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Financial Aid's Future

July 24, 2012

CHICAGO -- The landscape for federal financial aid has been so turbulent in the past two years, as Congress has voted seemingly every few months to change the rules on Pell Grants and student loans, that many who care about helping low-income students aren't looking any further than the next Congress -- or the possibility of sequestration in January -- for the future of financial aid.

But at the annual meeting of the National Association of Student Financial Aid Administrators here Monday, four financial aid directors or regulatory experts from nonprofit, for-profit and public colleges tried to look much further ahead, outlining how they think current trends will develop over the next decade.

In many cases, their outlook was ominous, or at least complex. The aid directors predicted the end to several financial aid programs and said the challenges presented by nontraditional approaches, such as massive open online courses or prior learning assessments, could make awarding aid in the future more challenging than it is today.

"I see the future as having two groups: the haves and the have-nots," said Joe Paul Case, dean of financial aid at Amherst College. "While I generally am an optimist, some of this may come off as sounding rather pessimistic."

Several changes could transform financial aid in the coming years, the administrators said. The first is the growing dysfunction in Congress, which many described in stark terms: "The federal government is broken," Case said. With wry humor, another panelist put the prospect for reauthorizing the Higher Education Act -- a process supposed to begin next year -- this way: "Reauthorization should occur within the next 15 years," said William Spiers, director of financial aid at Tallahassee Community College.

The looming "fiscal cliff" in January, when mandatory spending cuts will go into effect if Congress does nothing, could have a lasting effect on financial aid programs, said Thomas Babel, vice president for regulatory affairs at DeVry, Inc. So could larger trends, including the emphasis on budget cutting and "pay-as-you-go" measures for new programs.

Members of the panel described the coming decade as a graveyard littered with programs that were once mainstays of federal financial aid. Case predicted the demise of campus-based Perkins loans and Supplemental Educational Opportunity Grants, two programs already targeted for overhaul by both President Obama and his Republican challenger, Mitt Romney.

Next will be federally subsidized student loans for undergraduate students, he said. Congress has nibbled away at subsidized loans in the past year, eliminating them for graduate students, then ending a six-month "grace period" for undergraduates, during which the government paid the interest after students left college.

Even Pell Grants themselves could be threatened, said several panelists, who said the grants serve several ends -- like providing education benefits for unemployed workers going back to college -- that weren't originally intended. "It's going to be all loans, all the time, for everyone," said Richard Shipman, financial aid director at Michigan State University. (Direct loans themselves will survive, the panel agreed, despite Republican efforts to bring back bank-based lending.)

The panel described another trend as equally transformative but less bleak: the rise of massive open online courses (which the panelists said will probably become eligible for college credit in the coming years, although steps in that direction have been tentative at best), prior learning assessments and other nontraditional methods of getting a college degree.

But as fewer students enroll at one college for two or four (or more) years to earn a degree, instead cobbling together credits from community colleges, online classes and prior learning assessments, federal financial aid programs will have to change, Babel said.

"Our delivery model has to change in order to meet those folks' needs, some of whom are place-bound, some of whom are time-bound," he said.

The panel also predicted more emphasis on institutional quality -- the financial aid shopping sheet the Education Department announced Monday is often compared to a window sticker on a car, but right now it's missing "the MPG and the crash test," or other measures of quality, Shipman said.

"Institutional differences will really start entering into the debate," he said.

Still, despite the bleak picture some painted -- pointing to growing concern about the return on investment for a college degree, Case predicted a "new dark ages in higher education" as the humanities are de-emphasized -- they also pointed out that 10 years ago, no one could have foreseen many recent technological changes.

"In leveraging technology, we've done a lot of good things," Shipman said. "Many things we're doing today weren't possible 10 years ago -- many things we're doing today weren't possible five years ago. And the explosion in technological capability is going to continue."

 

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