Federal Issues Index | Year-End Report Index
Important Federal Resources Index | Committee Information

End of the Year Report
Important Federal Resources

A Reauthorization Perspective
The MASFAA Executive Council accepted the following position at its April Meeting. The Federal Issues Committee reviewed major higher education proposals, including NASFAA’s Reauthorization Recommendations, Fed-Up, etc., and based its recommendations on issues that promoted access, opportunity and success for students.

The Federal Issues Committee did not see a need to further survey the association, because the recommendations from NASFAA and other key higher education agencies thoroughly sought input from the financial aid community. In addition, the committee reviewed recommendations from other sources and sought to suggest recommendations that reflected a common theme. As a result, the recommendations are those that reflect a consensus among the committee and the 2003 MASFAA Executive Council.

Priority Issues & Recommendations for the Reauthorization Of the Higher Education Act
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.

Mission
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.

Introduction
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.

Presently, the Reauthorizations Recommendations that have been included in this paper are preliminary and reflect broad areas of consensus within the aid community.

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 show contributes to increased enrollment in our nation’s colleges and universities especially 2-year 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.

Higher education funding moved toward a market-driven financing system during the 1990s, as student aid eclipsed state support throughout the country. In 2001, $23.5 billion of student aid was in the form of grants and $43 billion came from loans. Grants include tax credits that started in 1998 and provided $5billion in 2001. (John B. Lee, “Everything’s Up, “the Greentree Gazette, March 2003)

Student loans and work-study programs made a combined contribution of $3,393 per student to help cover the cost of attendance in 1991-1992. That came to $4,576 per student in 2001-2002, including tuition tax credits that came into play in 1998-1999. The immediate cost of attending college has been reduced. However, student loans must be repaid—the reduction is a delayed expense. (Lee)

MASFAATitle IV Share
MASFAA colleges and universities awarded over 1.4 billion dollars in Federal Pell Grants, to well over 729,000student, during the award year 2000-2001. The average Federal Pell award was $1,900 in the MASFAA region. Subsidized Student Loans were awarded to over 992,000 in our region, totaling over four billion dollars. The region’s average subsidized loan was $4,236 in 2000-2001.

All of our institutions could benefit from more financial aid, particularly in the form of grants, regardless of type of institution. Research has shown us that increasing aid provides more immediate benefits to private institutions than to public colleges and universities. However, it is fair to say that endowments may not be as lucrative or forthcoming due to the economic down slope.

Public colleges lack the flexibility to set tuition rates with student aid policies that can generate maximum income to the institution. Low-tuition community colleges are the most constrained. Historically they favor low tuition and most of their students attend part-time and are not eligible for significant awards. (Lee)

Public institutions have been tracking upward. The College Board’s Trends in College Pricing 2002 shows public four-year college tuition has increased by 60 percent between 1993-94 and 2002-03, while community colleges increased by 38 percent. The average public 4-year public college charges just over $4,000.00 tuition and community colleges are close to $1,750, still low in comparison to the average $18,275 for private colleges.

In his article Lee points out and MASFAA concurs that public student aid programs were created to improve access for low-income students and expand educational options for middle-income student. He cautions that these goals may be displaced as student aid expands as the dominant higher education mechanism. An increasing share of aid now goes to middle and upper income students.

In a broad sense, the recommendations brought forth here are about putting more money into the hands of needy students. If the recommendations were implemented, Congress would ensure access and opportunity in a more efficient and effective easy by simplifying the process, and providing regulatory relief for the professional that administer those funds.

MASFAA’s key areas of importance are similar to other higher education agencies and associates, in that we believe that HEA themes should center on:

• Access and choice in higher education;
• Expanding access to higher education for low-income students by increasing grant aid and support for early intervention programs;
• Effectiveness, efficiency and integration of programs;
• Persistence and retention and
• Institutions should be accountable to students by ensuring that high quality information is available to them.

Recommendations to improve access, promote opportunity, ensure affordability and encourage student persistence with the framework of the HEA:

• Change the Pell Grant from a discretionary fund to a true entitlement program. The Pell Grant is the “floor” of the financial aid package for needy students. 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 debt, 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 student 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.
  
  
• 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 student 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.
  
  
• 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, in turn, we recommend also an increase in the Aggregate Loan limits to match 5 years of full loan eligibility.

MASFAA’S Recommendations for changes to the existing HEA provisions will increase efficiency and effectiveness in financial aid programs.

• Increase support for the Federal Supplemental Education Opportunity Grant (FSEOG). With additional federal funding, this important grant program could help low income students pay for more of their college education with grants instead of loans. 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 FSEOG could be transferred to Federal Perkins or Federal CWS. 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 (R2TIV) 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.
  
  
• Support student withdrawals after 50% point in the payment or enrollment period; the student has earned 100% of Title IV.
  
  
• Repeal student loan fees. The up-front fees were approved in 1981 as a “temporary” deficit reduction measure and, in the intervening years, have become an unwelcome element of student loan obtainment. (Title IV, Part A, Subpart 2)
  
  
• 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 tax credit as currently structured for periods of enrollment would be better served as direct funds to students—transfer these dollars to Pell or campus-based funds. (IRS CODE)
  
  
• 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. The other allows colleges to disburse a loan in s single installment for short-term programs. (Title IV, Part B, Section 428G(a)(3) AND (B)(1))
  
  
• Increase the authorization level for the Federal Perkins loan Program. The Perkins Loan program continues to be an exceptional value because it helps to bridge the gap of college affordability. (Section 464)
  
  
• 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.
  
  
• 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.
  
  
• Eliminate the requirement to distribute voter registration materials. Like the drug-related provision, this provision should not be a requirement in the HEA. This is an unfunded mandate.

Summary
The Midwest Association of Student Financial Aid Administrators is pleased to have had the opportunity to give input into the reauthorization of the Higher Education Act. It is our hope that the gateways to education will be widened by the aforementioned recommendations, thereby allowing open access to education and success for more students.

By these recommendations we have demonstrated our position of putting more money into the hands of needy students, promoting access and opportunity in a more efficient and effective way by simplifying the process and providing regulatory relief for the professional that administer those funds.