A Year in Review: The Biggest Financial Aid News of 2016

By Allie Bidwell, Communications Staff

With a collective national eye turned toward the presidential election this past year, significant policy changes and legislation within higher education—and specifically financial aid—fell to the wayside for the most part.

Still, the Obama administration and the Department of Education (ED) pushed forward with several regulations and enforcement actions, students for the first time were able to file the FAFSA months ahead of normal schedule, and the closure of another large for-profit college chain put increasing pressure on the government to refine its debt relief process.

Here is some of the biggest financial aid news from 2016:

Early FAFSA and Prior-Prior Year in Action:
One of the most significant changes to financial aid policy in recent years was the Obama administration’s decision to move to the use of prior-prior year (PPY) income data—a change that would allow the FAFSA application to be available to students and parents much sooner. President Barack Obama made the change possible through his use of executive action in September 2015, and just more than one year later, the Early FAFSA was released in October 2016. NASFAA has long advocated for the move to PPY, but the change did not come without challenges for the financial aid community. As a way to help ensure a smooth transition, NASFAA’s PPY Implementation Task Force developed a PPY Toolkit full of resources for practicing financial aid and admissions administrators.

Pell Grants Came Out on Top, Despite Stall on HEA Reauthorization:
Those within the higher education realm have anxiously awaited the reauthorization of the Higher Education Act (HEA), particularly now that Congress has cleared the way by reauthorizing the other large law governing K-12 education, No Child Left Behind (now the Every Student Succeeds Act). Despite the fact that action on HEA reauthorization stalled in 2016, some significant support for federal student aid programs rose to the top. Over the summer, for example, the Senate included a provision to reinstate the “year-round” Pell Grant in its spending bill, with NASFAA-supported language. Sen. Lamar Alexander (R-TN), chair of the Senate education committee, said the news on year-round Pell was the "most important news in higher education out of the Congress this year."

Another For-Profit Giant, ITT Technical Institutes, Shuts Its Doors:
In a trajectory that mirrored that of Corinthian Colleges in 2015, another large for-profit college chain closed its doors after being heavily sanctioned by the Department of Education. In August, ED took harsh action against ITT Educational Services, Inc. (ITT), essentially barring the for-profit chain from participating in Title IV programs, enhancing federal oversight, and restricting compensations for the company’s top executives. Shortly thereafter, ITT abruptly announced that it would be closing its doors, leaving thousands of students in the lurch, and putting financial aid administrators in a unique position to counsel those students on their next steps. The path of ITT’s sanction and closure fits the pattern of the Obama administration’s crackdown on what it believes to be unscrupulous for-profit colleges, which officials have said are bad actors within the higher education sector. In addition, NASFAA resumed its collaboration with Beyond 12 to help connect displaced students with volunteers to help guide them and just today announced that it has been awarded a two-year grant by Lumina Foundation to continue its efforts to assist these students.

ED Pushes Forward With Several New Regulations:
Throughout 2016, the Obama administration continued with its tradition of effecting change on higher education policy through the use of regulation and rules. One such rule was spurred by the flood of former Corinthian College students who began petitioning ED for debt relief after the for-profit chain collapsed last year. While there was a debt relief process in place, it was not sufficient to handle the thousands of requests that came from students. After a lengthy negotiated rulemaking process that failed to produce a consensus on the rule, ED published the final rule in October. ED also in October released its final rules on teacher preparation, which set out to condition TEACH Grant program funding on teacher preparation program quality, and align TEACH Grant regulations with Title II reporting system data (a deeper analysis can be found here).

ED Formally Removes Federal Recognition of ACICS:
After a lengthy battle, ED in September announced its decision to drop federal recognition of the Accrediting Council for Independent Colleges and Schools (ACICS), the accreditation agency that oversaw ITT Tech, among many other institutions. However, ACICS did not go down without a fight. The accreditation agency then appealed ED’s decision, but that appeal was ultimately denied. ED then put several requirements in place for ACICS-accredited institutions that hope to keep their Title IV eligibility in order to ensure those institutions are on track to receive accreditation from another federally recognized agency. Despite the denial of its appeal, ACICS officials said in a statement that they plan to pursue the matter further, potentially taking legal action.

Trump Elected President, Implications for Higher Education Remain Unclear:
In one of the biggest political upsets in recent history, Republican nominee Donald Trump was elected President of the United States. While many other candidates, including his primary challenger and Democratic nominee Hillary Clinton, put forth comprehensive plans for higher education policy, many were left wondering what will come with a Trump administration. Although Trump never released a formal higher education proposal, he and members of his campaign made comments about some higher education-related policies that NASFAA used to piece together his positions. Trump has said, for example, that he wants to tweak the existing income-driven student loan repayment plans. He also previously said that he would repeal Obama’s Deferred Action for Childhood Arrivals policy, but has since backtracked on those statements. Without a clear picture of what’s to come, NASFAA released a priorities document that outlines potential areas of focus, and urged President-elect Trump to make financial aid work for all.


Publication Date: 12/19/2016

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