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Considerations for Lycoming College and Independent Higher Education
In this posting, I will again turn my attention to the impact of public policy deliberations upon private higher education and Lycoming College. At present, both the House of Representatives and the Senate have begun the process of rewriting the Higher Education Act (HEA). First enacted in 1965, HEA provides the framework for both federal assistance to citizens seeking to pursue higher education and federal regulation of the education sector. Since its enactment, HEA has been revised on eight occasions, but not since 2008.
The current reauthorization is important in part because HEA is the mechanism that authorizes the federal grants, loans and work-study opportunities that help families pay for higher education. In 2016-17, the federal government provided $123 billion to about 13 million students. Federal student loans at nearly $94 billion composed the largest element of this support while grants totaled $28 billion and work-study added another $1 billion. It is also important to note that there is little support for the idea that increased federal student aid results in higher tuition; three bipartisan administrations have issued reports disputing this theory. Rather, since its inception in 1965, the primary objective of HEA has been expanding access to a college education.
Efforts currently underway in both the House and Senate could substantially alter the way federal financial aid is provided and the nature of federal regulation and, accordingly, meaningfully impact Lycoming College and its students and families. The Education and the Workforce Committee of the House has already advanced a bill called Promoting Real Opportunity, Success and Prosperity through Education Reform Act, or PROSPER. As I will outline below, this bill contains several provisions that would adversely impact Lycoming College and the private higher education sector.
The process in the Senate is less advanced. The Health, Education, Labor and Pensions Committee (HELP) has held four hearings to address themes and ideas and request feedback from higher education stakeholders. The Chair, Sen. Lamar Alexander (R-TN), and Ranking Member Sen. Patty Murray (D-WA) have indicated a desire to advance a bipartisan bill this spring. Hearings have focused on financial aid simplification and transparency, a preferred element of reauthorization for Alexander, as well as access and innovation, accountability to taxpayers and improving college affordability.
Alexander and other legislators have been advocating for a “one loan/one grant” system of federal financial aid on the grounds that the system requires simplification to be more user-friendly. This step would likely result in the preservation of Pell Grants, which are the cornerstone of federal student aid programs, but lead to elimination of campus-based programs such as the Federal Supplemental Educational Opportunity Grant (SEOG) and Perkins loans that are also important tools for financial aid offices trying to find ways of meeting student financial need. For example, the SEOG program allows campuses to review and target additional grant aid to the most at-risk students by looking into their individual circumstances on a case-by-case basis, including many of the financial obstacles students may face that the Free Application for Federal Student Aid (FAFSA) doesn’t consider. In addition, SEOG funds can be used as emergency funding — complementing the gifts that Lycoming receives through annual giving for the “Help Line” and Retention Fund. I have joined other private college presidents in recommending that Congress not pursue the current simplification formula, but instead increase, not cut, funding for campus-based aid, including the Federal Work Study program.
While the simplification proposal is worrisome, Congress has taken and is considering changes to the Pell Grant program that will have a positive impact on Lycoming students. For example, access to year-round Pell Grants have recently been reinstated, and the Prosper Act proposes a “Pell Bonus” for students taking 30 credits annually. Both of these measures will help students stay in school, complete on time, enter the workforce and find financial independence. Building on these positive steps, the National Association of Independent Colleges and Universities (NAICU) has proposed a Pell Plus initiative that would provide even more equitable funding for on-time completers and incentivize colleges to help students complete on time. I have also indicated my support for this Pell Plus initiative.
The HEA reauthorization process is also focused on what some legislators perceive as a loan repayment crisis in the country. Taking steps to ensure that students do not accumulate excessive debt and are able to repay their loans is a laudable initiative, but designing an effective program requires accurate information about student debt loads and the functioning of higher education. For example, much of the legislative anxiety is premised on the idea that many students face debt loads in excess of $100,000 at the time of graduation. In fact, less than two percent of students accumulate debt at this level and those with the highest debt levels overwhelmingly attended for-profit institutions or pursued post-graduate degrees.
In an effort to reduce lending and default rates, the PROSPER Act proposes to hold institutions accountable for student defaults and to do so on a program-by-program basis. This approach is opposed by Murray and Sen. Bob Casey (D-PA), who also serves on HELP. In addition, PROSPER includes provisions that would lower annual and aggregate loan limits for parents and graduate students as well as one that would eliminate the interest subsidy that middle and lower income students currently enjoy (students are not charged interest as long as they remain in school).
All of these provisions could negatively impact Lycoming College and its students and their families. The idea of holding colleges accountable for graduates defaulting on loans on a program-by-program basis would lead to an enormous regulatory burden in tracking and then having differential standards governing student loan eligibility. Moreover, its underlying principle that colleges should charge less for majors where more graduates default is antithetical to the liberal arts ethos that encourages student to pursue their intellectual passions and recognizes that graduates of liberal arts colleges often find employment in sectors far removed from their majors.
Leaders in private higher education are also concerned that lowering annual and aggregate federal loan limits will have unintended consequences. This provision could force many students and parents to turn to the private market for loans (which typically charges higher interest rates) and could also make it impossible for some students to attend college. Similarly, there is great concern about eliminating the subsidy because it would increase loan fees paid by low-income borrowers and diminish an incentive for staying in school and graduating.
While there are other ideas being explored as part of HEA reauthorization, proposals related to federal student aid programs and student debt are the ones likely to have the most immediate impact upon Lycoming students and their families. In addition, the concept of a system of institutional accountability organized on a program-by-program basis might well cause a fundamental reexamination of Lycoming’s mission as an institution providing broad access to a first-rate education in the liberal arts and sciences. I hope you will join me in encouraging your elected representatives to listen carefully to the voices of independent higher education as the reauthorization process unfolds.
Kent C. Trachte, Ph.D., is the 15th president of Lycoming College.