Higher Education Financial Aid Policy – Lessons Unlearned

In 2003, Edward P. St. John wrote Refinancing the College Dream: Access, Equal Opportunity, and Justice for Taxpayers, an ambitious work explaining the failures and challenges of United States higher education financial aid policy. St. John, a distinguished professor education at the University of Michigan, charted at a macro-level the coalitions and thinking that led to shifting policies, from the bipartisan belief in education as investment in the 1960s and 1970s, to the emphasis on personal responsibility in the 1980s, to focus on loans and support for the middle class in the 1990s. St. John used data from a host of different studies to paint a fairly complete picture of what policy had what effect on what kind of students. It is an impressive work that goes far in defining financial aid at the national level. Above and beyond explanation, St. John’s primary concern was that access and opportunity were becoming increasingly limited for lower-income American students.

Refinancing the College DreamMore than a decade later, almost all of St. John’s concerns have become increasingly acute. While he did not anticipate the massive surge and decrease in for-profit education, he did foresee massive student debt loads and the shortcomings of inadequate grant and loan support. In other words, the choices that would make college a less viable option for poorer Americans.

St. John argued for access and opportunity from the vantage point of social justice. He wanted us to avoid the left-right, Democrat-Republican splits that polarize educational policy debates. Positing education as a social good, St. John sees benefit for all Americans if we can forge a rational policy to pay for higher education.

The book is comprehensive, thoughtfully argued, and prescient. Read today, Refinancing the College Dream is also a tremendously frustrating. St. John’s arguments were accurate, yet they did not lead to any meaningful positive changes in how we, as a country, finance higher education. Being right does not necessarily mean being persuasive.

In 2013, the National Association of State Budget Officers published a report on higher education finance reform, Improving Postsecondary Education Through the Budget Process: Challenges & Opportunities. Noting that the current “system” (and the term is used advisedly) is not sustainable, the report calls for government and educational leaders to look to new funding models, to reward completion and results, to increase access and opportunities, and to develop shared information so that decision-makers can make informed decisions. The discussion cannot just be about the cost to taxpayers. These recommendations would all resonate with anyone familiar with St. John’s work.

So why haven’t we seen meaningful reform? A few possible reasons:

  • Higher education is working well at its high-end. The well-schooled children of educated and successful parents receive outstanding, best in the world educational opportunities at our nation’s leading colleges and universities. There is no higher education problem if your child is in Harvard, Stanford, or Yale – and if you can afford it.
  • The lack of bipartisan policy-making at the federal level has prevented even common-sense adjustments to financial aid policy, making smaller problems worse.
  • The focus of the debate has been more on the quality and utility of education than the means to finance it. We have spent much more energy talking about general education, college sports and student life than about Pell grants and the student loans. And while higher education has much to answer for in these and related issues, improving student graduation rates is still not going to help with the bottom line.
  • When higher education fails for working class and poor students, a segment of our population with less economic and political clout, the failed student often owns the failure. Rarely is the finger pointed at higher education and its financial system. This happens at the policy level and also with individuals – I can think of many college drop-outs who blame themselves and rarely question the system and structures that hindered their commitment to higher education.
  • Lastly – and here I write from the perspective within higher education, student debt and financial aid policy still have a relatively minor and indirect impact on operations. Even with poor financial aid policy and increased regulation and accountability, higher education is healthy. Applications are up and the value of a college education remains solid.

If – and it is a big if – we are to develop federal policy that provides more access and opportunity to more Americans, the discussion will have to include more stakeholders. It has to matter to higher education as a whole. It also has to recognized as an issue of great importance to American business and our economy. I believe that if we, in academia, were to continue to open up our doors and make this our concerns, we might find a path to better policy. We also might discover more support and understanding from the public at large.

David Potash

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