Dear Sen. Alexander and Sen. Murray,
As a nation, we are facing a dangerous precipice in higher education. Throughout my nearly 15 years spent in the financial aid industry, I’ve watched both the education and funding model we’ve built falter—and fail—those who need it most.
Our slow walk to this precipice turned into a jog over the last few years as student populations continued to shift at a rapid pace, educational costs continued to rise, and the demands of our future technological, industrial-based workforces became more and more dependent on higher levels of education. Today, our workforce and students are facing rapidly evolving environments and demands at a rate unseen in history.
Structural Issues Hinder Agility Within the Education and Funding Model
To keep up, our education system needs to be equally as agile. It needs to be able to adjust real-time, moving lock-step with the needs of the future. The system currently in place is cumbersome, and anything but agile. I hope the next reauthorization addresses structural issues in the present system, increasing its responsiveness.
As an industry we can, and, should:
- Increase accessibility to short-term and certificate-level programs through enhanced vocational and technical programs that can be accessed during high school.
- Increase access to internships through a re-imagination of the Federal Work-Study program that returns to its initial intent allowing for positive and proactive exploration of career opportunities.
- Ensure better college readiness and access to short-term programs by deepening collaboration between the K–12 and higher education institutions, effectively creating a K–16 educational structure.
- Continue investment of competency-based education and assessment through strategic partnerships with employers in developing assessments, ensuring students are workforce-ready.
- Increase student access to college counselors who are not affiliated with a college or university, ensuring unbiased counseling and assistance.
Accountability: Key to Reducing Waste
The model currently in place is unsustainable. No one holds all parties accountable for educational outcomes including student, school, state, federal government, and accreditation bodies. This lack of accountability has led to significant documented waste and mismanagement of funds, including:
- $6 billion in improper, inaccurate payments made within Title IV programs.
- $38 paid for every $1 collected by debt-collection agencies, with nearly half of all students who work with these agencies re-defaulting in three years.
- Estimates that 40% of the 2004 cohort could default on their loans.
These are just three very recent examples of fund mismanagement/waste that better accountability standards, increased transparency, and appropriate oversight and enforcement would address. Establishing and enforcing accountability across all stakeholders will improve sustainability.
Cost Transparency: Echoes of the Housing Crisis
Let’s be clear that by choosing higher education, students are making one of the largest financial decisions of their life.
Often, only the purchase of a home will be more expensive than a college education. But no one simply hands a prospective homebuyer a mortgage during the buying process. Instead, homebuyers have to jump through many well-defined, strategically developed hoops meant to drive awareness of their financial commitment—and their ability, and consequences, to repay. There are eerie similarities between the housing crisis and our current education funding crisis. During the sub-prime housing crisis of 2007–2010, we were too easily lending without adequate oversight. Bad actors on all sides—borrowers, lenders, real-estate agents, and underwriters—all played a role and have accountability for the crises that ensued.
Initiatives to Consider
Education transforms lives—it can change the trajectory of an entire family. But the financial commitment can also hold an entire family hostage. This is why we are in support of initiatives that foster accountability, ensure sustainability, and improve access to higher education, including:
- Verification of all self-reported financial data for 100% of Title IV aid applicants.
- Enforcement of performance-based organization standards for the Department of Education.
- Enhanced student loan counseling requirements to include reinstatement of annual counseling requirements and the insurance that borrowers understand loan terms.
- Required annual notifications—with active confirmation—to students about incurred student loan debt, including estimated loan payment amounts.
- Eliminating the option for passive loan acceptance for Title IV loans.
- Establishment and enforcement of service-level agreements between the Department of Education and institutions in relation to the processing of program reviews conducted by the Department.
- Development of funding tied directly to college readiness for high school graduates—with the goal of reducing the need for remediation and ensuring college ready students.
- Re-evaluation of the compensation model for debt collection and servicing agencies contracted with the Department of Education, ensuring companies are not financially incentivized to counsel students into programs that are a poor financial fit.
- Development of stricter requirements and enforcement for higher education accrediting agencies accountable to the colleges and programs that are being accredited by them. These agencies, like schools, should have skin in the game.
- Establishment of award letter standards for institutions including minimum requirements for data elements associated with cost and funding options and the use of personalized content to address unique student needs.
A New Funding Model for Strategic Simplification
A new funding model needs to be instituted in a thoughtful way to address the structural deficiencies within higher education. This model needs to champion accountability standards and focus on investment from all areas including the state, employers, students, institution, and federal agencies.
I am a firm believer in simplification. However, many simplification efforts recently discussed will have a detrimental impact on students and their families. We need to be thoughtful and deliberate in determining how to move forward. Ensuring that college remains affordable for students needs to be an ever-present theme when writing the new re-authorization. I believe that the following initiatives should be included:
- Maintain public service loan forgiveness programs.
- Maintain a need-based subsidized student loan program.
- Incentivize state re-investment in higher education:
- States need to be applauded for the bold education attainment goals they are setting. With 41 states setting goals to increase the percentage of residents who have obtained an education beyond high school, setting a goal in and of itself is not enough. Between 2012-2018, state investment in higher education was reduced 26%. Since that time, there has been improvement—and states have begun to dedicate funding back to higher education. However, many states are still not investing appropriately in higher education. Investment levels are still 15% below pre-recession funding levels.
Involve FinAid Professionals
I applaud the efforts that have been made by the Senate’s Health Education Labor and Pensions (HELP) Committee over the past few months. The discussions that have occurred have been relevant and timely. However, I’m significantly disappointed by the lack of financial aid professionals who have been included in testimony.
To best understand the challenges facing students and aid offices, I would urge you to consider speaking to those who are in the aid office, working on the front lines with students and families, day-in, day-out.