Reauthorizing the Higher Education Act: Issues and Options

A Forum — July 18, 2003

Background

The Higher Education Act (HEA), one of the most far-reaching federal education laws, is due for reauthorization by the U.S. Congress this year and next. HEA authorizes programs that provide college students with financial support to attend college; it also includes other programs related to teacher training and institutional aid. A new report from the Institute for Higher Education Policy (IHEP), Reauthorizing the Higher Education Act: Issues and Options, suggests an agenda of major policy issues for the HEA reauthorization and options for dealing with these issues. At this AYPF forum, the authors of the report addressed the issues identified in the report, as well as related policy options. The full report can be viewed and downloaded from the IHEP website at www.ihep.org.

Forum Summary

According to Jamie Merisotis, President of the Institute for Higher Education Policy, the report is the product of eighteen months of analysis and discussion by a wide range of national higher education experts under the leadership of the Institute. Ten topics that should and are likely to be addressed during the reauthorization were identified. These include social, cultural, and academic barriers to higher education access and persistence, financial barriers as they relate to federal student grants and loans, higher education tax breaks, accountability for college prices, the role of federal spending and regulation in producing ‘quality’ education, the regulatory burdens of HEA, and the capacity of HEA to respond to new national priorities.

Aliza Cunningham, Director of Research at IHEP, addressed higher education cost issues. She argued that while these issues are not currently addressed by HEA, they are critically important, as indicated by recent trends. For instance, the economic value of a bachelor’s degree versus a high school diploma continues to increase. At the same time, college costs, controlling for inflation, have steadily increased for all types of institutions. The percentage of student financial aid covered by Pell grants has decreased and lower income families must use an increasing percentage of their income to afford higher education. Consequently even as the economic value of higher education increases, lower income families are experiencing greater difficulty accessing and affording that education.

It is difficult to determine the exact causes of the increase in college tuition; it is necessary to consider both the inputs (things such as revenue from the state and private gifts), and the outputs (services provided to students, increases in the value of higher education). However, some Members of Congress are concerned that increases in student aid are responsible for rapid increases in college costs. According to Cunningham, however, while tuition has risen at the same time that student aid has increased, this is not necessary a causal relationship; research shows that increases in student aid is only one factor contributing to increases in college tuition. Thus, even if there is a causal connection between federal aid and increasing college costs, this is not a strong relationship and there are many other complicating factors that must be considered.

Up to this point, Congress has not yet used HEA to control higher education costs but this is now being discussed. Cunningham suggested we should ask whether it is appropriate for the federal government to exert this control over higher education institutions and that we should think carefully about some issues that arise: would federal involvement lead to conflict with state higher education policies? How would policies to control costs work? How would they be implemented? What unexpected effects might occur? What would be the impact on student access to higher education?

Jane Wellman, Senior Associate at IHEP and an author of another chapter in the report, discussed the role of the federal government in ensuring the quality of higher education. According to Wellman, the focus of the federal government on institutional accountability has shifted over time from administrative to financial accountability and then to institutional and academic performance. However, too often, the meaning of the term accountability has not been defined clearly or it has been used inconsistently in HEA; this should be remedied in the reauthorization.

Currently, the role of the Department of Education in quality assurance is complex and multi-faceted; HEA uses a variety of direct and indirect strategies to enforce accountability. These include 1) promoting and protecting market strategies; 2) applying direct regulation of standards or terms of eligibility; 3) leveraging other processes for quality assurance (such as accreditation); and 4) collecting data and supporting research. Current discussion surrounding the HEA reauthorization reflects an agenda of greater accountability. A variety of initiatives to improve higher education quality will most likely be considered. One initiative might be direct regulation of institutional and student eligibility for financial aid. Measures of retention, graduation, and time to degree might stand in as surrogates for quality and institutional performance. Other options include a) leveraging market strategies to enhance accountability by increasing public information about student learning, and b) increasing quality through expanded competition in higher education. According to Wellman, it is very important to realize that these various approaches would involve certain tradeoffs; there is no perfect policy solution here.

Wellman said that the gradual growth of the federal role in quality assurance has not followed an explicit agenda. Moving forward on a more explicit or aggressive federal role is bound to be controversial, yet an expansion of this role could be carried out without serious political backlash if the law were crafted to ensure a minimum of new reporting requirements. Any dramatic increase in the federal role in quality assurance would have to be preceded by a groundswell of public support. In the absence of a clear mandate for change, any expansion in this role should be incremental.

Thomas Wolanin, editor of the IHEP report, said it is vital that Congress keeps in mind the core goal of HEA during the reauthorization: to help people access and complete college who would not do so otherwise. Wolanin identified some of the different types of barriers to access and completion that HEA needs to address: 1) cultural (students do not believe that higher education is accessible); 2) academic (students do not receive adequate preparation in K-12 to prepare them for higher education); 3) financial (students do not have adequate financial resources and 4) insufficient space for colleges to enroll all interested students.

Wolanin discussed several of the findings from the IHEP report and some of their implications for HEA reauthorization: First, traditional college students now make up only 25 percent of the student body; therefore, HEA needs to be revised to take this demographic change into account. Second, while college tuition has increased 900 percent since the original passage of the Act, the first-year loan limit has not increased and there has been a dramatic growth in private loans, credit card debt, and the number of hours of employment that students must take on. To ensure that HEA achieves its mission, Congress needs to act to make sure that loans are made available at a reasonable interest rate. Third, the current loan forgiveness and cancellation initiatives available to teachers and others are not very enticing and for this reason are not effective. To make them more enticing, rewards must be larger, and students must be more certain that they will be available after graduation. Lastly, Congress should consider removing many of the regulatory burdens facing states and institutions of higher education.

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