Simplification Is ... Complicated

Gathering of policy makers and researchers reveals widespread agreement that financial aid system should be streamlined -- but offers little confidence that it will be.
May 27, 2009

WASHINGTON -- To many student loan providers, President Obama's proposal to end the guaranteed student loan program is pretty close to apocalyptic, and to many advocates for student aid, his plan to use the savings to ensure a permanent and growing stream of funds for the Pell Grant Program would represent a long-awaited dream come true.

But despite the proposal's seeming grandiosity, it is actually very narrow in the overall scheme of the student aid system, and excessive focus on it will represent a missed opportunity, several policy makers and financial aid experts suggested Tuesday at a symposium on simplifying the student aid system.

The event, which was held by the Brookings Institution's Brown Center for Education Policy, was in many ways designed to show just how much consensus has emerged -- from a diverse array of perspectives -- around the idea that the system for delivering financial aid to college students is very broken, and around a basic set of principles and approaches to fixing it. In the last year or so, student aid simplification has been on the agendas of the past and current presidential administrations, and the focus of major reports by a College Board-affiliated panel and the National Association of Student Financial Aid Administrators.

Unlike at any time in the past 30 years, "the possibility for change in student aid [has] opened wide," said Michael McPherson, president of the Spencer Foundation and co-chair, with Skidmore College's Sandy Baum, of the College Board's Rethinking Student Aid project. "Real change is on the table, and the resources and energy seem to be there to make a difference."

But most of the energy and intensity in the student aid world right now is focused on the Obama administration's student loan/Pell Grant plan, which is designed to redirect billions of dollars that now flow to banks and lenders to increase aid to students instead. Ratcheting up federal support for students alone, however, won't help the country produce the millions of additional college graduates that the president and others are aiming for, argued Celia Sims, a legislative assistant to U.S. Senator Richard Burr (R-N.C.).

"The myopic concentration on student loans and the student loan fight misses the bigger picture and has distracted us from doing the comprehensive redesign that we need," Sims said at Tuesday's Brookings event. "We're running the risk of concentrating on this one piece, and just tinkering around the edges" on the other important elements of aid simplification.

Sims acknowledged that a "comprehensive redesign" -- which to her would include an overhaul not just of student aid but of the entire "educational system, from high school through college" -- could be so daunting a task for Congress that the result could be inertia. But the system is broken enough that "I don't think we can any longer just chip away" at the problem, Sims added.

Sims and her boss strongly oppose the Obama administration's proposal to end the guaranteed student loan program, but even aid experts who generally support the idea express concern that it could distract lawmakers from the broader goal they share. Pouring more money into a broken financial aid system -- especially one that often seems to reward colleges for increasing tuition -- will not by itself help more Americans go to college. "We can increase Pell Grants and loan limits to try to keep up," said Grover J. (Russ) Whitehurst, a senior fellow in governance studies at Brookings who headed the Institute for Education Sciences during the Bush administration. "But if the cost of attendance continues to escalate, all we're doing is playing catchup."

Robert Shireman, the Obama administration's chief higher education policy maker, was a strong advocate for aid simplification during his years at the Institute for College Access and Success, and it remains high on his agenda now that he's at the Education Department, despite the focus on the student loan proposal. The administration is moving ahead on a wide variety of fronts, Shireman said Tuesday, "making enormous progress" on its goal of information from the Internal Revenue Service to populate students' federal student aid applications, for instance.

And if the administration's student loan overhaul proceeds, Shireman noted, it will produce enough money not only to solidify the Pell Grant Program but also to produce a multi-billion-dollar fund to spur innovation by states and colleges -- including experiments to simplify the student aid process.

"We don't have to wait for the grand redesign to get things that make the financial aid process faster," Shireman said.


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