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Volume 18, Issue 3                                                         Spring, 2003
Editor: Don Hossler                               Associate Editor: Larry Hoezee
       Indiana University Center for Postsecondary Research and Planning

The Higher Education Act is once again in the process of being reauthorized. This piece
of federal legislation determines the scope and substance of all federally funded financial
aid programs, TRIO, and GEAR UP Programs, as well as being the source of several
federal mandates such as the requirement to produce campus crime statistics each year.
Barmak Nassarian, the Associate Executive Director of the American Association of
Collegiate Registrars and Admissions Officers, is the guest editor for this issue of the
Enrollment Management Review that focuses on the reauthorization of the Higher
Education Act and how it may affect campus-based enrollment managers.

  The College Board, through its CSS Council, has already forwarded a set of
 recommendations regarding reauthorization to Congress. These can be found at: Also,
 enrollment managers interested in the future of financial aid should take time to
 review “Challenging Times, Clear Choices,” the report of the College Board’s Blue
 Ribbon Panel at:,3183,20790,00.html.

Reauthorization and Enrollment Managers
      Barmak Nassarian, Associate Executive Director, AACRAO

For much of the past two decades, higher education policy has been checkmated by
ballooning federal deficits. Time and time again, compelling and urgently needed
legislation has been dismissed and deferred because of concerns about deficit spending.
Legislating higher education policy has been no less painful than the annual
appropriations fights, primarily because national needs have vastly outstripped resources
made available to higher education.

The Clinton presidency departed from budget-driven federal higher education policies
that dated back to the first year of Ronald Reagan’s presidency. Barely one year after the
1992 reauthorization of the Higher Education Act (HEA), the new administration
overhauled the student loan system as part of the 1993 Omnibus Budget Reconciliation
Act. That legislation created the direct loan program, introduced a broadly available
income-contingent repayment system for borrowers, and cut subsidies to financial
intermediaries involved in the guaranteed student loan system. The GOP’s 1994
ascendance to majority in both the House and the Senate, far from forcing a retreat for
higher education, proved to be a boon. Instead, both political parties sought greater
visibility on education and made every attempt to outdo each other in displaying their
support. By the end of the second Clinton term, Pell Grant funding had nearly doubled,
student loan rates had been slashed, and some $40 billion in new subsidies for middle-
and upper-middle-income families were being delivered through the tax code.

What Lies Ahead

Against the backdrop of the massive expansion of federal support for higher education
through the 1990s, the upcoming reauthorization of the Higher Education Act (HEA)—
the cyclical congressional review and redesign of some of the most important federal
higher education programs—looks dismal. This next reauthorization, scheduled for
2003, but likely to drag into 2004, will take place in an environment complicated by at
least three major factors. First, the federal budget deficits and the high priority placed on
military and anti-terrorism spending make bold new policy initiatives unlikely. Second,
one-party control of the House and Senate, as well as the executive branch, might lead to
a more ideological, less bipartisan, approach to higher education policy. Finally, with
some of the most substantive loan issues settled in 2001, and no significant additional
funds to do new things, the congressional tendency to act by imposing more federal
mandates on institutions may prove irresistible. Campus enrollment officials will be
directly affected by the manner in which the reauthorization process navigates these
contextual difficulties. They will have an impact upon the tasks of enrollment managers.

In theory, each reauthorization provides an opportunity for policymakers to engage in a
comprehensive review of the programs authorized under the HEA and to make
improvements where needed. In reality, politics and money severely limit the scope of
policy enquiry. This reauthorization promises to be particularly constrained because the
underlying interest group politics makes it quite unlikely that Congress will be willing to
shift resources from one group to another. In the absence of a meaningful infusion of
new federal dollars, the most one may expect in terms of a constructive agenda is likely
to be minor tweaks and incremental changes. Bold changes such as the creation of a Pell
Grant entitlement, large increases to student loan limits, or the elimination of upfront loan
fees are unlikely.

The improbability of large new initiatives notwithstanding, the laundry list of smaller
provisions on the reauthorization agenda, if revamped the right way, would still make a
positive difference to campus operations. Examples of areas in which improvements
could be accomplished in a more technical rather than visionary reauthorization include:

   Return of Title IV Funds -- The 1998 Amendments to the HEA replaced the
   “refunds” provision of previous law with a new algorithm. The 1998 changes
   impose a repayment requirement on students who drop out of their program for
   grants, as well as the loans, they receive for the academic term. At-risk students
   are often reduced to one shot at college. Should they drop out on their first try,
   they will be effectively ineligible for future aid unless they make payment on
   balances created by this provision. Commuter, two-year, and institutions
   attracting large numbers of low-income students could be particularly affected by
   policy shifts in this area.

   Unofficial Date of Withdrawal -- Closely related to the return of Title IV Funds
   provision, this requirement imposes the unreasonable mandate of surmising the
   date on which a student, without having taken official action to withdraw from a
   program, effectively did so by simply not showing up in class. Short of taking
   high-school style attendance—to which some institutions have resorted—
   compliance with this requirement is cumbersome and arduous. Some institutions
   have actually altered their grading policy to distinguish failing grades due to non-
   attendance from failing grades that are “earned” by students.

   Creation of Year-Round Eligibility for Aid --Virtually all student aid programs
   are predicated on traditional academic terms. With the number of non-traditional
   students on the rise, and the need for better resource utilization, many colleges
   and universities see year-round academic terms as an appealing method of
   offering convenience and shortening time-to-degree for their students. Congress
   could facilitate these efforts by allowing for year-round aid eligibility. This could
   benefit all student and institutions, especially those campuses with large numbers
   of older and part-time students.

   Distance Education -- The 1998 reauthorization created a demonstration program
   to allow experimentation with federal financing of distance education. The
   pending reauthorization provides an excellent opportunity to review the lessons
   learned from the experience of the past few years, and could chart the course for a
   more expansive and stable treatment of distance education in the HEA.

Student loan issues, which tend to dominate the agenda by virtue of the loan programs’
financial size, will be somewhat less central to this reauthorization. This is partly because
the most important feature of the student loan programs, the interest rate formula, was
settled in 2001. It is also because the other contentious loan issue, direct lending, is
unlikely to be the subject of decisive action. The direct loan program generates such
significant federal budget savings that its elimination—no matter how eagerly desired by
loan industry lobbyists—is simply unaffordable.

Other loan issues, however, will certainly be revisited and tweaked. Chief among these
are the much-debated topics of school-as-lender, loan consolidation, and income-
contingent repayment. The first of these has to do with whether institutions may act as
loan providers for their students on the same basis as banks currently do. In view of the
lucrative profit margins embedded in the subsidy structure of student loans, this might be
extremely appealing to schools with large enrollments. At least a subset of current
lenders would also be inclined to support school participation, primarily because they
believe schools will be enticed to exit direct lending, originate loans for their own
students, and sell the loan assets to them. Critics of such a move are sure to point out the
conflict of interest schools would face if they were simultaneously cast as loan counselors
and loan providers. Enrollment officers at some universities may already be involved in
discussions on this topic.

Loan consolidation likewise divides the lending community into two camps, one of
which will argue for the status quo, which allows borrowers only one chance at
consolidation. Others will argue for broader borrower choice in student loans, and will
advocate a refinancing system similar to the mortgage industry, in which borrowers are
free to take their business to a different lender/holder if they are offered a better deal.
The outcome of these deliberations will have an impact on students.

The last issue, income-contingent repayment, has been a sore point for the loan industry,
which has unsuccessfully sought billions of additional dollars to offer the same option to
guaranteed student loan borrowers that, is offered to those with direct loans. In the
absence of deep federal pockets to finance such a scheme, there is every possibility that
this important repayment option for borrowers will come under attack in the name of
“leveling the playing field” on which the direct and the bank-based student loan programs

Congress and the Administration

What might the Administration’s role be this round? The White House and the
Department of Education are primarily focused on elementary and secondary education.
There they are unlikely to play a strong role in reauthorization.

Finally, the Department of Education has already signaled its interest in federal
involvement in issues of institutional autonomy in the collegiate sector in the name of
quality. While specifics have not been offered as to how the Administration might
envision federal intervention on behalf of quality, the Department’s Strategic Plan,
released in early February of 2002, seemed to suggest a mechanical approach driven by
numerical indices like graduation rates. Should a simplistic definition of accountability
or quality be adopted as a top Administration priority, colleges and universities would
face an uphill battle? Judging institutions on the basis of graduation rates, particularly in
an era of unprecedented demand, would provide a perverse incentive for colleges and
universities. A ranking or incentive system built around graduation rates would
immediately undermine the distinctive missions adopted by various institutions. It would
punish institutions that serve as gateways of access to higher education for at-risk
populations, and provide them with a strong inducement to become more selective in
their admissions policies.

Less Money, More Mandates

Not to build too deterministic a model of how the reauthorization process might unfold, it
is appropriate to end this brief review with a reminder of how random and anecdote-
driven the legislative process tends to be. Especially in tight budgetary circumstances,
the policy process is susceptible to over-regulation. Examples of well intentioned, but
non-germane or ineffective, provisions of this genre abound throughout the HEA. The
list of mandates already in the law ranges from reasonably proximate issues such as
graduation rates to such unrelated items as crime statistics and distribution of voter
registration forms to students. At the very least, these become unfunded mandates that
increase administrative costs in enrollment-related offices on every campus.

While this form of legislative activism is unpredictable precisely because it is anecdote-
driven, the contours of one likely mandate are already beginning to emerge. There is
every sign that a serious effort will be made to force a federal requirement on transfer and
portability of academic of credit. The effort, which could well be embedded in the
earliest drafts of the reauthorization bill, is borne of frustration on the part of nationally-
accredited schools with problems encountered by their students in transferring
coursework to regionally accredited colleges and universities. The likely construction of
such a provision would consist of an amendment prohibiting disparate treatment of
incoming academic credit by institutions participating in Title IV programs solely on the
basis of the sending institution’s accrediting agency, so long as this latter is federally
recognized. This federalization of transfer policy would constitute the most serious
assault on the academic independence of colleges and universities since the 1992
reauthorization’s ill-fated State Postsecondary Review Entities (SPREs). In
contemplating such a requirement, the federal government would in effect be substituting
its own judgment about the coursework needed to earn a degree at each college or
university for the considered judgment of the institution itself. Such initiatives would
have a dramatic impact on academic policy issues on every campus and campus
enrollment organizations.


Enrollment officers have much to think about in connection with the upcoming
reauthorization. Along with the awareness of possible changes, however, should come a
real engagement with a process that is extremely receptive to input from constituents.
Better information and a willingness to educate policymakers about the impact of their
acts of commission and omission can take us a long way in the direction of favorable
policy outcomes. It may be critical for senior enrollment officers to engage their
presidents in these issues. In recent years, college and university presidents have become
less involved in these kinds of policy issues and more involved in research and
development policies and other areas of federal policy making. As a result, the influence
of public and private institutions has diminished, yet these policies have a direct impact
on their enrollments, which are the most predictable source of revenue for every college
and university.

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