The Obama administration wants to provide an "unprecedented amount of resources" to increase college access, affordability and attainment especially for student populations that have historically been underserved by higher education, Education Secretary Arne Duncan said Friday during a Webinar hosted by the American Council on Education (ACE).

Duncan recognized that there is widespread disparity in college completion rates for certain student populations -- like first-generation and low-income students. He said that breaking the cycle for these students and families was a top priority for the Obama administration and highlighted the administration's efforts to close the college achievement gap. These efforts include proposals to increase Perkins Loans, Pell Grants, and tax credits, create a $2.5 billion college access and completion fund, and the Department's recent efforts to simplify the student aid application process.

The House Education and Labor Committee recently approved legislation to implement some of the administration's proposals, but Department officials participating in Friday's Webinar said that the House bill did could have gone further to accomplish the administration's goals.

Robert Shireman, the Deputy Under Secretary of Education, said that the House bill generally follows the approaches laid out by the Obama administration, but it didn't go quite as far on FAFSA simplification or funding for community colleges as the administration would like. Shireman said the Department will be working with the Senate and hopes the senate will go further when it crafts its version of the bill.

Duncan noted that the Obama administration has set an aggressive agenda to significantly reform higher education, and the Department of Education would be part of that change. He said that the Department was being very critical of itself and was looking to dramatically alter the way it does business.

Traditionally, the Department has been a bureaucracy that could hinder innovation and change, Duncan said. He hopes to change this b y taking all the good ideas that are out in the field and providing unprecedented resources to scale up those ideas that improve education.

"We want to be an engine of innovation," he said. "This is one of the biggest fundamental changes the Department of Education is trying to make."

An example of this is the administration's proposal to increase the Perkins Loan program and use the extra funding to reward schools that successfully serve traditionally underserved student populations.

Shireman explained that the Department is concerned with schools increasing tuition and cutting student aid. To address this issue the administration would like to distribute the additional Perkins funds to schools that provide need-based aid and graduate a large proportion of Pell-eligible students. Shireman noted that the administration supports having a clause to ensure that schools currently receiving Perkins Loan funds would continue to receive at least the same amount they currently receive.

Regarding the switch to Direct Lending, Duncan noted that the Department is taking the switch very seriously and that it has been a smooth transition for schools who have switched. He said that the Department handled last year's 41% increase in Direct Loan volume "very well" and that this gave him confidence that the Department would be able to handle a full conversion to Direct Lending. He urged any school that might have an issue with switching to Direct Lending to contact the Department.

In response to a question regarding the back-end servicing of student loans in the Direct Loan program, Shireman explained that the Department has contracted with five private sector companies and would reward the companies that provide the best customer service and help students avoid default by giving them additional loan volume to service.

"We provide the right kind of incentives to prevent default and assure good service," Shireman said.

A recording of the ACE Webinar has been posted to the ACE web site.

Posted 08/10/09 to www.NASFAA.org. Redistribution to non-NASFAA institutions is prohibited. Please submit Web site questions or comments to Web@NASFAA.org.