Archived Information

Reauthorization of the Higher Education Act


One Size Does Not Fit All: Reducing Burden at Colleges through Performance-Based Approaches

"Performance-based regulation benefits parents, students, colleges and government. It has proven its effectiveness in many other public policy areas and it is time we start using it in higher education."

-- Dr. A. Lee Fritschler, President, Dickinson College, March 1998

"The University of Notre Dame has actively participated in the Quality Assurance Program for over 10 years. We are proud to have become a prominent leader on the national level in demonstrating the efficiencies which a performance based approach clearly has provided for our multi-million dollar per year operation...We strongly encourage our legislators to expand this common sense approach to aid administration by providing much needed regulatory relief to all institutions with proven records of quality performance...A one size fits all policy is not always best and sometimes proves to be not only costly and ineffective but also inefficient."

-- Joseph Russo, Director of Financial Aid and Susan Brandt, Associate
Director of Financial Aid, University of Notre Dame, March 1998

Nearly 7,000 postsecondary institutions currently participate in the Title IV student financial aid programs. All of these institutions face the same rules and regulations with respect to the administration of the programs, despite the fact that many provisions are in place to curb problems at a relatively small number of institutions. This is not an effective use of resources at institutions or at the Department of Education. Moreover, the recent National Commission on the Cost of Higher Education recommended deregulation in higher education and more reliance on performance-based requirements.

There are many institutions -- public and private, non-profit and for profit, large and small, and new and old -- that successfully administer the student aid programs, pose little risk to exposing taxpayer funds, and deserve more flexibility and alternate ways to manage the programs. The Administration is proposing two initiatives during reauthorization that would reduce regulatory burden and provide additional flexibility for schools in administering the Title IV programs: (1) creating a performance-based approach for the administration of Title IV programs and (2) expanding the successful Quality Assurance Program.

Tailor Rules and Requirements More Appropriately

The Department has made big strides in the past few years in reinventing its regulations for all schools, using tailored regulations that balance flexibility and accountability. Another step in that direction is the proposal for a system of institutional management of the student financial aid programs based on the performance of institutions in administering those programs and the financial strength of those institutions.

As part of this system, the Secretary would be authorized to waive or modify Title IV statutory or regulatory requirements relating to the administration of the student financial aid programs. Requirements unrelated to the administration of student financial aid, such as reporting requirements for campus security, would not be modified or waived for any institution. In general, there are two ways to implement this approach. The first way is to tie individual relief to a specific performance criterion that is directly related to the relief provided. For example, institutions with low default rates could be exempted from the 30-day delayed disbursement requirement. A second approach is to provide a "package" of administrative relief to institutions that meet a set of performance indicators. For example, institutions with low default rates, reasonable financial health, and no material findings in their annual audit submissions could be relieved of the following administrative requirements:

Regardless of which approach is used, a performance-based system would create a proper balance between reducing burdens on schools and protecting students and Federal funds. It would move us away from the "one size fits all" structure that unduly burdens institutions that have successfully administered the Title IV programs in the past. The Secretary would be authorized to provide waivers only upon a determination, based on the institution's performance in administering the Title IV programs and its financial strength, that the waivers would pose no substantial threat to program integrity. Rigorous criteria would ensure that administrative burdens would be lessened only on institutions that continue to administer the programs in ways that best serve their students. All postsecondary institutions, regardless of their type and control, would be eligible for the relief as long as they meet the performance criteria.

Develop Specifics through Open, Participatory System

The specifics of this performance-based approach, including decisions on which way to structure the system, would be developed through an open rulemaking process that would ensure proper stewardship of taxpayer funds while providing flexibility and burden relief for the institutions. Similar to the recent financial responsibility regulation, the Department would engage the higher education community in an effort to develop a system that all parties believe is fair and responsible. The Department was lauded for the deliberative nature of the process used to develop the financial responsibility regulation, and for the opportunities for public and community involvement. That process is a model for future efforts to regulate comprehensive issues such as this.

Build Upon Successful Approaches in the Past

The Department's proposal to expand the Quality Assurance Program (QAP) builds upon 10 years of successes in permitting institutions to develop and implement more comprehensive and individualized management systems to enhance program integrity in the delivery of student financial aid. The QAP provides expanded flexibility in the area of verification of student financial aid application data to institutions that have self assessed, measured, and continuously improved their service delivery and stewardship of Federal dollars. This approach to flexibility expands on a tested, successful performance-based methodology that minimizes risk while emphasizing innovation. Participating institutions praise the program as being a new and more efficient way of doing business. The Department is proposing to expand the scope of the program beyond verification of student financial aid application data to include, but not limit it to, the following additional areas:

Strong Community Support for Performance-Based Approaches

We have received widespread support for our initiatives to reduce burden on institutions, where appropriate, and to provide flexibility for institutions to manage the Title IV programs.

"Although each of us had special concerns, we all seemed to recognize and applaud the Department for focusing on some regulatory relief. We are tired of being asked to do more because of others who do less."

-- Claire Roemer, Tarrant County Junior College (Texas), District Coordinator, Financial Aid, May 1996, in a follow-up letter to the Department regarding focus group meetings held by the Department on proposing a performance-based approach to statute and regulation

"Those institutions that are financially responsible, who work diligently to do the right things, and who are always looking to free up additional resources for other programs would be very appreciative of the initiatives that are under way."

-- James Dodson, McPherson College (Kansas), Executive Vice President and Treasurer, May 1996, in a follow-up letter to the Department regarding the same focus group meetings

"We applaud efforts to simplify regulations and administrative processes. We strongly endorse differential levels of oversight of institutions participating in Title IV student aid programs."

-- Carol Campbell, Carleton College, Vice President and Treasurer, March 1996

"We heartily endorse the concept of performance-based outcomes."

-- Susan Pugh, Indiana University, Director, Office of Student Financial Assistance, February 1998

"Our experience with the Quality Assurance Program has improved our stewardship of federal funds, ensuring that those students the programs are intended to help are helped. I am confident that an expansion of this performance based system into other aid delivery areas will enable us to efficiently and effectively administer the financial aid programs, reduce the administrative burden on institutions, and most importantly, enhance services for our students and their families."

-- Eric Godfrey, University of Washington, Assistant Vice President for Student Affairs and Director of Student Financial Aid, March 1998

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