The U.S. system of federal student aid is badly in need of reform. Students are borrowing more than ever before to pay the rapidly rising costs of higher education, while at the same time questioning the value of the degrees they are earning. There are real problems to be solved in our nation’s system of higher education, including: limited access for student from low income households; disappointing graduation rates; students defaulting on loans; and rapid tuition inflation across the industry. The first step in creating solutions to these problems is to reform the system of financial aid.
In preparation for the upcoming reauthorization of the Higher Education Act, the Bill and Melinda Gates Foundation funded a group of organizations, representing a diverse set of viewpoints, to draft reports that provide implementable policy recommendations for reimagining the design and delivery of student financial aid. This project generated a vast number of recommendations for policy makers to consider. Despite the diversity of the viewpoints represented, a number of points of consensus emerged among the reports. While implementation strategies often differed, objectives were aligned, largely around the need for: simplification; better information for students and families; a system of institutional accountability; and new ways to serve the needs of non-traditional students.
Despite the widespread agreement in many areas, however, some disputes remain. For instance, fundamental disagreement exists around the issue of affordability and the role of debt. While some implicitly support the notion that debt is acceptable insofar as a degree is affordable in the long run, others argue that savings and current earnings should be sufficient to pay most of the bill for college enrollment. This is an area that will require further research and deliberation.
This paper recommends that policy makers move forward by implementing the recommendations that have widespread support. Insights regarding implementation are provided. While these reforms will be a step in the right direction, it is critical that policy makers continue work in this area in order to address the challenges that remain and the challenges that emerge as the system of higher education evolves.