On November 8, 1965, surrounded by faculty, lawmakers, and former teachers on the gymnasium floor at his alma mater, Southwest Texas State University, President Lyndon B. Johnson signed into law the Higher Education Act of 1965. At the time Johnson claimed that the bill would “swing open a new door for the young people of America… [T]his means the path of knowledge is open to all that have the determination to walk it.”

Fifty years after the signing of the Higher Education Act, colleges and universities face unprecedented challenges in meeting President Johnson’s exhortation to open the path of knowledge. Costs of higher education soar as state and federal support falls. A growing number of students and parents question the value of higher education and its return on investment. And record numbers of potential employers claim that higher education is no longer adequately preparing students for the workforce. Understanding these challenges and how they are driving federal higher education policy will help institutions choose the right opportunities and strategies for growing in 2016.

2015: The Higher Education Year in Review

The most anticipated higher education policy event of 2015—reauthorization of the Higher Education Act (HEA)—was also the biggest disappointment of the year. 2015 began with the release of three briefs on institutional risk sharing, improved consumer information, and the effectiveness and role of accreditation from the Senate Committee on Health, Education, Labor, and Pensions (HELP) that were meant to inform and direct the conversations around HEA reauthorization. As a result, much of the federal policy conversation for the remainder of 2015 focused on consumer protection (including transparency and accreditation), financial aid, and data privacy.

Consumer protection

Absent reauthorization of HEA, one of the largest higher education policy developments of 2015 was the September release of the White House’s long anticipated College Scorecard. Lauded by President Obama as a way to access “reliable data on every institution of higher education,” the Scorecard is an attempt to provide parents and students with the information they need to make informed decisions about college attendance. By providing consumers with information on institutional costs, graduation and retention rates, average earnings after college, average annual cost by family income, typical student debt, and monthly loan repayments, the administration believes that consumers can make more informed college choices. Institutions, however, have been less than enthusiastic. Even though the Scorecard is less ambitious than the administration’s previous plan to create a national college ranking system, critics still pointed out that because the data populating the Scorecard was pulled from IPEDS, it was far from complete. For example, the Scorecard uses first-time, full-time students when calculating retention and graduation rates. As a result the graduation rate for institutions that educate large transfer or part-time student populations is based on an appallingly small percentage of their student population. Take for example the University of Phoenix who reports a 42% graduation rate for all students (full- and part-time). It’s College Scorecard graduation rate of 20% is based on a scant 9.3% of its student population.

Financial Aid

During 2015, both Democrats and Republicans advocated for a simplification of the FAFSA, although the extent of simplification ranged from Republic Senator Lamar Alexander’s suggestion that the FAFSA application should fit on the back of a postcard to the White House’s more moderate request to remove 29 questions from the form. 2015 also brought us changes to how the FAFSA calculates financial aid. Rather than rely on the prior year’s tax returns to validate income, students may now use tax returns from two years ago, aka the “prior-prior year income.” This substitution allows students to submit the FAFSA on time whether or not they or their parents have completed filing income taxes.

Other notable financial aid developments in 2015 included increased discussion around financial aid eligibility for students enrolled in non-semester credit hour programs such as competency-based education as well as the death and partial resurrection around Perkins loans. Much of the student eligibility conversation continues to center on the Department of Education’s definition of “regular and substantive” faculty interaction. In light of new modalities that focus less on traditional instruction and more on evidence of student mastery, faculty roles and the types and amounts of interaction with students are changing. In competency-based education programs, for example, faculty may provide more of a tutorial role in which they provide just-in-time instruction to students. Thus making it possible for students to demonstrate mastery of content without having what traditionally looks like “regular and substantive” faculty interactions. Many had hopes that this tension would be resolved during the reauthorization of HEA.

2015 also saw cuts in federal student financial aid programs with the elimination and then partial resurrection of Perkins student loans. The expiration of the Perkins loan program in September triggered a flurry of conversations on Capital Hill. Ultimately a two-year extension of the program was agreed upon but it’s life after the extension remains questionable. Democratic legislators lauded its extension while Republican Senator Lamar Alexander described the extension as a “managed shutdown” period.

Data Privacy

Finally, data privacy emerged as a significant issue in last year’s policy discussions. Numerous bills were filed that would have amended FERPA and/or COPPA. Although most of these bills would have had a greater impact on data privacy in K-12, data privacy in higher education was still addressed in some of the bills. The primary challenge facing Congress around data privacy is the need to balance privacy with the ability to collect actionable data that can be used to improve student performance. Given the numerous pieces of legislation filed at both the state and federal level in 2015, there is every reason to believe that data privacy will continue to be a significant issue as we move further into 2016.

2016: The Year Ahead

So what should we expect as we move into 2016 and what will be a hotly contested presidential election year? Will we see the Higher Education Act reauthorized? And barring its reauthorization how will lingering challenges such as financial aid regulations, the role of accreditation, institutional transparency and accountability, and growing college costs be dealt with?

Alternatives to HEA Reauthorization

At this point there appears to be little hope of HEA reauthorization in what is becoming an increasingly partisan year in Congress. But we are likely to see more attempts at unbundling higher education into smaller bills rather than relying on the passage of an omnibus HEA reauthorization bill. Although Senate HELP chair Lamar Alexander opposed unbundling HEA into smaller bills last year, we are already seeing HEA components being spun off into separate pieces of legislation. Likely bills filed in 2016 include legislation to update the “regular and substantive” financial aid regulatory language as well as data privacy and financial aid legislation. Whether any bills will be able to make it out of committee for a floor vote is anyone’s guess although there was bipartisan support in 2015 for student data privacy legislation and competency-based education.

Presidential Politics and Higher Education

Both parties are paying unprecedented attention to higher education during this presidential election cycle as candidates identify student cost, increased debt load, workforce readiness, and the need for new educational options as issues that must be dealt with. Candidates’ solutions, however, differ.

Republican Candidates

Of the three Republican front runners (Trump, Cruz, and Rubio), Rubio has the most extensive higher education plan. Stating that the higher education is “outdated and broken in multiple ways,” Marco Rubio proposes:

  • Consolidating multiple educational tax incentives into one incentive to minimize confusion
  • Simplifying FAFSA
  • Ensuring that existing information about college graduation rates, cost, etc. are online in an easily accessible format that consumers can use to improve their decision making
  • Automatically enrolling students in an income based repayment system for student loan repayment
  • Reforming accreditation by establishing a new accreditation entity for “innovative learning programs”
  • Allowing students to negotiate and use student investment plans (aka “pay it forward” plans) where private backers finance a student’s education in return for a fixed percentage of the student’s income over a set period of time after graduation
  • Increasing vocational education, including apprenticeships and on-the-job training

Ted Cruz has not offered a formal higher education plan although he has proposed that the Department of Education be eliminated and that federal financial aid be given to state for dispersal. Donald Trump has not addressed higher education outside of promising that he would cut the Department of Education “way, way down.”

Democratic Candidates

Both Hillary Clinton and Bernie Sanders have offered higher education plans meant to significantly reduce or entirely eliminate the cost of public higher education. Clinton’s plan would develop debt-free options for students by:

  • Allowing students to use Pell money to cover living expenses
  • Decreasing the interest rate on federal loans
  • Simplifying FAFSA
  • Allowing students to refinance loans at a lower interest rate
  • Extending educational tax credits
  • Making income based repayment options universal
  • Making community college free

Embedded in the Clinton plan are several underlying assumptions including:

  • Families will make realistic contribution and students will contribute to paying for college based on ten hours per week of work
  • States will be required to continue and ultimately increase higher education funding
  • Institutions will receive federal grants based upon increased graduation rates and the number of low income students served
  • Institutions will also be required to have some skin-in-the game and be responsible to student loan defaults
  • Gainful employment rules will be strengthened
  • The role of accreditation would be reviewed to ensure that innovation is incentivized but not at the cost of quality
  • The $35 billion per year costs would be covered by closing tax loopholes

The Sanders’ plan advocates free college by:

  • Eliminating undergraduate tuition and fees at public universities and colleges
  • Decreasing the interest rate on federal loans by half and ending the federal government’s ability to make a profit off of student loans
  • Allowing students to refinance loans at lower interest rates
  • Allowing students to use Pell and other federal grant funds to cover living expenses

Embedded in the Sanders plan is the assumption that:

  • States will be required to continue higher education funding
  • The $75 billion per year costs would be covered by imposing a tax on Wall Street speculators

Although it’s unclear what 2016 will bring for higher education policy, it is clear that challenges facing higher education will continue. And regardless of whom each party nominates for president, discussions of higher education policy are likely to play a larger role in this election year than ever before.

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