When the Rethinking Student Aid Study Group published its report in September 2008, it represented the culmination of two years of research and analysis on improving the student aid system. Last week NASFAA interviewed the group's co-chairs, Spencer Foundation President Michael McPherson and College Board Senior Policy Analyst Sandy Baum to discuss some of the questions that have been raised in the six months since the release of the report and to learn more about how the group arrived at some of its recommendations.
Q. What was the impetus for beginning the Rethinking Student Aid Study Group?
A. We wanted to think about how to make fundamental improvements in the student aid system. Conversations about aid policy too frequently focus on what will pass Congress, on how to get more money rather than how to be sure the dollars are as effective as possible, and on the distribution of funds across different interest groups. Our goal was to get a group of thoughtful experts to examine available evidence and deliberate about potential long-term improvements to aid policy.
Q. There are those in the higher education community, as well as members of Congress , who have pointed to issues other than student aid as reasons students fail to make it to college. Why focus so much on the federal student aid system?
A. It is certainly true that students face significant non-financial barriers to enrolling and succeeding in college. No financial aid system can eliminate all of those barriers. But there is considerable evidence that financial barriers exist and that the complexity of the student aid system diminishes its effectiveness. A better student aid system can't eliminate all the gaps in educational attainment across demographic groups, but it could narrow those gaps. Moreover, fixes for other problems will be less effective if they run up against a flawed aid system.
Q. Would you please describe the process you used - who was involved and what research you used - to formulate your recommendations?
A. We gathered a group of people who are very knowledgeable about student aid, college finance, and higher education policy. We were careful to assure that no one would be there to represent any particular institutions or groups of students. The goal was to think analytically about good public policy.
We succeeded in getting funding from the Andrew W. Mellon Foundation, the Spencer Foundation, and Lumina Foundation for Education to supplement the support from the College Board. The College Board assured the group that it could act independently and its recommendations would not be subject to approval by the College Board.
We commissioned eight researchers to write papers examining the available evidence about what makes student aid policies most effective. We also worked with the Urban Institute/ Brookings Tax Policy
Center to generate cost estimates of proposals we developed.
Our group met a number of times over a two-year period. We traveled around the country talking to many financial aid professionals, guidance counselors, students, scholars, and others about their views on financial aid programs and policies. The group had lively discussions but, in the end, reached a clear consensus on the recommendations we issued.
Q. Which of your recommendations do you feel has the potential to have the biggest impact on increasing college access?
A. Simplifying the application process so that students and parents don't have to fill out complicated forms in order to apply for aid probably has the most potential for short-term improvements. However, simplifying the programs, so that everyone can easily understand what aid will be available to them is also critical. Over the longer run, our proposed savings program, which would put money into accounts for low-income children so they could see that college will be affordable, might increase their motivation to prepare academically and have an even more profound impact on access.
Q. You suggest some dramatic changes that would simplify the financial aid application process. What did the study group discuss relating to trade-offs associated with simplification in terms of ensuring that scarce dollars go to truly needy students?
A. The group certainly discussed the trade-offs between relying on more detailed information about family finances and creating a simple allocation system. Because we proposed relying on IRS data, it would be possible to have a simple application process but a more complex allocation formula. However, we were convinced that simple, early information about the amount of federal aid for which students are likely to be eligible is vital in terms of planning and preparing for college. The group perceives the current Federal Methodology as complicated but really not very good at distinguishing among students and families and allocating dollars according to true need.
We need to stress that, while we believe that our proposed simple formula is appropriate for Pell Grants, it is probably not precise enough for allocating aid to students from more affluent backgrounds. We looked carefully at data on tax filers with low adjusted gross income but evidence of other resources. We all agreed that the small number of people who will get through the system in this way is a small price to pay for the much simpler system - and probably not greater than under the current system.
Q. A growing majority of students are non-traditional students--e.g., older, part-time, or independent--but the study group seemed to focus on the traditional 18-22 year old college-going cohort. Can you explain why you chose that focus and what your recommendations may mean for nontraditional students?
A. We chose to focus on undergraduate students not graduate students, but our recommendations will improve the aid system for traditional and nontraditional students alike. It's certainly true that any proposals focused on assuring young students that funding will be available when they are ready to go to college is going to affect young people. But a simpler system with Pell look-up tables will be valuable to older students as well as to parents of younger students. And our proposed savings program could transform the prospects of nontraditional students. Individuals who grow up in low- and moderate-income families, but who do not go to college immediately after high school, will have funds to support their postsecondary education even if they wait for many years to use those funds.
Q. Higher education advocates applauded the recommendation to move Pell Grant funding into mandatory funding with mandated increases in subsequent years. How did the study group decide to use the consumer price index as the best way to mandate future Pell Grant increases?
A. Automatic increases to Pell Grants are important so that students are not dependent on Congress legislating increases. Linking the size of the grant to tuition levels would be problematic and the group wanted to avoid increasing the possibility (or even the perception) that the student aid system would provide incentives for tuition to increase more rapidly. The Obama administration's proposal that the maximum grant be linked to CPI + 1% is a very appealing idea.
Q. Some schools might bristle at the idea of eliminating the Perkins, Federal Work-Study, and Federal Supplemental Opportunity Grant Programs. How did the group reach the determination that these programs should be eliminated?
A. The group agreed from the beginning that the current allocation formula for campus-based aid, which is linked to institutional history rather than to students, should be changed. Our proposal for campus-based aid links funds to the success of low- and moderate-income students in progressing through institutional programs. As we developed our proposal for a very simple allocation formula for Pell, it became clear that maintaining a complicated formula for the purpose of allocating the small portion of federal aid that is campus-based was not practical or wise. Our proposal provides funds over which institutions will have discretion, but does not constrain them to allocate those funds according to a federal formula. It is important to underscore that our recommendations would only phase out existing campus-based program as their funding is replaced by our new (and in our view, improved) program. It would also assure that some of the funds be used to provide on-campus employment for students.
Q. The group recommended government-funded block grants that would be distributed to schools in amounts proportional to the numbers of Pell-eligible students who successfully make it beyond their first year of study. What type of discretion do you think schools should have in using those funds?
A. We proposed that schools be required to use a portion of the funds to provide on-campus employment, but that there not be other strings attached. Schools that do not successfully support low- and moderate-income students would not continue to receive the funds. Avoiding additional bureaucracy and reporting requirements was an important component of our thinking. We also believe that institutions are best positioned to figure out how to help their own students succeed and that specific requirements designed by the federal government are unlikely to be optimal.
Q. The study group explained that college savings plans have been used successfully by middle- and upper-class families to help pay for college for years. Would you tell us more about the study group's recommendations for getting low-income families into a college savings mindset?
A. We discussed the possibility of requiring low-income families to save some of their own money in order to get federal subsidies. We rejected that idea because we believe that truly low-income families are simply not in a position to cut their current consumption in order to save. We recommend that the federal government annually put funds in the names of dependent children who would, based on their parents' tax returns, be eligible for Pell Grants if they were enrolling in college. The funds would be proportional to the Pell Grants they would be receiving. Clearly, a process for providing funds for children whose parents do not have to file tax returns would be required. Children who were poor for only a few years would end up with smaller accounts than those who were poor for longer periods of time. Funds could be used only to pay postsecondary education expenses, but would not have to be used immediately after high school. Adults without college degrees who returned to school would still have their funds available. A major attraction of this proposal is that it would enable parents and children with limited incomes to begin envisioning college as a real possibility from early in children's lives, just as affluent families do now.
Q. Last year NASFAA launched its National Conversation Initiative, NASFAA's campaign to increase college access and success for low-income, minority, first-generation, and other disadvantaged students by improving the U.S. financial aid system. How do you see NASFAA and the Rethinking Student Aid Study Group working together to achieve a more effective student aid system?
A. We are delighted that NASFAA is also investigating ways to improve the financial aid system. Our goal is to increase the momentum for reforming existing policies. We talked extensively with NASFAA members in developing our proposals and we hope and expect NASFAA's proposals to reflect goals and principles similar to ours. We all share the goal of increasing educational opportunities for students with limited resources, of creating a financial aid system that will be easy for students and parents to navigate, and of using funds efficiently and effectively. While we think our recommendations are very strong, we are eager to work with others with similar goals to promote ideas that will generate broad support and have the potential to improve the lives of students. As President Obama said about the economic stimulus package, this is not about pride of authorship, this is about supporting the best ideas.
Posted 04/02/09 to www.NASFAA.org. Redistribution to non-NASFAA institutions is prohibited. Please submit Web site questions or comments to Web@NASFAA.org.
