eligibility based on the type of institution offering the program. We believe that the determination of program eligibility should not be based on whether a school is for-profit, public or private non-profit. Currently, institutions offering similar programs are not treated similarly under Title IV regulations. Only for-profit institutions are blocked from offering degree or certificate program unless they "provide training for gainful employment in a recognized occupation" (as found in the U.S. Department of Labor's Dictionary of Occupational Titles). Although a for-profit institution and a public institution may offer identical programs, accredited by the same authorizing body, the students attending the proprietary institution may be barred from receiving federal aid due to this provision.
These limitations are unfair to students and consumers. Their choice of schools will be driven by the wrong conditions; rather than choosing a school based on quality, location, or services provided that meet their needs, the student may be forced to choose based on institutional type. This provision creates inequity among otherwise similar programs.
Issue 2: Campus-Based Programs Allocation Formulas [Sections 413D, 442, 462]
Recommendation:
A. Phase-out the base guarantee by fiscal year 2009 in accordance with the following schedule:
Fiscal Year 2004 – 100% of base
guarantee
Fiscal Year 2005
– 80% of base guarantee
Fiscal Year 2006
– 60% of base guarantee
Fiscal Year 2007
– 40% of base guarantee
Fiscal Year 2008
– 20% of base guarantee
Fiscal year 2009 and thereafter –
0% of base guarantee
B. Modify the fair share portion of the process by:
- Increasing the allowance for books and supplies in the average cost of attendance determination from $450 to $800 for Fiscal Year 2004 and adjust it by the change in CPI-X each succeeding year.
- Extending the income categories to reflect the distribution of EFCs relative to the average cost of attendance.
C. Direct the Secretary to conduct a study of alternative measurements of institutional need for campus-based funds considering factors such as, but not limited to, state grants, institutional grants (need based and non-need based), the distribution of full-time and part-time students, and tuition discounts. The results of the study shall be reported to Congress by June 30, 2006.
Rationale: The campus-based allotment formulas, through the base guarantee based on fiscal year 1999 allotments, have suppressed the allocation of funds to institutions with a growing student population and do not reasonably reflect the proportions of needy students at many institutions. A gradual phase-out of the base guarantee will permit a redistribution of fund to reflect more accurately the distribution of student need among institutions.
The modifications for the book and supplies allowance will provide a more current estimate of the costs in the formula.
The extension of the income bands will permit a more equitable assessment of institutional need by permitting a fairer representation of the distribution of EFCs for middle- and upper middle-income families in the calculation of institutional need. The current bands are capped at $60,000+ and $20,000+ for dependent and independent students and compress the representation of the EFCs. An extension of the bands to a cap of about $120,000 and $40,000 would provide for a more refined computation of institutional need.
The study and report by the Secretary will allow for community discussion of the formulas to permit progress toward the development of a more equitable allotment process.
Additional Data: In order to inform members about the impact of this proposed change in the campus-based programs allocation formula, NASFAA provides the following information on how funding would be redistributed among postsecondary education sectors for each of the campus-based programs. Currently, under the formulas used to distribute federal campus-based funds to institutions, about 60% of the allocations are provided under the base guarantee.
The charts of campus-based allocations compare allocations between the current base guarantee and fair share formulas with estimated distributions based entirely on the fair share formula. These estimates assume that there would be no increase in the current federal dollars (so that the dollars would be distributed differently among the institutions, but the total spending would not change). The percentage changes in the table are based on changes in the distribution of funds within each sector for each program, but the total federal allocation within each program remains unchanged.
Estimated 2002-2003 Allocations for the Federal Supplemental Educational Opportunity Grant Program for Base Guarantee and Fair Share, and Estimated Amounts Awarded if Allocations Were Based Entirely on Fair Share
|
Institution Type
|
Base Guarantee
(in $1,000s)
|
Current Fair Share
|
Total Allocation
(in $1,000s)
|
Estimated New Allocation Based on Fair Share
(in $1,000s)
|
Percentage Change in Allocation (Based on Fair Share)
|
|
4-Yr Public
|
$169,838
|
$61,400
|
$231,238
|
$163,817
|
-29.2%
|
|
4-Yr Private
|
$180,073
|
$98,276
|
$278,349
|
$262,202
|
-5.8%
|
|
2-Yr Private
|
$6,637
|
$5,077
|
$11,714
|
$13,545
|
+15.6%
|
|
2-Yr Public
|
$65,531
|
$59,306
|
$124,837
|
$158,230
|
+26.7%
|
|
Proprietary
|
$31,181
|
$47,676
|
$78,857
|
$127,201
|
+61.3%
|
|
Total
|
$453,260
|
$271,735
|
$724,995
|
$724,995
|
n/a
|
Source: Calculations from the
"Component Distribution of Allocations, 2002-2003 Campus Based Programs." Report
published by the Office of Postsecondary Education, U.S. Department of
Education.
Estimated 2002-2003 Allocations for the Federal Work-Study Program for Base Guarantee and Fair Share, and Estimated Amounts Awarded if Allocations Were Based Entirely on Fair Share
|
Institution Type
|
Base Guarantee
(in $1,000s)
|
Current Fair Share
(in $1,000s)
|
Total Allocation
(in $1,000s)
|
Estimated New Allocation Based on Fair Share
(in $1,000s)
|
Percentage Change in Allocation (Based on Fair Share)
|
|
4-Yr Public
|
$281,882
|
$84,545
|
$366,427
|
$243,983
|
-33.4%
|
|
4-Yr Private
|
$253,826
|
$170,664
|
$424,490
|
$492,508
|
+16.0%
|
|
2-Yr Private
|
$7,508
|
$5,911
|
$13,419
|
$17,058
|
+27.1%
|
|
2-Yr Public
|
$101,062
|
$55,348
|
$156,410
|
$159,725
|
+2.1%
|
|
Proprietary
|
$13,776
|
$32,478
|
$46,254
|
$93,726
|
+102.6%
|
|
Total
|
$658,054
|
$348,946
|
$1,007,000
|
$1,007,000
|
n/a
|
Source: Calculations from the "Component Distribution of Allocations, 2002-2003 Campus Based Programs." Report published by the Office of Postsecondary Education, U.S. Department of Education.
Estimated 2002-2003 Allocations for the Federal Perkins Loan Program Federal Capital Contributions for Base Guarantee and Fair Share, and Estimated Amounts Awarded if Allocations Were Based Entirely on Fair Share
|
Institution Type
|
Base Guarantee
(in $1,000s)
|
Current Fair Share
(in $1,000s)
|
Total Allocation
(in $1,000s)
|
Estimated New Allocation Based on Fair Share
(in $1,000s)
|
Percentage Change in Allocation (Based on Fair Share)
|
|
4-Yr Public
|
$37,710
|
$2,863
|
$40,573
|
$41,023
|
+1.1%
|
|
4-Yr Private
|
$44,788
|
$3,697
|
$48,485
|
$52,973
|
+9.3%
|
|
2-Yr Private
|
$748
|
$66
|
$814
|
$945
|
+16.1%
|
|
2-Yr Public
|
$3,405
|
$212
|
$3,617
|
$3,038
|
-16.0%
|
|
Proprietary
|
$6,370
|
$141
|
$6,511
|
$2,021
|
-69.0%
|
|
Total
|
$93,021
|
$6,979
|
$100,000
|
$100,000
|
n/a
|
Source: Calculations from the "Component Distribution of Allocations, 2002-2003 Campus Based Programs." Report published by the Office of Postsecondary Education, U.S. Department of Education.
Issue 3: Distance/Non-Traditional Education and Financial Aid [Several HEA Sections]
Recommendation: NASFAA should negotiate with its sister higher education associations statutory changes in distance/non-traditional education as those academic delivery systems affect student aid and vice versa.
Rationale: The Task Force believes NASFAA is best situated to work and negotiate changes in distance/non-traditional education student aid requirements with its sister higher education associations. This does not mean the Task Force does not want changes in such provisions. Such changes affect a wide swath of campus offices and interests, not only the financial aid office, and therefore such changes to streamline, refine, and reform these requirements is better accomplished in concert with all in the higher education community. We will update members on the progress of those discussions requesting your feedback.
Issue 4: Voluntary Flexible Agreements (VFA) [Section 428A]
Recommendation: Maintain statutory VFA authority; grandfather current VFA arrangements; expand number of VFA participants; and urge future adoption of a new model for Guaranty Agency services and payment structure.
Rationale: Voluntary Flexible Agreement statutory language was included in the last HEA reauthorization. The purpose of VFAs is to experiment with new ways to deliver and pay for services provided by Guaranty Agencies. Several agencies have taken advantage of this authority, including ASA, Great Lakes, and the Texas agencies. The Task Force recommends "grandfathering" these and other current participants so that they might continue their innovative activities into the future. We recommend expanding the number of agencies that may participate beyond the currently authorized six so that any Guaranty Agency can participate if ED agrees.
Finally, the Task Force believes that several of the current VFA experiments hold considerable promise for reorienting not only the structure of the current payment system for Guaranty Agencies, but, more importantly, refocusing their activities and services provided in reducing default claims. The Task Force urges consideration and adoption in the future of a new system of service and payment based on one or more of the current VFA experiments. We do not urge adoption of such a model at this time, since we believe certain outstanding questions remain and there is a need for the current VFA experiments to mature before we are ready to urge a wholesale reform of Guaranty Agency functions, but we believe that day is not very distant.
By Larry Zaglaniczny
NASFAA Director of Congressional Affairs
and
Marty Guthrie
NASFAA Director of Governmental Affairs
Posted October 31, 2002 on www.NASFAA.org, the Web Site of the
National Association of Student Financial Aid Administrators (NASFAA).
Copyright 2002 NASFAA.
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