Every few years, Congress revisits the federal legislation that governs higher education. Although they are under no mandate to do so, inaction can result in an outdated higher education system that does not account for recent changes in education. To ensure that colleges are operating to the best of their ability, and providing a high-quality education to their students, Congress proposes changes to the Higher Education Act.
What is the Higher Education Act?
The Higher Education Act (HEA) was first passed in 1965, and governs most federal higher education policy. The act includes provisions which regulate federal financial aid — Pell Grants, student loans, et cetera — accountability measures, completion ideas, and more. Revisiting the HEA could therefore bring about serious changes in higher education which, over the last few years, has come under serious scrutiny. A reauthorization bill has the potential to fix things such as the Free Application for Federal Student Aid, which has been denounced for being too complicated for many people to file; the bill could also tie Pell Grants to the rate of inflation and double them to make up for the rising prices of college; the bill could help create a safe environment for online-driven programs to act, and perhaps pave the way for accreditation for non-traditional programs.
The Higher Education Act affects more than $122 billion of federal spending through grants, loans, and other initiatives, and efforts to revisit the act have stagnated. The path to an updated HEA was always going to be long — especially considering the amount of money spent on the act — but there has been little activity in terms of reauthorizing the act. The Senate Health, Education, Labor, and Pensions (HELP) Committee has recently held hearings on the HEA, but those hearings have not resulted in any actual legislation being passed. In December 2017, the House Committee on Education and the Workforce proposed the PROSPER Act, which would update the HEA for the first time since 2008. And, more recently, speeches have been held and members of the HELP committee have published op-eds regarding the importance of a reauthorization bill.
Why does Congress need to revisit the HEA?
There are a few reasons why Congress needs to revisit the HEA. Firstly, technology is changing the nature of work in almost every industry, including healthcare, manufacturing, and production. This means that an increasing number of jobs are under threat of being replaced by technology within the next few decades. Such changes will mean that a large number of workers will not be able to continue their jobs because many people are not familiar with the new technologies that are changing these industries. The college degrees people have earned in the past are no longer enough to help people stay a viable employee for life — workers need life-long training. When the initial HEA was written, the risk of automation was significantly lower, and computers were yet to revolutionize entire industries. Today, however, with the threat of automation more prudent, the higher education system needs to adapt to ensure people walk away with the skills they need to survive, and so that people can come back when they need to retrain.
Secondly, many of the regulatory structures in place have not been sufficient to govern higher education. One such example is accreditation — the process through which the quality of a college is verified by an outside body. Accreditors pay too much attention to inputs such as shared governance and financials, and fail to focus on what matters: student outcomes. Accreditation bodies do not weigh factors such as graduation rates or average salaries after graduation highly enough, which has meant that many colleges have been able to get away with poor outcomes in recent years. Accreditation bodies have developed complex standards that not only measure the wrong things, but also do not account for recent innovation in higher education. The standards they use cannot be applied to new innovative models such as those tried by colleges like Western Governors University, which has resulted in many new innovations are being stifled. Unless a reauthorization bill is passed soon, nurturing innovation in higher education will continue to be difficult, and new, experimental models may continue to be ignored by accreditors.
Finally, higher education has suffered from a lack of accountability in recent years. Amidst the rise of scandals such as Varsity Blues, more attention has been drawn on how colleges admit applicants, and how they raise money from students — and the failures of college accountability were a key component in these scandals. Over the last few years, colleges have started to spend larger portions of their budget on athletics and other amenities which add little value to the main business of a university: teaching and research.
As new stadiums, sports teams, administrative offices, and dorm rooms have been erected, the public has realized that colleges do not have enough oversight in terms of how they spend their money. For this reason, more people have started to question whether or not college is a good investment, if such a large portion of the money students spend is going toward amenities that have very little impact on a students’ success. And amenities have started to become a competition among colleges — the school with the best amenities will get better students — causing the focus on graduation rates and outcomes to shift toward which school has the best dorms and sports teams. A new HEA bill would need to account for the systemic problems in the accountability system, and develop new measures to hold colleges to account — and, in the process, restore the public’s faith in higher education.
The system is in immediate need of repair. Students, parents, and the public have been asking more questions around whether college is still worth it, and whether colleges can be trusted to spend tuition on services that will directly impact student success. Although, in most cases, pursuing a college degree is a good idea — those who pursue a college degree statistically earn more than those with only a high-school diploma — the public needs more assurance of that fact. In addition, two out of three jobs are filled by individuals who have at least some college education, according to a report titled “Don’t Stop Believin’ (In the Value of a College Degree)”, published by the HELP committee. Reauthorizing the HEA is becoming increasingly important, and will only become more important in the future.
What should the new HEA bill address?
What should be the main priorities for the new HEA? There are a few main things that any reauthorization bill should address.
Focus on Outcomes
The first would be to reform accreditation to focus on outcomes, rather than inputs. Accreditation bodies should be required to look at student outcome data — average post-graduation salaries, graduation rates, student satisfaction, et cetera — when evaluating an institution, and weigh those factors heavily. Institutions that have poor outcomes should be put under more pressure to reform their offerings, which would encourage schools with a lower-quality services to improve their education. In addition, such a transition would also make it easier for accreditors to evaluate new models of education — such as those pioneered by Western Governors University, new online-based education models, et cetera — because the focus would be on something all educational services have: outcomes.
The PROSPER Act includes a few changes that would simplify the accreditation process. The act would encourage accreditation bodies to assess student outcomes relative to the mission of the school, and to scrutinize low-performing institutions to ensure they provide a good education to their students. Future HEA reauthorization discussions should also cover how accreditation can perhaps be consolidated — there are dozens of approved accreditation boards around the U.S., each with their own rules. Accreditation acts as the core method of quality assurance in higher education, and so getting it right is critical.
Reform Title IV
The second issue a reauthorization bill should address would be to reform Title IV financing to account for new changes in higher education. As of Q2’19, there are $1.6 trillion of outstanding student loans, and student debt is the second-highest source of household debt after mortgages. Therefore, Congress needs to reconsider how the federal financial system works, and evaluate what changes need to be made to create a more equitable system that caters to the needs of students. The first change Congress needs to make is to link Pell Grants — a grant made to low-income students that does not need to be paid back — to the rate of inflation, which will ensure the size of the grants will evolve commensurate to any economic factors. Congress also needs to ensure that the purchasing power of Pell Grants remains the same year-over-year — tuition has increased at almost eight times the rate of wage increases, and Pell Grants have failed to catch up.
PROSPER also aims to improve completion of shorter-term programs by expanding access to Title IV funding. Although this may cause problems in the context of coding bootcamps, which do not need Title IV funding, expanding access to capital for other short-term programs would be a boon to students. The PROSPECT Act would lower the required credit hours and weeks needed for certificate programs to be eligible for Title IV funding from 600 hours and 15 weeks currently to 300 and 10, respectively. This would make it easier for people to attend further education programs and certificate-granting courses at local colleges, without having to worry about taking out a loan — either federal or private.
Disclose Student Outcomes
Finally, a HEA reauthorization bill should introduce new regulations around disclosing student outcomes. Historically, colleges have been hesitant to disclose their full outcomes data, especially institutions with poor outcomes. However, without this data, students cannot make a fully informed decision about their education. The HEA should introduce changes that force schools to collect more outcomes data in a standard form, accounting for factors such as average student salaries and student placement rates across each individual major. The HEA should then require that data be disclosed to the federal government, who could process the data and publish it online for all students to access. This data would go a long way in helping students understand the value of each degree a college offers, and would help them make a more informed decision about whether college is for them. Further, this data would help build more confidence in the value of higher education — students would be able to see success rates for an individual college, and for each of their programs.
The Future of Higher Education Policy
It is worth noting that higher education policy can still change without the HEA. There are a few independent bills which affect higher education and have not been included in the HEA reauthorization package. For example, creating a regulatory framework for Income Share Agreements — a new method of financing where students pay tuition as a percentage of their post-graduation income — has been introduced as its own bill. The ISA Student Protection Act was proposed in July with bipartisan support, and would help create a series of safeguards to protect both innovation and students entering into an ISA. The main idea behind an ISA is to give schools more skin-in-the-game by linking their financials with the outcomes of students.
Students enrolled in an ISA will only pay when they earn over a certain amount — referred to as the minimum income threshold — and what they pay will be represented as a percentage of their future income. Therefore, underemployed students will pay very little, and unemployed students will pay nothing. If a school has poor outcomes, they will suffer a direct financial impact, which should encourage them to offer better-quality services to students. Republicans should like ISAs because they would create a way where education financing could be privatized; Democrats should like ISAs because they align the incentives of schools and their students. There are a few other reforms such as changes to the Free Application for Federal Student Aid (FAFSA), and introducing more skin-in-the-game measures that hold colleges accountable for their outcomes which have been proposed outside of the HEA.
The prospects for a reauthorization bill appear to be slim, especially as it gets closer to the 2020 elections — Democrats do not want to give the White House any big victories in an election year, or close to one. However, both parties have an interest in reauthorizing the Higher Education Act, and any advances made toward that goal will likely be well received by voters. Without a new reauthorization bill, higher education will be able to continue as it is right now, with all of its problems being left unaddressed. It is in the best interests of both parties to come together and work toward crafting a solution that protects the higher education sector, and ensures that students who take a risk on further education are provided with the highest possible quality of education. Education is a public good, and legislation is needed to govern that fact.
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