The U.S. Senate on Wednesday gave final approval to a compromise budget bill that sets federal funding levels for the rest of this fiscal year and next year.
Lawmakers passed the deal on a 64-36 vote and sent it to President Obama, who supports the measure and is expected to sign it into law.
Higher education advocates supported the legislation because it is expected to alleviate automatic, across-the-board cuts to research funding and campus-based student aid programs. The bill increases the overall pool of money available to those parts of the budget, but Congressional appropriators will now have less than a month to hammer out funding for individual programs and agencies.
Part of the legislation passed Wednesday immediately eliminates part of a 2010 student aid law that allowed certain not-for-profit entities eligible for no-bid contracts from the Education Department to service federal student loans. The program entitled those servicers to a minimum of 100,000 borrower accounts, for which the department pays more compared with its accounts with its other, larger loan servicers.
Critics of the program, which included Rep. Paul Ryan, the Wisconsin Republican who helped craft the budget deal, say it is wasteful of taxpayer funds to provide those loan servicers with “special treatment.”
Although Congress has now ended the program, the Education Department announced Wednesday that its existing contracts with the several dozen not-for-profit servicers would remain in effect, meaning there would be no immediate changes for the approximately 3.5 million borrowers whose loans are managed by those entities.
The department also said it would continue plans to allocate another batch of student loans to the not-for-profit servicers next year, so long as Congress allocates the agency enough money to do so. Those allocations will be based on whether the servicers receive yet-to-be-determined minimum scores on their quarterly performance evaluations.
The Education Finance Council, the trade association representing not-for-profit servicers, said it was pleased with the department’s announcement.
“We’re glad the contracts won’t be canceled and will be working with appropriators to ensure sufficient discretionary funds are appropriated,” said Samantha DeZur, the group’s spokeswoman.
A separate provision in the legislation passed Wednesday would cuts the amount of money that guaranty agencies receive for rehabilitating loans in the now-defunct Federal Family Education Loan program.
The Obama administration on Friday announced that it had convinced nearly 1,956 colleges and universities to adopt its financial aid “shopping sheet” -- a standardized template aimed at allowing students to easily compare the aid packages they are offered from different institutions. The administration has more than doubled since this summer the number of colleges committed to using the voluntary templates. In July, officials said that about 700 colleges had opted to use the shopping sheet in its first year.
The institutions that will now be using the forms enroll more than 43 percent of undergraduate students in the United States, an Education Department official said in a blog post. The department also announced Friday that it was making minor changes to the shopping sheet. The new version, will clarify that a university’s median borrowing statistic listed on the form only captures students who borrow at the institution. The revised shopping sheet will also feature a glossary of financial aid terms and an expanded customizable box where institutions can provide more individualized information about a student.
Submitted by Ry Rivard on December 12, 2013 - 3:00am
Haverford College officials are backing away from a pledge to ensure no students are forced to borrow money to attend the private liberal arts college.
College administrators told students this week they are looking to do away with their six-year-old “no loan” pledge to some students – mostly its students from upper middle class households. The new plan still has significant protections for needy families in lower income brackets: Families making less than $60,000 will still not have to take out loans and no family should have to borrow more than $12,000 over four-years, which is far less debt than the average debt-bearing student. (The median family income in the United States is about $51,000.)
The plan still needs the approval by the college's board, which could modify or reject the proposal by college administrators. But Haverford seems ready to join the likes of Dartmouth and Williams Colleges, which all tried no loan programs but then abandoned them following the recession. The market blew a hole in many university endowment funds, which colleges draw on to provide financial aid.
There has been an increase in aid spending at Haverford -- which awards aid based solely on need -- but the no loan program is not entirely to blame, according to a presentation by college officials posted online by a Haverford student newspaper. Haverford spent $16.9 in financial aid in 2009 and over $23 million in 2013 – an increase of about $6.6 million per year. The no loan program cost about $1.9 million this year.
Jess Lord, the dean of admissions and financial aid, said the college has been seeking "equilibrium" between access and affordability and long-term sustainability.
“The truth is that we’ve been having conversations about the long-term sustainability of the financial model since 2008, since the economy took the turn that it took in 2008,” Lord said in a telephone interview Wednesday night.
The proposal to scale back the no loan program to only cover the lowest income families will save the college about $800,000 a year. For the Haverford class of 2012, which entered the college before the no loan program took effect, the average four-year debt burden was about $14,000. Nationally, the average debt burden for the class of 2012 is $29,000.
Colleges with no loan programs calculate a family's assets and use a formula to determine what they can afford to pay. The college picks up the difference between what a family can pay out of its own pocket or with scholarships and the college's price -- a gap that would either force families to borrow or send their students somewhere else. Tuition, fees and room and board at Haverford are priced at $59,000 a year.
College students from middle-income families are more likely to end up with student loan debt than their peers from both lower and higher socioeconomic backgrounds, a new study has found.
The research by Jason Houle, an assistant professor of sociology at Dartmouth College, will be published in January in Sociology of Education. “Children from middle-income families make too much money to qualify for student aid packages, but they do not have the financial means to cover the costs of college,” Houle writes in the article. The study found that students from families earning between $40,000 to $59,000 per year racked up 60 percent more debt than lower-income students and 280 percent more than their peers whose families earned between $100,000 and $149,000 per year. A similar trend held for more affluent middle-income families earning up to $99,000 annually.
A recent New York Times op-ed blames the rules and regulations of the federal Pell Grant program for many of our nation’s higher education access and completion problems. In short, the authors contend that the rule that defines a full-time course load as 12 or more credits per term hinders students from graduating early or even on time.
The emphasis on that relatively small technical issue distracts from a much more important point: the Pell Grant – which currently maxes out at $5,645 for the academic year – is not nearly enough to cover college costs for any of its recipients. That is the key issue legislators must grapple with when thinking about how to raise graduation rates.
While public investment in the Pell Grant has expanded over time, its purchasing power has dropped dramatically. Forty years ago, a needy student could use the Pell Grant to cover more than 75 percent of the costs of attending a public four-year college or university. Today, it covers barely 30 percent. There is little other grant award or work-study funding available to students at public institutions, so even students borrowing the maximum available subsidized loans are left with unmet financial need and thus must work as well.
This is a sharp change from the past, when students could optimize their focus on school by borrowing instead of working. Now, the vast majority of students must work long hours and borrow heavily in order to make ends meet. On top of that, students from working poor families also tend to carry elder and child care obligations, are more likely to have expensive struggles with their health, and often need to contribute their parents’ household expenses even while finding resources for their books and supplies. These “opportunity costs” of attending college greatly exceed the meager financial aid we provide.
The headlines focus on elite colleges with no-loans policies. But the latest federal data show that at public colleges and universities, where most Americans attend college, students from families in the bottom 25 percent of the family income distribution -- earning an average of just $15,870 a year -- must pay almost $12,000 a year for college.
That’s right: after taking all grant aid into account, those families are expected to live on about $4,000 a year if they want their child to get a bachelor’s degree. In that situation, borrowing is hardly optional (but quite risky for families with such little financial slack) but with current loan limits it is also insufficient. Making ends meet on financial aid alone -- even for America's poorest -- is thus far more difficult than public perception currently holds.
Of course, community colleges are available to these families as well. In a recent U.S. Senate testimony, the researcher Judith Scott-Clayton stated that more students ought to recognize just how affordable these colleges really are. To do this, she pointed out that the Pell Grant often covers tuition and fees, and that its recipients get money back to live on.
That’s true, but even with those dollars in hand those same low-income families must come up with an additional $7,000 a year for their child to attend those lower-priced alternatives. Leaving the rest of the family to live on $8,000 a year isn’t often possible.
The hard truth is that college is the least affordable for America’s working poor families. If you are lucky enough to have earnings in the top 50 percent of family income (making more than around $85,000), your child can get a bachelor’s degree at an expense of about 20 percent of your annual income.
But if you reside in or below the middle class, securing access to the bachelor’s degree at a public institution for your children demands one-third to three-fourths of your annual income (even a community college education eats 21 to 46 percent of annual income).
Increasing the college completion rates of financial aid recipients requires actually making college affordable. We should start by restoring the value of the Pell Grant by bringing states and institutions to the table and driving down college costs.
We must provide incentives for states to move toward providing two years of community or technical college at no cost to families. Let’s dramatically expand the federal work-study program, especially at community colleges. Ensure that every Pell Grant recipient has access to a minimum of 20 hours per week of on-campus employment.
Require colleges to provide all students with supportive staff to can help them construct realistic schedules and financial plans, and ensure that they are screened for eligibility for all forms of financial aid and public benefits each year to support their college attendance.
Finally, adjust the calculation of need so that it is possible for the expected family contribution to drop below $0 for the most severely poor students; this will allow them to accept as much financial aid (and subsidized loans) as they need to ensure their college costs are covered.
The American dream holds that individual merit rather than family background determines educational opportunities. Unfortunately, spending money on federal financial aid has given us a false sense of satisfaction that we are all living that dream.
We have not done enough to ensure all students have more than a foot in the door of higher education. Opening their pathways to degrees requires more than platitudes -- it requires accountability for states and institutions and also serious money.
Sara Goldrick-Rab is an associate professor of education policy studies & sociology at the University of Wisconsin at Madison.
The Obama administration is moving ahead with plans to waive certain federal student aid rules for a limited number of colleges that want to experiment with competency-based education and other innovative forms of higher education.
Officials are soliciting suggestions on what those experiments should look like, according to a notice set to be published in the Federal Register this week. The Education Department said it is “particularly interested in experiments that are designed to improve student persistence and academic success, result in shorter time to degree, including by allowing students to advance through educational courses and programs at their own pace by demonstrating academic achievement, and reduce reliance on student loans.”
The department gave three examples of the types of innovations it may approve: competency-based education, dual enrollment of high school students in higher education, and prior learning assessment.
Education Secretary Arne Duncan said in remarks at a student aid conference Wednesday that the experiments will allow colleges to “pursue responsible innovations to increase college value and affordability.”
The Obama administration first announced in August that it wanted to use its “experimental sites” authority to pilot higher education innovations aimed at lowering costs while maintain quality.
President Obama said in a speech on the economy Wednesday that his administration was “pursuing an aggressive strategy to promote innovation that reins in tuition costs.”
The push for federal funding for higher education innovations has been aggressive elsewhere in Washington as well. Several education foundations and think tanks have embraced alternative models of higher education, and the issue is attracting attention from a growingnumber of lawmakers on Capitol Hill.
The Education Department said it wants to hear experiment proposals from colleges, businesses, philanthropies and state agencies. The suggestions are due by January 31 of next year.
The Obama administration on Wednesday unveiled a new web portal aimed at the people who help students and families prepare for college.
The site aggregates a range of Education Department resources and promotional material meant to encourage students to attend college and take advantage of federal student aid programs. Guidance counselors and other mentors are able to search a database containing infographics, fact sheets, videos, and other presentation materials relating to the financial aid process.
The new effort comes as the administration is increasingly using its bully pulpit to promote college access. First Lady Michelle Obama has recently begun speaking out on higher education. And, after hosting a series of meetings with college presidents over the past several months about boosting low-income students’ access to higher education, the White House plans to hold a symposium on the topic December 11. It’s not yet clear if administration officials will announce any new policy proposals at that event, which is set to feature business leaders, philanthropists and college presidents.