Financial aid

Budget negotiators reach deal that would increase NIH spending, Pell Grant award

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Congressional negotiators reach agreement to boost spending on NIH and student aid, though deal does not restore all of the sequester cuts.

Higher ed lobbyist retires after four decades

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After four decades, Becky Timmons to retire as key lobbyist for higher education.

New report asks policy makers to impose tighter standards on Parent PLUS Loans

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New report says Education Department did not go far enough in controversial changes it made several years ago to eligibility requirements for Parent PLUS Loans. 

Senate Democrats launch new push on student loan debt, college accountability

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/sites/default/server_files/files/Student Loan Borrower Bill of Rights-Section by Section.pdfSenate Democrats begin push on student loan debt and accountability for colleges and universities, though Republican support may be elusive.

Education Department recognizes same-sex marriages for student aid purposes

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Responding to Supreme Court ruling, the Education Department will begin recognizing same-sex couples for the purposes of distributing federal financial aid.

 

Budget deal expected to alleviate automatic cuts to scientific research

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Advocates for higher education say Tuesday's accord would largely alleviate cuts to research funding and campus-based student aid programs.

Federal aid for needy students is inadequate (essay)

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.

2 Democrats plan legislation to promote competency-based ed and rate colleges

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Two senators join the increasingly crowded Washington bandwagon for alternative forms of higher education to have access to federal funding. They also want college aid tied to institutional performance.

For-profit colleges step up criticism of gainful employment regulations as negotiations continue

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As a federal panel reconvenes to negotiate "gainful employment" regulations, representatives of for-profit colleges -- backed by a surprise visit from a key Congresswoman -- step up their criticism.

How to increase college access in 3 easy steps (essay)

Today the Senate is holding a hearing on student aid and college access with a focus on simplification, in advance of the upcoming reauthorization of the Higher Education Act. Focusing on streamlining federal student aid and making the various programs more flexible is a well-reasoned approach in a fiscal environment where increases in federal funding for the programs appear unlikely. Here are three recommendations policy makers can apply immediately to simplify programs and increase college access:

1. Better align financial aid applications with college admissions by using prior-prior year

Each year a student is enrolled in postsecondary education, he or she must submit a FAFSA to be considered for federal student aid (grants, loans, work-study). Under the current structure, the FAFSA becomes available Jan. 1 and requires tax information from the prior year (PY). However, most students and families haven’t even filed their taxes by then, making it difficult to complete the form in totality. This delay can cause an unfavorable chain reaction: a delay in submitting the FAFSA due to lack of tax information can result in a delayed financial aid award letter, which in some cases could lead to a reduced amount of financial aid, at least when it comes to aid that is awarded on a first-come, first-served basis.

The use of prior-prior year (PPY) income on the FAFSA would have multiple benefits for students and families. These benefits include the ability to: file the FAFSA earlier, often at the time they are applying to college; make better use of the current IRS data retrieval tool, which allows automatic population of a student’s tax return data; receive notification of a financial aid package earlier; and streamline the college-going process by applying for financial aid the same time they are applying for admissions.

This would be welcome news for students who need financial aid the most -- who also happen to be the most likely to miss current financial aid deadlines and overestimate college costs, according to a study by researchers at the University of Illinois at Chicago and an Illinois financial aid official.

The best part? The U.S. secretary of education was already given the authority to implement PPY over five years ago, so Congressional action is not needed to implement this idea.

While there are some concerns about using PPY as a proxy for current financial strength, it is important to remember that prior year information is also a proxy. The National Association of Student Financial Aid Administrators recently released a study on the impact of using PPY data and found that for most of the lowest-income students, using PPY versus PY did not greatly impact the amount of Pell that a student received.

2. Implement an early Pell notification, or “Pell Promise”

Low-income students often decide at an early age that college is too costly and therefore just “not for them.” Enrollment data underscore this pattern, with 52 percent of low-income high school graduates enrolling in postsecondary education compared to 82 percent of high-income graduates, according to the National Center for Education Statistics. Even for low-income students who do go on to college, many are self-selecting out of competitive or elite schools that would have been less expensive than where they ultimately attend. (This issue of "undermatching" has recently attracted significant attention from President Obama, as well as the first lady.)

One recent study of a sample of high school valedictorians found that only 50 percent of those from low-income backgrounds even applied to a selective university, compared to roughly 80 percent of the valedictorians from upper-middle and high-income families. Unfortunately, when a student decides early on that higher education is not an option, it impacts their high school coursework choices and college enrollment behaviors.

A “Pell Promise” -- a commitment of funds from the federal government as early as the ninth grade -- would make low-income students aware of their Pell grant eligibility in much the same way that the Social Security Administration disseminates information to citizens about the amount of social security they can expect in retirement.

While not technically a promised income, Social Security statements allow individuals to plan for an eventual retirement. A Pell promise would assure low-income students that a specific amount of funds would be available to them upon successful completion of high school and incentivize early college-going behaviors and patterns. Early studies from similar state-based programs, such as the 21st Century Scholars Program in Indiana, have shown that when students and parents know there are funds available to them for higher education, there are noticeable increases in college preparatory coursework and college going rates.

Identifying low-income students early would not be difficult given IRS data and other federal and state means-tested benefit programs. This change would also be easy to implement since the Higher Education Opportunity Act (HEOA) already authorized a similar demonstration program, although funds were never appropriated to fulfill the program.

3. Provide flexibility in the Pell Grant program through a “Pell Well” of funds.

The current system of Pell Grant delivery is based on the traditional spring/fall calendar and the traditional student.  A student may wish to move through their program at an accelerated pace by taking courses each summer, yet under the current Pell Grant rules, that student would run out of Pell eligibility and be forced into loans to cover academic costs or defer additional enrollment until the next year. This structure is outdated and confusing to families, particularly as nontraditional students and innovative programs with nonstandard academic calendars proliferate.

To increase flexibility and encourage students to complete at a quicker pace, lawmakers could implement a Pell Well system, whereby a student’s lifetime Pell Grant eligibility would be calculated when the student initially applies for aid.  The student would then be able to draw funds from their well of Pell Grant at their own pace, not to exceed a certain amount per payment period.

This is different than how Pell eligibility is currently calculated, which is based on telling students annually how much they qualify for in Pell funds and then trying to explain future Pell eligibility as a percentage of full time enrollment. Students and parents understand dollars, not percentages, and they increasingly require predictability and flexibility. Such a change would both simplify and streamline the program, and incentivize continuous enrollment and higher retention and graduation rates. 

As Congress considers various proposals through HEA hearings, and as grant makers and college access advocates continue to think of ways to reimagine student aid, we should remember that manageable and realistic changes like these could have a huge impact on college access and success.

 

Justin Draeger is president and CEO of the National Association of Student Financial Aid Administrators.

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