Catching Up on HEA: An Update for #SAPros & #SAadvocates

It’s been a busy week on the Hill with several hearing related to reauthorization of the Higher Education Act (HEA), initial due for reauthorization in 2013, in both the House and the Senate. Policymakers from both parties generally agree with NASPA’s overarching priorities related to HEA, though they differ in where they place the emphasis for why and how best to accomplish them. These differences become apparent in the details, which matter in any legislation, but with legislation as broad and far-reaching as HEA, there are a lot of details. Both Senator Alexander (R-TN), Chair of the Senate Health, Education, Labor, and Pensions Committee (HELP Committee), and Representative Bobby Scott (D-VA), Chair of the House Education and Labor Committee (Ed & Labor Committee)[1], have recently addressed the issues they expect to include in comprehensive HEA reauthorization bills to be introduced in spring 2019.

Senator Alexander’s Priorities for HEA

In early February 2019, Senator Alexander spoke at numerous events outlining his priorities for HEA Reauthorization in the 116^th Congress. Many of the proposals the Senator discussed are similar to those he has raised in the past[2], though he seems to have softened on removing or significantly weakening several regulatory protections in HEA the derailed progress on a bipartisan bill in spring 2018. As Senator Alexander has announced that he will not seek re-election in 2020, the 116^th Congress represents his last chance to leave a mark on the nation’s signature higher education legislation.

Simplifying applying for financial aid. In remarks at the American Enterprise Institute, the Senator spoke both about removing unnecessary questions from the FAFSA and about addressing concerns related to the FAFSA verification process. While he has in the past advocated for oversimplification of the FAFSA, suggesting that it could be reduced to two questions submitted on a postcard, the Senator’s remarks indicated that HELP Committee staff have worked with experts in the field to whittle the FAFSA down from its current 108 questions to about two dozen[3]. Another option the Senator mentioned considering would expand the data sharing between the Internal Revenue Service (IRS) and the Department of Education (ED) to import more data needed to complete the FAFSA automatically.

FAFSA verification is a process for checking the accuracy of data submitted by students and their families in order to prevent improper payments. According to the National Association of Student Financial Aid Administrators (NASFAA), the Department of Education’s Central Processing Services uses a proprietary algorithm to identify up to 30% of all FAFSA applications for verification. The audit-like process must be completed prior to release of any federal aid. Data compiled by the National College Access Network (NCAN) from the 2016-17 aid year show that over half of Pell Grant recipients were identified for verification, suggesting that low-income students, who may also frequently be first-generation students and unfamiliar with the bureaucracy around applying for federal aid, may be disproportionately selected. This level of burden represents a significant barrier for low-income students to access aid, especially in light of data compiled by NASFAA that shows the verification process does not impact most financial aid awards. Fortunately, the second proposal Senator Alexander mentioned considering for simplification of the FAFSA – increasing the data sharing capabilities between the IRS and ED – is recommended by NASFAA as a way to address many of the issues with the current verification process as well.

Simplifying student loan repayment and creating an automatic payroll deduction for loan repayment. Senator Alexander also discussed a proposal for only two repayment options for federal student loans, both of which would involve an automatic deduction from borrowers’ paychecks. Borrowers would be required to either enter a standard 10-year repayment plan, where an equal payment would be deducted from every paycheck in an amount necessary to repay their loans within 10 years, or an income-based repayment plan that would automatically deduct a set percentage of a borrower’s disposable income. Senator Alexander specified that the deduction may be $0 for borrowers with no disposable income and that such a situation would not adversely affect their credit ratings.

Many have questioned the requirement of payroll deductions for student loan payments, citing the complexity of accurately determining what constitutes a borrower’s disposable income as well as concerns about forcing borrowers to prioritize repayment of lower-interest-rate-bearing student loan debt before higher-interest-rate consumer debt. Concerns related to inflexibility of a payroll withholding system for workers with seasonal or other income that fluctuates, as is common in the increasing gig economy, have also been raised. All of which says nothing of the additional infrastructure and data sharing that would be necessary to allow employers to adequately implement a payroll deduction of this type. Until additional details about the proposals are available, including the formula that might be used to determine a borrower’s disposable income, it will be difficult to accurately determine the potential impacts on individuals’ budgets.

Replacing the gainful employment debt-to-earnings metric with repayment rates for all programs. Senator Alexander proposed addressing more comprehensive accountability for institutions of higher education by “expanding and simplifying” the gainful employment debt-to-earnings ratio metric with program-level loan repayment rates for all programs. While the existing gainful employment rule, currently proposed to be rescinded by Secretary DeVos, is undoubtedly imperfect, NASPA joined comments submitted by the American Council on Education (ACE) opposing the rescission due to the possible direction of Pell funds to programs that demonstrate poor returns for students. It’s unclear, however, how or whether replacement of the rule’s key metric with repayment rates would improve either institutional or program-level accountability. In addition to the myriad complexities of calculating accurate and meaningful repayment rates, summarized in a July 2018 paper from the Center for American Progress, there remain questions about how the data would either allow consumers to make more informed decisions or about how they would allow for greater oversight by ED. While program level repayment rates make sense when the connection between an educational program and subsequent employment paths is clear, as is the case for many job-training programs, it’s less clear how useful they would be as a tool for evaluating a liberal arts degree, which may lead to many career paths.

Representative Scott’s Priorities for HEA

Representative Scott has been less specific on the priorities of the House Democrats in seeking HEA reauthorization.[4] In Fall 2018, as Ranking Member of the House Committee on Education and the Workforce, Representative Scott introduced the Aim Higher Act, which was comprised of several Democrat proposals related to HEA and combined into a single omnibus bill. At an event held by Inside Higher Ed in February 2019, Representative Scott spoke about needing an HEA reauthorization that would make sweeping changes rather than simply applying tweaks to existing legislation or regulations. He noted that current financial aid programs were insufficient to meet the needs of today’s students, who increasingly struggle to meet basic food, housing, and childcare costs. Among the more broad-based reforms discussed by Representative Scott is an as-yet-undisclosed package of incentives for states to provide free community college tuition to all students and a state maintenance of effort proposal.[5] Unlike in other federal-state funding partnerships, the federal government’s contributions to higher education do not rely on any sort of state-matching requirement. As states have faced tighter and tighter budgetary constraints over the years, their support for higher education has dwindled. Representative Scott has spoken of the need to re-incentivize states to increase their investments in higher education.

As hearings continue in both chambers related to HEA reauthorization, more and more details will come clear. NASPA’s policy and advocacy team will track the conversation and provide updates throughout the year, so check back with the RPI blog frequently!