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College Affordability in the News: What are the Feds’ Priorities?

July 27, 2016
In the past month, Congress and the U.S. Department of Education (ED) have proposed two major measures that tackle college affordability. The Senate appropriations subcommittee recently approved a bill to restore the availability of Pell Grant funds for students year-round [1]. The ED also released new draft regulations to improve the processes for students seeking debt forgiveness from fraudulent colleges [2]. As a hot button issue in the 2016 election, what do these policies say about where the federal government sees its role in making college more affordable?

By Elaine W. Leigh, PhD’19

Addressing how to pay for college and loan debt, while separate, but related issues, suggests a core focus on the needs of low-income students. And, rightly so. The Pell Grant remains the largest federal subsidy for low-income students to attend college. Students can currently receive up to $5,775 each year to attend degree and non-degree granting institutions. While college costs have risen for all income groups, low-income families have to pay almost four times their share of family income to meet college costs (99% or more of total family income for families making $30,000 or less) compared to higher-income families (26% or less of total family income for families making at least $100,000) [3]. Over the past 20 years, unmet need­ – the financial gap after accounting for grants and family contributions – has more than doubled for full-time undergraduates in the lowest income quartile. Meanwhile, unmet need has shrunk for students in the highest income quartile [3].

Yet, while Pell Grants have helped millions of students attend college, the program has failed to close enrollment and completion gaps between high and low-income groups [4] [5]. Over the past 45 years, the gap in college enrollment between top and bottom income quartiles has only shrunk by 11 percentage points (46% in 1970 to 35% in 2014) [3]. The completion gap between top and bottom income quartiles widened by 4 percentage points (40% in 1970 to 44% in 2014) [3]. Accumulating fewer credits towards a degree, especially for part-time students, also leads to much lower graduation rates [6]. Only 10% of part-time Associate’s degree students and 21% of part-time Bachelor’s degree students ever finish their programs [[6]. By restoring year-round Pell Grants after their initial cut in 2011 [7], an estimated 1 million students [8] could have more funds to take classes, incentivizing on-time completion [9].

By drafting loan debt forgiveness regulations for borrowers, the ED also recognized that low-income students disproportionately attend lower-performing institutions, particularly in the for-profit sector. Of the 26,603 claims for loan debt relief from colleges, 87 percent came from students who attended the for-profit chain, Corinthian Colleges [10]. Low-income students, defined by Pell Grant receipt, are more than three times as likely to attend for-profit colleges as non-Pell Grant recipients (16% compared to 5% based on available 2013 data) [3]. Low-income students who attend for-profit institutions also tend to borrow the most to fund their education [11]. To date, nearly 3,800 students defrauded by such schools received relief, totaling about $70 million from ED [10]. The extra mechanisms implemented by the ED to relieve students of crushing debt from poor quality institutions is a win for consumer protection and for the protection of our most vulnerable college students.

These measures also recognize the importance of holding institutions accountable to their students. Institutions face mounting pressure to accommodate more students, raise completion rates, and meet performance metrics to assess their quality. Reinstated Pell Grant funding will help all institutions and especially those who serve the most low-income students. Schools will need to ensure necessary programming and services are in place for students to take full advantage of attending all year and accumulating the appropriate credits. The subsidy can shorten the time to degree and has the potential to raise completion rates. Institutions will need to ensure students understand their options and should use data to alert those close to degree completion about the availability of new funds.

Additionally, ED’s debt relief actions are occurring simultaneously with their proposal to terminate federal recognition of the Accrediting Council for Independent Colleges and Schools (ACICS), a major accreditor of for-profit colleges [12]. Such a move suggests much stronger oversight for both the institutions and those who oversee them. This change puts the accreditation status of 766 campuses at risk [12], but it also protects future students from schools that have the worst combined of any major accreditation agency [13]. With much of the current focus on for-profit colleges, the ED is taking unprecedented levels of federal action on overseeing accrediting bodies, worrying some that folding ACICS will potentially create chaos for students [14].

Issues around year-round Pell Grant and loan debt relief measures will continue to be hot topics in the college affordability debate. Congress is paying attention to how financial aid can be leveraged to encourage college completion. The ED is taking both proactive and preventative measures to protect consumers of higher education. By focusing on highest-need students and protecting their interests, federal priorities are on the right track before and after the elections.

 

References

  [1] A. Smith, “Senate Bill Backs Year-Round Pell,Inside Higher Ed, June 8, 2016. [Online]. Available: https://www.insidehighered.com/news/2016/06/08/senate-panel-backs-year-round-pell-grants-and-boost-nih-funding. [Accessed June 29, 2016]. 

 

  [2] P. Fain, “Wiping Out Debt,” Inside Higher Ed, June 14, 2016. [Online]. Available: https://www.insidehighered.com/news/2016/06/14/draft-federal-rules-debt-forgiveness-please-consumer-groups-anger-profits. [Accessed June 29, 2016].

 

  [3] M. Cahalan, L. Perna, M. Yamashita, R. Ruiz, and K. Franklin, “Indicators of Higher Education Equity in the United States: 2016 Historical Trend Report,” Pell Institute and PennAHEAD, 2016. [Online]. Available: http://www.pellinstitute.org/downloads/publications-Indicators_of_Higher_Education_Equity_in_the_US_2016_Historical_Trend_Report.pdf. [Accessed June 29, 2016].

 

  [4] W.R. Doyle, “A new partnership: Reshaping the federal and state commitment to need-based aid,” The Committee for Economic Development, 2013. [Online]. Available: http://files.eric.ed.gov/fulltext/ED544377.pdf. [Accessed June 30, 2016].

 

  [5] Rethinking Pell Study Group, “Rethinking Pell Grants,” College Board, 2013. [Online]. Available: http://media.collegeboard.com/digitalServices/pdf/advocacy/policycenter/advocacy-rethinking-pell-grants-report.pdf. [Accessed June 30, 2016].

 

  [6] J. Johnson and K. Zaback, “On-Time Pell: Maintain Access, Ensure Completion,” Complete College America, June 2016. [Online]. Available: http://completecollege.org/wp-content/uploads/2016/06/PellBriefFinal.pdf. [Accessed June 30, 2016].

 

  [7] J. Delisle and B. Miller, “Year- Round Pell Grants: What You Know is Probably Not True,” New America, January 21, 2016. [Online]. Available: https://www.newamerica.org/education-policy/edcentral/yearroundpell/. [Accessed June 30, 2016].

 

  [8] United States Senate Committee on Appropriations, “FY2017 Labor, HHS & Education Appropriations Bill Cleared for Senate Consideration,” June 9, 2016. [Online]. Available: http://www.appropriations.senate.gov/news/majority/fy2017-labor-hhs-and-education-appropriations-bill-cleared-for-senate-consideration. [Accessed June 30, 2016].

 

  [9] A.P. Kelly, “Why Republicans and Democrats Should Come Together on Pell Grant Reforms,” American Enterprise Institute, June 14, 2016. [Online]. Available: https://www.aei.org/publication/why-republicans-and-democrats-should-come-together-on-pell-grant-reforms/. [Accessed June 30, 2016].

 

  [10] F. Zamudio-Suarez, “Education Dept. Releases Final Report on Corinthian Loan Discharge,” The Chronicle of Higher Education, June 29, 2016. [Online]. Available: http://chronicle.com/blogs/ticker/special-master-delivers-final-report-on-corinthian-loan-discharge. [Accessed June 30, 2016].

 

  [11] S. Rigg and R. Darolia, “Different degrees of debt: Student borrowing in the for-profit, nonprofit, and public sectors,” Brown Center on Education Policy, June 2016. [Online]. Available: http://www.brookings.edu/~/media/research/files/papers/2016/06/23-student-borrowing-cellini-darolia/cellini.pdf. [Accessed June 30, 2016].

 

  [12] P. Fain, “Getting Tough With a Gatekeeper,” Inside Higher Ed, June 16, 2016. [Online]. Available: https://www.insidehighered.com/news/2016/06/16/education-department-recommends-eliminating-national-accreditor-many-profit-colleges. [Accessed June 30, 2016].

 

  [13] B. Miller, “ACICS Must Go,” Center for American Progress, June 6, 2016. [Online]. Available: https://www.americanprogress.org/issues/higher-education/report/2016/06/06/138826/acics-must-go/. [Accessed June 30, 2016].

 

  [14] D. Lederman, “Accreditor, and Accreditation, on Trial,” Inside Higher Ed, June 13, 2016. [Online]. Available: https://www.insidehighered.com/news/2016/06/13/much-stake-acics-and-accreditation-upcoming-federal-review. [Accessed June 30, 2016].

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