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

Latest News

Trump Administration Plans to Scrap Rule Meant to Limit Abuses at For-Profit Colleges

The Trump administration intends to scrap limits on the debt students amass in career training programs, undoing an Obama-era initiative that sought to tighten federal oversight of for-profit colleges, according to people familiar with the plan.

Education Secretary Betsy DeVos had previously signaled her skepticism about what is called the “gainful employment” rule, delaying enforcement of key provisions as the Education Department studied revisions.

Member Stories

July 20 – July 26
Here's what we're reading by EWA members this week

AL.com’s Trisha Crain crunches the numbers to see if Alabama’s rising graduation rate is translating to greater college and career readiness for its students.

In California, historians and Native Americans are urging lawmakers to to expand Native California curriculum in the state’s K-12 schools, reports Carolyn Jones of EdSource.

WLRN’s Jessica Bakeman examines a troubling climate of racism at an elite private school in Miami.

Member Stories

July 13 – July 19
Here's what we're reading by EWA members this week

The Associated Press tracked nearly half a billion dollars that have flowed from philanthropies to charter school organizations, reports Sally Ho.

Rising national debt and a growing elderly population may force drastic cuts to federal programs that serve children, writes John Fensterwald for EdSource.

Education Week’s Madeline Will reports on the unprecedented wave of teachers running for political office.

Seminar

Higher Education Seminar Fall 2018
Las Vegas • UNLV • September 24-25, 2018

The Education Writers Association will hold its 2018 Higher Education Seminar Sept. 24-25 on the campus of the University of Nevada, Las Vegas.

The theme of this year’s intensive training event for journalists will be “Navigating Rapid Change.” This journalist-only event will offer two days of high-impact learning opportunities. The seminar will focus on how both postsecondary education and journalism are adjusting to an increasingly divisive political environment, the decline of traditional revenue sources, and continuing technological innovations that are upending much of the economy.

Blog: Higher Ed Beat

Top Higher Ed Stories for the 2018-19 Academic Year
Politics is driving some of the hottest news stories on college campuses.

Some of the most pressing higher education stories for the next academic year will spring from the intersection of education and politics, predicts Scott Jaschik, the editor of Inside Higher Ed.

Jaschik reprised his always-popular rundown of the top higher education story ideas during the Education Writers Association’s National Seminar in May.

Latest News

Number Two Senate Republican Backs College Transparency Bill

Senator John Cornyn last week quietly signed on to a bill that would overturn the ban on a federal postsecondary student-level data system.

Advocates for the College Transparency Act say the Texas Republican’s support doesn’t just mean one more co-sponsor for the legislation. The decision by Cornyn, the second-ranking GOP senator, also suggests the kind of bipartisan support that could make stronger federal data inevitable.

Member Stories

June 22-June 28
Here's what we're reading by EWA members this week

Eva-Marie Ayala of The Dallas Morning News examines the relationship between a shelter for immigrant children and a charter school that wants to educate them.

For migrant teachers in Dallas, performance evaluations could mean the difference between staying in the U.S. and facing deportation, writes Mario Koran for The 74.

Latest News

Universities Are Hotbeds of Scholarship on Mass Incarceration. But Are They Doing Enough to Fix the Problem?

Elizabeth Hinton believes that Harvard University is falling short in its response to one of the most-pressing moral issues of our time: mass incarceration. Tonight, stepping up to the lectern of a theater on campus, the Harvard historian hopes to change that by bringing her colleagues face-to-face with those who have experienced the prison system firsthand.

Blog: Higher Ed Beat

How President Trump and the Republicans Are Changing Colleges
Impacts already being seen in admissions, student loans and for-profit colleges.

Even though a long-delayed update to a major higher education law appears to be stalled in the U.S. Senate, Republican policies are starting to influence colleges around the country because of orders and actions taken by the administration of President Donald Trump, according to a recent panel of Washington insiders and higher education leaders.

Speaking at the Education Writers Association’s 2018 National Seminar in May, the panelists highlighted three ways federal actions are affecting colleges around the country.

Member Stories

June 15-June 21
Here's what we're reading by EWA members this week

Emmanuel Felton of The Hechinger Report investigates charter schools where the student population is significantly whiter than neighboring district schools.

A lawsuit alleges that school districts across the country are excluding immigrant students. Zoë Kirsch of The Teacher Project explores the issue for Naples Daily News.

Latest News

Harvard Rated Asian-American Applicants Lower on Personality Traits, Lawsuit Says

Harvard consistently rated Asian-American applicants lower than any other race on personal traits like “positive personality,” likability, courage, kindness and being “widely respected,” according to an analysis of more than 160,000 student records filed Friday in federal court in Boston by a group representing Asian-American students in a lawsuit against the university.

Latest News

A Professor Brought His Guns to Protect Protesters at White-Supremacist Rallies. Then His Troubles Started.

At a time when colleges are sorting through how to handle controversies over violence, racism, and sexism, and as the nation grapples with the limits of the First and Second Amendments, Dixon has emerged as an unlikely figure, one who embraces seemingly irreconcilable extremes. He sees guns and gun culture as a tactic to achieve what he calls “community self-defense” — but in service of issues that are typically associated with the political left. He embraces diversity, and opposes white supremacy, transphobia, and misogyny.