The last comprehensive reauthorization of the Higher Education Act (HEA) occurred in 2008, and the law has been overdue for another reauthorization for nearly a decade. The National Association of Student Financial Aid Administrators (NASFAA) has worked on reauthorization for nearly a decade. Beginning with the original 2013 Reauthorization Task Force (RTF) report — and followed by updates in 2016 and 2019 — NASFAA's HEA recommendations reflect the work of more than 15 member-led policy development task forces. Though Congress has made some progress on HEA reauthorization, observers have yet to see comprehensive bipartisan legislation introduced in either congressional chamber.
Despite the absence of a comprehensive bipartisan proposal, NASFAA is pleased to report that several recommendations have been accomplished since our update to these recommendations in 2019. Most notably, two pieces of legislation, the Fostering Undergraduate Talent by Unlocking Resources for Education (FUTURE) Act and the FAFSA Simplification Act, have been signed into law that will bring much-needed improvement to students and the federal student aid system as a whole.
"Even without a full HEA reauthorization on the horizon, having a comprehensive set of recommendations that are founded on our principles continues to guide our advocacy work," said NASFAA President Justin Draeger. "We are pleased to present these proposals, which have been updated by NASFAA volunteers, staff, and the board of directors, as we seek to meet the needs of today’s students."
In addition to the reauthorization positions highlighted below, NASFAA's updated recommendations are included in the following documents:
Strengthening Federal Pell Grants
- Double the maximum Pell Grant.
The time has come for Congress to make a substantial investment in the program by doubling the maximum Pell Grant, a proposal that is enthusiastically supported by many in the higher education community. The current maximum is increasingly insufficient to move the needle on college access, leaving low-income students to borrow high amounts or, worse yet, not attend postsecondary education at all. Doubling the maximum Pell Grant will provide myriad benefits not only to our nation's lowest-income students, but also to the federal government and broader society.
- Extend Pell Grant eligibility to Deferred Action for Childhood Arrivals recipients.
Congress should extend Pell Grant eligibility to Deferred Action for Childhood Arrivals (DACA) recipients. Providing access to Pell Grants is a critical step in providing this population with access to affordable higher education opportunities.
- Make Pell a true entitlement and reinstate the Pell Grant's automatic inflation adjustment.
The Federal Pell Grant should be a true entitlement with 100% mandatory funding. To deliver the sustained and certain annual increases needed to ensure the grant maintains its purchasing power, Congress should also reinstate an automatic inflation adjustment to the maximum award.
- Create a Pell Grant supplement and allow aid to exceed Cost of Attendance for negative Student Aid Index.
NASFAA recommends that applicants with a negative SAI receive a Pell Grant supplement in the amount of the negative number. NASFAA also recommends that, for applicants with a negative SAI, institutions be given the authority to award aid in excess of COA up to the amount of the negative SAI; and/or apply an overaward tolerance in the amount of the negative SAI.
Strengthening Campus-Based Aid
- Bolster investment in the campus-based aid programs.
In a period of financial austerity, the Federal Supplemental Educational Opportunity Grant (FSEOG) and Federal Work-Study (FWS) programs stretch the federal dollar further in support of the neediest students. Congress should ensure the programs receive the consistent annual funding increases needed to expand their impact to our nation's lowest-income students.
- Revise the campus-based aid allocation formula.
Due to the antiquated design of the funding formula, today's allocation of campus-based aid largely reflects a 40-year-old distribution of funds, in which institutions receive a "base guarantee" of funding. Growing schools that are serving needier student populations cannot increase their funding because other institutions' funding levels are largely protected, regardless of institutional need. NASFAA recommends phasing out the base guarantee portion of the allocation formula over 10 years; thus, allocations would be based only on a "fair share" formula.
- Increase awarding flexibility in FSEOG.
Currently, FSEOG must be awarded first to students with exceptional need, with priority given to Pell Grant recipients. The law defines "students with exceptional need" as students with the lowest EFCs at the institution. Congress should retain the tie between the FSEOG and Pell Grant programs, but NASFAA supports prioritizing FSEOG awards to students whose EFCs fall into the Pell eligibility range, rather than the student's actual receipt of a Pell Grant. In addition, the "lowest EFC" order of awarding should be eliminated.
Simplifying the Aid Application Process
- Ensure smooth implementation of the FUTURE Act and FY 2021 omnibus FAFSA simplification provisions.
Congress should ensure that the Department of Education (ED) executes a smooth implementation that offers ample opportunities for stakeholder feedback and encourages meaningful collaboration among federal agencies and the financial aid community.
- Ensure smooth implementation of Pell Grant eligibility restoration for incarcerated students.
Congress should work with ED to ensure a smooth implementation that addresses the unique challenges experienced by incarcerated students navigating the financial aid application process, and ensure this student population is provided with high-quality education programs.
- Increase transparency and repeal ED's authority to regulate Cost of Attendance (COA).
Congress should repeal ED's authority to regulate COA components, and instead add institutional requirements that increase transparency about how COAs are developed. Congress should also allow institutions to include average loan fees in the COA, rather than the actual cost charged to each student, and repeal the requirement that the cost of professional licensure be included in the COA for all students in programs that lead to licensure, and instead require this cost to be included in the COA only upon student request.
Enhancing Student Aid Delivery
- Improve the operational efficiency of ED's Office of Federal Student Aid.
NASFAA urges Congress to prioritize accountability and oversight of FSA, particularly in meeting basic customer service objectives in its interaction with schools, such as by requiring FSA to provide the final report for a program review within 60 days after receipt of an institution's response.
- Simplify the return of Title IV funds (R2T4) calculations and process for withdrawing students.
The Return of Title IV Funds, or R2T4, process explains how to handle a student's federal aid funds when he or she withdraws from school before completing the payment period or period of enrollment. However, the process is entirely too complex and burdensome for institutions to execute. NASFAA has several recommendations to improve the process, Congress and ED should consider eliminating the requirement altogether, devising a new set of rules (perhaps through a dedicated negotiated rulemaking session), or fixing the current process.
Promoting Opportunity Through Education
- Restore full "ability-to-benefit" access.
Students without a high school diploma or its recognized equivalent, who were not home-schooled, should be allowed to meet the general student eligibility requirement concerning academic credentials by completing, with the equivalent of a grade of C or better, at least six credit hours of college coursework (or the equivalent) that is applicable toward a degree or certificate.
- Consider the impacts of poorly-designed accountability proposals on low-income students and under-resourced institutions.
While policymakers continue to emphasize the need for additional "skin-in-the-game" for institutions, a poorly-designed risk-sharing model could end up hurting the same students the HEA is designed to support. Lawmakers should take caution to avoid unintended consequences and perverse incentives for institutions that could incentivize serving fewer at-risk students than more. Instead, Congress should attempt to work within existing institutional risk-sharing parameters or consider "carrot" versus "stick" approaches to accountability if developing new models.
Curbing Excessive Student Indebtedness
- Eliminate student loan origination fees.
Origination fees withhold a portion of a student's proceeds while still requiring repayment with accrued interest of the full loan amount before the deduction of fees. Congress should eliminate loan origination fees altogether to make more transparent borrowers' true loan costs and eliminate unnecessary confusion.
- Restore graduate and professional student eligibility for subsidized loans.
The Budget Control Act of 2011 eliminated graduate student eligibility for the in-school interest subsidy as a means of reducing the federal budget deficit, a change that was particularly harmful for low-income students in pursuit of an advanced degree who have no access to federal grants. Congress should restore subsidized loan eligibility for graduate students.
- Modify the current structure of loan limits.
The current structure of annual and aggregate loan limits for Direct Loans reflects piecemeal changes to the loan programs over time and does not necessarily work effectively or efficiently for today's students. Congress should improve the structure of loan limits by establishing one, annual subsidized limit by eliminating differences based on year in school, increase annual and aggregate limits to a more realistic level, step aggregate limits based on year in school, and eliminate Direct Loan proration for final periods of enrollment in programs that are at least a year in length.
- Provide financial aid offices with more tools to curb student indebtedness.
Financial aid administrators want to be good stewards of federal funds, but more importantly, they want to ensure their students avoid accruing unnecessary or excessive debt and are able to repay their loans. Congress should allow schools to set lower loan limits for specific populations based on reasonable factors such as dependency status or living arrangement. Congress should also provide institutions with the authority to mandate additional counseling for students borrowing federal student loans, if the school so chooses.
Reforming Student Loan Repayment
- Consolidate and simplify the federal loan repayment plans.
The tangled web of repayment options confuses borrowers. Consolidating the various repayment plans into a single income-driven repayment (IDR) plan and a single standard repayment plan will help borrowers understand the benefits and protections inherent in our federal student loan repayment system.
- Strengthen Public Service Loan Forgiveness (PSLF).
The PSLF program encourages students to pursue and commit to vital public service careers without fear that their student loan payments will follow them for decades. Congress should work to strengthen PSLF and improve the administration of the program by encouraging the annual submission of employment certification forms, increasing borrower communications, and making PSLF data public.
Improving Information for Students and Families
- Standardize financial aid offer elements and terms.
Financial aid administrators value the importance of clear, concise, and accurate information for students and parents, and recognize there are ways to improve financial aid offers. NASFAA's Code of Conduct includes requirements around aid offers, such as the inclusion of specific elements and the use of standard terminology and definitions. Congress should pass legislation that requires institutions to include certain core elements (such as an itemized Cost of Attendance and aid broken down by type) and standard, consumer-tested terms and definitions on aid notifications, while maintaining institutional flexibility to customize aid offers to meet the needs of their specific student population.
- Develop and consistently use a consumer-testing model for new disclosure requirements.
Moving forward, no new consumer information requirement should be imposed without prior consumer testing, which should then inform subsequent congressional or departmental action. Requirements to provide consumer information should consider their intended audience and distinguish between undergraduate and graduate students.
- Repeal the ban on a federal-level student unit record.
Congress should pass the College Transparency Act to repeal the student unit record ban and create a secure, privacy protected student-level data network.
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