1 / 45

Evolution of Financial Aid

Evolution of Financial Aid. Presented by: Tracy Reisinger Director of Financial Aid Marylhurst University. History of Aid. In the beginning there was nothing… Then there was chaos and darkness… Nothing’s changed… Any Questions?. Context. Social and political environments

faris
Download Presentation

Evolution of Financial Aid

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Evolution of Financial Aid Presented by: Tracy Reisinger Director of Financial Aid Marylhurst University

  2. History of Aid • In the beginning there was nothing… • Then there was chaos and darkness… • Nothing’s changed… • Any Questions?

  3. Context • Social and political environments • Public policy considerations • Economic climate • World and national events

  4. Questions • Who deserves financial assistance with postsecondary education? • Who benefits from postsecondary education? • How much should it cost? • Who should fund it?

  5. Questions (cont’d) • What form should funding take? • How should eligibility for it be determined? • How should funding decisions be affected by social, political, and economic changes?

  6. Current Issues • Simplification of application • Elimination of certain income and assets • Expanded definitions of independent student • Non-Financial Aid requirements (such as) • Selective Service • Drug Conviction • Incarceration • Constitution Day • Crime Rates • Graduation Rates

  7. How did we get here?

  8. Beginnings I • Lady Anne’s $100 – 1643 • “Perpetual scholarships” – 1800’s • First unfunded scholarships – 1800’s • First student loans – 1838 • First permanently endowed scholarship funds – 1852 • Land Grant Act - 1862

  9. Beginnings II • Economic downturn and consequences – 1890’s • First comprehensive state-funded financial aid (New York) – 1919 • First federally funded work-study program - 1934

  10. Early Developments I • Veteran’s Readjustment Act – 1944 • The federal government began its role in financial aid with this act • The rationale was that the veteran had earned and deserved an education • The country would benefit from the education of the veterans

  11. Early Developments I (cont’d) • Truman Commission – 1946 • First standardized need analysis formula – 1953 • College Scholarship Service created – 1954 • Parent’s Confidential Statement - 1956 • First standardized financial aid application

  12. Early Developments II • National Defense Education Act – 1958 • National Defense Student Loans • Graduate Fellowships • Health Education Assistance Act – 1963 • Civil Rights Act - 1964

  13. Early Developments II (cont’d) • Economic Opportunity Act – 1964 • Campus Work-Study (CWS) created • Education Opportunity Grant (EOG) created • Later to become the SEOG • Guaranteed Student Loan (GSL) established • Later to become the Stafford Loan

  14. Modern Era I • Higher Education Act (HEA) – 1965 • The first one and what gets “reauthorized” every “5” years (has taken longer) • HEA – 1968 • Maximum loan of $1500 • Interest rate at 7%

  15. Modern Era I (cont’d) • HEA – 1972 • Created BEOG (later to become Pell) • EOG got an “S” to become SEOG • Sallie Mae was chartered • State Student Incentive Grants (SSIG) (Later to become LEAP/SLEAP) • Proprietary Institutions become Title IV eligible • Part-time students become Title IV eligible

  16. Modern Era I (cont’d) • The 1970-1980’s were a period of philosophical and policy change, increased scrutiny and regulation of programs and practices, appeal to special interest groups, and movement away from need-based aid. • Middle income families (large voting block) noticed the increasing cost of sending kids to college, and that low-income families were receiving what looked like a lot of aid. • They wanted to know what the government would do for them • Private institutions started using own institutional money more strategically to discount their costs for desirable students.

  17. Modern Era I (cont’d) • Student Loan Marketing Association (Sallie Mae) – 1972 • Uniform methodology – 1974 (later to become federal methodology) • “Financial Aid Form” (FAF) – 1976 • HEA – 1976 • Satisfactory Academic Progress • Guarantee Agencies • Consumer Information • MDE’s Authorized (to process FAF forms)

  18. Modern Era II • Middle Income Student Assistance Act (MISAA)- 1978 • Income limits removed for GSL’s • Expanded Pell Grant eligibility

  19. Modern Era II (cont’d) • HEA – 1980 • U.S. Dept of Education created • BEOG renamed Pell with $10 ACA • Common Need Analysis form and formula • Minimum Room and Board limits • Defined Independent Student • Included definition of student who earned over $4000 prior two years and not claimed on parent’s tax return (definition of “self-sufficient”) • Four year cap eliminated for Pell • NDSL (now Perkins loan) Interest Rate increased to 4% • GSL rate 7% to 9% for first time borrowers • PLUS loans (for parents)

  20. Modern Era II (cont’d) • Omnibus Reconciliation Act – 1981 • Tightened Pell Grant eligibility • Made GSL need-based • GSL origination fee 5% • Eliminated $10 ACA for GSL • Pell formula restricted

  21. Modern Era II (cont’d) • Solomon Amendment to Defense Authorization Act – 1982 • Selective Service Registration required for Title IV eligibility (And so the social regulations begin) • Gramm-Rudman-Hollings – 1985 • Multiple disbursements for GSL • GSL checks sent to schools • Title IV aid denied to loan defaulters

  22. Modern Era II (cont’d) • HEA – 1986 and Technical Amendments – 1987 • Congressional Methodology (CM – later to be FM) • Simplified Needs Test • Verification limited to 30% • NDSL’s renamed to Perkins loan • Supplemental Loans for Students (SLS) (later became Unsubsidized Stafford Loan • Changed Independent student definition • FFEL Consolidation Loans • Professional Judgment for Financial Aid Officers

  23. Modern Era III • GSL’s renamed Stafford Loans – 1987 • Drug Free School and Communities Act – 1988 • Schools must have program to prevent drug and alcohol • Crime Awareness and Campus Security Act – 1988 • Requires collecting and reporting on campus crime

  24. Modern Era III (cont’d) • 1989 Default rates = 17.6% • 1990 Default rates = 22.4% • Omnibus Budget Reconciliation Act – 1990 • Title IV loss at high default rate schools

  25. Modern Era III (cont’d) • The 1990’s were a time of dramatically increasing tuition costs • Continued movement away from need-based aid and toward assistance to middle and upper income families • Federal aid processes, and processes at schools became increasingly automated

  26. Modern Era III (cont’d) • HEA – 1992 • PLUS loan up to full cost of attendance • Redefinition of the Independent Student • No more “self-sufficiency” definition • Mandates CM (FM) for all Title IV • “Free Application for Federal Student Aid” – FAFSA • Created negotiated rule making • Stafford loan limits raised • Interest rates are capped • Mandated 5% Community Service for CWS • Mandates refund policy (not yet R2T4)

  27. Modern Era III (cont’d) • National Service Trust Act – 1993 • Americorps • Student Loan Reform Act – 1993 • Full Implementation of Direct Loans • Reduced margins on FFELP • Cancelled SLS loan program • Reinstated PJ for Pell Grants • Violent Crime Control and Law Enforcement Act – 1994 • Eliminated Pell for incarcerated students

  28. Modern Era III (cont’d) • Improving America’s Schools Act – 1995 • Student Right to Know • Direct Loans renamed to Ford Direct Loans • FAFSA on the Web – 1997 • Taxpayer Relief Act – 1997 • Hope Scholarship • Lifetime Learning Tax Credit

  29. Modern Era III (cont’d) • HEA – 1998 • SSIG renamed LEAP • Parent in college FAFSA change (no longer counted in college) • R2T4 created (but not required until 2000) • Community Service requirement for CWS increased to 7% • Loss of Title IV for drug convictions • Authorized ED-IRS database matches (still not in effect) • Clarified professional judgment (due to abuse by some schools) • Teacher loan cancellation (has it ever been funded?)

  30. Modern Era IV • The 2000’s were and continue to be an era with regulatory and complexity increases • Continued movement away from need-based aid programs • Reathorization delay (10 years) longest ever required 14 CR’s to keep aid programs operating

  31. Modern Era IV (cont’d) • P.L.107-139 (2002) • Changed loan interest rates from variable to fixed • Variable rate on old loans hit new low • Consolidation possible for continuing students (closed loophole in 2005)

  32. Modern Era IV (cont’d) • Higher Education Reconciliation Act – 2005 • $12.7 billion cut from student aid • Continued freeze on Pell Grant maximum • ACG and SMART grants created • First time Feds get into realm of merit aid • Fixed Stafford and PLUS interest rates • Graduated reduction in loan fees • Some annual loan limits increased • Creation of Graduate student PLUS loans

  33. Modern Era IV (cont’d) • Ethical, misconduct, conflict of interest allegations – 2007 • Increased scrutiny of financial aid administrators and lenders – 2007 • College Cost Reduction and Access Act – 2007 • Created TEACH Grant (thinly veiled loan forgiveness program) • Cut interest rates for subsidized Stafford loans for undergraduate students • Made changes to FM increasing average need again

  34. Modern Era V • Higher Education Opportunity Act – 2008 • Created sweeping changes to many aspects of aid programs that are still being discussed, regulated and implemented • Economic downturn (“credit-crunch”) hurt lender liquidity on heels of allegations of misconduct and subsidy cuts. • Many lenders leave FFEL program

  35. Modern Era V (cont’d) HEOA - 2008 • Self-certification required for private loans • Drug and Alcohol Abuse Prevention • Transparency in College Tuition for Consumers

  36. Modern Era V (cont’d) • HEOA – 2008 (cont’d) • Schools required to post “Net Price Calculator” on institutional web-sites • Cost of attendance • Amount of need-based aid and merit-based aid available (as must as practicable)

  37. Modern Era V (cont’d) HEOA – 2008 (cont’d) • Litany of consumer information must be posted on college web-sites (such as) • Average annual grant amount (federal, state, and institutional aid) awarded to first-time full-time UG students enrolled who receives financial aid • Total annual grant aid awarded • Average annual loans provided to enrolled students • Number of students receiving Pell Grant • Cohort Default Rate • Link to Bureau of Labor Statistics web-site that provides information on regional starting salary data in major occupations

  38. Modern Era V (cont’d) HEOA – 2008 (cont’d) • Multi-year tuition calculator to help current and prospective students estimate the amount of tuition they may pay to attend in future years • Includes extensive disclosure requirements, for lenders and institutions participating in “educational loan arrangements”.

  39. Modern Era V (cont’d) HEOA – 2008 (cont’d) • Increased preferred lender arrangement regulations • Increased Pell Grant Authorizations • But not appropriate funding for higher authorizations as in past • Implements “Year-Round-Pell” where student can receive up to two years of Pell Grant in one academic year • Puts back time-limit on Pell Grant (4-year cap had been removed in 1980) • 18 semesters or its equivalent

  40. Modern Era V (cont’d) HEOA – 2008 (cont’d) • Eliminates Pell eligibility for sexual offenses • Extends eligibility for TRIO program • Eliminates all Veteran’s Benefits from being considered as resource for financial aid eligibility • Changes Cohort Default Rate to be based on 3 years (was 2 years) from repayment

  41. Modern Era V (cont’d) HEOA – 2008 (cont’d) • Increased annual and cumulative loan limits for Perkins loan • Increased definition of dependent student • Students in foster care or wards of court • Homeless Youth • Additional requirements if school has recommended lender list (FFEL program) • Mandates schools have a code of conduct

  42. Where We Are Now Consumer information and all the new “Transparency” rules in where policies can be found that school’s are struggling with, all came about after years and years of cumulative, unique, minute, and “irrelevant to aid eligibility” regulations.

  43. Simplification • Increased ability to get “Auto-Zero” EFC • Increased ability to qualify for “Simplified Needs-Analysis” • Elimination of certain types of income and assets • Increasingly easy to become independent • Makes easier to qualify for aid • Still limited funding • Not enough aid to fill the increased need

  44. Why do we do it? “To give away money is an easy matter and in any man’s power. But to decide to whom to give it, and how large and when and for what purpose and how, is neither in every man’s power, nor an easy matter. Hence it is that such excellence is rare, praiseworthy and noble.” - Aristotle

  45. Questions? Tracy Reisinger Marylhurst University treisinger@marylhurst.edu 503-699-6253

More Related