Advisory Committee Hearing Focuses on Higher Ed Reforms, Financial Aid Simplification

 Reauthorization - Masthead  

By Allie Bidwell and Brittany Hackett, Communications Staff

As Congress continues the process to reauthorize the Higher Education Act (HEA), the Advisory Committee on Student Financial Assistance convened a meeting of experts to discuss potential suggestions for reform to include in a reauthorization bill.

The committee held four panels, each focusing on a different aspect of higher education policy, such as access and completion, financial aid simplification, accountability, and consumer information. Below is a summary of the main points presented during each panel.

Panel 1: Access and Completion

The access and completion panel discussed topics including state investment in higher education, federal-state partnerships, and access to financial aid.

King Alexander, president and chancellor of Louisiana State University: Alexander’s testimony focused on the decline in state funding for higher education nationwide, and the potential for federal-state partnerships to serve as a solution. “States are dropping off the map one by one,” Alexander said. “By 2045, we will have no state investment in higher education.” But when states join with the federal government, in a grant-matching partnership, it makes it more difficult for states to decrease their own funding for higher education, as they would risk losing federal funds, he said. Alexander also added that there needs to be a re-allocation of campus-based aid programs, such as the Federal Work-Study Program and the Supplemental Educational Opportunity Grant Program.

Sara Goldrick-Rab, professor of educational policy studies and sociology at the University of Wisconsin–Madison (full remarks here): Goldrick-Rab said that based on her own calculations, college is unaffordable for about 75 percent of American families, and that the financial aid system doesn’t do enough to keep the cost of college under control. She made five recommendations for addressing college affordability: simplifying and targeting the entire higher education finance system; aligning financial aid eligibility with social benefits programs; relieving colleges and universities of the administrative burden of calculating off-campus living costs; making it possible for students to work their way through college; and overhauling the funding formula for the Federal Work-Study Program. “In short, Congress needs to take the problem of making college genuinely affordable very seriously,” Goldrick-Rab said. “It is not enough to simplify the FAFSA — the entire process of means-testing should be reconsidered.”

Alexander Mayer, senior research associate at MDRC (full remarks here): Mayer shared findings from what research has shown on innovations with financial aid that could help improve student success, such as year-round financial aid, Federal Work-Study and satisfactory academic progress requirements, and pairing innovations with evaluation research. Mayer said evidence from three rigorous studies has shown that year-round financial aid can encourage students to enroll at higher rates during summer and winter intersessions, leading them to earn more credits and complete their programs faster than they would otherwise. Mayer also suggested retargeting and realigning the Federal Work-Study Program. “The Work-Study Program could be expanded to more low-income students to reduce their need to take full-time jobs disconnected from their educational pursuits, which puts them at risk for dropping out or prolonging their time to degree completion,” he said. “In addition, work-study jobs could be better aligned with students’ career objectives.”

Joan Zanders, director of financial aid for Northern Virginia Community College: Zanders noted that many students throughout the community college system require developmental education and/or are English language learners. Zanders said that if the 150 percent Subsidized Usage Limit Applies (SULA) regulation continues, it will be “an access and completion issue for students if they run out before they get to their degrees.” Zanders also praised the potential of “Second Chance Pell,” saying it is more often the first chance for inmates. Allowing inmates who are eligible for probation or release to access education through Pell Grants “can help prepare them for a productive life when release occurs,” she said. “As a society, we are perpetuating the problem by not encouraging education or training [within] our prison systems,” Zanders said.

Panel 2: Simplification

The second panel focused on financial aid simplification, and the experts discussed proposals such as FAFSA application simplification, student loan repayment, federal regulations, and financial aid funding formulas.

Sandy Baum, senior fellow at the Urban Institute: Baum said that overall, the nation’s financial aid system is less effective because it is complicated and “people don’t know how to access it.” Student debt, she said, is also worse because borrowers don’t know about or understand the systems in place to create flexibility in repayment. Baum said her first choice for financial aid simplification would be to automatically determine Pell eligibility in high school, and separate Pell Grant eligibility from the other types of financial aid. “We can predict Pell Grants using a very simple formula,” she said.

Kim Cook, executive director of the National College Access Network (full remarks here): Despite the fact that low-income students aspire to go to college at the same rate as their peers, they are more concerned about financial aid, Cook said. But 2 million students each year fail to fill out the FAFSA, she said, and about 1.3 million of those students would qualify to receive Pell Grants. Cook focused her testimony on the barriers to completing the FAFSA. Some of the obstacles students face, Cook said, are timing, the application itself, creating an FSA ID, and the verification process. Several panelists, including Cook, took issue with the mismatch in the timing of filling out the FAFSA and applying to colleges. “Most students are deciding to apply to colleges and selecting the colleges to which they will apply in late fall of senior year, months in advance of the January 1 start of FAFSA filing,” Cook said. “This is significant in that they are choosing to go and where to go without the benefit of an aid commitment.” Cook also advocated for the use of “prior-prior year” income data to allow students to fill out the FAFSA and learn about their financial aid options sooner.

Antoinette Flores, a policy analyst for the Center for American Progress (full remarks here): Flores said that while it’s important to simplify the process of actually applying for financial aid, it’s also necessary to broaden the timeline to include the time before students think about and plan for college, as well as after they graduate. Flores said the higher education financial aid system should be “transparent, accessible, and understandable at all points.” Flores focused on simplifying the FAFSA and providing aid guarantees as early as eighth grade, streamlining aid while students are in college, and reducing the number of income-based repayment plans for student loan borrowers.

Daniel Madzelan, associate vice president for government relations for the American Council on Education: In his remarks, Madzelan said that simplifying the FAFSA might not be as simple as some proposals have suggested. “Reducing the number of questions on the FAFSA is going to increase program costs,” he said. “You’ll be less precise in measuring relative differences and financial strengths between families. You also have to consider program integrity – what does that mean if you eliminate certain information that is needed?” However, the average FAFSA filer (on the electronic form) completes less than half of the questions due to the skip logic built into the process, Madzelan said. “You have to dig into the details of the form if you’re really interested in simplification,” he said. Madzelan concluded by saying policymakers should consider building on ED’s efforts in leveraging technology to simplify the application process.

Karen McCarthy, senior policy analyst for NASFAA: McCarthy focused her remarks on the recommendations from NASFAA’s FAFSA Simplification Working Group Report, which was released in July. Rather than moving to a two-question FAFSA application – as some policymakers have proposed – or leaving the application unaltered, the working group recommended shifting to a three-path application process for students from different income levels. The proposal also includes using prior-prior year income data and an expansion of the IRS Data Retrieval tool. After giving information on basic personal identifiers and demographic information, and answering questions to determine their dependency status, the students would be directed down one of three paths. The lowest-income students (such as those who received SNAP or SSI benefits) would not be required to provide any additional information, while higher-income students would be required to give more financial information on a sliding scale as their family incomes increased.

Panel 3: Accountability

The third panel focused on accountability, during which the panelists discussed potential risk-sharing models between institutions and the federal government. They also discussed possible changes to the use of cohort default rates to determine institutional eligibility.

Robert Kelchen, assistant professor of higher education at Seton Hall University: Kelchen’s remarks largely focused on risk sharing in higher education and how institutions can have “skin in the game” without negatively impacting college access. He highlighted a recent policy paper he authored, funded by the Lumina Foundation, that outlines a risk-sharing proposal between the federal government and higher education institutions. “My proposal would reward colleges for strong performance on Pell Grant success and student loan repayment rates, while requiring colleges with weaker performance to pay a penalty to the Department of Education from a source other than institutional aid dollars.” The proposed system would also require the federal government to provide better tracking and reporting of outcomes for students who receive federal financial aid, as well as creating federal guidelines for non-tuition aspects of the cost of attendance. This in particular would help put colleges on a more even playing field regarding accountability.

Jee Hang Lee, vice president for public policy and external relations at the Association of Community College Trustees: In his remarks, Lee recommended adjusting the cohort default rate (CDR) currently used by the Department to measure higher institution accountability, telling the committee that the current calculation is “not without flaws.” He added that under the current formula, it is becoming “increasingly difficult to make the case” for many community colleges to remain in the federal financial aid program, particularly the Federal Direct Loan Program. The high rate of student defaults at these institutions is simply too great a risk for them to take, he said, adding that the current CDR formula may jeopardize the mission of community colleges. Risk sharing also poses a threat to the sector, Lee said. The financial penalties associated with risk sharing “would ultimately game the sector’s ability to serve its students,” and could result in higher tuition and fees and decreased program offerings, he told the committee.

Clara Lovett, scholar-in-residence at the American Council of Trustees and Alumni: Lovett’s testimony focused on the link between institutional accountability and the expenditure of federal investments in higher education, as well as the role accreditors play in overseeing that expenditure. She told the committee that “it would be wise policy … to let the accreditors go on and do what they were designed to do,” which is to provide program evaluations and serve as gatekeepers and monitors for institutions’ academic and financial accountability.

Jessica Thompson, senior policy analyst at The Institute for College Access and Success (TICAS): Thompson’s testimony focused on two recommendations for a risk-sharing proposal from TICAS: moving away from using a CDR to determine eligibility for federal aid and including a component that rewards colleges for serving low-income students well. Rather than a CDR, Thompson recommended using the Student Default Risk Indicator (SDRI), “which is a school’s CDR multiplied by the share of students at that school who borrow.” According to Thompson, “In one simple calculation, the SDRI measures the risk to both students and taxpayers, conveying the risk of defaulting for a typical student at the school.” Her organization also recommended creating a reward system for institutions “that serve students well,” such as enrolling a high percentage of Pell Grant recipients.

Peter McPherson, president of the Association of Public and Land-Grant Universities: In his testimony, McPherson that the current institutional eligibility tool is broken, suggesting that collecting more data on graduation, loan repayment, and employment rates is a way to better determine accountability.

Panel 4: Consumer Information and Data Transparency

The final panel focused on consumer information and data transparency. Across the board, panelists advocated for a some kind of federal student unit record, as well as better data on student outcomes like employment and earnings.

Tom Allison, deputy policy and research director at Young Invincibles (full remarks here): In his testimony, Allison called for the creation of a student unit record system that would include demographic information, academic status, area of study, graduation rates, employment metrics, and other components. However, he noted, simply gathering more data is not the same as providing students and families with better information. How the information is delivered matters, Allison said, adding that policymakers should provide consumer information that is “as personally tailored as possible” for students and families. When asked what specific pieces of data he would like to see collected, Allison told the committee that is “the wrong question.” He said, “it’s more about how we can filter [the data] and contextualize the decision” students and families are faced with.

Anna Cielinski, senior policy analyst at the Center for Law and Social Policy: Cielinski also testified in favor of a student unit record, telling the committee that she supports accountability that “moves beyond measuring inputs and focuses on outcomes.” She offered four recommendations, the first of which was the use of earning and employment data. Second, she recommended that policymakers reduce incentives for institutions to limit access to low-income students. She also recommended that policymakers take into account labor market differences using economic benchmarks and that they take into account programs that are not high in pay but provide services to communities, such as social work or teaching. The recommendations “are more easily said than done,” Cielinski said, “but now’s the time to create safeguards” to protect access to higher education for low-income students.

Iris Palmer, senior policy analyst at New America: In her own call for a student unit record, Palmer said we need a system that “would allow us to clearly answer questions we can’t currently answer,” and would provide the flexibility to answer future questions. A student unit record would provide more flexibility to measure higher education outcomes and institutional innovation, as well a reduce the administrative burden associated with the IPEDS reporting system, she said.

Mamie Voight, director of policy research at the Institute for Higher Education Policy: “Quality data when used effectively … can and should inform decisions” made by students, their families, and policymakers, Voight told the committee. The current system used to gather data and provide consumer information could be made more effective, she said, offering three recommendations. First, she said that all students, institutions, and outcomes should be counted, not just those for traditional students and institutions. Data should be collected on non-traditional students, programs, and institutions, as well as data on employment, earnings, and graduation rates for transfer students and part-time students. Second, Voight called for the creation of a federal student unit record system, echoing the thoughts of the other panel members. Finally, she said existing federal data should be released publicly by policymakers.

 

Publication Date: 9/14/2015


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