Federal Financial Aid Reforms Proposed

A panel of education experts and policy analysts have released a set of recommendations aimed at simplifying the process by which students apply for federal financial aid, in order to increase the representation of low-income students in higher education.

The proposed changes, issued last Thursday by the independent Rethinking Student Aid study group, include obtaining all financial information from the IRS, instead of requiring that students compile tax information themselves. The report also calls for adjusting the size of Pell Grants for inflation while accounting for family size and adjusted gross income.

The study group—which included Graduate School of Education professors Bridget T. Long and Thomas Kane—also suggested creating incentives to increase the retention of low- and moderate-income students at colleges and universities.

Finally, the report proposes developing a federal savings program for low-income families, in which the government would make deposits into an account which could only be drawn upon for postsecondary education.

According to Sandy Baum, a senior policy analyst for the College Board, the current state of federal financial aid deters many students in lower income brackets from pursuing a college education.

“The system is difficult for students to navigate and not very predictable,” said Baum, who also served as the study group’s co-chair. “It’s impossible to know ahead of time how much aid you’ll get.”

Baum said that the haphazard creation of federal aid programs, which has occurred through piecemeal legislative action since the 1950s, is responsible for the system’s convoluted structure.

While Baum said it was difficult to predict how many more low-income students would apply to college under such a plan, she said that a guarantee of federal aid has been shown to increase enrollment.

“We believe that students from low-income families will be more likely to prepare for college because they will be able to pay for it,” she said.

Mark Kantrowitz, publisher of the Web site FinAid.org, said that because the report’s proposals do not differ significantly from previous ones, they’re likely to be politically palatable.

But Kanerwitz criticized the proposal for not going far enough in its suggestions for reform.

“The purpose of this report is to try to stimulate discussion and to try to reach consensus,” he said. “And any time you try to reach consensus, you’re not going to really stir things up, you’re not going to make waves, you’re not going to do something really bold.”

Kanerowitz said that the consideration given to compromise and political expediency may help the proposals be put in place relatively quickly, but he added that the political climate would ultimately decide how quickly the proposals are enacted.

“A lot depends on who’s elected President, and whether or not the Democrats retain control of the Congress,” he said.

While Baum acknowledged that federal financial aid policy would not be reformed overnight, she said the committee was confident that their recommendations would generate discussion.

“We don’t have any thoughts that next week, that immediately Congress is going to start legislating our proposals,” she said. “But we are optimistic. Our goal is to change the conversation, to get people to pay attention.”

—Staff writer Alexandra Perloff-Giles can be reached at aperloff@fas.harvard.edu.