A group of leading financial aid experts say the government ought to radically simplify and improve the federal financial aid system—and they say it wouldn't take much money to do so.
The "Rethinking Student Aid" study group, funded by several foundations and the College Board, said that simply by allowing parents and students to submit their tax information, instead of filling out the 145-question federal financial aid application, thousands of students might get more aid and be more likely to finish college. In addition, the group, made up of college presidents, economists, and other financial aid experts, said that Congress should consolidate the many small, sometimes overlapping grants and loan programs so that there is just one of each. That would save the government and colleges millions in administrative hassles, and make it easier for students to understand. By radically restructuring the biggest student loan program, Congress could help to fund new college savings accounts for low-income families and give all educational borrowers an opportunity to pay their loans back as a percentage of their income, instead of today's fixed payment, according to the group.
Depositing a few hundred dollars every year in a college savings account for each child from a low-income background could encourage children who might otherwise think college is unaffordable to stay in school and aim for a degree, says Michael McPherson, president of the Spencer Foundation and co-chairman of the study group. McPherson, formerly president of Macalester College, said the United States needs to encourage more people to finish college because a growing number of countries are becoming more highly educated. He notes that the Organization for Economic Development recently announced that the United States is now 10th in the ranking of countries with a high percentage of college-educated young adults. For many years, America was atop the list, and that probably was why our economy dominated that of the rest of the world's, McPherson says.
Of course, he said, there are many reasons why American young people are failing to finish colleges, such as poor study preparation and study skills. "But money is a piece of the picture," he said.
The proposals drew immediate controversy. Robert Shireman, president of the Institute for College Access & Success, says that while he likes many of the group's ideas, he would find it difficult to support the proposals to allow students to borrow more money from the federal government and to eliminate the interest rate break given to low income students. (The group proposes using that money to repay the loans of students who leave school and take low-paying jobs.) "In principle, it makes a lot of sense to have just one loan program. But the idea of increased loan limits needs to be approached carefully," Shireman says.
In addition, several congressional aides say that while there is broad bipartisan support for the simplification of the federal aid application, the Internal Revenue Service has some objections to sharing its information. Also, many colleges will likely fight attempts to take away funding coming from the smaller grant programs, such as the Supplemental Educational Opportunity Grants (SEOGs).
Sandy Baum, a Skidmore economist, says her fellow study group members realize their plan "isn't going to make for good one-liners" and so might not be snapped up by the presidential candidates. But the group now plans a six-month "communication" campaign to get colleges, lobbyists, and legislators at least talking about how to simplify and improve the aid process.
"We're not lobbyists," Baum says. "But we want to see if we can make the system work better for students."