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Federal Watch: Higher Education Has Changed. Will the Higher Education Act?

7/1/2013

 

 

The perennial joke about any reauthorization of the Higher Education Act (HEA) is that it’s like a Russian novel: It’s long, it’s boring, and by the end, everyone winds up dead. But as yet another HEA reauthorization rolls around, it’s a good bet that many of us will think there’s a fair amount of truth in that old chestnut.

Since the original act was created in 1965, the law has been rewritten eight separate times, and for all but one of those reauthorizations, the process started one year and concluded the next. The last reauthorization, however, turned out to be an epic forced march, extending from 2003 to 2008. And given the current partisanship in Washington over even the most mundane matters, we can expect another long haul this time.

It’s impossible to tell what issues will ultimately dominate the reauthorization discussions, and even harder to project what a final bill will look like. Certainly there are some issues that we can see right now, such as affordability. But nobody knows how the process will unfold or what issues will become the central focus of congressional attention.

At this point, perhaps the only thing we can do with much certainty is to identify a few key changes in higher education that are likely to shape much of the discussion and debate.

First, the student population served by federal programs continues to change dramatically.

When Congress enacted the HEA in 1965, the vast majority of the nation’s 7.4 million students were 18 to 24 years old, predominantly dependents who attended higher education full time, lived in campus housing, and sought a bachelor’s degree. Today, that demographic profile represents just 15 percent of the nation’s 21 million students. They are much more likely to be older, have a family, be financially independent, or work part time. They may be pursuing a four-year degree, seeking short-term training that leads to a certificate, or taking just a few specific courses.

Second, “completion” or “graduation” has become a key goal for federal policymakers.

Since its inception, the central focus of the HEA has been access: opening the doors of colleges and universities. In recent years, however, discussions have focused far more on graduation or completion, suggesting that a new federal priority will drive policy debate in the future. Designing policies around a completion metric is complicated because they involve complex issues regarding the role the student plays in achieving success versus the role the institution plays. This is not to say that we shouldn’t have a vigorous debate about what we want federal student aid to accomplish. Nor is it to suggest that graduation is an unreasonable goal to pursue. But we should do so in a way that complements the historic purpose of federal student aid without abandoning or retreating from it.

Third, the states have largely dropped the ball. Federal student aid policy was built upon the premise that states would support public higher education and keep tuition affordable, freeing the federal government to ensure equal educational opportunity and a measure of choice in the selection of a college.

This assumption has fallen by the wayside as state governments have slashed funding for public colleges and universities and sharp tuition increases have followed. Since 80 percent of American college students attend public institutions, this has meant much higher college costs for millions of families. The dramatic growth in federal financial aid expenditures has helped insulate some families from these price hikes, but almost all families are still paying more. Unfortunately, the federal government appears to have few tools available to ensure that states continue to play their historic role in making higher education available at a modest price. There is a real question as to whether the federal government, acting virtually alone in the student aid policy sphere, has the resources to help keep college affordable.

Fourth, the universe of postsecondary institutions has become much more complex and this has complicated the design of federal policy.

In 1965, there were slightly more than 2,000 colleges and universities in the United States. Today, there are more than 6,000 two- and four-year, public and private nonprofit colleges; research universities; for-profit career colleges; and online as well as brick-and-mortar schools. New learning modalities such as massive open online courses (MOOCs), competency based instruction, and prior learning assessment are continually changing the world of postsecondary education. If educators have trouble coping with this constant change, one can only imagine how government officials will fashion appropriate public policies.

Fifth, the process for determining which institutions are eligible to participate in federal student aid programs has grown even more dysfunctional and incoherent.

Historically, the HEA has relied on the so-called triad of states, the federal government, and regional (and national) accrediting agencies to ensure proper stewardship of federal resources. Unfortunately, the state and federal roles have never been fully realized, so accreditation has become overwhelmed with added and—some would say—inappropriate responsibilities. Instead of being a barrier to federal regulation, accreditation has become a portal to it. Accreditation will remain a central element of federal higher education policy, but the key question for reauthorization will be whether it can avoid becoming a regulatory extension of the U.S. Department of Education.

Sixth, every reauthorization results in an exponential increase in federal record keeping, reporting, and regulatory requirements.

Until the early 1990s, federal student aid regulations were almost entirely designed to ensure that campuses would carefully manage federal funds. But in the 1990s, Congress began to impose regulations for a huge variety of purposes totally unrelated to student aid. While these regulations may address worthy things, they also impose compliance costs, and someone must pay for them. Moreover, even the most conscientious campus can never be sure that it is in full compliance with all the rules, regulations, and “sub-regulatory guidance” published by the U.S. Department of Education.

Seventh, “simplification”—reauthorization’s holy grail—remains elusive.

Promises to simplify federal student aid are as common as promises to simplify the tax code—and about as likely to actually occur. The reasons are twofold. First, simplification can be expensive. It would be easy to streamline the Free Application for Federal Student Aid (FAFSA) by simply asking fewer questions. But doing so would inevitably make more individuals eligible for aid and increase the cost of the federal programs. Second, efforts to streamline federal student aid often run headlong into a desire to create more options to help students and families. We could, for example, simplify student loan repayment by putting all borrowers into a single repayment plan. But doing so eliminates options that would be of interest to at least some borrowers. This is not in any way to suggest that “simplification” is undesirable. Rather, it illustrates a paradox: Simplification in federal student aid is very complex.

Eighth, experience has taught us that federal policy creates incentives and that individuals and organizations will respond to them.

In the 2008 HEA reauthorization, to enable students to shorten their time to a degree, Congress made it possible for students to receive a Pell grant to attend school year-round. So many students responded to this incentive that more than $4 billion per year was added to the cost of the program. Unfortunately, that increase proved financially unsustainable, and Congress reversed itself in 2010. It is a pattern we have seen before: Public policy creates incentives and people act accordingly. It’s vitally important that we understand those incentives before changing public policies, because we will get what we ask for.

Not all of these observations will be addressed in the upcoming reauthorization. Indeed, not all of them can be addressed by federal policy. But all of them will shape the public policy discussion and influence the outcome. Stay tuned.

 

Terry W. Hartle is ACE’s senior vice president for Government and Public Affairs.

 


 

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