Future of Higher Education Report Recommends Restructuring Student Financial Aid

Members of a commission established by the U.S. Secretary Education to study the future of American higher education have approved their final report, which includes a call for restructuring “the entire student financial aid system.”

The final draft report of the Commission on the Future of Higher Education concludes that the “entire financial aid system — including federal, state, institutional and private programs — is confusing, complex, inefficient, duplicative, and frequently does not direct aid to students who truly need it.” To remedy these shortcomings, the commission recommends the following steps:

• Replace the present student financial-aid system with “a strategically oriented, results-driven system” built on the following principles:
  • Increase access to college by students, including nontraditional students, who would not otherwise be likely to attend.
  • Increase retention and graduation rates by students who might not otherwise complete college due to cost.
  • Decrease debt burdens.
  • Eliminate structural incentives for tuition inflation.
• Replace the Free Application for Federal Student Aid with a much shorter and simpler financial-aid application, and provide students as early as eighth grade with information about financial-aid eligibility and estimates of aid.
• Address the financial-aid needs of transfer students.
• Consolidate federal grant programs to increase the purchasing power of the Pell Grant. Set a specific benchmark to increase, over a period of five years, the purchasing power of the average Pell Grant to a level of 70 percent, from 48 percent in 2004-2005, of the average in-state tuition at a public, four-year institution. The report cautions that efforts to restore the purchasing power of the Pell Grant will be fruitless if tuition increases absorb most or all of the new funding.
• Streamline administrative costs of federal aid programs through a comprehensive review of financial-aid regulations.

Restructuring financial aid is one of six high-level recommendations in the report to “make higher education more accessible, more affordable and more accountable, while maintaining world-class quality.” Overall the report finds that, despite its impressive achievements, “U.S. higher education needs to improve in dramatic ways.”

The 19-member commission includes representatives from business, government and higher education. The panel has been meeting since last October to address issues of access, affordability, quality and accountability.

The panel is expected to submit its final report to Education Secretary Margaret Spellings next month.

You will need Adobe Acrobat Reader to view the report.