Senate Committee Recommends Simplifying Financial Aid Regulations
Posted By Paul Southerland on March 24, 2015 at 10:56 am
As the Senate Education Committee works to clean up the Higher Education Act before reauthorizing it later this year, they have already identified several areas of “sloppy, inefficient government,” and “red tape.” And in January, the Committee introduced legislation that would simplify financial aid regulations, reduce the amount of paperwork required, and make it easier for educational institutions to comply with these regulations.
Changes to the financial aid application process
While most of the Committee’s proposed changes will affect institutions, the change to the application process is one that will directly affect students. The Free Application for Federal Student Aid (FAFSA) is a 108-question document that all students must complete if they wish to apply for grants, loans, and other financial aid. The proposed changes would significantly reduce the form’s length, making it easier and less intimidating for students and their families to apply.
Other areas of improvement
The Committee based its changes on a report compiled by a special task force charged with evaluating the Higher Education Act. The report’s primary finding? That many of the Act’s rules were “unnecessarily voluminous and too often ambiguous.” The amount of documentation is bogging down colleges, and the cost of compliance is “unreasonable.” Among the task force’s other findings were ten “Specific Regulations of Concern.” A few notable concerns include:
The verification of student eligibility for financial aid
The current verification process uses income reported on the prior year’s tax return to determine eligibility. The problem is that tax returns for the prior year are often not finalized until April, while students are working on obtaining financial aid as early as January. The committee’s recommendation is income information from the year before that (e.g. for the 2015-2016 school year, students would use income reported for 2013).
Return of Title IV funds
When a student withdraws from a class, the institution must return a portion of the funds received based on how many days the student attended class. The issue? There are hundreds of pages of guidelines to describe this process. The Committee is recommending to give colleges more discretion when it comes to returning these funds, and to hold future discussions for identifying solutions.
Accreditation is a voluntary process in which schools agree to follow guidelines to ensure a quality educational environment. Schools must also be accredited to participate in federal student aid programs. However, the accreditation process has grown to include a broad range of regulations that reach far beyond the original purpose of the program. The Committee wants to refocus the process on educational quality, student learning, and institutional innovation, as well as draw clear boundaries to remove unnecessary and overreaching regulations.
How these changes impact universities and colleges
The task force report cites a 2011 self-audit performed by Hartwick College in Oneonta, NY to determine how much the college was spending on compliance-related activities. Hartwick identified itself as a modestly sized school, estimating its compliance costs at almost $300,000 and 7,284 labor hours every year. A much larger institution, Vanderbilt University in Nashville, performed a similar analysis in 2014 and found that $15 million was spent complying with federal mandates.
Reducing these expenses would be a tremendous help to universities and colleges nationwide, many of which are still struggling with budget cuts that go back to the beginning of the recession. All but two states are still spending less than they did prior to the recession, and eight states are continuing to cut back. Many schools are raising tuition rates, cutting academic programs, and reducing staff to help ease budget issues. Regulatory and compliance relief, like that proposed by the Senate Education Committee, would allow schools to trim their budgets – without compromising educational quality or services to students.