Education Doesn't Have to Be a Gauntlet

(This article originally appeared on Campus Progress.)

The House of Representatives passed the Student Aid and Fiscal Responsibility Act (SAFRA) this afternoon, a bill which will radically overhaul the federal student loan system and invest billions of dollars in making the benefits of an affordable college education available for more Americans. The legislation is based on a plan presented in the president's 2010 budget proposal, and is a first step toward the president's goal of making the United States the most educated country in the world by 2020.

The United States used to hold this title, but decades of public divestment from education and student aid programs, along with the progress of other countries, has led the United States to slip in its level of educational attainment. The United States currently ranks 15th in the number of degrees and certificates awarded per 100 students enrolled.

And a recent study (PDF) shows that the United States may not only be losing ground compared to other countries, but also in relation to its own population and education attainment growth rate. The Lumina Foundation estimates that the American economy will face a shortage (PDF) of 16 million college educated workers by 2025. It is clear that strong action is needed now to keep the U.S. economy competitive and prevent young people from falling through the cracks.

The Higher Education Gauntlet

The relative de-education of America is happening largely because we are leaving too many talented young people behind, especially those from low-income or minority families. Even if young people exit the K-12 system with a degree and are prepared for college, they still face a gauntlet of challenges that are tied more to demographics than talent. The highest achieving low-income high school graduates go on to college at about the same rate (PDF) as the lowest achieving students from wealthy families. And large class and racial disparities exist in completion rates for those who do attend college. Almost 67 percent of white college students earn a bachelor's degree from any school within six years, but only 45.7 percent (PDF) of non-Hispanic black students

Part of the problem is that college has become increasingly unaffordable. According to Postsecondary Education Opportunity, students from families making under $70,000 a year face an average of at least $1,433 in unmet need each year -- the amount they still owe in college costs after taking into account all grants, loans, and the expected family contribution. The figure is even higher for students with families making less than $40,000 a year -- between $5,622 and $7,204. Part of the problem is that student aid has often failed to keep up with college costs. The Pell Grant, which helps low- and middle-income families, covered 72 percent of the average cost of a public four-year college in 1976, but only 33 percent of this cost in 2006.

This forces too many students into situations that hinder their ability to complete their education, or make them forgo better schools for which they are qualified, but cannot afford. The National Postsecondary Student Aid Survey shows, for example, that 47 percent of full-time students are now working more than 20 hours a week, which is the maximum typically recommended. And that figure is above 50 percent for most underrepresented racial or ethnic groups. Those who do successfully complete this gauntlet of high costs and tough decisions often still face excessive levels of student debt (PDF), which discourages many from making major life decisions like attending graduate school, getting married, or buying a home.

A Step in the Right Direction

The road to remedying the country's educational problems will be long and hard, but the Student Aid and Fiscal Responsibility Act takes a first step in the right direction by including important provisions, such as:

Cut $87 billion in wasteful subsidies to loan companies: Right now there are two different federal programs that award the same types of loans to students: the Federal Family Education Loan (FFELP) program, and the Direct Loan Program (DLP). FFELP has consistently been found to be more expensive to taxpayers than DLP because it uses subsidies and loan guarantees to persuade loan companies to act as middlemen, rather than lending directly to students through the Education Department. FFELP is also more prone to corruption, backroom political deals and instability during economic crisis. SAFRA would originate all future federal loans from DLP and use the $87 billion in savings to fund all of the other reforms in the bill.

Provide more and larger grants for students: SAFRA invests $40 billion in increasing the maximum Pell Grant award from the current $5,350 to $5,550 by 2010, and $6,900 by 2019. A recent report by U.S. PIRG and the Institute for America's Future estimated that this would provide an additional 260,000 students with Pell Grants and give existing Pell recipients access to larger grants.

Make grants more reliable for students: SAFRA would help make sure that the Pell Grant continues to grow each year, which means that its value will not fall relative to college costs by the extent that it has in the past. It provides the funding necessary to ensure that the maximum grant level will grow by the rate of inflation plus one percent. This will make the grant more reliable for students and families.

Keep student loan interest rates low: Congress slashed interest rates on subsidized Stafford loans in 2007, but these reforms are set to expire in 2012, causing the interest rates on these loans to jump from 3.4 percent to 6.8 percent. SAFRA would make the interest rate variable, but cap the rate at 6.8 percent, which means borrowers will be able to benefit from low-interest rates and be protected from high rates.

Invest in community colleges and minority-serving institutions: SAFRA would create a competitive grant program for community colleges to create programs that would improve completion rates, improve instruction, create partnerships with employers and implement other reforms. It will also invest in modernizing community college facilities and create a grant program for the establishment of quality online college, high school and job training classes. The goal is to graduate an additional five million students during the next 10 years. Finally, it would invest $2.55 billion in minority-serving institutions and historically black colleges and universities to expand the number of science, technology, engineering and mathematics ("STEM") graduates from underrepresented racial or ethnic groups.

Invests $3 billion in state and federal programs to improve college access and completion rates: SAFRA will invest these funds in the College Access Challenge Grant program, which funds state, local and federal projects that help get low-income students ready for college, able to navigate the admissions and financial aid process and earn their degrees. These funds will also be used to support programs at both the state and institutional level that focus on improving college completion rates and financial literacy.

Simplify the FAFSA form: SAFRA would finally make the FAFSA less of an onerous burden on students and families by removing unnecessary questions and allowing families to use information from their tax returns to fill out some parts of the application.