FAFSA Simplification Efforts Begin This Summer

After months of work by the Department of Education, Secretary Arne Duncan announced on June 24, a series of steps to simplify the application process for federal student aid. The action is part of President Obama's education goal "to once again have the highest percentage of college graduates in the world."

At a White House press corps briefing, Duncan explained that the department is already providing instant Pell Grant and loan eligibility estimates to aid applicants. This kind of information, which in the past arrived weeks after a student applied, is seen as essential in assuring low-income students that they can afford to attend college.

As early as this summer, some students using the new Web-based FAFSA will be able to ignore many of the 153 questions on the form through improved skip-logic. This enables applicants to ignore questions that are irrelevant to them. For example, students who are at least 24 year old, or who are married, will not have to be answer questions about their parents' income and assets.

Duncan said that "Starting in January 2010, students applying for financial aid for the spring semester will be able to seamlessly retrieve their relevant tax information from the Internal Revenue Service" when applying for aid on-line. This means that students from low-income families will not be asked about assets. The department and the IRS are working to expand the IRS option to all students in the future.

The administration also intends to propose legislation that would allow the department to eliminate from the FAFSA any information not available from the IRS. This would permit removal of 26 financial questions from the form that, the department claims, have little impact on award amounts and are difficult for applicants to answer.

The department completed a study late last year comparing eligibility under the current need analysis formula and one taking into account only a family's adjusted gross income and its size. Their conclusion was that the information from the much abbreviated form was acceptably similar to that from the longer form.

However, eligibility adjustments that are minor in the national aggregate, could make a large difference to certain students, colleges, or sectors of higher education. Also, if the FAFSA is made too simple, states and colleges might no longer use the form in awarding their own aid, leading to kinds of multiple aid forms and high application fees that were common before the FAFSA was created in 1992.

NAICU is actively engaged in the conversation to ensure that simplification truly helps students.

Private College Tuition Rises at Lowest Rate in 37 Years!

With families facing one of the worst economic crises in the nation’s history, private, nonprofit colleges and universities have responded with the smallest average increase in tuition and fees in 37 years, according to the final results of a recent survey of our members.

The 4.3 percent increase for 2009-10 is the smallest since 1972-73, when average tuition and fees at private institutions rose by the same rate. The increase is slightly higher than the 2008 Consumer Price Index of 3.8 percent. The figure is based on responses from 350 private, nonprofit colleges and universities.

The average increase in institutional student aid budgets for 2009-10 at these colleges is 9 percent. (This is the first year that we collected student aid figures from its member institutions as part of the annual tuition survey.) Over the past 10 years, the average annual increase in tuition and fees at private colleges has been 6 percent.

“To an unprecedented degree, students and families are concerned about affording the college of their choice,” said NAICU President David L. Warren. “Private colleges are committed to maintaining access for students from all backgrounds—especially in tough times.

“Private college and university budgets have been hit by dropping endowments, a reduction in charitable giving, and growing student financial need,” Warren said. “Nevertheless, they have made extraordinary efforts to keep students’ out-of-pocket costs as low as possible while protecting academic quality.

See our press release on the survey here.

New GI Bill Extends Significant New Benefits to Veterans

We're nearing the final implementation date for the Post 9/11 GI Bill, the new program that greatly expands the education benefits available to veterans. Benefits become available to veterans on August 1, 2009.

The basics of the program are these: veterans that meet certain qualifications (see this roundup of qualifications from the VA) are eligible to receive an amount equivalent to the highest state institution's tuition and fees for each state. Click here for a chart that lists the amounts for each state.

This amount can be applied to a veteran's education at any institution, public or private.

In some cases, the amount charged at an institution is higher than the basic benefit, so the Post 9/11 Bill provides for the Yellow Ribbon Program, wherein a participating institution splits the extra amount on a 1-to-1 basis with the VA. more than 740 private non-profit institutions, as well as many public and for-profit institutions, signed up to participate by the June 15 deadline.
Click here for a list of participating institutions from the VA (the VA should publish a final list by June 30, 2009), and click here for a video explaining how yellow ribbon benefits are calculated.

NAICU has a number of resources available on the GI Bill at our special dedicated website. We've also compiled recent news articles of interest.

"Bailout" Bill: Surprise Help for Colleges and Parents

Important college tax provisions that expired at the end of 2007 were finally extended this last week, after Congress had failed repeatedly to reenact them. The provisions caught a ride as “sweeteners” on the multi-billion dollar rescue bill for at-risk financial services institutions.

The bill also gives authority to the Treasury Secretary to secure both private and federal student loans in the case of an emergency. Passed by the Senate on October 1 and the House on October 3, the bill was immediately signed into law by the president.

Just a week earlier, the House and Senate had reached their third impasse on extending the tax provisions, with both sides announcing they wouldn’t try again this year. Only through the financial services rescue bill were these important provisions – which include the IRA rollover, the tuition deduction, and important tax breaks for research and development – given one last chance at passage this year.

All of the expired provisions in the bill will be extended for two years. The tax benefits will be retroactively extended to cover all of 2008, and be in effect until December 31, 2009.

While most members of Congress support extending these provisions, disagreements over offsetting the cost of the bill kept the package from moving separately. In the end, the extenders will be partially offset, reflecting the language reached in a compromise in the Senate. Inclusion of the extenders in the larger economic recovery package – sweetened with additional safety precautions for small businesses, plus an increase in FDIC deposit protections – was enough to make the tax provisions acceptable to some of the House members who had opposed any offset.

Passage of the extenders is a welcome relief to college parents who are eligible for the deduction, and who have come to depend on it. It also guarantees that families can claim the deduction for 2008 and 2009, providing more certainty when planning tuition payments.

The extension of the IRA charitable rollover provision is important to colleges. Their development offices now can definitively assure waiting donors that any gifts made through the end of 2009 will be subject to the benefits of the new law. NAICU survey results show that during the 2007 calendar year, 581 NAICU members raised more than $185 million through use of the IRA charitable rollover.

The provision allowing the Secretary of the Treasury to secure student loan assets – including private student loans – could also prove important to private colleges and their families, should a crisis hit the student loan programs. A different authority given to the Department of Education last summer to act as a type of secondary market for federal student loans is widely credited with having helped keep student loans flowing this fall. The new authority allows the Treasury Secretary to get into the act as well, if broader student loan problems arise. It’s an important addition, since the Treasury Secretary has fewer hoops to run through in the event of an emergency, and because he has authority to cover all types of student loans, including private loans, for more lenders.

Endowments

Yesterday’s roundtable on endowments organized by Senator Charles Grassley of Iowa led the news this morning. A roundup of some top stories:

• College Presidents Defend Rising Tuition, but Lawmakers Sound Skeptical (New York Times)
• Watching Endowments, Not Legislating Over Them (Inside Higher Ed)
• Lawmakers Ease Pressure for Mandatory Payouts as Colleges Increase Aid (Chronicle of Higher Education)
• Colleges spending wisely? Discuss. (Yale Daily News)
• Endowment Spending Idea Is Attacked by Academics (New York Sun)
  
• Senator Grassley Wants New 990 Tax Form Tailored to Colleges (Chronicle of Higher Education)
• Remarks by President Shirley M. Tilghman on endowments and college costs (Princeton Press Release)

Drinking age debate fills the August doldrums

An initiative to reopen the debate on the drinking age, led by a consortium of college presidents (called the Amethyst Initiative), has hit the jackpot in media coverage during the mid-August higher ed reporting doldrums.

Within the past few days, the story has been reported in more than 600 articles (see the Google news roundup here, and a listing of blog hits here. The last 24 hours alone have seen stories in the Chicago Trib, the LA Times, the Washington Post, the Wall Street Journal, CNN, MSNBC, Christian Science Monitor, and AFP, among others.

John McCardell, the initiative's leader, made a presentation on his efforts at the NAICU annual meeting in February - click here for audio excerpts and powerpoint.

The initiative's statement of purpose is to "call upon elected officials to weigh all the consequences of current alcohol policies and to invite new ideas on how best to prepare young adults to make responsible decisions about alcohol use."

If they're looking to open the debate, then the explosion of coverage indicates success. The initiative has raised criticism from several sources, including MADD and the Governors Highway Safety Association.

Democrats release platform, McCain posts higher education agenda

A forum last Friday at the New America Foundation gave Democrats an opportunity to roll-out elements of their recently completed platform. The foundation has extended an invitation to the Republicans to do the same with the GOP platform in September (we'll provide the link when available).

See McCain’s higher ed agenda here. and Obama's here.

The higher education section of the Democratic platform is what we expected, having heard these ideas in Obama speeches (see Inside Higher Ed article for more) – simplifying the financial aid system, support the Pell Grant program, and create a new American Opportunity Tax Credit, which students can receive in exchange for community service. The McCain campaign this weekend released their higher education program – which also has no big surprises. McCain calls for supporting modernized universities without increased regulation; improving information for parents; simplifying higher ed tax benefits; simplifying financial aid; and fixing the student loan programs.

The release of the Democratic platform piqued the interest of the DC set, with a packed room, a spill-over room, and 500+ people who (according to the foundation) logged in for the webcast, notable given that the foundation put the event together in just one day.

An overview of the Democratic platform drafting process was given by Karen Kornbluh (formerly of the foundation and now on leave from Obama’s senate staff and working on his campaign). As she put it, the Democrats had five weeks to write the platform instead of the usual five months (as a result of the prolonged primary season). They had a drafting committee and a platform committee with two high level meetings – one of about 50 people in Ohio, one of 180 in Pittsburgh. The groups were made up of half Clinton people and half Obama people. Apparently, there was no dissension.

Preceding those two meetings, grassroots participation in the platform process took place as "meet-ups” (a throwback to the Dean campaign). Kornbluh reported that there were 1,645 listening hearings and more than 30,000 people participated.

Other items of note include some new language (which we'll all be tired of by November), such as "no restoration to the status quo ante," "transnational challenges," "common security,” and "green-collar jobs."