The main event at the San Antonio conference yesterday was a general session focused on NASFAA's National Conversation Initiative (NCI). Justin Draeger, NASFAA Vice President, discussed the status of the project, assisted by a panel of experts including Joan Berkes, NASFAA Director of Legislative and Regulatory Affairs, Pat Hurley of Glendale Community College, and George Chin, retired student aid director.

Draeger began by reviewing the economic events of the last year and highlighted key recommendations of the NCI project as especially relevant and timely.

"We began hearing financial experts use phrases like "too big to fail" and "systemic risk" to explain why the government had to become a more active participant in the economy to alleviate pressures in the credit markets ... My message today is this: Financial institutions are not the only systemic risk we face as a nation. Banks are not the only entities that are too big to let fail. We are at risk as a nation of allowing some of our scarcest and most important resources - our citizens - to languish in the relentless grip of poverty ... The best economic stimulus plan involves a long-term investment in our educational system.

"If you step back for just a moment and look at what NCI set out to do nearly a year ago, it would seem that we had some sort of clairvoyance. Look at the biggest issues on the legislative and regulatory docket today - simplification, grants, and loans - and you'll see that NCI tackled each and every one of those issues.

"Paramount in NCI - and from what we heard from the field - is that financial aid has become too complicated. Certainly there is recognition that the application is complicated and should be simplified. Through NCI, NASFAA developed a financial aid application with 24 questions. We were pleased that both the White House and Congressional leaders have requested a copy of our simplified FAFSA and tapped our expertise on how best to simplify the process. Since then, NASFAA staff have been engaged in helping the Department to make that simplification a reality, first through the Department’s existing authority and in the future through legislative action.

"Last month, the Department announced major steps forward in simplifying the FAFSA that mirror several of our NCI recommendations, including matching financial questions on the application with the IRS, which should alleviate verification requirements for schools and students."

The audience responded with loud applause when Draeger said, "Finally, we are making progress to ensure that financial aid administrators can work as aid administrators and not as agents of the IRS, drug enforcement, or the selective service administrations!"

Draeger discussed needs analysis formulas and stressed that while a full needs analysis is still an important tool for aid administrators, "simple isn't always better", and that some complexity on the back end would need to be retained while simplifying the student-facing aspects of the system.

"The needs analysis formula still stands as the most precise, most reasonable, most accurate measure of a family’s financial need. At the present time, there is no more precise way to measure need than a system which derives a family contribution based on a full and complete assessment of family finances, and then deducts that contribution from costs at a specific institution to arrive at financial need. But we have not been fully and completely assessing family finances for quite some time. The congressionally mandated formula eliminates consideration of important assets. The federal EFC formula ceased years ago to be, and is not now, an accurate measurement of need. We have to recognize the needs analysis formula for what it is: a rationing device used to distribute limited funds against a pool of applicants. Why then does NASFAA not advocate for restoring a precise and detailed measurement of need at the federal level? The data is in—data we did not have years ago— and it shows that regaining the precise detail that a full needs analysis would require would only serve to make the aid application system more complex, more intimidating than it is now, and would not—on a macro level—significantly improve the achievement of national goals of access and equity, This kind of needs analysis does very little to encourage those who cannot afford a higher education.. NASFAA believes that there is still a place at the institutional level for true needs analysis—in fact, we think it is essential. On the federal level, however, as a matter of social policy which supports national goals, we as a nation gain much more than we lose by making it higher education more accessible—even if it means that a few students with greater resources slip through the cracks."

Draeger discussed the proposal to use poverty thresholds as an eligibility determinant, noting that some student aid programs administered by the Department of Health and Human Services, such as the Scholarships for Health Professions Students from Disadvantaged Backgrounds and Loans for Disadvantaged Students, already use the poverty guidelines for eligibility determination. "It is perfectly reasonable to insist that for purposes of the Pell Grant, we replace needs analysis with an eligibility determination that relies solely on adjusted gross income (or a modified adjusted gross income), family size, and poverty thresholds as determined by HHS. Using this method, families could be informed very early about the amount of federal grant money for which they may qualify. Any dependent student whose parents are receiving means-tested benefits, or any independent student who is receiving such benefits, would automatically qualify for the maximum Pell Grant."

Shifting gears to the current hot topic of the loan programs, Draeger noted that many financial aid administrators are understandably anxious about the Administration’s proposals to eliminate FFELP and assured members that NASFAA is highly concerned about an abrupt end to the services FFELP has provided to students and is doing its best to work with the Budget process to make sure that students and schools are not left out in the cold.

But, added Draeger, "I want to be frank with you about the future of student loans. The FFEL vs. DL debate has been going on for more than a decade. Both sides have made their arguments equally well. But as far as NCI goes, we cannot allow the FFEL/DL debate to sidetrack us from issues that are far more important. I'm afraid that many of the other aspects of our student loan recommendations have been overshadowed and lost through this debate. As they are currently structured, student loans are unlikely to help the nation close the gap in college participation between rich and poor. In fact, they not only fail to improve college access, studies show that loans may actually discourage enrollment. In short, a successful student aid program would be one where disadvantaged or low-income students need not borrow at all. Given the dramatic increase in the Pell Grant amount proposed in NASFAA’s model, low-income students attending low-cost public institutions would not be reliant on student loans, especially if they begin their degrees at low-cost community colleges, a sector of higher education that the current administration has taken an extreme interest in as a vehicle of higher education access."

Noting that the NCI project is now in Phase 3, Draeger stressed that the recommendations on the table now will be further refined and modified through additional member discussion and feedback. "This is the National Conversation, and a conversation is a two-way street. Join us. Get involved. Review these preliminary recommendations and give us your feedback. This is YOUR association and we need you fully engaged in all of the advocacy issues that our students need us to be involved in."

In keeping with the conference's "Cowboy Up!" western theme, at the luncheon later on Monday, James Owen, a former investor, author and founder and chief inspiration officer at the Center for Cowboy Ethics & Leadership, delivered a speech highlighting the importance of adopting some of the ethical standards that make up the "code of the west", or "cowboy code."

Owen noted that the business world has recently gotten itself into trouble because of the lack of ethics. He said that business men need to rethink the greedy practices that keep getting them into trouble and should adopt some cowboy ideals to restore trust in the business world. These ideals include things like taking pride in one’s work and keeping promises.

To illustrate his point he told the story of a businessman who questioned Owen's mantra that the business world would benefit from being more ethical. The man caught Owen off guard when he asked what was the "pay off""for being more ethical. Owen did not have the perfect answer for the man, but accepted his business card. Forgetting that the card was in his coat pocket until he wore the suit months later, Owen pulled out the card and discovered that the man had been a senior vice president at Lehman Brothers, which had since filed for Chapter 11 bankruptcy protection.

Owen reflected that living by a code and being ethical will benefit you personally, the company you work for, and the nation as a whole. He said the current economic difficulties offer an opportunity to for the nation to "wake up" and adopt better ethics so we can build a stronger nation.

Posted 07/14/09 to www.NASFAA.org. Redistribution to non-NASFAA institutions is prohibited. Please submit Web site questions or comments to Web@NASFAA.org.