Remarks to the Coalition of State University Aid Administrators

   

It is a special pleasure to speak to you today because it gives me the opportunity to do something I’ve wanted to do for some time: say “thank you.” Thank you for the wonderful work you do. I know very well how important the work of financial aid administrators is, because student aid has been one of the most important elements of my personal and professional life…starting with the fact that I probably wouldn’t be standing here speaking to you today without it.

When I was an undergraduate the cost to attend college was pretty low. But I was a first generation college student, with five siblings still under my parents’ roof. I knew calling home to ask my folks for money if things got tight was not an option. The Work-Study program at my institution and state aid programs helped me pay my bills, or I might never have graduated without it.

Years later, when I was president of Buffalo State College, that undergraduate experience gave me a deeper, personal understanding of how vitally and intimately student assistance is connected to access and opportunity. So many of the students at Buffalo were in the same situation I had been in:  hard working, low income, first generation young people who would not have made it to graduation without financial aid.

Because I knew from life—not theory—how important aid was not only to our students’ success but also to the success of our institution, I made it a point as president, to work closely with our student financial aid administrators. 
By partnering with the financial aid professionals, I had an early warning system to alert me to trends that meant hardships on our students – everything from how many students were at risk of default, to how the price of books in the book store were stressing student budgets. I also paid particular attention to students in good academic standing who were experiencing financial challenges. This past January at my former institution the number of students in good academic standing but in need of aid to continue their education was nearly 300.

Today, as President of AASCU, student aid remains a critically important aspect of my work. Access, affordability and educational opportunity are at the heart of AASCU’s mission. That puts student aid front and center at our more than 430 institutions.  

More than three million AASCU undergraduates receive aid. Many are first generation students. About a third of the full time undergraduates receive aid use Pell Grants, and roughly 46% of them receive federal loans and over 50% are minority students. To put it another way, many of our students won’t graduate, and many of our institutions won’t succeed without strong, vibrant student aid programs.

If I’d said what I just did about student aid 18 months ago, I could have probably just stopped there and moved on. But the last 18 months have been historic—and not in a predictable good way.

Throughout my higher education career, I have lived through several recessions. I’m sure you worked through a least one or two, as well. Each time, the economy recovered fairly well and fairly quickly. But what we’re going through now is something fundamentally different. I’m sure all of you are much more familiar with all the grim economic statistics than I am. So I’ll just say that this recession is so devastating that it’s changing the playing field.

Every week I receive calls from presidents seeking advice on how to handle budget cuts. All of them say this has been the most difficult year of their presidency.

True, we’ve seen some glimmers of hope in the national economy over the last few weeks. And if we’ve learned anything over the last couple years, it’s that making economic predictions is not what you’d call an exact science.
However, I’m afraid that for colleges and universities we’re not going to “return to normal.” “The good old days” before the recession of 2008 and 2009 are gone forever. Even when the recession officially ends, higher education will have to get used to a “new normal,” that will make all of our lives more difficult.

Don’t look for state budget surpluses to return any time soon. State budgets, which we depend on, will continue to be stressed. More than half the states already anticipate deficits for fiscal year 2011, even after big cuts in fiscal year 2009, and more reductions in fiscal year 2010. It’s easy to understand why. After their biggest drop in 50 years, state tax receipts are not rebounding. Believe it or not, even gambling revenues are down. And 2012 is now being projected as our most difficult fiscal year.

At the same time, states confront increasing costs in health care, state pension programs, prisons, k- 12 education and other areas. The stimulus bill did contain money for state higher education budgets; it is one time money and will barely replace what states are losing from crashing sales, income and property taxes.

While funding continues to decline, one critically important aspect of higher education is on the rise: enrollment is surging, especially at AASCU members and other state colleges and universities. The result? For colleges and universities, the “new normal” will feature a collision between these two giant waves – pressure to cut back on higher education to rescue budgets will be smashing into rising demand for access to higher education.

I hope I’m wrong, but I believe the outcome of this collision will be some of the greatest threats to access and educational opportunity in decades, as pressure rises to cut back or re-direct student assistance.

We can see the first signs already.

  1. Credit remains tight for some states’ student loan programs.
  2. Some states are scaling back their student aid and scholarship programs.
  3. Some are reducing or ending state loan forgiveness programs, which were aimed at encouraging students to pursue occupations –teachers, doctors, etc. -- or serve in areas where society’s needs aren’t being met.

In addition, as state funding shrinks, colleges are under pressure to increase efficiency and graduation rates, diverting aid from needy students to “better” students. I’m concerned that they will seek students who already come to college well prepared, because they will be more likely to graduate and boost completion rates.

In fact, a recent report from The Education Trust found that flagship public universities “continue to enroll students who are significantly richer and significantly whiter than the state populations they are supposed to be serving.” The report added, “many of these universities direct aid to wealthy students who will attend college without it… In fact, some low-income students who literally cannot afford to attend college without a grant must find a way to finance the equivalent of 70 percent of their family’s annual income.”

Those are the trends. Here are some of the voices behind them.

  1. Joaquin Beltran, 25, is a senior studying political science and is president of Associated Students Inc California State University’s Los Angeles campus. When he learned his tuition was going up, he said, “I’m one of those students…who is working and living paycheck to paycheck. I can’t afford this increase.”

  2. Ezra Kazee has $29,000 in student debt and has been unable to find a job since graduating from Winona State University in Minnesota last May. He says, “You often hear the quote that you can’t put a price on ignorance. But with the way higher education is going, ignorance is looking more and more affordable every day.”

  3. And when a Kentucky agency cut back its program to forgive student loans for schoolteachers, Travis B. Gay knew he and his wife, Stephanie — both special-education teachers — were in trouble. “We’d gotten married in June and bought a house, pretty much planned our whole life,” said Gay. Now “it’s going to be very difficult for us to make our student loan payments, house payments and just eat.”

Those are some of the challenges the New Normal poses for students. What about the challenges to institutions and to the people in this room, our chief financial aid administrators?

About the only good thing I can say about this terrible recession is—to paraphrase Samuel Johnson – who said an economic meltdown does tend to focus the mind wonderfully. Everyone in higher education now knows that adjustments at the margin won’t work any more. Instead, we need fundamental change.

But where should we start? It may sound a little strange, but I think we have to begin the process of change by going back to basics: re-dedicating ourselves – presidents and chief financial officers alike—to the bedrock goals of public higher education.

As Russ Meyer and Joseph Garcia, Provost and President of Colorado State University-Pueblo recently wrote,Higher education is about more than just cost efficiencies; it is about access to education that allows people to build better lives, become more productive citizens and, yes, pay more taxes as a result of higher wages.  [Colleges and universities] were formed to bring education to the people, not to make it more difficult for them to attain.”

Access, equity and opportunity—these are what AASCU is all about; the goals I devoted my career to during the “old Normal,” are the goals the higher education community must continue to pursue now. I say that not just because George Washington Carver had it right when he wrote, “Education is the key to unlock the golden door of freedom.” Access and equity in education are noble objectives and more. They are also what we need to thrive as a nation in the 21st Century economy.

President Obama recently said, “The source of America's prosperity has never been merely how ably we accumulate wealth, but how well we educate our people. This has never been more true than it is today.”

As he pointed out, by 2016, four out of every 10 new jobs will require at least some advanced education or training. And yet, in just a single generation, America has fallen from 2nd place to 11th in the world in the portion of students completing college. The Lumina Foundation estimates that if colleges continue to graduate students at current rates, by 2025 the United States will fall short by 16 million in the number of college educated workers needed to keep up with competitors abroad.

The only way the nation will be able to fill that gap is by strengthening access and opportunity – ensuring that minority, immigrant and first generation students have the chance to enter colleges and universities and complete their studies. Those are exactly the young people who are most in need of financial assistance and who will comprise the largest majority of college age students.

Unfortunately, reaffirming a commitment to equity and access is the easy part. Pursuing those goals while ensuring that colleges and universities survive and thrive in the new normal is what gives higher education leaders gray hair. The job of presidents and aid administrators has always been a high wire balancing act. Now we have to keep our balance in a hurricane—juggling the short and long terms, the needs of the underserved and fiscal constraints, all while trying to rally our stakeholders to give us the support needed to make changes.  

Let me offer a few thoughts on how to stay upright on that tightrope. They are ideas based on experience—my own and that of AASCU members.

If you haven’t seen it yet, I highly recommend a new report by The Southern Regional Education Board. The board studied the ways 15 AASCU colleges and universities were able to improve their degree completion rates. The report noted “Financial aid officers …play a critical role in degree completion, especially for students with economic challenges.”

What I’ve found is that the key is for Presidents and financial aid officers to develop creative ways to work together.

First, they should look for new ways to work together within their own campus. For example, colleges and universities should create new forms of cooperation and improved communications between their presidents and their chief financial aid officers. A close relationship between these two groups exists on some campuses already. However, on far too many, I’ve found that the financial aid office is in its own silo, two or three tiers removed from the office of the President. That won’t work in the new normal.

In the 21st Century, the financial aid office should have a direct and regular communication channel to the president, so that aid officers can be effective advocates for students. In particular, chief financial aid officers should be reporting on challenges and trends: which groups of students are in danger of dropping out? Are there specific issues – the price of books, unexpected costs, changes in the economy – that are putting certain students at risk?

In addition, presidents should ensure that other administrators share information with financial aid officers to help ensure that students are receiving the help they need. Financial aid officers should have access to data on students’ academic progress or attendance.

You can find real life examples of this at several AASCU institutions, including Sam Houston State University in Texas. At that institution, financial aid staffs regularly refer students to other campus offices for help with study skills, reading and writing.
Presidents should also work to ensure that financial aid officers get involved with students even earlier than they do now – during the recruitment process. At one of our institutions, Elizabeth City State University, a historically black institution in North Carolina, financial aid staff often visits local high schools in the region throughout the year. They help students understand that college is possible for them and help them complete financial aid applications.

In addition, Presidents and chief financial aid officers should work together to find ways to use student aid to create incentives for students to complete their degrees and achieve at high levels. Northwest Missouri State University, for example, has had great results providing financial aid incentives for students earning high GPAs and making good academic progress.

Presidents and financial aid officers could also be working together to reach their most important outside audiences. I’ve found that when Presidents fundraise, they typically bring along a student or two to tell their stories. That’s a wonderful approach. But in the New Normal, the chief financial officers should be there, too. That would give them the opportunity to talk about the challenges facing student assistance, describe how the institution is meeting them, and lay out how the alumni and other donors can help. Take my word for it, that approach worked at Buffalo and can work on your campus.

In addition, financial aid officers should be part of the team the President takes along when making the institution’s case to a state legislature for funding. Chief financial aid officers can do a lot to demonstrate that the state funds are going to students, to help them achieve.

Now, having offered you that list of recommendations let me make a commitment. AASCU will take the lead in fostering the kind of cooperation I’ve just spoken about. We will launch an initiative to encourage the presidents of our institutions to reach out to chief financial officers in new ways. We will make available to them the best practices, the forms of cooperation that have proven effective in maintaining access and improving completion rates, even in the face of all the challenges of the new normal. We also continue to meet with Bill Taggart of the Department of Education to refine federal aid dollars and tools such as IBR. We believe that there are enough tools and opportunities to avoid student defaults.

And of course, I’ve got something to ask in return. I think COSUAA could play a terrific role in communicating to opinion leaders and the general public how the challenges of student aid have been changed by the New Normal – what institutions of higher education are doing in response, and what we need from federal and state governments as well as foundations and private donors. Working together, we could really make some waves. Forward your points of interest to myself or George.

You were kind enough to invite me to come here from Washington DC where AASCU is headquartered, so let me talk just briefly about some of the latest developments in the nation’s capital, and how they might affect the New Normal. 

I may be wrong, but I’d bet that the people in this room are one of the few groups of Americans who were most concerned about the “education” part of the Health Care and Education Reconciliation Act that President Obama signed last month.  As you well know, that Act replaces the old bank-subsidy student loan program with direct lending by the Department of Education. It will generate $61 billion in savings over the next 10 years, part of which will be used to help expand the Pell Grant program. Over all, it’s wonderful news for higher education and for students.

But this change also poses a challenge for the higher education community, which we must take very seriously. As we discussed the legislation with the Department of Education, we discovered that one of the difficulties in keeping students out of default was simply keeping track of them. Students with loans would move, or graduate, or transfer. The Department would lose track of them. The grace period on loans would expire, without the students being aware that they had to start making payments. So students would slip into default. With the huge expansion of direct lending, colleges and universities will have to develop new tools to keep track of students with loans, and help prevent defaults. We need help with new campus models that are easy to implement and scalable.

While we have to make changes to respond to the most pressing, near term challenges posed by the New Normal, I want to take a few minutes to talk about the long term, as well.

Even as we create innovative ways to meet the financial needs of students, over the long term institutions will have to more fully understand both our core activity of teaching and the core product of student learning. One way to do that is to take a hard look at what we are doing. We can learn from the recent expansion of for-profit institutions, gaining from the student- and learning-centered aspects of enterprises such as the University of Phoenix, while preserving academic integrity.

Also let me mention Volunteer System of Accountability (VSA). Developed by APLU and AASCU, the cost estimator calculator will be up and running shortly to help students and families.

Second, while we reaffirm our commitments to access and opportunity, I strongly believe that public institutions in particular must continue to pursue our role as what we at AASCU calls “stewards of place.” That is, our campuses engage the communities and regions we serve—helping to advance economic development and the quality of life for all with whom we live.  To me, that commitment is not only what public higher education is all about. It also opens up the possibilities of new forms of partnerships with private, non-profit, philanthropic and local governmental entities. These partnerships will help us meet the financial and academics needs of students and communities during the “new normal.”

Finally, to meet the needs of the new normal, we need some new creative approaches. For too long, our state leaders have tried to “fix” financial aid and other fiscal issues by sticking one band-aid on top of another. The result is that now they have brought campus funding mechanisms to a near collapse. No campus and no system can continue to sustain crisis after crisis, with reductions becoming a routine activity.

So our model is broken and we must convene groups at all levels of higher education to focus on developing the new “normal.”
           
Let me conclude by saying that although I’ve talked a lot about the problems and challenges we face in the New Normal, I also believe in the Chinese proverb that says, “A crisis is an opportunity riding the dangerous wind.”

For the presidents and financial aid administrators, the crisis of the “New Normal” has created opportunities to take bold action. Working together we can seize those opportunities, ensure that our institutions have a bright future, and provide future generations the support, opportunity, and access they, and America need.