American families continue to identify college affordability as one of their biggest concerns. AASCU believes that student grants, student loans and tax policies all contribute to college affordability, but that limited public resources should be targeted to the neediest students in the form of direct grant aid. Student debt should be limited, student loan repayment options flexible and manageable for students in all income categories, work-study opportunities available and financially feasible for students, and education tax benefits transparent.
Analysis & Resources: 2010 College Board College Pricing and Student Aid Reports
Public Policy Agenda Related to Affordability/Student Aid
Federal Grants - Pell Grants
- Advocate for sufficient funding to sustain the value of Pell Grant awards by ensuring an appropriations base of $4,860, given the escalating demand for awards. This amount will ensure the path of predictable and continuous growth laid out by President Obama as realized through the passage of the Health Care and Education Reconciliation Act of 2010.
- Monitor the impact of the Department of Education’s implementation of year-around Pell Grants in order to minimize confusion and help low-income students reduce their time to degree.
- Explore augmenting the maximum Pell Grant award to benefit the lowest income students. AASCU will continue to advocate for proposals that advance additional monies to support individuals with greater financial need among this group.
- Advocate for a student-aid financing model heavily based on federal grants supplemented with loan resources in order to cover a significant portion of the financial need for a low-income student attending a public institution. The remaining costs should be covered by a combination of state grants and institutional aid. This model is predicated on the premise that states and institutions should work to ensure affordable tuition via adequate state operating support and grant aid for students.
Campus-Based Financial Aid Programs and Leveraging Educational Assistance Partnership (LEAP)
- Increase funding for the Federal Supplemental Educational Opportunity Grant Program (FSEOG), Federal Work-Study Program (FWS) and Perkins Loan Program.
- Ensure that LEAP funds are used for need-based aid, particularly targeted toward Pell Grant recipients. Increased LEAP funds should be allocated only to states that do not reduce appropriations for need-based awards.
Student Debt Burden and Loan Limits
- Maintain aggregate loan limits for undergraduate students in the federal Direct Loan Program at the current level of $31,000 for dependent students and $57,500 for independent students (in both cases, no more than $23,000 can be subsidized).
Federal Student Loans
- As the Department of Education becomes the sole entity responsible for originating and servicing loans, ensure that the department delivers high quality service throughout the process, especially with regard to adequate and timely information, early outreach to delinquent borrowers and more accommodating recovery efforts for borrowers in default.
- Encourage the Department of Education to promptly contact delinquent borrowers in the Direct Loan Program, as well as borrowers whose loans were directly or indirectly purchased by the federal government, to avoid default. The department should put these borrowers in an appropriate repayment plan, including Income Based Repayment (IBR) and Income Contingent Repayment (ICR), and set up special handling for those borrowers who have recurring repayment problems.
- Encourage the Department of Education to utilize all necessary federal and institutional sources to maintain contact with borrowers during the six-month post-graduation grace period so that they can successfully enter repayment. According to department data, lack of up–to-date contact information is the major cause of loan default.
- Encourage congressional oversight of loan servicing to identify any legislative changes needed to promote the use of income-related repayments and avoid the use of excessive forbearance, which greatly increases student interest charges.
- Require that any federal Stafford Guaranteed Loan that is past due for a specified period of time be immediately assigned by the lender to the Department of Education. The department should immediately inform the borrower of the full range of repayment options and assist in selecting an option most appropriate to the financial circumstances of the borrower.
- Support a change in federal student loan collection policy to collect only what is currently due and manageable instead of adhering to a practice of declaring the entire loan to be due and payable. Such a change in policy would facilitate borrowers curing their past-due status and mitigate the accumulation of excessive collection charges and fees when collection agencies are able to assess penalty fees based on the entire loan rather than just the payments due to date.
- Fully reimburse institutions for loan cancellations related to service-related activity in the military, teaching, public service, law enforcement, corrections and firefighting.
- Support a legislative change to require mandatory use of institutional certification of private loans by lenders. This will help ensure that students and families fully utilize state and federal grants and less expensive financing options, such as subsidized and unsubsidized Stafford Loans and PLUS Loans, before securing more costly private loans.
- Support revising the bankruptcy code to permit the discharge of private educational loans in bankruptcy proceedings to provide greater protection to borrowers faced with unmanageable student loan debt burden.