Keep reauthorization on the mark: IHEs must work to keep the focus on topics that will make a difference to their needy students.

Although the Higher Education Act is comprised of seven titles (covering such areas as teacher quality enhancement, international education, and institutional aid programs), traditionally, the title that garners the most attention is Title IV, which authorizes federal student assistance and student support services programs such as Pell grants, Stafford loans, TRIO, and GEAR UP. It's no surprise, then, that as Congress prepares to renew the Higher Education Act (the Act expires in 2004), the conversation has centered on issues of access and affordability. What is surprising, however, is that the changes discussed most frequently actually have little to do with federal financial aid programs and policy. It was reported this past October, for instance, that Sen. Ted Kennedy (D-MA) was considering proposing legislation that would reduce federal aid funding to colleges and universities that offer early decision, or that give preferential consideration to alumni children. Also under consideration was legislation that would limit federal financial aid at institutions with minority graduation rates that fall more than 10 percentage points below the overall graduation rates.

Such proposals are reminiscent of the last reauthorization, which, for one thing, added to the Free Application for Federal Student Aid (FAFSA) form the controversial and often incorrectly answered (or unanswered) question: "Have you ever been convicted of possessing or selling illegal drugs?" The last reauthorization also introduced campus crime reporting requirements--another topic far removed from issues of accessibility and financial aid policy.

Probably the most controversial and oft-discussed issue last fall was Rep. Howard "Buck" McKeon's (R-CA) initial proposal to deny federal financial aid program eligibility to all institutions that raised tuition by more than twice the rate of inflation for two years in a row. Based in part on feedback from the higher education community, the bill he ultimately introduced in October a) significantly softened the penalties, b) excluded low cost institutions, and c) introduced a probationary period or "affordability alert status," during which a college out of compliance would be expected to provide to the Department of Education detailed information about their costs and expenditures, but would retain eligibility for campus-based aid. So ...

INSTITUTIONAL VS. FEDERAL POLICY FOCUS

Given the critically important role federal aid policies play in making college possible for so many students, why has the bulk of the focus thus far been on institutional policies? Some have speculated that this is a natural outcome of federal budget Limitations. When there is no money to spend, it is easier for our congressional representatives to define "access" in terms of cost containment of admissions policies rather than in terms of aid programs that come at an expense.

Unfortunately, it is difficult to consider tradeoffs within the array of federal aid programs that would target funds to those students demonstrating the most financial need. For example, little has been said about the possibility of eliminating federal income tax benefits such as Hope and Lifetime Learning tax credits (only 30 percent of which go to families making less than $30,000), in order to provide more funding for Pell grants.

Also ironic, given the congressional interest in cost containment, is the lack of discussion regarding changes to policy that would reduce the administrative burdens colleges and universities face in managing federal aid programs. These changes could include eliminating tangential tasks currently expected of institutions that participate in federal aid programs (such as distributing voter registration materials and tracking selective service information). In addition, the development of a seamless verification system between the TRS and the Department of Education would eliminate current cumbersome paper processes for both schools and students.

NASFAA AND THE IHES SPEAK UP

The National Association of Student Financial Aid Administrators (NASFAA; www.nasfaa.org) has raised these and other critical issues, including:

* Increasing federal Loan limits to reflect rising borrowing needs

* Reducing current disincentives for saving by treating tuition savings plans as parental assets rather than student assets in the calculation of expected family contribution (EFC). (Only about 5 percent of parental assets are expected to be available in the calculation of EFC, while student assets are assessed at 35 percent).

* Recognizing the emergence of new educational delivery systems by eliminating the 50 percent rule--a federal law that denies the use of federal financial aid to institutions that educate more than half of their students via distance technologies.

Curiously, these proposals got lost in last fall's reauthorization discussions as higher education representatives had to focus instead on preventing the latest attempts to legislate institutional policies with the lever of financial aid eligibility. So, how can higher education institutions work to keep the focus on topics that will make a difference to their needy students?

According to George Chin, university director of Financial Aid at the City University of New York (currently serving on NASFAA's reauthorization task force), it is all about getting the general public to have a better understanding of the complexities of higher education finance. "The focus on rising college costs makes for an easy sound bite. We know the issues aren't that easy. For example, public higher education institutions have been forced to raise tuition prices after several years of absorbing cuts in state funding. The practical effect of trying to provide access by controlling costs is that sufficient aid funding will not materialize for those who need it. But we need to work the political grass roots with that message. College presidents, in particular, need to help their political contacts better understand the issues surrounding college cost and affordability."

In an August 2003 letter to members, NASFAA President Dallas Martin urged aid officers to be involved in the legislative process as never before, noting, "We believe many lawmakers are sincere in raising broader issues such as affordability, accountability, and access. However, giving attention to these matters can divert efforts away from other topics that go to the core of our interests as financial aid administrators ... It is imperative that you and your colleagues become and stay involved on matters that directly affect your students, your office, and your work."

The question is: What are some of the issues that will make the biggest difference to students, according to financial aid officers?

Joseph Bailey, director of Financial Aid at Genesee Community College (NY), believes the most critical issues for his students are Pell funding, loan limits, and independent status regulations. GCC serves almost 7,000 students, 78 percent of which are eligible for federal financial aid. In fact, one-quarter of GCC's students report family contributions low enough to be eligible for federal Pell Grants. It's not surprising, then, that the deteriorating purchase Dower of Pell is a key issue Bailey wishes would be addressed in reauthorization.

"When I first started in financial aid," he says, "I was surprised at the significant difference between authorized and funded Pell grants. Although maximum Pell grants have increased, they haven't kept pace with the needs of our students." He adds, "Increasing loan limits would be helpful to those students who just miss eligibility for Pell and state grants, and for independent students who often miss grant cutoffs because of their part-time income. It would be great if they could borrow enough, even as freshmen and sophomores, to cover our tuition and lees of $3,200, plus books and some living expenses." Bailey also points to the current age limit for independent status. "Although I do believe families have a responsibility to help pay the educational expenses of traditional-age students, setting the age for independence at 24 is an issue for many of my students who are 22 or 23 and have been on their own for four or five years."

At Harvard University (MA), Student Financial Services Director Ryan Williams shares Bailey's interest in increasing loan limits, but also identifies as critical a number of issues around equitable treatment in loan programs and need-analysis formulas. Harvard and other institutions participating in the Direct Loan program constantly struggle with inconsistencies in the rules under which the Direct Loan (DL) and the Federal Family Educational Loan (FFEL) programs must operate. Says Williams: "FFEL tenders, for example, are able to waive origination fees and offer good-payer incentives that are unavailable to students borrowing under DL. Another inconsistency, which predominantly impacts graduate and professional school students, relates to interest capitalization under the DL and FFEL programs. Some lenders capitalize interest immediately following the expiration of the grace period. Others capitalize it only at the time of active repayment. Those who wait until active repayment are potentially including deferments and forbearances, which can delay interest capitalization for months, if not years. For those students who borrow the most--graduate and professional students--this can add up to significant dollars."

Williams also hopes that reauthorization will address some of the inconsistencies he sees in the formulas used to determine family contribution. He notes, for example, "treating an earned income credit as untaxed income in the formula seems very inequitable when you consider that this tax credit is only available to low-income families. In contrast, the Hope and Lifetime Learning tax credits--primarily used by middle- and upper-income families--are specifically excluded from consideration." Finally, he suggests, "The treatment of college savings vehicles needs to be reviewed. Treating some savings options (529 plans) as assets, and others (tuition prepayment plans) as direct resources against cost of attendance, is not appropriate and may work as a disincentive to families' saving for college."

GETTING BACK ON TRACK

The bottom line is that the higher education community will simply need to work harder over the next few months to get the reauthorization discussion back on track--focused on federal policy, rather than institutional policy, and focused on those students most in need of federal assistance. Time is running out; the time to speak is now.

Kathy Kurz and Jim Scannell are partners in the enrollment management consulting firm, Scannell & Kurz, Inc. Visit their Web site at www.scannellkurz.com.