Federal Policy & Reform

Overview

Federal Policy & Reform

The federal government provides billions of dollars in student aid and tax breaks to the nation’s colleges and universities each year, and it demands remarkably little in return.

The federal government provides billions of dollars in student aid and tax breaks to the nation’s colleges and universities each year, and it demands remarkably little in return.

In large part, that’s because the federal government has relatively few levers with which to hold colleges accountable. Unlike in K-12 education, where federal dollars flow through states to schools, most postsecondary aid goes directly to students, in the form of vouchers (Pell grants), loans, and tax benefits. To withhold money from an institution, the federal government effectively would have to punish its students as well.

The comparatively weak federal accountability levers in higher education are also a testament to the strength of the college lobby, which employed more lobbyists in 2014 than any other industry except electronics manufacturing and pharmaceuticals, according to the Center for Responsive Politics. With colleges in every congressional district, and millions of faculty and staff on voter rolls, college lobbyists have repeatedly beaten back efforts to link federal dollars to student outcomes and college costs.

Federal involvement in higher education goes back to the Morrill Act of 1862, which provided land to states to finance the creation of a system of agricultural colleges, known as “land grant” institutions. The federal role grew in the 1940’s and 1950’s, with passage of the GI Bill — which provided generous tuition benefits to veterans — and the National Defense Education Act, which created the first student-loan program.

But the real watershed was passage of the Higher Education Act, a 1965 law that laid the foundation for the modern student-aid system. The law, which created a system of grants and loans to help  students from low-income backgrounds pay for college, firmly established the federal role in ensuring equal access to higher education. In the years since, lawmakers have extended the bill’s benefits to middle- and upper-income students, providing unsubsidized loans and tax benefits to offset rising college costs.  

To qualify to award federal financial aid to students, institutions must show that they are financially “responsible” and administratively “capable,”  and have been approved by an accreditor and state regulators. Colleges can lose their eligibility if their state or accreditor revokes their approval, or if too many of their students default on their debt, but those conditions rarely happen. For-profit colleges can be kicked out of the programs if too much of their revenue comes from federal aid, but that, too, is uncommon.

Fifty years after the passage of the Higher Education Act, the government awards about $150 billion a year in grants, work-study, and loans to more than 15 million students. Policymakers and the public generally agree that the federal government should continue to make college accessible to all Americans.

Yet as college tuitions have risen, and student debt has skyrocketed, some lawmakers have questioned whether that federal aid may be fueling tuition growth — a theory known as the “Bennett Hypothesis,” which has been widely disputed in research. Others point to rising student loan defaults and lackluster graduation rates and ask why the government isn’t demanding more for the billions that it provides in student aid.

In fact, policymakers have tried to impose cost controls on colleges and condition small amounts of federal aid on student outcomes. But they have faced fierce opposition from colleges, who have branded such efforts “overreach” and accused lawmakers of intruding on academic affairs. In the end, most of the would-be reformers have had to settle for more “transparency” around college costs and student outcomes.

President Obama used both carrots and sticks to pressure colleges to lower their costs and graduate more students. He didn’t always succeed: His plan to reward high-performing colleges with additional Perkins loans went no where, and his controversial college “ratings” plan was reduced to a revamped “College Scorecard.” Still, Obama managed to tie aid to for-profit colleges to their graduates’ debt burdens, and to shine a spotlight on institutions with weak student earnings and low loan repayment rates.

At the same time, Obama sought to make applying for student aid easier and repaying student debt less difficult. He took steps to simplify the Free Application for Federal Student Aid, or FAFSA, and expanded income-based repayment for student loans. Congress might continue these efforts in the upcoming reauthorization of the Higher Education Act, which is expected to focus on streamlining and simplifying the student aid and loan repayment systems. 

Lawmakers might also look to reform accreditation and increase college accountability, giving institutions more “skin in the game,” i.e., responsibility for their students’ abilities to pay back their student loans.

What the federal role in higher education will look like going forward will depend, in part, on who is elected president next November. On the campaign trail, Democrats are pledging to make college free — or at least debt-free — while Republicans are promising to bring down the cost of college through new technology and alternative credentialing.

Published: January 2016

EWA Radio

Betsy DeVos Goes From Ideas to Action
EWA Radio: Episode 127

Alyson Klein of Education Week and Andrew Kreighbaum of Inside Higher Ed discuss recent developments on the federal policy front, and what’s been a busy month for  U.S. Secretary of Education Betsy DeVos. The Education Department has hit the “pause button” on regulations aimed at reining in for-profit colleges, announced plans to scale back civil rights investigations, and suggested federal scrutiny of state accountability plans for K-12 education could be more forceful than some people — particularly Republicans — were expecting.

Latest News

When student journalists need defending, these lawyers swoop in. For free.

In recent months, millions of dollars in donations have rained down upon journalism organizations, prompted by President Trump’s verbal attacks on the news media and citizen support for the press’s role in America’s democracy. That’s been great news for worthy recipients such as the Committee to Protect Journalists, the Reporters Committee for Freedom of the Press, ProPublica and others. But one tiny outfit, working out of a windowless Washington office, has not benefited.

EWA Radio

NPR Digs Deep on School Vouchers
EWA Radio: Episode 123

Cory Turner discusses the NPR education team’s deep dive into school vouchers, with a focus on Indiana, home to the largest voucher program in the nation. Among NPR’s findings: less than 1 percent of participating students transferred out of public schools that had been labeled by the state as low performers, and many students using vouchers were already attending private schools. With school choice as a centerpiece to President Trump’s education policy agenda, what does the evidence show when it comes to academic outcomes for students using vouchers?

Blog: Higher Ed Beat

Fear and Loathing in Higher Education: No One Knows What Trump’s College Agenda Looks Like

Confusion and uncertainty. Gridlock and disagreement.

Sound familiar?

No, we’re not just talking about the political machinations on Capitol Hill. It’s also a pretty good characterization of the discussion on “The Changing Politics of Higher Education” at the 2017 Education Writers Association seminar at Georgetown University.

Member Stories

May 19 – 25
Here's what we're reading by EWA members this week

Jennifer Pignolet of the Commercial Appeal checks on the closure of an AmeriCorps program called City Year in Memphis, which is wrapping up a pilot year at Brownsville and Westside Achievement Middle, a state-run school in Frayser. 

 
 

EWA Radio

A Reality Check on Trump’s Education Budget
EWA Radio: Episode 123

Emma Brown of The Washington Post discusses President Trump’s budget proposal for education, with fresh analysis of the priorities and politics behind the line items. She also explains the prospects in the GOP-led Congress for the Trump plan. Overall, the president’s budget envisions deep cuts to the U.S. Department of Education budget, even as he wants to step up federal aid for school choice.  Which education programs are up for major cuts or outright elimination and why? How do some of the largest programs, like Title I aid for disadvantaged students and Pell grants, fare?

Latest News

What Good Is New Summer Pell Money if Students Can’t Use It?

The semester is winding down and summer is coming, but don’t get too excited about that recently passed summer Pell budget – it looks like it won’t become a reality for most students until summer of 2018.

Educators cheered a budget extension passed by Congress last month, which restored “year-round” Pell. The change is huge for low-income students, who can now get summer college courses covered by the needs-based federal financial aid program. That can make it more likely that they’ll graduate.

Latest News

The U.S. Makes It Easy for Parents to Get College Loans—Repaying Them Is Another Story

Millions of U.S. parents have taken out loans from the government to help their children pay for college. Now a crushing bill is coming due. Hundreds of thousands have tumbled into delinquency and default. In the process, many have delayed retirement, put off health expenses and lost portions of Social Security checks and tax refunds to their lender, the federal government.

Latest News

Identity Thieves May Have Hacked Files of Up to 100,000 Financial Aid Applicants

Internal Revenue Service Commissioner John Koskinen said Thursday the information of up to 100,000 taxpayers may have been stolen in a security breach of an online tool used to apply for federal student aid.

Testifying before the Senate Finance Committee, Koskinen said the IRS identified suspicious activity in the files of people who were using a “data retrieval tool” as they filled out the Free Application for Federal Student Aid. FAFSA is the form the government and colleges use to determine financial aid for millions of students.

Latest News

Year-Round Pell’s Likely Return
Congress and White House Appear to Back Return of Year-Round Pell in Upcoming Budget Bill

Many more college students soon may be able to use Pell Grants to pay for summer courses, with the likely return of so-called year-round Pell.

Republican leaders in the U.S. Congress and the Trump White House back the reinstatement of year-round Pell eligibility, according to a wide range of sources. However, increased spending on the grants, which experts have estimated at $2 billion per year, likely would be offset by a cut of at least $1.2 billion to Pell’s current surplus of $10.6 billion.

Blog: The Educated Reporter

Trump Budget Signals Education Priorities

President Donald Trump’s first budget blueprint begins to flesh out the areas in which he sees an important federal role in education — most notably expanding school choice — and those he doesn’t. At the same time, it raises questions about the fate of big-ticket items, including aid to improve teacher quality and support after-school programs. 

Blog: Higher Ed Beat

Would Free College Lead to Too Many Graduates?

The presidential election pushed grassroots proposals to make public college free into the mainstream. But should these plans stay there? And if so, in what form, now that the most prominent supporters of those proposals lost the race for the White House?

EWA Radio

Betsy DeVos Is Secretary of Education. Now What?
EWA Radio: Episode 108

Betsy DeVos takes the oath of office.

Kimberly Hefling of Politico discusses the new U.S. secretary of education, Betsy DeVos, who was confirmed Tuesday after Vice President Mike Pence was called in to break a 50-50 tie in the Senate. What will be her top priorities moving forward? How aggressively will the new secretary push school choice, and how likely is President Trump’s $20 billion school choice plan to gain traction? Has DeVos lost political capital during the bruising confirmation process? Was she held to a higher standard than other nominees for President Trump’s cabinet? And how much power will the Republican mega-donor have to roll back the Obama administration’s education policies and initiatives? 

Multimedia

New President, New Higher Education Agenda
Doing More With Higher Ed Data

During his time in office, President Obama substantially altered the landscape of postsecondary education, from making the federal government the direct lender of student loans to changing the climate for how colleges address allegations of sexual assault. Journalists who cover federal policy on higher education offer insights and story ideas about issues to track, from the regulation of for-profit colleges to the reauthorization of the Higher Education Act.