How Student-Aid Policy Is Really Made

In a guest post today, Jon Fansmith explains that some of the biggest changes to federal student-aid policy can happen outside of the Higher Education Act reauthorization process. Mr. Fansmith, associate director in the office of government relations at the American Council on Education, will present on this topic on Thursday during a session at the College Board Forum, in Miami.

College affordability has never before been such a prominent topic. The first question of last week’s presidential debate led to both candidates stating their support for expanding Pell Grants and the importance of a diploma. So naturally, with the Higher Education Act (the law governing almost all federal higher-education programs) expiring next year, there has been a lot of discussion in policy circles about what will (and should) be on the table when Congress works to reauthorize the act. Numerous proposals have been advanced to remake all aspects of federal student aid, and reauthorization is the ideal place to look at how these programs interact and make the changes needed to improve them.

Unfortunately, the biggest changes to student-aid programs may be made well before Congress ever begins drafting language to renew the act. The students, financial-aid officers, and other stakeholders who have witnessed the elimination of the summer Pell Grant, interest subsidies for graduate students, and eligibility for ability-to-benefit students (among other changes) in the last few years most likely haven’t paid close attention to how those changes came about.  The outcome is what matters to students and campuses, and the result has been the loss of over $4.6-billion in student aid since 2010.

It’s common sense that legislation dealing with financial aid be handled by the legislators and staff who know the issues best, through the so-called authorizing committees, which have specific oversight and expertise in issue areas like education. Traditionally, that’s how higher-education policy has been handled. But in the last few years, that process has been inverted. In the half century since the Higher Education Act became law, there have been 20 major pieces of legislation addressing financial aid, eight of which have been passed in the last seven years. Of those eight bills, six have originated not with the policy experts, but with the funding committees tasked with setting federal spending, and that’s a problem.

It is widely expected within Washington that Congress will have to reach some sort of deal to avert the so-called “fiscal cliff” (a combination of massive tax-cut expirations and across-the-board cuts to almost all federal spending through a process known as sequestration). With trillions of dollars at stake, any deal will be massive in scope and will necessarily mean large cuts in federal spending, regardless of the outcome of the elections. These funding concerns will take precedence over program merit, and considering the sheer size of the federal aid programs (especially Pell Grants and student loans), it’s likely that efforts will be made to further cut student aid.

To be clear, no one would say that the staffs of the funding committees (the Budget and Appropriations committees) are uninformed or unconcerned when it comes to financial aid. They’re smart and hard-working and know a great deal about the programs they oversee. It’s simply that they’re working under a different set of priorities. The need to make the numbers adds up can drive policy making away from “what’s the best possible outcome?” and toward “what’s the least harmful cut?” Appropriators are given a target number and have to work backwards from it. As a result, student aid isn’t examined in the light of a comprehensive approach, but as a jumble of pieces, each of which represents a certain number of students and a certain amount of money.

Regardless of your views on what changes need to be made to the aid programs, it’s easy to see that a piecemeal approach like this is a recipe for bad outcomes. This week I’ll be part of a panel at the College Board Forum in Miami that will be looking at the reauthorization of the Higher Education Act. In addition to sharing my concern that the key changes to student aid may be made before reauthorization even begins, I’ll be urging the campus folks attending the session to share their best ideas for reshaping these programs.

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