Following through on a promise to start the new year by diving in to higher education reform, the Senate education committee on Thursday held one in a series of hearings on reauthorizing the Higher Education Act (HEA), which focused on federal student aid simplification and transparency.
Sen. Lamar Alexander (R-TN) — chairman of the Senate Health, Education, Labor, and Pensions (HELP) Committee — in November said the "first order of business" in 2018 would be to work on HEA reauthorization.
"The consensus that I see emerging is student focused: Simpler, more effective regulations to make it easier for students to pay for college and to pay back their loans; reducing red tape so administrators can spend more time and money on students; making sure a degree is worth the time and money students spend to earn it; and helping colleges keep students safe on campus," Alexander said in his opening remarks, before listing several bipartisan bills committee members have introduced to simplify the federal aid system.
The hearing comes after the House Committee on Education and the Workforce late last year quickly introduced, marked up, and passed out of committee its own version of a reauthorization bill, dubbed the PROSPER Act.
The HELP committee in particular has a history of bipartisan cooperation on some larger pieces of legislation, such as reauthorizing the Elementary and Secondary Education Act (ESEA), now the Every Student Succeeds Act (ESSA). The committee moved forward in a similar manner on Thursday, listening to witnesses' recommendations for ways to simplify the federal student aid process and make it more transparent for students and families.
"By simplifying the financial aid process and making it more transparent we can help more students afford higher education — and lower barriers for those who couldn't attend college otherwise," Sen. Patty Murray (D-WA), the ranking member on the committee, said during her opening remarks.
The witnesses included: Matthew Chingos, director of the Urban Institute's Education Policy Program; Joanna Darcus, a racial justice fellow at the National Consumer Law Center; Susan Dynarski, a professor of public policy at the University of Michigan; Laura Keane, chief policy officer at UAspire; and Russell Lowery-Hart, president of Amarillo College.
Those who spoke before the committee suggested several proposals that have been increasingly discussed in recent years, such as implementing payroll withholding as a way to pay down student debt, automatically enrolling delinquent borrowers in income-driven repayment plans to avoid default, streamlining federal financial aid into a "one grant, one loan" system, and implementing some standard terms in financial aid award letters to make them more accessible to students who may be confused about what they're expected to pay for college.
In particular, Keane expressed concern with the way some institutions present financial aid award letters to students. Through an extensive data review of thousands of award letters — in conjunction with New America — UAspire found that many award letters use inconsistent or inaccurate terminology, leave out information on the cost of attendance, and do not distinguish between loans and grant aid, among other issues.
Keane went on to suggest developing through consumer testing a required set of defined terms for all financial aid award letters, requiring terms with federally-defined definitions (such as cost of attendance, direct cost, indirect expenses, gift aid, loans, net costs, estimated bill, and work-study), and requiring five formatting practices. Those practices would include breaking down the cost of attendance for direct costs and indirect expenses, residency and housing assumption stated on the letter, aid distinguished between grants and/or scholarships and loans, an estimated bill and net cost calculations, and PLUS loan and work-study offers listed outside of the aid offer as potential options.
Those proposals fall in line with NASFAA's own recommendations on improving financial aid award letters. NASFAA's Award Notification and Consumer Information Task Force recommended developing a standard list of terms, and stated that maintaining some flexibility for institutions is important so they have the opportunity to choose which format best suits the needs of their students. NASFAA also includes in its Code of Conduct requirements that information given by the financial aid office "is accurate, unbiased, and does not reflect preference arising from actual or potential personal gain." The code also requires award notifications to include:
A breakdown of individual components of the institution's Cost of Attendance, designating all potential billable charges;
Clear identification of each award, indicating type of aid, i.e. gift aid (grant, scholarship), work, or loan;
Standard terminology and definitions, using NASFAA's glossary of award letter terms; and
Renewal requirements for each award.
Some of NASFAA's policy team discussed the hearing overall and more specific proposals related to award letters on the most recent episode of "Off The Cuff."
Shortly after the hearing concluded, the HELP committee announced that it will hold another HEA reauthorization hearing next Thursday, Jan. 25, 2018, on access and innovation.
Publication Date: 1/19/2018