This fall, the Higher Education Act, the law governing federal financial aid for college students, turns 50. It was born in an era when “mid-century modern” was a contemporary design trend, and color television was still considered a luxury. How times have changed.
Over the past half-century, federal financial aid has impacted millions of college students. Unfortunately, it has failed to keep pace with changes in education. The aid system today often works against students who may be attempting to graduate quickly, utilize emerging education models, or simply balance school with busy modern life.
Congress is expected to reauthorize the Higher Education Act this year. When it does, lawmakers have a historic opportunity to overhaul federal financial aid to reflect the way students attend college in the 21st century.
A modernized system would link federal aid to students’ actual educational progress and allow them to plan for an entire academic program — not just one year at a time.
Today’s federal aid system has three fundamental problems.
First, it’s extremely inefficient. The method for awarding aid is only loosely tied to a student’s educational progress. This enables students to over-borrow and over-consume grants. That’s bad for both students and the taxpayers who fund federal aid.
Consider this hypothetical scenario depicting today’s system. All else being equal, David, a traditional full-time student who enrolls in 24 credits, can receive the same annual amount of federal Pell grant funding as Nancy, who takes 30 credits. Yet Nancy is completing approximately one-quarter of her program, while David is completing just one-fifth. Over the course of an academic program, that represents a disparity of nearly $6,000 in grants alone.
The situation is worse for federal student loans. Half-time students can and often do borrow the same amount annually as full-time students. Perhaps surprisingly, higher education institutions have little authority to restrict a student’s use of federal loans.
Second, federal student aid is confusing. The application process, which has garnered several calls for simplification in recent months, is only the first challenge.
The real difficulty begins with understanding aid eligibility and how it translates to an entire educational program that could span years.
Imagine purchasing a new car — but only knowing how to pay for it over the first nine months of ownership. That’s how the current system functions.
Third, the federal student aid system has not kept pace with the way today’s students attend college. Less than one-third of students are considered “traditional” — meaning recent high school graduates who enroll full-time immediately, depend on parents for financial support, and either have part-time jobs or do not work during the school year.
Today’s reality is that more than two-thirds of students display at least one “nontraditional” attribute. And that doesn’t account for students enrolled in emerging educational models, such as programs based on competency rather than seat time.
Federal Pell grants, meanwhile, are not available to students who wish to study “year ‘round.” That penalizes students looking to accelerate their progress toward graduation. Federal policy should encourage timely completion, not present a barrier.
We can solve these problems by linking federal financial aid eligibility to a student’s actual educational progress, and by enabling them to plan for the entire academic program. This would also encourage traditional students to graduate more quickly, since aid would increase along with course load.
This common-sense approach is far more straightforward and equitable than the current system. It presents a unique opportunity to positively impact students simply by using the resources we have more efficiently.
I recently packaged these ideas into a proposal called the Student Aid Modernization Initiative (SAMI), which was chosen by a panel of judges and financial aid professionals attending the National Association of Student Financial Aid Administrators annual conference as the inaugural winner of “The Big Idea: NASFAA’s Policy Challenge.”
With input from higher education researchers and NASFAA officials, SAMI will be further developed in the coming weeks. But lawmakers can begin considering its key tenets right away, as they prepare to reauthorize the Higher Education Act.
Such reforms will transform federal student aid for today’s students — and preserve it for another 50 years.
• Marcus Szymanoski is manager of training and communications at DeVry Education Group’s regulatory affairs division.