Laws & Guidance HIGHER EDUCATION
Reauthorization of the Higher Education Act of 1965
Ms. Sarah Flanagan, Vice President for Government Relations, National Association of Independent Colleges & Universities Supporting Document 2
Archived Information



Questions for Public Comment

1. (A) HOW CAN WE IMPROVE ACCESS AND PROMOTE ADDITIONAL EDUCATIONAL OPPORTUNITY FOR ALL STUDENTS, ESPECIALLY STUDENTS WITH DISABILITIES, WITHIN THE FRAMEWORK OF THE HEA?

NAICU believes that access to a college education for low-income Americans should remain the primary focus of the Higher Education Act because, stated simply, student aid programs work. Independent colleges and universities are committed to remaining affordable and available to students from diverse backgrounds. Independent institutions enroll the same proportion of students from families earning less than $25,000 a year as do public four-year universities. Eighty-four percent of all full-time, dependent undergraduates at independent institutions receive some form of student financial aid. If the dream of a college education is to remain a possibility for everyone, the federal student aid programs-particularly grant programs-must be continued and must be adequately funded.

We also believe that no student should be denied the opportunity to attend the college that best fits his or her educational needs solely because of the size of the family's financial resources. Such equality of opportunity is embedded in our nation's roots.

For nearly four centuries, independent institutions have come into existence to meet a wide array of needs in a complex population. They include traditional liberal arts colleges, major research universities, church-and faith-related institutions, historically black colleges and universities, women's colleges, two-year colleges, and schools of law, medicine, engineering, business, art, and other professions. This decentralized approach that students have enjoyed and benefitted from is a hallmark of American higher education and has helped the United States earn a reputation as a world leader in providing higher education opportunities.

Pell grants should remain the foundation of a student's aid package. The Pell program provides students across the country levels of grant aid based on family income. This student-centered, portable grant is designed to provide poor students the same power of student choice available to their wealthier peers: namely to chose a college that best fits their personal needs, philosophical beliefs and academic interests.

In addition to increased federal funding for student aid programs, we recommend the development of active student aid partnerships with States, colleges, and private foundations. Too often, these entities develop separate solutions to common student aid problems without considering how these approaches will interact with one another. The formation of partnerships would go a long way towards maximizing the effectiveness of the substantial investments being made in student aid.

  • The LEAP program provides an important foundation for such a partnership. It encourages states to assist in making college choice possible through leveraging additional state resources, by requiring students who receive LEAP funds to be able to use them at any college within the state, and through the development of a variety of innovative grant programs. Given the serious budget problems now facing the states, the elimination of LEAP would send the wrong signal at the wrong time. Instead, the LEAP program should be enhanced to ensure it provides adequate incentives to states that partner with the federal government in making college affordable for all students.
  • The campus-based programs also support a vital partnership between colleges and the federal government in addressing the access problem and in supporting educational choice. For example, SEOG targets additional funds to the neediest of these students, while leveraging additional resources from colleges- encouraging schools to partner with the federal government in meeting the access problem.

TRIO AND GEAR UP provide important information, support, and preparation for low-income and minority students who are under-represented in higher education. Early intervention programs are an essential component in ensuring that underserved populations learn how to make the dream of a college education a reality.

The Demonstration Projects to Ensure Students With Disabilities Receive a Quality Higher Education program, which was authorized in 1998, has been beneficial in increasing access to higher education for students with disabilities. This program should be expanded.

The borrowing limits for students should be increased and made more flexible. Low-cost loans are a key component of access, and annual and cumulative loan limits should be increased to provide students with the least expensive loans possible. Despite concerns with student debt, borrowing is often preferable to working more hours than is manageable while going to school. The borrowing limits in federal loan programs have not changed since 1992. Institutions have been increasing their institutional aid, but many students, especially those at private colleges, need to borrow more expensive, private loans because federal loan limits are insufficient.

A robust, flexible and adequate student loan program is also an essential part of ensuring low-income students a choice of institution. When federal loan limits are too low, students who want to attend an independent college often have to borrow money in the private market to fill the gap. Raising loan limits, at least for students in the private sector, is essential to ensuring all students choice.

Specifically, the aggregate loan limit for undergraduates should be raised to $30,000 and students should be able to draw down annual amounts, like a line of credit, as they progress toward their degrees. The supplemental, unsubsidized borrowing limits for independent undergraduates should be raised by $1,000 per year. The aggregate limit for independent students would be $58,000. The aggregate limit for graduate and professional students should also be given an inflationary increase, and students should be able to draw down funds as proposed for undergraduates. Graduate students should continue to be allowed to borrow any unused portion of their undergraduate loan limits. For additional detail and proposed legislative language, see http://www.naicu.edu/updates/HEA%20ReauthProposalSummary.shtml

The up-front loan fees that students are charged should also be dropped, and ways should be found to make repayment more manageable for borrowers. In addition, the benefits and subsidy structure of the current loan program should be examined.

(B) HOW CAN THE FEDERAL GOVERNMENT ENCOURAGE GREATER PERSISTENCE AND COMPLETION OF STUDENTS ENROLLED IN POSTSECONDARY EDUCATION?

We propose the establishment of a national competitive grant program to help institutions of higher education, or consortia, to implement programs to increase persistence and graduation rates of students, particularly high-risk students. The College Graduation and Retention Assistance Demonstration Grants program (College GRAD Grants) would initially be funded at $15 million in FY 2005. The five-year, peer-reviewed grants could be used to improve freshman orientation, academic support activities, and joint programs between institutions. Additional detail and proposed legislative language may be found at http://www.naicu.edu/updates/HEA%20ReauthProposalSummary.shtml.

The secretary should use the National Student Loan Data System (NSLDS) to collect data for periodic reports on persistence and degree/certificate completion rates for federal student aid recipients. Better information about student persistence and graduation rates would be useful in evaluating the return on the federal investment in higher education, and could be obtained by adjusting the existing NSLDS. This method of data collection is superior to approaches such as linking state tracking systems that raise serious issues of student privacy. For additional detail and proposed legislative language, see http://www.naicu.edu/updates/HEA%20ReauthProposalSummary.shtml.

We oppose the front-loading of Pell Grant on the basis that such a policy change would have the unintended consequence of discouraging persistence. A reduction in grant aid after a student has begun college is a significant factor in dropping out of college.

2. (A) HOW CAN EXISTING HEA PROGRAMS BE CHANGED AND MADE TO WORK MORE EFFICIENTLY AND EFFECTIVELY?

The federal system of need-based student aid is designed to ensure that all qualified and motivated Americans have the financial means to pursue higher education at the college of their choice. The present configuration of grant, work-study, and loan programs grew out of specific assumptions about access and choice, the responsibilities of students and parents, the partnership of state and federal governments, and the role of colleges and universities. These programs were designed to offer all qualified citizens a chance to advance their minds, skills, and economic potential, while also providing for the betterment of society. We believe that the assumptions underlying the federal student aid programs are still valid today and that these assumptions should guide any revisions considered to the Higher Education Act.

(B) IN WHAT WAYS DO THEY NEED TO BE ADAPTED OR MODIFIED TO RESPOND TO CHANGES IN POSTSECONDARY EDUCATION THAT HAVE OCCURRED SINCE 1998?

Given demographic trends and new efforts at elementary and secondary education reform, the nation can expect more college-ready students than ever before. We will need to make a major investment in the Pell Grant program, if we are to keep the promise made to these students that a college education will be available for those who work hard. Specifically, we believe the Pell Grant maximum should be doubled over a six-year time period.

Need analysis should be updated to rationalize the consideration of assets to reflect the recent development of new, tax-advantaged college savings plans. Different types of college savings vehicles receive different treatment under need analysis, largely due to savings vehicles created after the 1992 HEA Amendments that defined federal need analysis. To achieve equity, we propose treating all types of college savings plans like parental savings. Further discussion of this proposal is included in our response to question #5.

Student privacy rights need to be reviewed in light of an increased federal interest in student performance data and in the post 9-11 environment. As interest in measuring student success grows, public officials are asking for student data that appears to violate privacy protections provided by the Family Educational Rights and Privacy Act (FERPA). There is a need to review and balance concern for privacy with its interest in information, and provide institutions with clear guidance on what is both legal and appropriate. Technological advances offer greater potential for institutions of higher education to achieve efficiencies and promote student learning. We endorse the establishment of a $50 million competitive grant program to assist technology-related curriculum, faculty development, teacher education, and systems development activities.

Likewise, technological advances offer the opportunity for great use of electronic dissemination of information. For example, the law should be amended to clarify that institutions can use electronic means to meet the requirement to disseminate voter registration forms to students and to provide for the electronic dissemination of title II information. Language making both of these changes was included in the FED UP legislation approved by the House last year.

3.(A) HOW CAN THE HEA PROGRAMS BE CHANGED TO ELIMINATE ANY UNNECESSARY BURDENS ON STUDENTS, INSTITUTIONS, OR THE FEDERAL GOVERNMENT, YET MAINTAIN ACCOUNTABILITY OF FEDERAL FUNDS?

Institutional accountability measures must recognize the diverse missions of our nation's post-secondary schools and the historic role of accreditation. Federal "one size fits all" measures will not work. Independent colleges and universities are accountable to their individual governing boards for policy decisions on mission, educational philosophy, and priorities for the allocation of resources; to local, state, and federal governments to insure the proper expenditure of public funds; and to peer review for judgments about whether learning resources and policies are appropriate to meet the stated mission of the institution. The freedom of students to choose from the diversity of colleges and universities is the key to keeping higher education strong. In the end, informed student choice is the most demanding source of accountability for institutions. For information on current college accountability measures, click on the upcoming accountability icon on the NAICU Web site home page, http://www.naicu.edu/.

Certainly, appropriate accountability for federal education programs is a legitimate federal responsibility. Taxpayers invest billions of dollars each year in the federal student aid programs. Federal policy makers have a responsibility to ensure that this money is spent wisely.

However, accountability measures must have a clear purpose related to the federal role and produce information that is both understandable and useful in measuring the effectiveness of the federal programs. Reporting and disclosure requirements unrelated to student aid are overwhelming colleges and adding significantly to institutional program costs. Since the early 1990s, the federal government has put new reporting and disclosure requirements on colleges. If colleges do not provide these reports and information, their students will not be eligible for federal student aid. Colleges receive no financial assistance to carry out these mandates. The reports are overly complex, costly to produce, and not always understandable to the parents and students they were designed to serve. Government and higher education must work together to develop a system of appropriate accountability that responds to legitimate governmental needs for oversight and public needs for information, while enhancing institutional diversity and creativity.

We have several specific proposals to address these concerns:

  • The Secretary should carry out his obligation to review the HEA regulations by establishing four expert panels to review the different types of regulations tied to the Higher Education Act. Review of all the Title IV regulations is a necessary but daunting task. To make it more manageable, we would propose the creation of panels to review regulations in their areas of expertise: financial aid operations, institutional eligibility, regulations unrelated to Title IV operations, and dissemination of information requirements. The panels would identify goals to be achieved by the regulations and recommend improvements. For additional detail and proposed legislative language, see http://www.naicu.edu/updates/HEA%20ReauthProposalSummary.shtml.

  • Establish an independent Higher Education Regulatory Burden Relief Commission, to recommend changes in, or repeal, unnecessarily burdensome HEA statutory and regulatory requirements. The commission's recommendations would have to be approved or rejected as a whole by the Congress. Despite efforts by some members of Congress to limit burdensome regulations, it remains difficult to fend off new requirements, especially those based on a tragic event and advanced by a single-interest group. As a result, these requirements continue to accumulate with little attention given to their overall benefit relative to their cost, their usefulness in promoting positive outcomes for students, or their continued relevance. Increasingly, institutions are being forced to divert resources from their primary mission of educating students in order to gather data and process paper which is marginal to that mission. An independent body, modeled after the military base closing commission, could provide a thorough objective review and make impartial recommendations.

  • The secretary should give institutions an annual list of HEA reporting and disclosure requirements. The Secretary can help institutions avoid inadvertent errors in meeting reporting and disclosure requirements by providing them with an updated list each year of all information pertinent to fulfilling the requirements. Such a list would be extremely useful to institutions in assigning responsibility for and monitoring progress toward the development and preparation of these reports. The availability of this annual list will also enable institutions to conduct self-audits of their compliance with multiple and varied reporting and disclosure requirements. The list would contain report due dates, recipients, method of transmittal, content, necessary citations, and any other required information. This should help institutions keep track of the many HEA reporting and disclosure requirements and avoid errors. For additional detail and proposed legislative language, see http://www.naicu.edu/updates/HEA%20ReauthProposalSummary.shtml.

  • Give institutions of higher education at least 270 days between the publication of final regulations and initiation of the related data collection. Adequate time must be provided for institutions to develop new systems to collect data, analyze the data, and prepare reports before public disclosure or submission of the data. This proposal is based on the successful master calendar for financial aid regulations. For additional detail and proposed legislative language, see http://www.naicu.edu/updates/HEA%20ReauthProposalSummary.shtml.

  • Allow institutions to use alternative methods of calculating the completion or graduation rates of students who leave school to serve in the armed forces, on official church missions, or with a recognized foreign aid service of the Federal Government. Institutions of higher education should be permitted to use alternative methods of calculating the completion or graduation rates of students who leave school to serve in the armed forces, on official church missions, or with a recognized foreign aid service of the Federal Government. Currently, such students may be excluded entirely from this calculation, and this would continue as an option. We believe the institution should also have the option to include these students under a method of calculation that excludes the period of their military, church mission, or foreign aid service. This revision of the law would make it possible for institutions facing this situation to develop more accurate and useful completion or graduation rate information. For additional detail and proposed legislative language, see http://www.naicu.edu/updates/HEA%20ReauthProposalSummary.shtml.

  • Limit disclosure requirements to those that are meaningful and relevant to students and families, where benefits clearly justify the cost of producing and disseminating the information. Disclosure requirements should be realistic in scope and schedule, and should accommodate the diversity of higher education institutions. It is also important to protect the privacy of individuals whose records may be included in databases on which disclosures are based.

  • Limit regulations to the scope of the statute, narrowly construed, and reflecting the intent of Congress.

  • Develop regulations in consultation with the higher education community, both through formal negotiated rulemaking and less formal consultation.

  • The area of distance education is one where particular care must be taken to balance innovation with appropriate oversight. Distance education is being developed by schools in all sectors and offers a new and innovative means of delivering higher education. Much has been learned about distance education since the last reauthorization. Many early programs have shut down, while others have expanded. For most colleges and universities, the student aid rules that eliminated the program scandals of the late 1980s have not proven a barrier to promoting distance education or other innovations in time and place. To assure that these innovations can be continued without opening new opportunities for abuse of the student financial aid system, we would propose replacing the Distance Education Demonstration Program with a permanent Distance Education Program. The new program would permit the Secretary to waive selected provisions of law and regulation that impede the expansion of distance education programs. To prevent fraud and abuse, participants could continue in the program only as long as they complied with program integrity standards. For additional detail and proposed legislative language, see http://www.naicu.edu/updates/HEA%20ReauthProposalSummary.shtml.

  • The Performance Based Organization (PBO) created in 1998 has made significant improvements in the management and delivery of federal student aid. Interactions between the Department and outside parties involved with student aid now run far more smoothly, and the effort to develop a seamless system is showing results. We do not believe that major changes are required and would oppose any effort to lessen the effectiveness of the PBO.

    (B) HOW CAN PROGRAM REQUIREMENTS BE SIMPLIFIED, PARTICULARLY FOR STUDENTS?

    Need analysis should be modified to promote better use of the simple need test, remove inappropriate questions (such as the drug questions), and reduce the number of State questions. The Secretary should develop a separate form modeled after the 1040A or 1040EZ tax forms to make better use of the "simplified needs test" and "automatic zero" provisions.

    Provisions prohibiting persons convicted of drug offenses from receiving federal student financial assistance should be repealed. This is an inequitable and flawed policy.

    4. (A) HOW CAN WE BEST PRIORITIZE THE USE OF FUNDS PROVIDED FOR POSTSECONDARY EDUCATION AND THE BENEFITS PROVIDED UNDER THE HEA PROGRAMS?

    NAICU believes that Pell grants should remain the foundation of a student's aid package. They should remain need-based, exclude merit components, and be available equally to students at each class level. Additional grant funds should be made available for the poorest Pell families (those with negative EFC).

    SEOG must be restored to its original status to ensure supplemental grant aid for the neediest Pell students. Too few of these families receive the aid they need. Increasing support for SEOG is an economically sound way to ensure the poorest Pell recipients receive more grant aid without having to increase grants for all Pell students.

    (B) HOW CAN THE SIGNIFICANT LEVELS OF FEDERAL FUNDING ALREADY PROVIDED FOR THE HEA PROGRAMS BEST HELP TO FURTHER THE GOALS OF IMPROVING EDUCATIONAL QUALITY, EXPANDING ACCESS, AND ENSURING AFFORDABILITY?

    We believe that the student aid programs now in operation are enormously successful in promoting the goals of quality, access, and affordability. These programs are fundamentally sound and should be continued and expanded.

    The campus-based programs should be designated as the "Institutional Partnership" programs. Since these programs require colleges to provide a one-third match to the federal funds they receive, they create a vital partnership between colleges and the federal government in addressing the access problem. These programs should be supported, the institutional funding formulas maintained, and flexibility to transfer funds among the programs increased. We propose FY 2005 funding levels of $1 billion for SEOG, $1.5 bilion for Federal Work Study, and $300 million for Perkins Loan Capital.

    LEAP should be revitalized to ensure that it provides adequate incentives to states to be full partners in helping to address access issues. Recently, a few states have made tremendous strides in ensuring that low-income students have full access to post-secondary education. But many states have decreased their support for low-income students, shutting down state aid programs or diverting resources to merit aid. The authorized funding level of the program should be increased to $200 million in FY 2005.

    Financial aid officer discretion should be maintained in order to assure that individual needs are met in exceptional circumstances. The exercise of professional judgment is an important means for guaranteeing equitable treatment, expanding access, and assuring affordability for students.

    5. ARE THERE INNOVATIVE AND CREATIVE WAYS THE FEDERAL GOVERNMENT CAN INTEGRATE TAX CREDITS, DEDUCTIONS, AND TAX-FREE SAVINGS INCENTIVES WITH THE FEDERAL STUDENT AID PROGRAMS IN THE HEA TO IMPROVE ACCESS TO AND CHOICE IN POSTSECONDARY EDUCATION?

    One area where better integration between federal tax and student aid policy could be achieved is that of Need Analysis. Currently, different types of college savings vehicles receive different treatment under need analysis. As noted previously, much of this disparity exists because many new college savings vehicles were developed since 1992, when the current Need Analysis treatment of assets was incorporated into law.

    The current asset protection allowance under Title IV, which treats funds in traditional savings plans, is a good model for the treatment of funds in college savings plans. With its generous protection allowance and maximum assessment rate of 12 percent, this formula strikes a good balance between rewarding families that save while ensuring that underfunded student aid programs do not become available to those with substantial assets.

    Therefore, we recommend that assets in the various college savings plans be considered under the same category, and in combination with, any funds in traditional savings accounts. While some advocate the removal of assets from any consideration in determining federal need, we believe such a move would undermine the integrity of the federal need analysis system.

    Also, two types of plans-529 savings plans and Coverdale ESAs-- can be transferred among siblings with no penalties. In order to prevent financial strategists from counseling families to shift assets to younger siblings to avoid detection, we recommend that the assets in all dependent children's plans be reported by families. This total could then be divided by the number of children in the family, so that families can reserve adequate funds for the education of younger siblings.

    Finally, the employer contribution to retirement accounts should be removed from the calculation of total income. This money is not available to families. Also, considering the employer's contributions to retirement accounts is not consistent with the disregard of retirement savings in the current need analysis system, nor federal tax policies designed to encourage families to save for retirement.

    For additional details, see http://www.naicu.edu/updates/HEA%20ReauthProposalSummary.shtml.

    6. WHAT RESULTS SHOULD BE MEASURED IN EACH HEA PROGRAM TO DETERMINE THE EFFECTIVENESS OF THAT PROGRAM?

    We understand that the Department of Education has considered completion rates as a means for measuring program effectiveness. In our view, using completion rates or any other single set of measures for this purpose would be ineffective. For example, using six-year graduation rates alone obscures the importance of four- and five-year rates. Institutional rates will vary according to mission and the types of students served. Successfully tracking students who transfer is also problematic.

    Currently, institutions of higher education are evaluated by numerous entities with respect to institutional quality appropriate to their missions. There is enormous diversity in these missions, and the multi-pronged, decentralized approach now in operation has been effective in addressing academic quality issues in this varied environment. No single measure or national standard can possibly capture meaningful information about the academic experience of all students in the wide range of educational settings available to them.

    We do recognize the value of reliable information to students and their families as they select the institutions of higher education most suited to their academic goals. A substantial amount of information about institutions and institutional outcomes is already available from states, accrediting agencies, and other private organizations. We are participating in an effort to compile this information in a form which will be useful to students and their families, and we are developing a web site that makes a variety of accountability information about NAICU institutions readily available to them. We believe that this approach is the best means for providing accurate information about higher education outcomes and assuring informed choices among institutions.

    We also recognize the importance of student persistence and completion. As noted previously, we are recommending the establishment of a national competitive grant program to help institutions of higher education, or consortia, to implement programs to increase persistence and graduation rates of students, particularly high-risk students.

    7. ARE THERE OTHER IDEAS OR INITIATIVES THAT SHOULD BE CONSIDERED DURING REAUTHORIZATION THAT WOULD IMPROVE THE FRAMEWORK IN WHICH THE FEDERAL GOVERNMENT PROMOTES ACCESS TO POSTSECONDARY EDUCATION AND ENSURES ACCOUNTABILITY OF TAXPAYER FUNDS?

    Establish a national competitive grant program to help consortia of institutions of higher education to plan, develop, and implement articulation agreements designed to facilitate the transfer of credit. Approximately one-third of all students will change institutions of higher education at some point during their postsecondary studies. Given the diversity in the programs and missions of these institutions, the transfer of academic credit can become a complicated process. Decisions about the award of academic credit are a fundamental component of any institution of higher education, and those decisions must be made by officials of the institution. Recognizing that joint efforts can facilitate this decisionmaking process, we would propose the establishment of the Articulation Partnerships to Assist College Transfers (Articulation PACT) program, with an initial funding level of $10 million in FY 2005. The three-year, peer-reviewed competitive grants could be used for analysis of courses, technical assistance, development of publications to assist students wanting to transfer credit, development of programs and services, and training. For additional detail and proposed legislative language, see http://www.naicu.edu/updates/HEA%20ReauthProposalSummary.shtml.

    NAICU has developed a number of other positions and proposals which would improve the operation of the Higher Education Act. For additional information, see the reauthorization pages on the NAICU Web site home page, http://www.naicu.edu/.

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    Last Modified: 02/05/2009