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

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. 

Latest News

Student Loan Defaults Hit a New Record In 2016

The number of defaulted federal student loans hit a new high in 2016: about 8 million borrowers have given up paying on more than $137 billion in education debts.

That means at least one out of every six people who have any federal student debt haven’t made a payment on their loans for at least nine months, says Jessica Thompson, research director for The Institute for College Access and Success.

In fact, 1.1 million student borrowers defaulted for the first time in 2016, according to data released by the U.S. Department of Education on Friday.

Latest News

Student Loan Defaults Hit a New Record In 2016

The number of defaulted federal student loans hit a new high in 2016: about 8 million borrowers have given up paying on more than $137 billion in education debts.

That means at least one out of every six people who have any federal student debt haven’t made a payment on their loans for at least nine months, says Jessica Thompson, research director for The Institute for College Access and Success.

In fact, 1.1 million student borrowers defaulted for the first time in 2016, according to data released by the U.S. Department of Education on Friday.

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Nearly 4 in 10 Universities Report Drops in International Student Applications

Nearly 40 percent of U.S. colleges are seeing declines in applications from international students, and international student recruitment professionals report “a great deal of concern” from students and their families about visas and perceptions of a less welcoming climate in the U.S., according to a survey conducted in February by six higher education groups.

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Shutdown of IRS Data Tool Affects Income-driven Repayment, Creates Further Discrepancies

After federal officials announced last week that the Internal Revenue Service data retrieval tool would be unavailable for “several weeks” because of concerns about security, college access advocates and financial aid administrations said repercussions would be go beyond a more burdensome financial aid application process.

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Revised Travel Ban Excludes Current Visa Holders but Continues to Raise Concerns For Higher Education

President Trump on Monday signed a new executive order temporarily barring nationals of six Muslim-majority countries — Iran, Libya, Somalia, Sudan, Syria and Yemen — from entering the U.S. after enforcement of an earlier entry ban was halted by federal courts. The revised ban, which goes into effect March 16, does not apply to lawful permanent residents of the U.S. and individuals from the six nations who already have valid visas, including student and exchange visas.

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Trump Moves Program On Historically Black Colleges Into The White House

President Trump signed an executive order Tuesday that moves a federal initiative supporting historically black colleges and universities directly into the White House, a move depicted as an effort to give the schools more clout within the government.

HBCU leaders said they were cautiously optimistic about the shift. They are eager for the government to raise its investment in their schools but wary of promises devoid of action.

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For-Profit Schools, an Obama Target, See New Day Under Trump

Since Election Day, for-profit college companies have been on a hot streak. DeVry Education Group’s stock has leapt more than 40 percent. Strayer’s jumped 35 percent and Grand Canyon Education’s more than 28 percent.

You do not need an M.B.A. to figure out why. Top officials in Washington who spearheaded a relentless crackdown on the multibillion-dollar industry have been replaced by others who have profited from it.

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DeVos Says Community Colleges Key to Workforce Development

Community colleges will play an important role in advancing President Donald Trump’s workforce agenda, Education Secretary Betsy DeVos said at a meeting of community college leaders Thursday. It was DeVos’ first appearance at a conference event in her new role.

Speaking from prepared remarks at the National Legislative Summit of the Association of Community College Trustees (ACCT), DeVos characterized the nation’s community colleges as “nimble, inclusive and entrepreneurial.”

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.

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Researchers Download Federal Data Amid Concerns Over Future Access

Before a confirmation vote at the Senate’s Health, Education, Labor and Pensions Committee this week, Betsy DeVos responded to more than 800 written questions from Democratic members of the committee. Those answers didn’t help persuade any Democrats to support her as the next secretary of education — her nomination advanced to the full Senate on a party-line 12-11 vote — but one response has stirred concerns among higher education researchers that the Department of Education will not remain committed to maintaining federal data currently published on its website.

Latest News

At First, 55 Schools Faced Sexual Violence Investigations. Now The List Has Quadrupled

The Obama administration sent shock waves through higher education in 2014 when it released a list of 55 schools that faced civil rights investigations related to their handling of sexual violence reports.

The tally eventually quadrupled. On Wednesday afternoon, less than two days before President-elect Donald Trump is sworn into office, the Obama administration released its final list of pending sexual violence investigations.