Congress is currently considering cutting funding for the campus-based Federal Work-Study Program that helps the most economically disadvantaged students pay for postsecondary education. Such action would be ill-advised. It would hurt not only deserving students but also cities and towns where college students supported by the program are working in an array of community service jobs.
Rather than cutting funds for Federal Work-Study, Congress should bolster the program’s financial support and expand its community service component. That would provide more educational benefits and career training to college students, and it would also strengthen local communities and schools by requiring more college students to work in jobs such as tutoring children in preschool, elementary school and middle school in reading and math.
Some 3,400 postsecondary institutions currently participate in the Federal Work-Study program. It provides crucial financial support for hundreds of thousands of full-time students with demonstrated financial need -- those from lower-income families. They work at a variety of jobs on and off campus while going to college, earning an hourly wage not less than the federal minimum wage. Participating colleges and universities are required to make the maximum effort in placing Federal Work-Study students in jobs that directly support their academic programs or career objectives.
By increasing funding for Federal Work-Study, Congress would be expanding access to higher education to students across the board. More financial support would give Congress the flexibility to adjust the funding formula for Work-Study, which currently provides less money to students attending public institutions than those going to private colleges.
Increasing support for Federal Work-Study has also surfaced as an issue on the presidential campaign trail, where some candidates have made increasing support for Federal Work-Study a key part of their plans to dramatically lower or even eliminate college tuition.
Participants in the Federal Work-Study program are more likely to graduate and get a job after college, as well, according to a new study by two researchers at the Community College Research Center (CCRC) at Columbia University’s Teachers College. But their research also showed a worrisome aspect of the work-study program. Participants are much more likely to take out loans during their first year of college. One reason that the researchers cited is that colleges typically package loans and work-study grants together, increasing the probability that a student will take out loans. Colleges should be more attentive to this issue and make sure that their neediest students can take advantage of Federal Work-Study without an undue loan burden.
We believe the community service component is one of the greatest values of Federal Work-Study. Beginning in the early 1990s, a key requirement of the Federal Work-Study program became that an institution spends at least 7 percent of its annual allocation on community service jobs. That’s a relatively low bar, especially considering the educational and community benefits and the challenging fiscal climate in our country. Many colleges -- including Oberlin College, where one of us works -- allocate a much higher percentage of their annual work-study funds to community service positions. This trend parallels growth in community engagement over all and signals that colleges are interested in becoming good citizens through meaningful contributions to their local areas. It results in a win-win situation, because well-run community service work-study programs provide students with ways to learn new skills and engage with diverse learning opportunities.
As at more than 65 other colleges and universities, Oberlin students’ community service jobs are organized through Bonner Scholars and Bonner Leader Programs, created in collaboration with the Corella and Bertram F. Bonner Foundation to give underrepresented and first-generation students “access to education and opportunity to serve.” The Bonner program provides a model for using Federal Work-Study funds to support students who make a sustained commitment to community service during college and help them develop as leaders and change agents in the local community and beyond.
The program works to identify community service jobs through consultation with local nonprofit, governmental and community-based organizations and to design jobs that will improve the quality of life for community residents -- particularly low-income people. In the past, some members of Congress were concerned that colleges and universities didn’t have the infrastructure to manage student community service positions. But now almost every campus in the country has an office or center for community engagement.
Expanding the community service component of the Federal Work-Study program is not a new idea. Harris L. Wofford, a former U.S. senator from Pennsylvania and president of Bryn Mawr College, is a longtime advocate for service learning and expanding the community service component of Federal Work-Study. In an article published in 1997 in the Journal of Public Service & Outreach, he provided a description of the benefits of Community Service Federal Work-Study that still applies today: “Moving work-study jobs off campus can be a win-win for all involved. Students benefit from the challenge of working on critical social issues and learning citizenship and problem-solving skills that will help them throughout life. Colleges benefit from improved relations with the surrounding community. And communities benefit from tapping the skills and energy of college students to help solve urgent local problems.”
Placing students in community service jobs fits especially well with the ethos and purpose of residential, liberal arts education. The Association of American Colleges and Universities (AAC&U) defines liberal education as an approach to learning that empowers students and prepares them to deal with complexity, diversity and change. It provides students with broad knowledge of the wider world -- science, culture and society -- as well as in-depth study in a specific area of interest. A liberal education helps students develop a sense of social responsibility, as well as strong and transferable intellectual and practical skills such as communication, analytical and problem-solving skills, and a demonstrated ability to apply knowledge and skills in real-world settings. Studies by Northeastern University and the AAC&U found that most employers are looking those qualities in the college graduates they hire.
Having students develop their skills in a real-world setting while helping pay for their undergraduate education is the essence of Community Service Federal Work-Study, benefiting not just liberal arts students but all students in multiple ways. College students receive classroom teaching experience while working with schoolkids who are often from a more racially and economically diverse community than one finds on campus. They often develop useful career contacts with people who can provide references on future job applications. In short, community service jobs get students outside the “campus bubble.” By working with people who are not between 18 and 22 years of age and who are not students at a residential liberal arts college, they learn to see the community in which they are attending college from a different perspective.
In some instances, our Bonner students work throughout their four undergraduate years with the same community partners. Those partners include local schools and churches, early childhood centers, visual arts and musical organizations, local governments and businesses, retirement communities, and sustainability and sustainable agricultural initiatives.
Community partners say they appreciate having college students working with them. Many K-12 schoolteachers say they like having extra help in the classroom. They value having college students make a difference in a child’s life, and they like the creative energy and ideas that college students bring.
That’s a big footprint in any community. And a lot of bang for the taxpayers’ bucks. One of the statutory purposes of Federal Work-Study is “to encourage students receiving federal student financial assistance to participate in community service activities that will benefit the nation and engender in the students a sense of social responsibility and commitment to the community.”
That is exactly what Community Service Federal Work-Study does. It is a valuable program that has not received additional funding in years. Rather than chipping away at it, Congress should act to increase the community service requirement for the Federal Work-Study and help relieve students’ debt burden by providing more funding, not less.
Marvin Krislov is president of Oberlin College, and Robert Hackett is president of the Bonner Foundation.
Most previous efforts to introduce transparency to college financial aid have not resulted in their intended changes. But a new policy that the White House announced this past Sunday has been described as a game changer. And it is.
Beginning in 2016 for the 2017-18 academic year, the Free Application for Federal Student Aid will be available earlier -- in October rather than January -- and students will be able to use income information from tax returns completed two years before they apply rather than the previous year. Allowing students to use this so-called prior-prior year (PPY) income data for the FAFSA moves the financial aid process forward in unprecedented ways.
When I began my career in admissions 24 years ago, my standard spiel included the following line: “Don’t rule out any college because of its sticker price, because you have no idea how much any college will cost until you apply, get admitted, and hear about scholarships and financial aid.” That line is just as relevant today, despite the changing landscape for higher education and admissions.
It has not been the most reassuring statement for students, and it has assumed a leap of faith from many families that we’ve not yet earned. But it has represented the reality of the college search and selection process. That reality has opened colleges and universities up to criticism that we are being elusive about cost and price and have not been providing the transparency we should to close the deal on a four-year partnership with students and families.
It has been a problematic aspect of the college search and selection process, but one on which work has continued to be done, with varying levels of success, to introduce simplicity and clarity.
First, there was the U.S. Department of Education’s mandated Net Price Calculator (NPC). But unfortunately, the NPC has done nothing to address the wait-and-see approach to paying for college. Instead, the NPC simply added another layer of complication and estimation that does nothing to provide the kind of insight we had hoped to give students, simplify the process of applying for financial aid or help families coming to terms with final cost of an advanced degree. (The truth is that, for many colleges, the NPC added more administrative costs, which are passed along to students.)
The Department of Education and the Gates Foundation have also called for simplifying the FAFSA as the solution. But higher education and the financial aid world seem to have only lukewarm support for making the FAFSA easier, because it could be oversimplified to the point that it is no longer useful or accurate. And some people predict that such efforts will lead more colleges to use more customized institutional forms or adopt other standardized applications for financial aid like the College Board’s College Scholarship Service (CSS) Profile.
This spring the National Association of Student Financial Aid Administrators issued a report about implementing prior-prior year income data for the FAFSA and some of the implications. Are there concerns and uncertainties about it? Yes. Will this force colleges and universities to change? Yes. Will traditional admissions practices be impacted? Yes. Will other enrollment professionals and I have to get creative to respond to a new admissions calendar? Yes.
Yet, despite those uncertainties and concerns, PPY, a truly student-centered solution, is ultimately good for the college search and selection process and the feds should be commended for this forward-thinking simplification of the financial aid process. Most important, will it simplify processes for families and make our complex system a bit easier for them to navigate? Undoubtedly.
Some of the major benefits include:
PPY will allow students to file their FAFSA much earlier. Instead of waiting until Jan. 1, after college applications have mostly been submitted, the financial aid application process now will align more closely with timelines for the traditional application process. PPY relies on tax returns and information completed before the senior year, so aid awards can be given much earlier in the recruitment and admissions process, consequently providing students and their families with valuable information about cost earlier.
Some within higher education circles will complain that this new timeline may result in more “shopping” by families from institution to institution, but I can’t imagine it being any worse than it is already. Imagine being able to provide real-time financial aid information to a student when they are most excited about your college, rather than telling them they have to jump through a bunch of hoops and then wait weeks, or even months.
PPY will allow most students to use the IRS’s Data Retrieval Tool. PPY would be a dream come true for those who advocate for simplicity. The Data Retrieval Tool, which is one of more positive developments that we’ve seen to improve the financial aid process in recent years, could be used to complete a FAFSA more accurately and with greater ease.
Moreover, since the FAFSA and financial aid award time frames have not kept pace with that of the college search, using PPY would eliminate the estimating that inevitably leads to confusion, delays and other potential problems in the financial aid process. PPY would also be friendlier to family-owned businesses and those students with complicated tax situations, often requiring extensions beyond April 15 for tax filing -- which does not allow some families to complete accurate tax information during what is now known as financial aid season. And since universal college decision day is May 1, these families often have to make a college choice without all of the necessary information.
PPY will result in more students accessing aid for which they are eligible. Because PPY relies on existing tax information and a new FAFSA could be populated using the Data Retrieval Tool, it has the potential to be more inviting for students who are turned off by the perceived complexity of the FAFSA and therefore opt not to complete it. Why wouldn’t we want to make it easier for these students to apply for and actually receive aid for which they are eligible, instead of having them opt out and ultimately miss out?
These students are likely to take out student loans to pay for college or perhaps take a semester off to earn tuition money -- only never to return. PPY is about access and choice, which are two of the most important defining qualities of the U.S. higher education system. Everyone should be excited about the prospect of greater accessibility to a college degree and realistic choices for paying for it.
If our goals are to provide earlier information about cost, to simplify the application process and to increase access to higher education and to financial aid available, then PPY -- regardless of the potential complications and anxiety for public policy makers and higher education professionals -- is one of the most important changes to the financial aid process in a generation. And, for me, it’s a great development because it is a win for students.
Kent Barnds is vice president of enrollment, communications and planning at Augustana College.
Corinthian's court-approved liquidation plan will provide $4.3 million for former students, which they will use to press U.S. to grant more sweeping discharges for students of the defunct for-profit chain.
This is a huge undertaking and one that we take very seriously, as students use their disbursements to pay for books, supplies and other living expenses.
Many of our students -- 61,000 of whom receive Pell Grants -- rely on the speedy and safe delivery of their student aid to ensure they can pay their bills and continue their education. Without significant modification, the proposed regulation would create unnecessary challenges for us to provide students with their financial aid refunds in a timely, secure manner. While many provisions of the proposed regulation seek to limit fees and tighten security measures, several aspects unfortunately have the opposite effect.
A Move Back to Paper Check
Today, institutions can decide whether to offer paper checks as an option for disbursement among the other options for electronic disbursement. In the event that students do not choose any method for receiving their funds, they will be mailed a paper check. This method has allowed institutions to encourage and promote electronic delivery, which is a more secure and a timely method for students and institutions. Requiring institutions to provide the up-front option of a check goes against decades of encouraging electronic transfer of funds for many consumer purposes, including government benefits and employee earnings.
This will be operationally challenging for our system, and it also would provide a ready market for check cashing services and their exorbitant fees. Again, other provisions of this regulation seek to limit fee exposure to students. Unfortunately, the requirement to provide paper checks up front will expose many students to check cashing fees.
Increased Risk of Financial Aid Fraud
Under the new requirement, colleges would be limited in what information they could share with their third-party disbursement providers. No data, other than a student’s name, address and email, would be permitted -- information that is too vague and opens up exposure to financial aid fraud.
Without the ability to securely authenticate the identity of the student and share additional information, including the amount of a student's disbursement, third parties would have no way to process these transactions with the level of security and accuracy that they do today. We need to find middle ground on this issue, which could be accomplished by giving third-party providers access to refund amounts and unique, nonpersonal student identifiers.
Federalization of the Disbursement Process
Under the proposed regulations, the education secretary is reserving the authority of the department to operate the credit balance disbursement process -- essentially an invitation for unnecessary complication and delay.
Institutions and their students would be required to use the department’s system, whether or not it met the unique needs of a particular college and despite logistical burdens on both institutions and the department. Additionally, any system developed by the department is unlikely to deal with non-Title IV funds, requiring institutions to have redundant systems for the delivery of this aid, which could lead to more delays and errors.
The distribution of financial aid disbursements to our students is a process we take extremely seriously. Students must receive this aid quickly and securely to ensure they can benefit from the education they receive at Ivy Tech and other institutions across the country.
Like the department, we want to protect our students’ financial well-being and provide the least expensive, least burdensome and most financially secure systems. Unfortunately, despite good intentions, the proposed regulation in its current form would be a step in the wrong direction -- a step many students can’t afford to take.
Thomas J. Snyder is president of Ivy Tech Community College, Indiana’s statewide community college system.
Inside Higher Ed's recent article on the growing chasm between wealthy institutions and “poorer” (in dollars) institutions begs us to answer this question: How should we deal with the reality that the 40 wealthiest institutions (the Elite 40) hold 66 percent of the higher education endowment wealth, receive 60 percent of private donations and have highest percentage of endowment growth in recent years among higher education institutions? Can we and should we live with this reality?
Regardless of one’s views of wealth distribution as a generalizable matter, the concentration of wealth in the Elite 40 is problematic for many within and outside government. I suspect that this concern is not because of a distaste, per se, for wealth and its benefits. Rather, it is the felt need to provide affordable quality education for the thousands upon thousands of vulnerable students currently and prospectively in the educational pipeline coupled with the current lack of resources at many of the institutions that have served and continue to serve these students.
In situations like this, I worry that current and future proposed solutions (whether public or private) will suffer from three defects: they will be overbroad, they can have dramatic unintended consequences and they will not lead to enabling educational opportunity for those most in need.
Take this example from the Inside Higher Ed article. One of cited colleges' presidents suggested that instead of redistributing wealth from the Elite 40 to others, we should redistribute students. This is, in essence, a call to address undermatching, an issue of keen interest to the Obama administration, among others. It sounds good; it sounds right. It appeals, at least on the surface, to our sense of fairness.
Would that the fix were that simple.
Even if elite institutions were to take more Pell students (say, double their current percentages), that alone will never address the growing chasm between the wealthy and the poorer (in dollars) institutions. Further, many vulnerable students would not succeed at or be a good fit for the Elite 40. Moreover, and perhaps of greatest significance as a reality check, given the growing percentage of vulnerable students in America, the Elite 40 cannot meet these needs, even if they so desired.
One Proffered Solution: Altered Taxation
So, we need to consider other solutions. There is a long history of using federal and state taxation to redistribute wealth.
Best to start with the most commonly proposed solution: taxing nonprofit institutions at the local, state and federal level. Unfortunately, this solution is at once overbroad and misguided.
Assuming the focus is on all nonprofits, such an approach would mean that churches, hospitals (many) and educational institutions could be subjected to property, income and capital gains taxes, as for-profit corporations are now. Such a solution would put many vulnerable institutions in jeopardy, as they would not have the capacity to meet these multilayered tax burdens. To be sure, one could determine that only some taxes paid by for-profits should be carried over to the nonprofit sector.
Putting nonprofits in financial jeopardy is unwise for many reasons. Nonprofit institutions truly contribute to their communities in meaningful ways and can be seen as having a positive economic impact, absent taxation. Some nonprofits actually pay local taxes on newly acquired property or renovations; others pay for water and sewerage. Others contribute space to the community or offer programs that benefit communities’ well-being -- like being a disaster relief site or immunization site in the event of a massive outbreak. They are often large employers in small communities, and they bring in revenue through visits and parental/family/friend stays. Just look at some of economic impact statements prepared by institutions.
Now, one could suggest a progressive tax solution where nonprofits with the largest endowments would pay the highest tax (federal and state) and then that rate would lower as endowment size diminished. Obviously, institutions could game the system (not unheard of in the world of tax); for example, instead of holding money in endowments, they could shift the monies to trusts or other nontaxable vehicles to avoid taxation.
Another tax approach would be to change the deductibility of donations (of individuals and organizations) to institutions with endowments of a certain size. For example, donations to endowments over $1 billion would be taxed at a predetermined rate. Alternatively, one could make this a regressive tax to encourage large gifts, where the deductibility would be greater than smaller gifts. This approach shifts the burden to donors, rather than receiving institutions and could reduce the level of giving to all institutions, an unfortunate outcome.
Some Out-of-the-Box Solutions
Instead of tax-based solutions, here are three other solutions worthy of consideration. They offer approaches that encourage giving, that retain revenue for the benefit of educational improvement and fit within the framework of how educational institutions currently function or could effectively function prospectively.
Before turning to them, a pragmatic note: for these approaches to succeed, the Elite 40 would need to see their obligations to other institutions and society more broadly. They would need to see that there is a price for wealth in terms of giving back to the larger community of students who want and need an education.
Idea One: For educational institutions with endowments over $1 billion (the threshold is a matter that could be adjusted), 5 percent of all dollars received as donations from private sources (whether individuals, corporations or foundations) would be placed into a national (or regional) designated fund designed to improve education across the pre-K-to-20 pipeline. (One could debate whether the right figure is 5 percent or 1 percent or 10 percent.) This fund could be managed by an existing or a to-be-created foundation. The Elite 40 (and those with endowments over $1 billion -- the Elite Plus) would be contributing to the same fund. How the fund operates, how it elects to distribute its interest and corpus can be determined.
In essence, this 5 percent “penalty” is akin to the penalty (often termed luxury tax) charged to professional athletic teams that have salaries over a mandated cap. Interestingly, the rationale is comparable in a sense: to create parity among competitive teams, salaries are capped so that the richest teams cannot accumulate all the talented players. Or, the fund could be analogized to the cy pres awards in class action lawsuits. These funds, made up of undistributed awards, must be given to nonprofits that will use the monies for a similar purpose. By way of example, a cy pres in a class action award against a credit card company could go to a nonprofit that engaged in financial literacy education.
Idea Two: The Elite Plus would be able to retain all donations received if they entered into meaningful partnerships with one or more colleges/universities that served at least 40 percent Pell-eligible students, 60 percent first-generation students or 50 percent minority students. (To be sure, these percentages can be re-evaluated.) The key here is meaningful partnerships, and how that would be assessed on an ongoing basis is a critical issue, as one wants to encourage compliance rather than gaming the system to further self-interest. The costs of these partnerships would be borne by the Elite Plus and would have to equal or exceed the dollar amounts identified in Idea One.
Examples would include reciprocal faculty swaps, payment to faculty from the Elite Plus or who are newly hired to teach at the partner institution; cross registration with the requisite transportation to/from the Elite Plus; shared or funded student support systems including tutoring, mentoring, psychological services, academic advising, career planning and graduate school preparation; creation of shared multicultural events and programming with joint participation from both campuses; and summer programming starting in the year between high school and college and each summer thereafter.
Viewed through a positive lens, these partnerships are not one-way transfers of dollars, knowledge and capacity. There are reciprocal benefits, creating a win-win rather than mandated largesse. Professors may learn from teaching students who are less privileged, and that learning can benefit their home institution. Research opportunities, mentoring and shared academic programming can be enriching. Consider a conference on homelessness or drug abuse or incarceration; might students who have had these experiences in sizable numbers enrich the understanding of these problems and their solutions?
Idea Three: The Elite Plus could create institutionally funded centers designed to study, reach out to and assist institutions serving vulnerable student populations (based on the criteria established in Idea Two). These centers would be funded from a percentage of the donations made (calculated as described above); their contributions would have to be tangible, producing scholarship, empirical research, conferences, engagement opportunities and the like.
A current example, although now funded through grants and donations from outside sources, would be the Penn Center for Minority Serving Institutions. As its website reflects, the center is engaged in a host of research projects designed to improve the outcomes for students at minority-serving institutions, including HBCUs. It issues white papers and publishes books, holds conferences, and its grants usually include monies to be distributed to fiscally constrained minority-serving institutions to enable them to effectuate change effectively.
Conclusions: Process and Theory Concerns
It is easy to critique the solutions presented here.
Some of the challenges are what I would call design questions: What institutions fit within the Elite Plus? How would the various financial thresholds be determined and would they come with automatic inflators (or deflators)? How would the fund created in Idea One function and who would oversee it? What would be the structure of the partnerships and how would success be measured and collaboration ensured in Idea Two? How would the centers within the Elite Plus would be created and overseen in Idea Three?
But there is another set of questions about how we want to treat the Elite 40 and whether they have obligations to others and whether strategies to redistribute wealth are apt in this situation, recognizing that we redistribute wealth regularly in this nation through any number of means at both the state and federal levels. Fundamentally, these questions go to the core of how we want to function as a nation, what obligations we have to others and how we view charitable giving, education (particularly higher education) and wealth disparities.
Process questions matter, but until the deeper philosophical questions are addressed, progress will be limited. To that end, here are two guiding principles that, at least for me, justify the suggestions made here.
First, whatever the challenges, it seems wiser to have the solutions developed and vetted by those with a real stake in the outcomes -- public and private educational institutions, organizations that support educational and social reform, including think tanks from all sides of the proverbial aisle, and philanthropists. Solutions delivered from the states or federal government are less likely to meet everyone’s needs effectively.
Second, as a nation, we are only as strong as our weakest citizens. As such, we all benefit by lifting the bottom -- overtly. We create a greater likelihood that more and more individuals will contribute meaningfully to their families, their communities and our nation. Our economy will be better off if more and more individuals have access to postsecondary education and career opportunities.
Failure is expensive. Think about the costs of prisons and psychiatric treatment. Ponder the costs of the criminal justice system. We pay a price for poverty. Poverty impacts health, education and community safety, among other negative consequences. Social support systems, even minimal ones, are expensive. There is no question about that.
So, it seems wiser to pay for success, to pay to create pathways to and through postsecondary education. Rather than paying for the consequences of failure, let’s develop ways to fund success. Indeed, the promise of opportunity is the bedrock of this nation. We need to make good on that promise. The ideas suggested here start us on that pathway.
Karen Gross is a former president of Southern Vermont College and a former senior policy adviser at the U.S. Department of Education.