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Syllabus: Week of January 27

Published:  January 31, 2013
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Welcome to the Syllabus, a weekly guide that provides insight into what’s happening in higher education.

Discuss:

This week New America’s Education Policy Program published Rebalancing Resources and Incentives in Federal Student Aid. In this policy paper we make more than 30 recommendations on how to improve our complex federal financial aid system so that it works better for students and taxpayers. With this many proposals, there was something for everyone to be happy about or frustrated over—sometimes simultaneously.

Inside Higher Ed, The Chronicle of Higher Education, and ProPublica offer great summaries of our proposal if you haven’t already read it. We also have this one-page explainer that will help get you up to speed.

Reactions from around the web:

Thoughts on the New America Foundation Report, Matt Reed
Confessions of a Community College Dean, A blog from Inside Higher Ed

Matt Reed likes that our proposal turns the Pell Grant into an entitlement with predictable annual funding. He also applauds the return of summer Pell and restoring eligibility for “Ability to Benefit” students at those institutions with strong outcomes. Lastly, he calls our expansion of “experimental site authority” a must. But Reed does have some reservations about limiting Pell to 125 percent of program length and the general political realism of the paper overall. “There’s a perfectly valid mathematical and ethical argument for capping student loans and eliminating tuition tax deductions to pay for increases in Pell Grants,” he says, “But there’s also a strong political argument for making sure the middle class gets its own.” (See some of my thoughts on this below.)

What to Think About New America’s Financial Aid Reform Recommendations, Andrew Gillen
The Quick and the Ed, A blog from Education Sector

Andrew Gillen, research director at Education Sector, agrees with our proposal to restore the ability to discharge private student loans in bankruptcy. He also likes that we put an end to PLUS loans and the higher education tax credits. Unlike Matt Reed, he calls the 125 percent limit to Pell sensible, along with ending the subsidized Stafford loan interest rate benefit.  He does not agree, however, with making Pell an entitlement or making a redesigned IBR program the sole repayment option for borrowers.

New Report: Rebalancing Resources and Incentives in Federal Student Aid, Hannah Emple
The Ladder, A blog from New America’s Asset Building Program

Hannah Emple, a policy analyst with New America’s Asset Building Program, agrees that our elimination of 529 savings plans makes sense since, “a recent GAO report found that only 3 percent of American families utilize them and that those who do have them have three times the median income of those who don’t.” But Emple does point out how important savings vehicles for higher education can be for improved student outcomes. And while Emple also likes that we triple funding for GEAR UP—a federal program that helps prepare low-income middle schoolers for the path to college—she says that GEAR UP must start sooner.

As for my reaction to the reactions?

One example of a difficult compromise on this paper was limiting Pell to 125 percent of program length. We all discussed how this could hit community college students, especially those taking remedial coursework alongside credit-bearing coursework and those who go to overenrolled schools. But it’s important to remember that we did not propose this idea as a standalone recommendation—in fact we would not support this idea on its own. It has to be a part of the whole package that includes incentives for colleges to help students earn credits and credentials in a timely manner, since protracted enrollment is a killer in terms of students ever completing. Additionally, the clock restarts if a student changes a program.

But this criticism reveals a lot about how our ad-hoc policy making works now—it doesn’t take into consideration the effects of all of the other levers in the system. We tried to do that. In general I think this illustrates one of the biggest strengths of our paper—it was written by seven financial aid policy experts who came to the table with different perspectives on the problems with financial aid. The paper represents some hard compromises, but ones that we find critical to improving financial aid and putting the federal student aid program on sound footing. And while some of these recommendations may be politically unfeasible, one of our goals is to get a serious conversation going around what a comprehensive federal financial aid policy would look like.

Higher Ed Watch readers, what is your reaction to our recommendations? What did you like? More importantly, what didn’t you like and why?

Listen:

On this week’s Sidebar, a podcast from the New America Foundation, Fuzz Hogan interviewed Kevin Carey and New York Times reporter Jason DeParle about financial aid. Is it a system designed to fail? Listen to find out.

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