Student Aid

The Fights that Loom Ahead for the Higher Ed Stimulus

This afternoon the Senate voted 61-37 to pass a slightly slimmer iteration of the American Recovery and Reinvestment Act than it initially proposed. Now, members of Congress will have some important decisions to make when they try to reconcile the two competing stimulus bills in conference committee. Today, Higher Ed Watch takes a look at some of the looming fights. Tomorrow, we will offer our suggestions for resolving the discrepancies between the two bills. 

A Last Look at Higher Education in the Bush Years

Today, Barack Obama will become the 44th president of the United States. But before turning the page, Higher Ed Watch takes a look back at the Bush administration's higher education record by the numbers. 


10 Higher Ed Questions for Arne Duncan

Education Secretary-Designate Arne Duncan will appear before the Senate Heath, Education, Labor, and Pensions Committee for his confirmation hearing on Tuesday morning. While Higher Ed Watch won't be there to grill Duncan, we do have some tough questions on higher education policy for the Chicago Public Schools chief. Feel free to suggest ones of your own.

(1) Do you believe that the federal student aid programs, as currently designed, are appropriately targeted and work both efficiently and effectively in expanding college access, or do you believe that the programs need to be overhauled to ensure that the doors of college remain open for low-income and working-class students?

(2) Do you expect the administration to continue supporting both the Direct and Guaranteed Student Loan Programs or instead push for a 100 percent Direct Lending model given research that shows this program is less costly to run?

(3) As currently designed, federal higher education tax credits disproportionately favor middle- and upper-income families and are largely unavailable to low-income families due to the fact that they are nonrefundable and have limitations on the costs that they cover (tuition and fees versus cost of attendance).  Given that the federal student aid system was created to increase the enrollment rates of those who could not otherwise afford to attend, are tax credits an efficient way to deliver limited student aid resources?  Has the administration given any thought to revamping the current tax credits so they are available to lower-income families?  What steps do you anticipate taking to ensure that the President-elect's proposed American Opportunity Tax Credit is available to low-income students who may have trouble meeting the 100 hour service requirement due to family and work responsibilities?

A Senator's Legacy

At Higher Ed Watch, we were saddened to learn of the recent death of former Sen. Claiborne Pell, the Rhode Island Democrat whose work on Capitol Hill helped open the doors of college to tens of millions of low-income students. The Pell Grant program remains the cornerstone of the federal government's efforts to help the most financially-needy students obtain a higher education.

As Maura Casey, an editorial writer for The New York Times wrote in a moving tribute to the Senator on Tuesday, "Pell Grants have been around so long that few remember how much opposition they had to overcome or how revolutionary they once seemed."

In fact, Senator Pell -- "a wealthy New England aristocrat," as Casey described him -- had to fight an epic battle in 1972 against his Democratic colleagues in the House of Representatives and the higher education establishment to create the grant program that he first dreamed up, legend has it, on a ski slope in Switzerland. [Whether or not he had ever skied at all is a matter of much debate.]

Pell's vision was to create a new grant program to aid low-income students modeled on the GI Bill, which had helped pay for his graduate education. Under the Senator's plan, federal grants would go directly to students who could use them at the college of their choice. The idea, however, was met with fierce opposition from the leading national higher education associations who wanted the money to go straight to their member institutions. They argued that college officials were in the best position to determine which students were in most need of financial aid funds. The college groups had powerful allies on the House education committee, who fought on their behalf.

Target Campus-Based Aid

The holidays may be over, but the higher ed community is still waiting to see what Uncle Sam is going to put into its stimulus stocking.  Our bet is it will be much needed tens of billions of dollars, hopefully for both student aid and campus infrastructure.

At some point though, and it may not be in his first budget, President Obama is going to follow through on his campaign promise to grow investment in areas critical to America's economic and civic future while also taking a scalpel to government programs where there is poor targeting, inefficiency, or ineffectiveness.  Federal higher education programs won't be free from that examination, nor should they be.  The key for advocates and incoming Secretary of Education Arne Duncan, however, is to make sure that savings generated by identified cuts are plowed back into quality education programs. 

Since its inception, Higher Ed Watch has focused on identifying waste and inefficiency in the federal student loan programs, because that's where big taxpayer savings were to be had for redirection into increased student financial aid.  But other programs deserve examination as well.

Happy Thanksgiving

Higher Ed Watch is about to take the week off to celebrate Thanksgiving, and help ourselves to plenty of turkey, cranberry sauce, stuffing, and pumpkin pie. But before we do, here is a brief list of some things that we are especially thankful for:

  • New leadership coming to the U.S. Department of Education that will hopefully close the revolving door between the agency and the student loan industry.

Higher Ed Roundup: Week of November 10 - November 14

Paulson Says Student Loans to Benefit from Bailout

New York Governor Announces Spending Cuts for Higher Ed

Bush Administration Unveils Blueprint for Revised Financial Aid System

Transfer Students are Disengaged, Survey Finds


Election 2008: A Taxing Decision for Obama

On January 20, 2009, Sen. Barack Obama (D-IL) will be sworn in as the 44th president of the United States. Around the same time, millions of college students across the country will be beginning their spring semesters. And these classes will arrive with sizeable tuition bills. Obama has a plan for helping students tackle these costs -- a tax credit for students who perform community service. But the president-elect should take note. Tinkering with the tax code is a less than ideal way to promote college access and affordability.

The cornerstone of Obama's college plan is the American Opportunity Tax Credit. Worth $4,000 annually, it is available to all college students, regardless of income, so long as they complete 100 hours of public service during the academic year. The tax credit is fully refundable, meaning that if a student's tax liability is less than $4,000, they will have their tax bill paid off and then receive a rebate for any leftover credit amount.

On paper at least, the American Opportunity Tax Credit (AOTC) appears far better than existing higher education tax credits. This is especially true with respect to the Hope and Lifetime Learning tax credits, which were championed by Obama's Democratic predecessor Bill Clinton. The Hope credit is worth up to $1,650 (100 percent of the first $1,100 spent on higher education and 50 percent of the next $1,100) for the first two years of postsecondary enrollment. The Lifetime credit, meanwhile, is worth up to $2,000 (20 percent of the first $10,000 spent on higher education) and may be taken so long as students are enrolled.

Election 2008: Our Wish List for the President-Elect

Barack Obama's historic victory last night ensures that a change in direction is coming to the U.S. Department of Education and hopefully to federal higher education policy.

Starting tomorrow, we will take a closer look at Obama's signature higher education proposals. (Got to give him at least a one day honeymoon, right?) Today, we will present our wish list for the incoming administration. Here are some changes we would like to see:

  • Emphasize Oversight and Enforcement at the Department of Education: Over the last eight years, the Bush administration officials in charge of the Department looked the other way as widespread abuses occurred in the Federal Family Education Loan (FFEL) program. To this day, the Department has not disciplined a single lender for violating a federal law that prohibits loan providers from offering inducements to secure student loan business. At the same time, the education secretary allowed lenders to keep more than $1 billion they illegally obtained in improper subsidy payments. Federal leadership is sorely needed to protect the integrity of the federal student loan programs, for the sake of both the students who depend on them and the taxpayers who finance them. For starters, the new administration should take a close look at the conflict-ridden relationship between Sallie Mae and USA Funds, the guarantee agency it effectively controls. As we have noted, there is compelling evidence that the loan giant has exploited this arrangement to take advantage of borrowers who are having difficulty repaying their federal loans. A thorough investigation is needed.

Election 2008: Student Aid Hurdles for the Next President

No matter whether Sen. Barack Obama (D-IL) or Sen. John McCain (R-AZ) wins today's election, the next president is going to face major challenges on the higher education front.

While neither candidate has made education a centerpiece of his campaign, each has offered proposals that may be difficult to carry out given the hurdles that lie ahead. Not the least of which is the federal budget deficit, which is likely to far exceed the $482 billion the Congressional Budget Office projected in July. Obama may be particularly frustrated in his plans, as he has called for significantly increased spending on federal student aid. McCain, on the other hand, has proposed consolidating the government's aid programs.

Here is a brief description of some of the other student aid challenges awaiting the next president:

  • The Continuing Credit Crunch

Over the last year, the federal government has made extraordinary efforts to help the student loan industry cope with the turmoil in the financial markets. As a result of these efforts, and the revitalization of the Direct Student Loan program, students haven't experienced any difficulty obtaining federal loans.