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An Underappreciated $64 Million

February 4, 2010

WASHINGTON -- At a time when the Obama administration is promising to increase spending on grants for college students by tens of billions of dollars, it might seem ungrateful, if not a bit tone deaf, for some college officials to be sweating the proposed elimination of a federal program worth just $64 million.

But the administration's plan to end the Leveraging Educational Assistance Partnership program -- laid out in this week in its budget blueprint for the 2011 fiscal year -- does indeed trouble advocates for students.

That's less because of the comparatively few federal dollars that would disappear than because the program, as they see it, prods states to spend much, much more of their own money on need-based financial aid than they would otherwise -- $1.3 billion in 2008, the National Association of State Student Grant & Aid Programs estimates. The nearly 40-year-old program, known as LEAP, provides funds to states through a formula that states must match with appropriated funds, and federal law sets a floor level (based on prior years' spending) below which states cannot fall without risking the funds.

Ending a program that has stimulated states to increase aid for students, and doing so when the economic downturn is sending more people back to higher education and making it harder for many families to afford college, seems ill-advised, say several officials who work with colleges on student aid issues.

"It seems the worst possible time to eliminate a program that is stable, understood and successful," Lois Hollis, an official of the Texas Higher Education Coordinating Board and president of the association of state grant programs. "That will send the wrong message to our neediest families at a time when we are increasing efforts to improve access and ensure completion of college."

Education Department officials say that the program has done its job and that other initiatives the administration has in the works would render it unnecessary.

"This program has accomplished its objective of stimulating all States to establish need-based postsecondary student grant programs, and Federal incentives for such aid are no longer required," the Education Department said in its published explanation for why it proposes eliminating programs in 2011. "State grant levels have expanded greatly over the years, and most states significantly exceed the statutory matching requirements. State matching funds in academic year 2007-2008, for example, totaled nearly $1 billion, or more than $950 million over the level generated by a dollar-for-dollar match."

Administration officials have also argued that greatly increasing spending on Pell Grants, the primary aid program for financially needy students, would more than offset any loss of funds from LEAP. They also assert that their plan to create a College Access and Completion Fund as part of the pending student loan restructuring legislation would obviate the need for a revamped section of the LEAP program (called Grants for Access and Persistence and established when Congress passed the Higher Education Opportunity Act in 2007) aimed at encouraging partnerships between states, colleges, nonprofit groups and corporations to give low-income students information about college going.

The fact that Congress saw fit to renew its support for LEAP 18 months ago, and that the Obama administration endorsed the program in its 2010 budget proposal last year, is part of what perplexes advocates of the program so much. LEAP, they note, is the only existing federal program that acknowledges the federal-state-institutional partnership that, together with the personal contributions of students and families, is supposed to underscore the financial aid system.

While the administration is right to say that many states spend enormously more of their own funds on financial aid than they must to match the federal contribution under LEAP, the federal law is "an important carrot" in many smaller states, says Marie Bennett, director of NASSGAP's Washington office and a senior manager for higher education services at Dow Lohnes.

The LEAP requirement that states match previous years' spending on need-based financial aid has proven to set a floor that holds states accountable for supporting students, Bennett says, and recent developments have college officials worried that without that protection, cash-strapped states could slash their student aid budgets.

In the 2008 fiscal year, says Stephanie Giesecke, director for budget and appropriations at the National Association of Independent Colleges and Universities, nine states (Arkansas, California, Georgia, Massachusetts, Michigan, Nebraska, New York and West Virginia) cut their spending on need-based financial aid below the average of the previous five years. And in the last year, given the massive influx of federal Pell Grant and other education aid to states delivered as part of the economic recovery law, legislators in several states have contemplated or made cuts in state financial aid budgets specifically citing the fact that the federal government has increased its own spending.

"LEAP is a measure of security to ensure that states continue to support their own student aid programs," said Giesecke. While the majority share of state student aid budgets flows to students at public colleges, since they typically outnumber independent college students, LEAP requires states to make their federally matching funds available to students at all nonprofit institutions within their borders, and about half include for-profit colleges, too.

Bennett, of NASSGAP, says it's possible that, as Obama administration officials argue, the new programs the White House is envisioning may make LEAP unnecessary at some point. But with those programs still theoretical and far from a sure thing, getting rid of a program that works at helping students makes little sense.

"The other ways of doing business aren't clear yet, and we just don't want another level of uncertainty out there for families at this time," she says. "The financial aid community may well get to the point where we say, 'Yes, this new thing is working, yes, this is a better solution.' We'd be perfectly willing to work with the department on that. But this is not the time to do that. It's way, way premature."

 

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