Colleges Seek to Save Student Aid Experiments

In last days, Bush administration killed program designed to encourage financial aid innovations; 100-plus colleges urge Education Department and Congress to restore it.
February 16, 2009

College financial aid officials are seeking to return an unwanted Christmas present the Bush administration delivered in its waning days in office: a plan to eliminate a program that eases federal rules governing financial aid to encourage experiments designed to improve the delivery of assistance to students.

In a December 23 letter to presidents of more than 100 colleges, Vince Sampson, deputy assistant secretary for policy, planning and innovation at the tail end of Education Secretary Margaret Spellings' term, said that department officials would end as of June 30 the innovations the institutions had undertaken as part of the government's "experimental sites" program.

The department, Sampson wrote, had determined that all but one of the various experiments "have not been successful in that they have not lead [sic] to changes in either the [Higher Education Act] or the implementing regulations" that the agency crafts to carry out the higher education law.

The department's decision has perplexed and infuriated financial aid officers, who say that the experimental sites program, which was created as part of the Higher Education Act renewal of 1992 and took effect in 1995, has encouraged innovation and benefited students.

In a February 13 letter to Education Secretary Arne Duncan -- and copied to key members of the Congress -- the National Association of Student Financial Aid Administrators urged Education Department leaders to reverse the "ill-conceived" decision by their predecessors. "The experiments," wrote Philip R. Day Jr., NASFAA's president and CEO, "have proven that administrative cost savings and improved service to students resulted from these alternative methods."

Experiments with loan regulations, Day wrote, have "proven that alternative approaches do not result in higher default rates and students benefit by having timely access to loan funds to pay their expenses. Resources, both financial and human, are freed to better serve student aid recipients and their parents."

The NASFAA letter, which was written on behalf of more than 100 colleges that have participated in the experimental sites program, notes that the Education Department's own reviews of the program -- including the most recent one, issued last summer -- concluded: “The flexibility provided institutions participating in these experiments with non-trivial administrative relief. This relief not only allowed financial aid office staff to concentrate on other issues but reduced the time demands on students and their families as well.”

For example, Richard Shipman, director of the office of financial aid at Michigan State University, said in an interview Sunday that his institution, through its experiment relieving it of the requirement that it provide entrance loan counseling to every first time borrower, had proven that it could ease the demands on students and its own staff members without increasing the rate at which borrowers default.

By focusing its efforts on 15 percent of first-time borrowers deemed to be at highest risk of default, Michigan State has been able to provide better, more individualized counseling to those borrowers. "We found that we were able to understand our population better than a federal law can, and target our resources where it made sense, yet still protects federal funds," Shipman said.

Virtually all of the 109 colleges currently in the program have similar stories, said Larry Zaglaniczny, director of Congressional relations for NASFAA.

Shipman said that financial aid officers were baffled by the department's desire to get rid of a program that does not cost the federal government a dime, saves colleges and students time and effort, and provides data-driven guidance for how the government might improve its methods of delivering financial aid.

"There seems to be a little bit of mean-spiritedness here," he said. In recent months, Shipman said, department officials had argued that getting rid of the program would not be "a big deal" because "so few schools are taking advantage" of it -- without acknowledging that the department itself had limited the number of colleges participating in it.

"It's hard not to see it," Shipman said, "as kind of a parting shot as [Spellings] was leaving office."


Be the first to know.
Get our free daily newsletter.


Back to Top