Addressing Student Financial Aid Challenges: 2009 Presentation Highlights

1. UPDATE ON ACSFA CHALLENGES AND OPPORTUNITIES IN 2009 PRESENTATION at NASSGAP Conference St. Pete Beach, Florida October 5, 2009

2. ABOUT THE ADVISORY COMMITTEE • ON STUDENT FINANCIAL ASSISTANCE • Purpose • Created by Congress in the Education Amendments of 1986 to be an independent and bipartisan source of advice and counsel to Congress • and the Secretary on student financial aid policy. • To make recommendations that increase access and persistence for low-, moderate-, and middle-income students. • To provide technical expertise and understanding of federal, state, • and institutional student financial aid programs, and systems of need analysis and application forms. • Composition • Eleven members appointed by Congress and the Secretary of Education • Four appointed by the House, four by the Senate, three by the Secretary • For a single term of four years • 1

3. THE ADVISORY COMMITTEE WAS REAUTHORIZED • THROUGH FY2014 WITH CHARGES IN FIVE AREAS: • Simplification of Student Aid • Condition of Access and Persistence • Innovative Pathways to Bachelor’s Degree • Higher Education Regulations • Technical Assistance to Congress • 2

4. CONDITION OF ACCESS AND PERSISTENCE • HEOA also directs the Advisory Committee to provide an annual report • to Congress with analysis and policy recommendations in three areas: • Adequacy of need-based grant aid for low-and moderate-income students. • Postsecondary enrollment rates of low- and moderate-income • students. • Graduation rates of low- and moderate income students. • The Advisory Committee’s approach to fulfilling this charge will entail: • Monitoring all federal, state, and institutional databases, including current financial aid packaging. • Reviewing research efforts on the adequacy of grant aid, • enrollment, and persistence. • Developing recommendations to advance access and persistence across institutions. • 3

5. DATABASES TO BE USED • NPSAS—a comprehensive nationwide study designed to determine • how students and their families pay for postsecondary education, • and to describe the demographic and other characteristics of those • enrolled. • NELS—A nationally representative sample of 8th graders was first • surveyed in the spring of 1988. A sample of these respondents was • then resurveyed through four follow-ups in 1990, 1992, 1994, and • 2000. • ELS—A nationally representative sample of 10th graders in 2002 • that tracks progress through high school and on to postsecondary • education and/or the world of work. • BPS—A longitudinal study designed to collect data related to • persistence in and completion of postsecondary education programs. • IPEDS—Data collected from providers of postsecondary education • including enrollments, program completions, graduation rates, • institutional prices, and student financial aid. • OTHER DATABASES—Census, state, and institutional data. • 4

6. PRELIMINARY FINDINGS • Data from two longitudinal studies show a consistent pattern of unequal • access and persistence for low- and moderate-income high school graduates • who aspire to attend and could gain admission to a 4-year college. • Most telling in the data are their lower rates of applying to and enrolling in a • 4-year college, in conjunction with lower rates of bachelor’s degree completion, • relative to similarly prepared higher income peers. • An important cause of these disparities appears to have been the high and • steadily rising price of 4-year public colleges – net of total need-based grant • aid – a trend that has resulted in a further shift in initial enrollment of these • students away from 4-year colleges to less expensive 2-year colleges. • A careful re-analysis of the data finds a strong negative relationship between • the importance families place on college expenses and financial aid and taking • the steps toward a 4-year college, as well as initial enrollment by type of college. • This overturns an influential previous assessment that family financial concerns • did not affect application and enrollment by college-qualified students. • 5

7. PRELIMINARY FINDINGS (CONT.) • The longitudinal record further suggests that the financially-induced • shift away from 4-year colleges among college-qualified high school • graduates has major implications for persistence and degree completion. • This, in turn, indicates that access and persistence are closely intertwined • sequential processes, and must be considered interdependent policy targets. • Since persistence among these students this decade appears to be stagnant, • at best, and likely declining, the underlying enrollment shift away from • 4-year colleges, if unchecked, will likely widen inequality in bachelor’s • degree completion by family income. • These trends in enrollment and their related effects on persistence are • pre-recessionand likely to be more severe over the next decade. • To be successful, today’s strategies to improve bachelor’s degree completion, • in particular those aimed at the K-12 level, must be informed by the complex • underlying structure of the access and persistence process, as revealed in the • longitudinal studies, as well as by the important role finances play. • 6

8. SCOPE OF FIRST ANNUAL REPORT • TO CONGRESS AND THE SECRETARY • To assess the condition of access and persistence today, as well as • implications for the future, the report compares data from the 1990s • and the current decade to answer the following questions: • Was need-based grant aid from all sources adequate to • eliminate financial barriers for low- and moderate-income • high school graduates who were college-qualified? • If not, what were the effects of the shortfall on their level and pattern of college enrollment? • And, equally important, what was the longer term impact • on their persistence and degree completion? • The answers to these questions identify where educational opportunity • stands today and where educational attainment,productivity, growth, • and income equality may be headed in the next decade. • 7 Key Study Questions

9. OVERVIEW OF REPORT • Part One: Condition of Access • Characteristics of the 1992 and 2004 High School Classes • Academic Preparation (as measured by course taking) • Distribution of Family Income and Parents’ Education • 10th Grade Expectations and 12th Grade Plans • Net Prices of 4-Year and 2-Year Public Colleges • Over the Period: 1989-1990 to 2007-2008 • List Prices from 2008-2009 • Today’s Net Prices: Two examples • Importance of College Expenses and Financial Aid (Net Price) • To Students and Parents • To the Family (a new Index) • Impact of the Importance of Finances • On Steps toward Enrollment in a 4-Year College • On the Pattern of Initial Enrollment by Type of College • 8

10. OVERVIEW OF REPORT (CONT.) • Part Two: Condition of Persistence • Persistence Pattern of the High School Class of 1992 • Rates of Bachelor’s Degree Attainment of the 1992 Class • —By Family Income • —By Academic Preparation • —By Initial Enrollment • Lessons from the High School Class of 1992: Interactions among Family Income, Academic Preparation and Initial Enrollment • Persistence Pattern (Thus Far) of the High School Class of 2004 • Projected Bachelor’s Degree Attainment of the 2004 Class • Discussion of Implications from MOF (2006) • 9

11. SAMPLE TABLE 10

12. RELEVANCE FOR TODAY’S POLICY • While the persistence pattern of the high school class of 1992 may seem like ancient history, it is important for three reasons: • Together with data from the high school class of 2004, it signals • a shift in enrollment away from 4-year colleges among low- and • moderate-income college-qualified high school graduates. • The impact of family income, academic preparation, and initial • enrollment on bachelor’s degree completion of the 1992 class • can be an excellent basis for projections today because the early • persistence pattern of the high school class of 2004 appears to • show little or no improvement over that of the 1992 class. • Since this is the case, the 1992 record provides a good context in • which strategies to increase the number of graduates – including • STEM graduates – should be designed and evaluated for • feasibility, funding requirements, and length of time required. • 11

13. POLICY IMPLICATIONS FROM MORTGAGING OUR FUTURE (2006) • Reinvigorate the federal-state-college partnership to increase • need-based aid from all sources. • Offset increases in net prices of 4-year public colleges with need- • based student aid. • Moderate the trend toward merit-based aid and the increasing • reliance on loans. • Reduce financial barriers to transfer from 2-year colleges to • 4-year colleges. • Expand early intervention programs in middle school and • high school. • Invest in efficient and productive remediation at 4-year colleges. • 12

14. HIGHER EDUCATION REGULATIONS • HEOA charges the Advisory Committee with conducting a review and • analysis to determine whether regulations affecting higher education are: • duplicative • no longer necessary • inconsistent with other federal regulations • overly burdensome • To fulfill this charge, the Advisory Committee will focus initially on • Title IV regulations and: • Develop and maintain regulations website to collect comments on recommendations for streamlining regulations • Convene a review panelto review regulations and provide recommendations with respect to streamlining • A report to Congress is due no later than two years after the negotiated • rulemaking process for the Higher Education Opportunity Act is complete. • 13

15. TITLE IV REGULATIONS REVIEW PANEL Student Representative Angela Peoples, Legislative Director, United States Students Association4-Year Public Institutions Sarah Bauder, Director of Student Financial Aid, University of Maryland- College Park4-Year Private Institutions Dr. Terri Standish-Kuon, Vice President, Communications and Administration, Commission on Independent Colleges and UniversitiesCommunity CollegesLinda Michalowski, Vice Chancellor of Student Services and Special Programs, California Community Colleges Systems OfficeProprietary Institutions Richard (Rick) Jerue, President, Art Institute of CharlestonState Grant Program AgencyMs. Christine Zuzack, Vice-President for State and Special Grant Programs, Pennsylvania Higher Education Assistance Authority 14

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20. PROGRESS TO DATE AND NEXT STEPS • To Date: • Convened a review panel to provide recommendations with • respect to streamlining. • Launched website to collect public comment. • Identified preliminary set of burdensome regulations. • Next Steps: • Continue initial review of regulations. • Continue working with professional associations to • understand the impact of overly burdensome regulations on • their constituencies. • The second year of the study will open up beyond Title IV to all • higher education regulations. • 19

21. ACSFA Website www.ed.gov/ACSFA Email Addresses: Megan.McClean@ed.gov Wendell.Hall@ed.gov Brent.Madoo@ed.gov 20