Ms. Zina Haywood Vice President, Student Life Gateway Technical College President, Midwest Association of Student Financial Aid Administrators
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U.S. Department of Education Testimony - March 7, 2003
Kansas City, MO
Zina Haywood, Vice President Student Life,
Gateway Technical College
Midwest Association of Student Financial Aid Administrators (MASFAA)
MASFAA is a non-profit corporation of professionals from post-secondary institutions and other related agencies and organizations interested in promoting the effective administration of student financial aid in the states of Illinois, Indiana, Iowa, Michigan, Minnesota, Missouri, Ohio, West Virginia and Wisconsin.
Our mission is to promote and provide quality training and professional development opportunities, to advocate and support financial aid programs, and to facilitate effective communication and coordination among interrelated professional associations, thereby serving the needs and interests of students and post-secondary institutions.
The Midwest Association of Student Financial Aid Administrators (MASFAA) has worked diligently since its inception in 1962 to promote access and opportunity to individuals seeking a college education. MASFAA will continue to facilitate and promote an agenda of student access and success.
Expanding access and opportunity for all is essential to the nation's social progress and economic prosperity. Congress' own Advisory Committee on Student Financial Aid (ACSFA) has issued two reports since the 1998 HEA Reauthorization, Access Denied: Restoring the Nation's Commitment to Equal Educational Opportunity (February 2001) and Empty Promises: The Myth of College Access in America (June 2002). Both reports present a compelling case that the primary reason most low-income, academically prepared high school graduates in the U.S. do not choose to enter postsecondary education is because of lack of financial resources. Both reports provide a solid basis for strengthening the federal student financial aid programs to address this issue, which is especially relevant to underrepresented minority populations.
A struggling economy will, as history shows contribute to increased enrollment in our nation's colleges and universities especially 2-yeaer institutions. Nearly one million additional students are anticipated over the next decade. Increased student enrollment is just one factor that will necessitate regulatory relief and delivery system simplification for students and administrators. The twin issues of simplifying the financial aid delivery system and reducing the regulatory burdens imposed on institutions should be addressed forcefully and directly.
In a broad sense, the recommendations brought forth here are about putting more money into the hands of needy students - access and opportunity, in a more efficient and effective way by simplifying the process and providing regulatory relief for the professionals that administer those funds.
Recommendations to improve access, promote opportunity, ensure affordability and encourage student persistence within the framework of the HEA:
- Some thirty years ago, the US Congress made a historical commitment to students from low-income families, promising these students would no longer face financial barriers to public two and four year institutions. This commitment in the form of Pell Grants guaranteed low-income students access to the benefits of postsecondary education enjoyed by their peers from middle- and upper-income families. The Pell Grant was considered to be the floor of a comprehensive group of Federal financial aid programs for needy students that included work and student loans. Over the years the Pell Grant has not kept pace with the rising costs, eroding the value of the Pell Grant for these students. Change the Pell Grant from a discretionary fund to a true entitlement program. This would be a move in the right direction of reemphasizing the philosophy of the importance and necessity of need-based aid. If we are serious about reducing student loan debut, increasing grant assistance and providing increased education opportunities, then we must make the Pell Grant Program a true entitlement program.
- Restore the buying power of the federal need-based student aid programs by providing a substantial increase in Pell Grant funding, and a guarantee of adequate additional grant aid to come substantially closer to covering at least the average cost of four-year public colleges and universities nationwide.
- Support elimination of the current statutory provision that schools lose Pell Grant eligibility for high cohort default rate. Pell Grant eligibility for current and future students should not be tied to loan repayment of former students.
- Establish a voluntary front-loading demonstration pilot project. This demonstration project would give us the data needed to determine the benefits and consequences of front-loading grants and back-loading loan. There is much debate around this topic, but we need to test it before we dismiss this idea.
- Offer greater funding for a full-time WS summer program to reduce AY debt load (also a predictor of poor persistence).
- Increase support for programs that provide college success skills, early information about college preparation, admission, costs and student financial aid, as well as those that connect and transition low-income and first-generation students to college, and that promote retention and graduation.
- Provide incentives for institutions, states and the private sector to fund student support and persistence services.
- Improve the design of and increase the funding for federal matching programs to induce states, institutions, and private entities to provide more need based aid to students. States should assure that growth in "merit" programs is not at the expense of need-based funding.
- Increase the level of support directly to institutions that serve large percentages of high-need students.
- Regulations requiring that prior term charges be paid prior to subsequent disbursement, regardless of the amount of prior term charge, also pose a significant financial barrier to needy students. The Experimental Site data has consistently demonstrated that allowing current term federal aid to pay prior term charges does not negatively affect loan defaults or continued persistence.
- Increase annual loan limits to $7,000 for all undergraduate grade levels and give the institution the authority to implement lower loan limits by program, class level or school-wide. This authority would be in addition to the current authority found in Section 428(1)(2)(F) which permits schools to refuse to certify (or reduce the amount of) a student's loan on a case-by-case basis. Increase annual loan limits to $10,000 for graduate students with step increases for future years for both undergrad and graduate students. The last time loan limits were raised for first-year students was 1986 and all other students 1992. However, tuition continues to rise on a yearly basis, and 2002-2003, some institutions raised tuition in the second semester. If loan limits are not raised in this reauthorization, then the next reauthorization will take place 2009 or 2010, an unreasonably long period of time. Without the increased federal loan limits the reliance on alternative loans will only increase.
- Therefore, we also recommend an increase in the Aggregate Loan limits to match 5 years of full loan eligibility.
Recommendations for changes to existing HEA provisions to increase efficiency and effectiveness.
- Eliminate lowest EFC order for awarding FSEOG. Retain priority for Pell Grant recipients, but permit schools some discretion in awarding of FSEOG funds to non-Pell recipients.
- Expand the authority of schools to transfer funds between all campus-based programs. Institutions should have the authority to transfer up to 25% of any campus-based fund to another. For example, 25% of annual Perkins loan collections could be transferred to FSEOG or FWS. This would provide administrative flexibility to schools to make decisions based on student needs. This change would not increase campus-based program appropriations or increase allocations to individual schools.
- Revise the Return of Title IV Funds Provisions (Part G, Section 484B).
- Allow the financial aid administrator to override R2TIV requirements if the withdrawal resulted from extraordinary circumstances. Certain students experience unavoidable circumstances that force them to withdraw from college.
- Repeal the requirement to identify unofficial withdrawals. Having to identify unofficial withdrawals is equivalent to requiring all schools to take attendance. Many faculty members at many institutions refuse to take attendance. Student withdrawals in these circumstances are addressed through the Satisfactory Academic Progress standards of each institution.
- Maintain both the Federal Family Education Loan and Direct Loan Programs while equalizing student loan terms and conditions between both programs.
- Repeal student loan fees. Origination fees on student loans were introduced as a temporary offset to government expenditures on higher education. All but a handful of the 36 FFELP guaranty agencies have voluntarily eliminated the 1% guarantee fee. It is time to allow student loan proceeds to go fully toward meeting financial need.
- Eliminate the Hope/Lifetime Learning tax credits and other alternatives to direct student financial aid. This approach is not well targeted to those with the most need for assistance. At best, using tax credits to encourage savings for college before an individual attends is a method that few would object to. Also providing a tax credit or deduction for interest paid on student loans after leaving school is an efficient method of reducing a borrower's debt burden. But the use of these approximately $9.7 billion in tax credits as currently structured for periods of enrollment would be better served as direct funds to students - The funds are needed up front by needy students. This is particularly critical in difficult economic times. The Hope and Lifelong Learning programs add another complexity to the educational aid programs and do not always direct the funds to the neediest students.
- Permanently extend the two expired provisions which apply to colleges with loan default rates under 10% for three consecutive years. One provision allows colleges to waive the normal 30-day delay in disbursement of loan funds for first-time borrowers. For high need students, delaying the disbursement of funds can be critical to persistence. The other allows colleges to disburse a loan in a single installment for short-term programs.
- Establish in the General Provisions a common over-award tolerance of $500 applicable to the campus-based and Stafford programs. This recommendation seeks to ensure consistent treatment of students across the Title IV programs and simplify institutional procedures
- Develop greater reliability and efficiency among the federal databases and systems. Data systems brought up for school use are poorly designed and tested; yet schools continue to be fiscally responsible for data integrity. NSLDS continues to have significant errors, particularly when loans are consolidated or students borrow on additional unsubsidized student loans. The database matches for the FAFSA continue to rely too heavily on intervention from the schools.
- Eliminate the requirement to suspend or terminate a student's eligibility for Title IV funds based on drug-related convictions. This requirement is unrelated to postsecondary enrollment or financial need. Do we not want people with drug convictions educated? It denies students a second chance to improve their lives. If the students were convicted, they have already "done their time." They do not need to be punished a second time.
- Eliminate the requirements to distribute voter registration materials. Like the drug-related provision, this provision should not be a requirement in the HEA.
By these recommendations we have demonstrated our position of putting more money into the hands of needy students - access and opportunity, in a more efficient and effective way by simplifying the process and providing regulatory relief for the professionals that administer those funds.
Thank you for the opportunity to offer comments and suggestions.