Group suggests aid be paid as reward for student success

Chart of Student Aid Sources for 2011-2012
Chart of Student Aid Sources for 2011-2012

With Congress expected this year to revisit how to help students pay for college, different policy groups are stepping forward trying to shape the conversation.

One group of college administrators, community leaders and education advocates funded by the Bill and Melinda Gates Foundation tackled the issue of reducing a trend where 46 percent of students enrolled in college fail to graduate within six years.

The group, which has Louisiana ties, concluded in its “American Dream 2.0” report that sweeping changes to the federal financial aid system likely will be necessary to turn that statistic around.

The group includes Southern University System President Ronald Mason and Marc Morial, president of the National Urban League and a former New Orleans mayor.

The report suggests dangling financial aid in front of schools and students as an incentive for positive results rather than “providing financial aid and just hoping for student success.”

Morial said other countries have caught up and, in some cases, are overtaking the U.S. in terms of producing the world’s most educated workforce.

“This is absolutely an issue of economic development and people need to see it that way,” he said. We have lots of jobs going unfilled because we don’t have the workforce. An investment in higher education pays a high rate of return for a community.”

The report put out last month by HCM Strategists, a Washington, D.C., public policy group, says that total annual student borrowing more than doubled between 2002 and 2012 from roughly $56 billion to $113 billion.

Many students default under that sort of “crushing debt” and are forced to drop out of school, “eroding the American Dream,” the report says.

Many of those students have to contend with hefty loans while trying to stay above water in an unfriendly job market.

Students leave college with an average debt of $26,600.

Additionally, the unemployment rate for adults with only a high school diploma reached 13.4 percent during the recent recession, while the rate for college graduates never rose above 6.8 percent, the report says.

Mason took part in writing the report. He said a revamped financial aid policy centered around helping the students with the greatest need could eventually lead to a shift in public policy where students would be more likely to enroll in schools best equipped to help them.

A shift like that would pay off with more people put in positions to make meaningful contributions to society, he added.

“What we really need to do is to set the tone for future change,” Mason said.

Besides the recommendation to limit financial aid programs to only the neediest students, the report also suggests that linking federal aid to completion — graduation rates rather than enrollment — will be an effective incentive for states, schools and students to achieve better outcomes.

David Longanecker, president of Colorado’s Western Interstate Commission for Higher Education, said the time to start those conversations is now, as Congress is expected to debate a new Higher Education Reauthorization Bill this year.

Longanecker said one of the most important things for people to realize is the roughly $175 billion the federal government appropriates toward financial aid is not likely to increase.

“The major message is that we have to use the money more wisely,” he said.

Longanecker suggested rolling back a push over the past several decades to expand access to college by expanding eligibility for financial aid.

About half of the country’s 30 million undergraduates receive federal need-based Pell Grants to help pay for college. In the past, Pell recipients made up between one-third or one-fourth of the student population, Longanecker said.

“A lot of those students come from backgrounds where they would have gone to college anyway,” he said. “Do we really believe they all need Pell grants?”

At the same time, 12 credit hours, and not 15, taken per semester is now considered a full load, he said.

“You can’t graduate on time taking 12 credits. This encourages students to be more casual about their education,” he said.

Longanecker suggests changing the system to where only students taking 15 credit hours per semester would be eligible for Pell, and doling out the financial aid to students only once courses are completed.

Making an institution’s ability to participate in federal aid programs contingent on student success, and only paying students for finishing courses, encourages both the student and the school to work toward better outcomes, he said.

“I’m not saying a community college has to have the same graduation rate as Harvard, but it should be comparable to good community colleges,” he said.