On behalf of the Center for Law and Social Policy (CLASP), I respectfully submit to the Advisory Committee on Student Financial Assistance this testimony describing our policy vision for two of the four topics addressed by the panel: access and completion; and simplification in higher education. CLASP has also submitted separate testimony by Senior Policy Analyst Anna Cielinski on consumer information and data transparency.

CLASP is a national nonprofit working to improve low-income families’ economic security and create pathways to education and work. Within CLASP, the Center for Postsecondary and Economic Success (C-PES) promotes policies and investments that increase career advancement and economic mobility for low-income adults and youth. Low-income and nontraditional students bring life experience, which enhances their educational experience and, at some institutions, contributes to higher completion rates as compared to their younger peers. However, these students are often juggling work and/or family obligations; they need flexible schedules and service delivery modes that accommodate their other responsibilities. They also require better information to make educational decisions.

Reauthorization of the Higher Education Act (HEA) provides a significant opportunity for Congress to update the law to reflect the changing face of higher education, as well as boldly reinvent federal higher education policy to ensure America’s postsecondary education system has what it takes to educate an increasingly diverse student body while accommodating the needs of a rapidly shifting labor market. Much of the discussion and many of the recommendations that follow can also be found in CLASP’s HEA recommendations, published in August 2015. In those recommendations, we focused on three areas of reform to support low-income and non-traditional students:

• Make financial aid responsive to today’s students through reforms that address the needs and attendance patterns of nontraditional and low-income students;
• Transform education delivery to support student success by connecting student financial aid with programs, benefits, and sources of student assistance or cross-agency data systems; establishing robust career pathways; better integrating competency-based education; and developing workforce partnerships; and,
• Leverage outcome information to support better decision making through data collections that reflect the current student population and measure their success.

I appreciate the opportunity to share these recommendations with the Advisory Committee and to raise concerns about access, completion, and simplification in the context of low-income and nontraditional students’ experience in postsecondary education.

Access and Completion

Low-income and nontraditional students face many barriers to access and completion. The most significant is finding the financial resources to pay for their education. Students’ unmet financial need (their remaining college costs after their expected family contribution and any grant aid) can be greater than—and for the lowest-income full-time independent students more than twice as much as—their family’s annual income. As the graphic below shows, this figure has risen over time.

Average Unmet Need of Lowest-Income Students Over Time
(inflation adjusted)

It’s critical to make reforms that address this unmet need before the problem gets even worse. This begins with Pell Grants—the foundational financial resource for low-income students. Many of CLASP’s HEA policy recommendations focus on improving the Pell Grant program. A brief summary of these proposals follows.

Allow students to receive Pell Grants more flexibly by reinstating year-round Pell. This policy change would benefit the two-thirds of postsecondary students who need to work while in school. It would also benefit students who have changing family and life circumstances or who choose to accelerate their studies and start a career more quickly. When year-round Pell was in place previously, 1.2 million Pell recipients were able to persist over the summer term.[i]

Restore the full Pell award under the Ability to Benefit (ATB) provision for qualified students without a high school equivalency (HSE). The ATB provision offers an important access point to higher education for many low-income and low-skilled students, providing an opportunity they would not otherwise have to increase their economic mobility. It is especially beneficial to students of color; 31 percent of ATB students are Hispanic, while 19 percent are Black.[ii] ATB allows students to progress directly into postsecondary education without first attempting to use the already-over-capacity adult education system to gain a high-school equivalency credential. At least 160,000 adult education students are on waiting lists, and nearly every state reports a waiting list for services.[iii] Current ATB-eligible students should have access to the full Pell award. To make that a reality, it is necessary to remove restrictions that have created a two-tiered Pell eligibility system.

Reduce the “work penalty.” The Income Protection Allowance (IPA) is the amount of income a student or family can keep to cover minimal expenses before being expected to contribute toward college costs. Setting IPA levels too low can penalize students who work while in school. It is more significant than ever to support working students; 39 percent of students are employed part time and 27 percent full time while attending postsecondary education.[iv] Among independent students who work nearly full-time hours, only a quarter earn at least $15,000 per year.[v] This amount is 150 percent of the federal poverty level for a family of one. To avoid penalizing students who must work while enrolled in school, the IPA should be expanded to 150 percent of the federal poverty level (to be updated annually). Congress should also consider modifying the IPA amounts to include an adjustment based on the cost of living in different geographical areas. Because 64 percent of students live 25 miles or less from their institution, incorporating this adjustment would be more reflective of students’ actual living expenses.

Harmonize Pell Grant requirements. All students are required to maintain Satisfactory Academic Progress (SAP) for financial aid eligibility. SAP guidelines allow for student aid up to 150 percent of program length, but students enrolled full time in 12 credits per semester would reach their lifetime limit (six years) prior to completing their program (at seven-and-a-half years). This is because taking 12 credits instead of 15 can add a year to a 4-year degree program.[vi] Under the current Pell semester cap, a full-time, low-income student would only be eligible for Pell aid up to 6 years, leaving significant unmet need in their final year of study and threatening their chances of completion. Thus, the lifetime cap should be increased to align with the 150 percent limit.

More efficiently target Pell Grant aid. The current expected family contribution (EFC) calculation is severely limited, in that there is no way to identify the true gap between a student’s resources and the direct and indirect educational costs of attendance. By creating a “negative expected family contribution” calculation in the need analysis, low-income students could document the full extent of their financial need and Pell funds could be more efficiently targeted to students with the most need. Under this proposal, students would be eligible for additional Pell Grant aid up to $750 to meet their cost of attendance. This proposal could also address current racial inequities. While high debt-to-asset ratios present major challenges to covering college costs, the current formula does not consider household debt.  Consequently, Black students—whose families have higher debt-to-asset ratios than their peers—“are disproportionately likely to receive less financial aid than they need.”[vii]

Maintain the Pell Grant’s spending power. Under current law, the maximum Pell Grant increases annually based on the Consumer Price Index (CPI) through 2017. After that time, the grant will remain a level amount. The Congressional Budget Office has estimated that, in real terms, allowing the increase to expire would cause the average Pell Grant to decline by 12 percent over the 10-year period ending in academic year 2023-2024.[viii] During the last period when Pell was allowed to remain stagnant (2010-2013), the average tuition, fees, room, and board at postsecondary institutions rose 7.4 percent.[ix] Individually, these factors can put higher education further out of reach for low-income students; in tandem, they’re even more devastating. The statutory increases to the Pell Grant award tied to CPI should be indefinitely extended.

Many students attend higher education throughout the year, often having to extend their time in school beyond 100 percent of completion time for their program of study due to work, family, or unforeseen circumstances. Protecting the eligibility of students who are unable to attend a full-time course load of 15 credits is a significant step toward ensuring nontraditional student access to financial aid. Overall, 37 percent of all students attend part time, including 59 percent of community college students.[x] Thus, a priority should be made to:

Preserve aid eligibility for half-time and less-than-half-time students. Significant evidence shows that students who enroll at less than half time do so only temporarily[xi]—and often due to factors out of the student’s control, such as courses not being available or being full.[xii] Grants during periods of lower enrollment intensity help students maintain momentum and avoid dropping out entirely. Importantly, for non-first-time students, mixing part-time and full-time enrollment leads to a reduced likelihood of dropping out and an increased chance of completing their associates degree.[xiii] Aid eligibility should be preserved for students who mix their enrollment over the course of their college program, including when they attend less than half time. This supports national college completion goals while helping low-income, working students earn postsecondary credentials.

Maintain the full-time enrollment standard of 12 credits per term. Many nontraditional students struggle to enroll in more than 12 credits per semester because of their life circumstances, such as the 26 percent of postsecondary students that are raising children. [xiv] For instance, nearly one-quarter of students who are enrolled full time are considered to be an employee enrolled in school (as opposed to a student who is working to meet expenses). [xv] An additional policy support that would help drive on-time completion for these students is to allow them to receive a Pell Grant year-round.

While a free college proposal, such as President Obama’s “America’s College Promise,” does address many of the financial pressures mentioned in our discussion on unmet need, there are a number of important issues to consider in designing such a program. CLASP supports President Obama’s proposal in part because it is a “first dollar” program, meaning it covers tuition and fee costs; this allows students to apply other grant aid, including Pell Grant funds, to other educational expenses. The gaps in student unmet need occur as a result of all costs of higher education, not only tuition and fees. We commend this proposed program for allowing part-time and older students to be eligible.[xvi] This is an uncommon and significant characteristic of “free college”- or “promise”-style proposals. There are many other examples of responsive programs that address nontraditional and low-income students’ needs by allowing flexibility in the continuity or intensity of enrollment and/or providing grants that cover costs beyond tuition and fees.[xvii] Any “free college”-style proposal must be as inclusionary as possible—in terms of accepting students attending less than full time and those who do not enroll immediately after high school—and must also have a “first dollar” program design.

In order to close the gap in unmet need and increase low-income students’ access to and completion of higher education, it is critical to provide financial supports beyond those currently available in the HEA. For instance, students need: access to comprehensive student supports, including public benefits; access to quality competency-based programs and assurances of quality that is evidenced through data and transparency; better contextualized and integrated developmental education so they can get to their core coursework faster; and clearer rules around the use of financial aid in career pathway programs.  Our recommendations in these areas are as follows:

Give low-income students access to more comprehensive financial supports. Public benefits, such as Medicaid and subsidized child care, can sustain students in the short term while they work toward degrees and family-supporting jobs.  On average, students who receive benefits complete more terms than those who do not receive benefits. This is especially true for students who bundle multiple benefits while enrolled. The HEA could integrate public benefits into a comprehensive student financial support strategy by adding them as an authorized activity for Title III and Title V institutions, the TRIO program, FIPSE, and CCAMPIS, as well as expanding experimental sites authority to study the impact of benefits receipt on college persistence and completion rates.

Innovate using competency-based approaches. Competency-based education (CBE) has the potential to provide flexible, quality-assured learning and credentialing options to better serve the needs of today’s diverse student body. CBE can also save money if it focuses on learning, rather than time in the classroom, providing credit for prior learning, and flexibility to move through the curriculum at an accelerated pace. The HEA should be updated to support capacity-building by fostering improved transfer and articulation agreements, scalable credit for prior learning processes, and competency-based assessment and curriculum. Additionally, an increased focus must be placed on data and transparency, including by aligning competency-based approaches with the Workforce Innovation and Opportunity Act and the Perkins Act.

Aid state and institutional efforts to codify programs for low-skilled adults. More than 60 percent of community college students are referred to at least one developmental education course upon enrolling in college;[xviii] however, recent research shows that prescribing long sequences of developmental education may actually hinder student progress, as opposed to preparing students to transition to college-level work. Considering the projected demand for workers with higher levels of education and the known challenges for basic skills students, the HEA should be updated to promote pathways that enable students to move into postsecondary education and training and complete credentials. As part of this strategy, CLASP believes reconsideration should be paid to two currently enacted programs in the HEA: the Business Workforce Partnerships program (Section 803) and Bridges from Jobs to Careers (Section 851), which leverage best practices at institutions to strengthen ties between academic offerings and the workforce and promote innovation in program content and delivery.

Clarify the minimum program length financial aid eligibility requirement. The HEA states that for a certificate program of less than one year in length to be eligible for federal financial aid, it must be at least 600 clock hours of instruction, 16 semester hours, or 24 quarter hours, and offered for at least 15 weeks. However, many career pathway programs, which target occupations in growing fields with family-supporting employment and work with employers to grow skilled workers, include first step(s) that do not meet the HEA’s duration requirements. At the end of such programs, which are part of an articulated pathway, students receive a credential that has demonstrable value to local employers. However, many higher education institutions are unclear about what the current minimum program length durations mean for these short-term programs. As a result, institutions either seek out non-Title IV funding—threatening student access to programs with proven employment outcomes—or enroll the student for more credits than are necessary to complete the training. Program length rules should be amended to clearly state that high-quality, short-term career pathway programs are eligible for Title IV student aid.

Finally, our highly decentralized education system necessitates federal-state partnerships to guarantee that states adopt and expand on best practices. States should receive funding through the HEA to adopt more coordinated planning and policy frameworks that are shown to improve student completion rates and employment outcomes, especially for at-risk students. This could be achieved through a program that incentivizes states to help community colleges build innovative workforce development partnerships, following the model of the Grants to Eligible States for Community Colleges program , which was proposed in the Student Aid and Fiscal Responsibility Act of 2009 (a bill that passed the House with bipartisan support).[xix] In addition to requiring that institutions demonstrate their effectiveness at improving completion rates (including by subgroups of students), improving employment-related outcomes, serving high-need students, and building or enhancing partnerships with workforce investment boards, such funds should be made available for:

• Interagency planning to increase alignment of policies and standards among postsecondary education, workforce development, and human services;
• Engaging state policy leadership and the workforce community;
• Creating state incentives, including matching funds for local implementation of comprehensive service delivery approaches;
• Developing comprehensive longitudinal data systems, including across adult education, career and technical education, and workforce development programs;
• Preparing a strategic communications strategy about the necessity for systemic policy change; and
• Capacity-building efforts.

Simplification

Many students do not realize they are missing out on crucial benefits when they fail to complete the Free Application for Federal Student Aid (FAFSA). This is especially true for low-income and nontraditional students. Among students who listed “the forms were too much work” as a reason they did not apply, half had incomes under $50,000 and close to 40 percent would have qualified for a Pell Grant.[xx] Making simple reforms that improve applicants’ experience with this form, including minimizing their exposure to it, could improve completion rates as well as the accuracy of the information that is provided.

In many ways, this is analogous to problems students have after separating from school. Students with federal student loans are again forced to contend with forms, interpret income and tax information, and select among repayment plans that may be indistinguishable or of unclear benefit to them. Simplifying the student experience in both of these areas is critical to ensuring students are able to access aid where and when it is needed as well as repay their loan obligations while remaining in good standing on their debt.

Simplify the FAFSA by implementing the use of prior-prior year and increasing the use of the IRS Data Retrieval Tool, and raising the automatic zero EFC threshold.

The Data Retrieval Tool (DRT) saves time, increases data accuracy, and reduces the chance of a family’s application being selected for verification, an extra step that can further derail student efforts to retain aid. However, timing is an issue; there can be long delays before tax return data becomes available through the Tool. For mailed returns, it can take as long as 11 weeks after filing; for electronic returns, it can take 3 weeks. Oftentimes, financial aid applications must be submitted early in the year—well before tax returns are due—either because aid is awarded on a first-come, first-served basis or because of scholarship deadlines. Many more aid applicants could take advantage of the DRT if they were allowed to use the “second prior”-year tax data (the tax year that was two years before enrollment, or the “prior-prior year”). Allowing students to use data from the prior-prior year gives them access to more relevant information further in advance, making more informed college decisions possible. Also, it reduces the burden on institutions to verify application data, allowing them to redirect staff time to student support.

The use of income from the prior-prior year should serve as the basis of student (or student family) income, and students and families should be permitted to use the DRT to import that data. In order to protect students or students’ families who have experienced a significant income change in between the prior-prior tax year and the time of enrollment, there should be explicit language encouraging financial aid administrators to use professional judgement in those situations. Research suggests this policy change could negatively affect single independent students;[xxi] consequently, its impact should be modeled by dependency status prior to implementation to build a fuller picture about the likely impact on nontraditional students.

Further, increasing the automatic zero EFC threshold would allow more students to fill out a simplified form based on their qualifying income. In the 2015-2016 academic year, students qualify for an automatic zero EFC if their (or their parents’) income is $24,000 or less and they (or their family) meet other eligibility requirements (e.g., receipt of selected public benefits or use of a simplified tax form). When the threshold was lowered to $24,000 in the Consolidated Appropriations Act of Fiscal Year 2012, the new income maximum took away postsecondary student aid for low-income students by overestimating the resources available to needy families and thereby reducing their potential grant aid. This change was estimated to have the most impact on vulnerable students and families between 150 percent and 190 percent of the poverty line.[xxii] An analysis of students attending public institutions in Kentucky revealed that the reduction in the automatic zero EFC level had a disproportionately negative impact on Black and Hispanic students at four-year institutions, further lowering their rates of program completion, which have historically been lower than White students’.[xxiii] If the automatic zero provision had not been changed in fiscal year 2012, and instead been allowed to continue to increase by the Consumer Price Index, the current automatic zero threshold would be $33,000. Thus, $33,000 should be established as the new threshold and should be indexed to increase annually with inflation in the future.

Limit loan repayment plans to one standard and one income-driven repayment plan. Eight repayment plans are available to federal student loan borrowers, including five that are income driven. When explanations about the Income-Based Repayment plan were provided to borrowers, many had never heard of it and struggled to understand even the basic requirements of the plan.[xxiv] In addition, many of the income-driven repayment (IDR) plans have similar or the same benefits but narrow restrictions around who qualifies or which loans are eligible. Going forward, borrower repayment options should be limited to two plans: one standard and one income-driven, modeled after the Pay As You Earn plan. Borrowers should be automatically enrolled in the IDR plan in order to prevent delinquency and/or default. Additionally, Parent PLUS loans should be made eligible for the IDR plan to continue to allow borrowers choice in their repayment options as well as acknowledge that these borrowers might struggle during repayment and need a plan that is responsive to their financial condition. Borrowers with these loans should also receive entrance counseling at the time of origination, so that they are fully informed about this financial obligation.