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

Webinar

Lies, Damn Lies and College Statistics
Dec. 14 • 1-2 p.m. ET

Everybody says college is expensive. But exactly how costly are the colleges you cover? At 1 p.m. EST on Dec. 14, journalists can participate in a free one-hour training webinar on two new and as-yet little-known data tools. You will learn ways to quickly find the most reliable and relevant data on costs, prices and affordability.

And you will get a chance to hear from – and pose questions to – two of the most knowledgeable college cost data experts in the country.

Latest News

Senate Tax Plan Could See Vote Today

With the GOP’s tax reform efforts moving swiftly along, higher education groups are stepping up their efforts to persuade lawmakers to strip the plans of provisions they say would make college more expensive, such as a plan in the House bill to scrap deductions on student loan interest and tax as income tuition waivers for graduate students.

Latest News

Betsy DeVos Just Might Save the Beauty School Industry

Steve Sullivan and his family had run their beauty school for more than 30 years when the letter arrived from the government to tell him the Stone Mountain, Georgia, college was failing.

Sullivan wasn’t alone. Hundreds of cosmetology schools across the country were suddenly in danger of losing access to government financial aid and shutting down. Obama’s rules promised to decimate the industry, likely shutting down 91 of the country’s nearly 900 programs and putting another 270 in the “zone,” at risk of closure.

Latest News

Tax bill reflects rift between many Republicans and higher education – The Washington Post

Ending a tax deduction for interest paid on student loans. Raising taxes for more than 100,000 graduate students who receive tuition waivers. Imposing a levy on endowments at certain private colleges and universities.

These actions are anathema to higher education leaders across the country. Yet they all appear in the House-approved Republican tax overhaul, evidence of a growing disconnect between large segments of the GOP and colleges that, for generations, have wielded enormous clout on Capitol Hill.

Member Stories

November 3 – November 9
Here's what we're reading by EWA members this week

EWA Reporting Fellow Stacy Teicher Khadaroo looks at the realities of college expectations as part of The Christian Science Monitor’s Equal Ed series.

 

To recruit badly needed teachers, Michigan turns on the charm, reports Lori Higgins for the Detroit Free Press.

 

Latest News

GOP Tax Plan Would Eliminate Student Loan Deduction, Educational Assistance Programs

The tax plan unveiled by House Republicans on Thursday permits the use of previously off-limits education savings accounts for tuition at K-12 private schools, though it stops short of allowing states to create a scholarship tax credit or voucher to help cover private school tuition – originally one of Education Secretary Betsy DeVos’ top priorities in her school choice agenda.

Latest News

Opioids on the Quad

The opioid epidemic has ravaged communities around the nation — deaths from overdoses now outnumber deaths from car crashes — prompting President Trump to establish a federal task force and, on Thursday, to declare a public health emergency, allowing some grant money to be released to combat the problem and some laws and regulations to be eased. The task force is to issue a plan of action this week.

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The Long Story of the Movement Toward College Cost Clarity

Once upon a time, paying for college was a relatively simple task. Parents who could often did. Teenagers with parents who lacked either the ability or the willingness to pay worked their way through school, which was easy enough to do at many schools before 1985 or so.

But then came rising costs and student loans, of which there are countless iterations, from the federal government and state agencies and private entities. 

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Why Education Reform Keeps Failing Students

For close to two decades now, or even longer, depending on your perspective, education reform has been on the agenda of Democrats and Republicans alike, school leaders around the country and major philanthropists who have influenced the debate.

It’s all led to big changes, new laws and programs, tougher requirements and additional funding, lots more testing, and occasional school closings and teacher layoffs. But what has it all brought?

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The Fragile State of the Midwest’s Public Universities

The cutting-edge research here [Ohio State University] combines the expertise of the university’s medical and engineering faculties to study something decidedly commonplace: back pain, which affects as many as eight out of every 10 Americans, accounts for more than 100 million annual lost workdays in the United States alone, and has accelerated the opioid addiction crisis.

Blog: Higher Ed Beat

Nine of the Hottest Stories on the Higher Ed Beat This Year

Campus racial conflicts, sports corruption scandals, and a new partisan divide over the perceived benefits of college are among the biggest potential storylines for journalists covering higher education these days, according to Inside Higher Ed co-founder and editor Scott Jaschik.

Blog: Higher Ed Beat

Jose Antonio Vargas Calls for Context, Clarity When Reporting on Undocumented Immigrants

An elderly black woman with a crumpled piece of paper helped reframe the way Jose Antonio Vargas views the debate over immigration in America.

Vargas is a longtime journalist, an undocumented immigrant, and an advocate for immigrants. He was at a Tea Party event in North Carolina a couple of years ago when the woman, who recognized him from television, approached. She held a document she said her great, great, grandmother was handed after landing in South Carolina.

It was a bill of sale.

Seminar

Higher Ed 2017: Covering Campus Conflict in the Time of Trump
Atlanta • October 2–3, 2017

From heated debates over free speech to the Trump administration’s threats to deport undocumented students, these are tense times on college campuses. For reporters who cover higher education, questions abound and important stories need to be told. 

On Oct. 2-3, EWA will bring together journalists at Georgia State University in Atlanta to explore pressing issues in education after high school. (Here’s the preliminary agenda.) At this journalist-only seminar you will hear:

Member Stories

September 21 – 28
Here's what we're reading by EWA members this week

Jennifer Chambers of the Detroit News reports on Ivanka Trump’s visit to Detroit to help advance a $500 public-private partnership to promote STEM and computer science in the nation’s schools.

 
 

Education Week’s Evie Blad examines the First Amendment rights of students in light of recent protests at national sporting events, and gives advice to educators on how to turn such events into a teachable moment. 


 

Agenda

Covering Campus Conflict in the Time of Trump: Agenda
Atlanta • October 2–3, 2017

Monday, October 2, 2017

9:45– 11:30 a.m.: (Optional) Journalists’ Tour of CNN

CNN has graciously agreed to give 20 EWA members a journalists-only tour of their newsroom, and a chance to talk with members of CNN’s newsgathering, digital and data analysis teams to learn about their state-of-the art techniques of building traffic. The tour will start at 10 a.m. Monday, Oct. 2 at CNN’s Atlanta headquarters, located at One CNN Center, Atlanta, GA 30303. Please be at the entryway at 9:45 a.m. so you can go through security.