Some Proposals to Remake Student Aid Would Harm College Access, Panel Warns

July 01, 2013

A key Congressional advisory committee is raising serious doubts about recent proposals for remaking the federal student-aid system.

In a report released late Sunday night, the Advisory Committee on Student Financial Assistance urges lawmakers to give "special scrutiny" to five ideas that it says could "worsen inequality in college completion," including plans to tie student aid to completion rates and to replace Pell Grants with block grants to states.

"These proposals disregard rising college expenses facing low-income students and the skyrocketing loan burden," according to the report, which highlights data on low-income black and Hispanic students. "Policy makers should consider their likely negative impact on college enrollment and completion," it says.

The report doesn't specifically mention the Bill & Melinda Gates Foundation's Reimagining Aid Design and Delivery project, which is in its second round of grant making, and the committee's executive director denied that the report was a direct response to the ideas in the project's 16 papers released to date.

"It's about ideas and proposals that would harm low-income students—regardless of their source," the director, William J. Goggin, wrote in an e-mail. "There is pretty wide agreement that the five proposals identified would hurt low-income students."

Hurting or Helping

Still, the report does challenge recommendations made by several of the Gates project's grantees, which included think tanks, associations, and other groups. And it rejects the "austerity-inspired assumption" underlying some of the reports that any changes in the student-aid system must be budget-neutral, calling for increased spending on need-based aid.

In particular, the report argues against linking some student aid to completion, an approach embraced, in various forms, by the National Association of Student Financial Aid Administrators, the Education Trust, and others.

Denying aid to students "based on risk of noncompletion" would be counterproductive, the report suggests, harming the very students who would benefit the most from the money.

It also cautions against converting Pell Grants into block grants to the states, an idea endorsed by the Committee for Economic Development, warning that budget constraints make it "likely that block grants could be diverted to other state needs." It urges policy makers to "demand that proponents show the redistributive impact on students and institutions."

And it takes a skeptical view of efforts to simplify the student-aid system, saying "there is no evidence" in the nation's longitudinal data system that low-income minority students who are qualified to attend a four-year college are deterred by inadequate information or overly complex financial-aid applications.

High-school graduates who aspire to attend college and are prepared "do not abandon those aspirations and plans upon seeing the Fafsa," the report reads. "Substituting delivery-system improvements for need-based grant aid cannot neutralize the impact of rising college prices."

The Fafsa, as the Free Application for Federal Student Aid is called, is the form the government uses to assess student need.

Several of the Gates project's grantees proposed improving the Fafsa, including the National College Access Network. In e-mail, Carrie Warick, the network's director of partnerships and policy, said that "while the complexity of the process may not be reflected in federal databases, our members face this in the field every day: students who need better, more helpful information and a simpler process to ensure they attend the right school and receive all possible need-based support."

'Open Discussion'

Justin Draeger, president of the National Association of Student Financial Aid Administrators, said the advisory panel's report raises "valid concerns" about the effect that changes in the student-aid system could have on low-income and minority students, but he argued that such concerns shouldn't prevent an "open discussion about how we improve student-aid programs to foster access and success."

"When we're living in a world of limited dollars, we understand that anytime you make considerable changes, there's a danger of creating winners and losers," he said. "This has to be done thoughtfully, but there's no reason not to continue these conversations."

The report comes five months after the committee issued a statement calling for debate over the Pell program to be "rational, fact-based, and data-driven," and arguing that "opinions unsupported by data and analysis do not advance the policy discussion."

In that statement, the committee recommended that any group submitting a proposal to change the Pell program should identify the problems that the proposal was trying to fix; assess its impact on program costs and the distribution of need-based aid; identify winners and losers under the proposal; and provide estimates of its impact on college enrollment and degree completion.

So far, not one proponent of changing the Pell program has done so, Mr. Goggin said.

Michelle Asha Cooper, president of the Institute for Higher Education Policy, which submitted a paper to the Gates project, said the new report reinforces "a message that the advisory committee has been consistent in making about inequality, and what could happen if we don't pay attention to changes we make in financial aid."

"As we try to reform higher education, we do have to be mindful of what this could potentially do to inequality," said Ms. Cooper, who worked for the committee from 2004 to 2008. She said she didn't see the report as a criticism of the institute's proposals for creating incentives for college completion because its plan would add money to the system, not simply shift it among colleges and students.

"Everything is about giving more, not making it a zero-sum game," Ms. Cooper said.

Later this month, the committee will release a report focusing on the idea of using graduation rates to award Pell Grants or campus-based aid.