PJ Tabit
So with that is my pleasure to introduce Wesley Whistle, a senior advisor for policy and strategy with the education program at the New America Foundation. As a member of the higher education team, he researches and analyzes policy as well as implements advocacy strategies to create more equitable and accountable system of higher education. Prior to joining New America, Wesley was an education policy advisor at Third Way, he was also previously a higher education administrator at colleges and universities in Kentucky, working on accreditation, federal and state reporting and assessment. Outside of education, he has also worked in Kentucky State government with the general assembly, the state auditor and the cabinet for economic development. Wesley earned his master’s degree in public administration with concentration in education policy from the University of Kentucky and his bachelor’s degree in political science from Kentucky Wesleyan College. His experience as a Pell Grant recipient and first generation college graduate informs his work every day.
PJ Tabit
So I will turn it over to Wesley in a moment. First, I just wanted to check back in on those poll results. The number one word you all entered was affordability followed by equity, and then after that accountability and supports, financial assistance and completion. So really interesting results and we’ll turn it over to Wesley.
Wesley Whistle
Thanks PJ. Good afternoon, my name is Wesley Whistle and like PJ said, I work at New America on the higher education team, primarily on federal higher ed policy, focused on issues like affordability, accountability and student debt. You can go to the next slide. Higher education is a pillar of national prosperity, but for a growing number of students, steep college costs and suspect quality are keeping the American dream out of breach. New America’s higher education program works to make education after high school more accessible, affordable, student-centered, outcomes focused and equitable. Our federal policy team conducts research and analysis to ensure that opportunity is made available to all, while ensuring that students debt is manageable and their education is high quality. Our state policy experts worked with governors and legislatures to strengthen the promise of public higher education. We developed policies to improve student outcomes in an equitable and evidence based ways. Next slide.
Wesley Whistle
So a little bit about the Higher Education Act. When the Higher Education Act, or HEA, was passed in 1965, the United States had a thriving middle class, but too many Americans lived in poverty and were unable to access good jobs. The HEA was one of a slew of great society programs that aimed to level the playing field of economic opportunity, particularly for those born into poverty. The student financial aid programs created under the HEA were designed to ensure that any American able to get into college could go, no matter their economic background. In a message to Congress, President Johnson said at the time, “Higher education is no longer a luxury, but a necessity.” Since then, the HEA has been reauthorized eight different times and amended substantively by a number of pieces of legislation. The last time the HEA was reauthorized was in August of 2008, the month I first enrolled in college and when the country was in the early stages of the great recession. As you know, a lot has changed in the economy and in higher education since then. Next slide.
Wesley Whistle
At the time, there were just under 30 million borrowers who cumulatively owed $577 billion in student debt, then the recession hit and wreaked havoc on the economy. More students enrolled in college than ever before, contributing to an increase in cumulative student debt. For profit college enrollment in particular exploded leaving students with large debts and often worthless degrees, where in many cases in debt with no degree to help them find a job to pay back their loans. Plus more students also enrolled in graduate school, borrowing significantly larger amounts to pay for their education. Next slide. At the same time, college costs have also increased significantly since then, especially as state governments have made cuts to public higher education. Since the 2008/2009 academic year, the net price of tuition fees, room and board at a public four year college has increased 22%, even after adjusting for inflation.
Wesley Whistle
Today, there are nearly 43 million borrowers who owe approximately $1.6 trillion in federal student loan debt and quality is still an issue. Learning results are uneven, graduation rates are wagging and many students struggle to manage their debt. Low income, minoritized and first generation students continue to fall behind their peers in earning high quality degrees. With that context, I think most would say there are reasons to at least consider an update to HEA. Prior to the pandemic, it looked like we might do just that, then Senator Alexander had announced his retirement and a reformed HEA could have been part of his legacy. At that time, negotiations seemed to be underway, but then the coronavirus hit. So before I talk about the issues at hand today, I think it’s important to discuss what has happened in the last approximately 13 months. Next slide.
Wesley Whistle
So last March Congress passed the Cares Act in response to the coronavirus, that bill sent about $14 billion to higher education, mostly based on a formula that considered the number of students who weren’t previously enrolled in an online education program and they placed a premium on Pell students. There were additional set asides for HBCUs, MSIs and other schools that had the greatest need. It was much needed, colleges and universities were faced with refunds for housing, lost revenue from other auxiliary services and in some instances, other costs associated with moving online. Governors also received some funds and were given discretion on where to spend across the education spectrum. Next slide, please.
Wesley Whistle
Half of the institutional money was provided for students in the form of emergency aid grants and the other half could be used to offset pandemic related costs for college and universities, with a good amount of discretion and that included for emergency grant aid too. All sectors of higher education were eligible. Next slide. Outside of money directly for schools, the Cares Act also gave colleges flexibility with their existing funds. So institutions no longer needed to provide matching funds for most of their campus based aid programs, HBCUs and other MSIs could repurpose their grant aid that they received under other HEA programs. Additionally, institutions could use SEOG funds to provide emergency grants to students in need, and they were allowed to pay their work study students, even if they weren’t able to work because obviously many of them were now learning remotely. Next slide.
Wesley Whistle
Additionally, the legislation provided a huge relief to student borrowers, by suspending payments and interests on federally held student loans through September, borrowers could count those months of Donner payment towards student loan forgiveness programs, under income-driven repayment and public service loan forgiveness. However, borrowers with loans under the old bank based system known as FFEL, privately held, they did not receive that relief, neither did private student loan borrowers. In September as the expiration of the payment suspension approach, President Trump used executive authority to extend the pause through December and then again in December, he extended it through January. Next slide.
Wesley Whistle
Congress also passed another relief bill in December, along with the broader spending deal to avoid a government shutdown. In terms of coronavirus relief, the deal impacted higher education in a few different ways. For one, it sent another $23 billion to public and nonprofit colleges under the federal formula, but with some tweaks to the formula that New America and other advocates pushed for in order to address some inequities around part-time students. It also created the Emergency Broadband Benefit Program, EBB, which provided $3.2 billion to fund a monthly $50 subsidy to low income households in order to offset the cost of broadband. The higher education connection, besides the fact that students need access to internet, is that the program made receiving a Pell Grant one of the ways a family can be eligible, that program is currently being set up by the FCC, as we speak.
Wesley Whistle
Additionally, the bill provided a temporary expansion of the SNAP program, or food stamps, that made students who are enrolled in higher education eligible during the pandemic. Next slide, but beyond pandemic relief, the deal actually included some HEA changes. While it was far from a comprehensive reauthorization, it included some pretty significant changes. Much of that centered around FAFSA simplification, which was the priority for Senator Alexander. The bill renames the expected family contribution, or EFC, as a student aid index and makes changes to the income protection allowance. And students whose income fall below a certain poverty level are automatically eligible for the maximum Pell Grant. Another change addressed the ongoing student loan servicing crisis. Current servicing contracts were set to expire as soon as December without option to renew them. So the education department had put its plans for an overhaul of servicing, known as NextGen on hold, and launched a procurement that was basically a recompete that reassembles existing contracts, but reduces the number of servicers with contracts to a more manageable two.
Wesley Whistle
Instead, the December bill directs the department to pause that work temporarily and granted it the authority to extend existing contracts for up to two years. That provision buys time, both for existing servicers, who are wary of losing business, and for the department, but it doesn’t reduce the urgency of a new servicing system, especially as borrowers will eventually reenter repayment. Next slide.
Wesley Whistle
But that’s not all, so the deal then also reversed the provision in the 1994 Crime Bill that made incarcerated individuals ineligible for Pell Grants. Importantly, it made sure that only public and nonprofit colleges that meet certain criteria will be eligible to offer Pell financed prison education programs. Additionally, the bill provided $150 increase to the maximum Pell Grant, so for the next award year starting the Summer, the maximum grant will now be almost $6,500. It also restores any amount of Pell money that was used up for students whose schools lied to them or closed permanently, giving students back some of their lifetime eligibility for the grant. And finally, the bill also forgave $1.3 billion in loans that are given to historically black colleges and universities for capital financing projects, which the department actually just completed last week. Next slide.
Wesley Whistle
It’s a new year, we have a new Congress and a new administration and a few things have already happened. First, on Biden’s first day in office, he extended the student loan payment pause through at least September and the coronavirus relief package that passed in March sent another $40 billion in funding to higher education under the previous formula. It also included a provision that made student loan forgiveness not count as taxable income for the next five years. Forgiveness under PSLF was always not considered taxable income, but unfortunately forgiveness under income-driven or payment was. The bill also had one important provision related to HEA, it closed what we call the 90/10 loop hole. Under the HEA, for-profit colleges are prohibited from receiving more than 90% of their revenue from federal education funds. The intent was that for-profit colleges should have to show their value so that others would provide them at least 10% of their revenue without federal dollars, such as a business paying to train their employees or students paying out of pocket.
Wesley Whistle
However, the law only specified education dollars provided under HEA, which created a loophole. For-profit colleges could enroll veterans and service members who would bring in DOD and VA education dollars, and those dollars would count towards their 10%. For-profit colleges could get 100% of the revenue from the federal government, but still pass the rule. The loophole creates a perverse incentive, especially for low quality and predatory schools, to recruit veterans and military members so they could stay eligible. The bill passed under reconciliation, included a bipartisan agreement to close that loophole though it won’t happen for two years and it has to be implemented still.
Wesley Whistle
Next slide. Since taking office, the Biden Administration has also moved to make a few changes of their own, last month the department rescinded the formula used by the previous administration to provide partial relief to borrowers who were defrauded by their college and they’re acting to create a streamline application process for going forward. Additionally, the department announced they’ll be waiving some requirements for students who are seeking a total and permanent disability discharge. So under HEA, borrowers who have a total of permanent disability can get student loan relief, but they are required to report their income for a three year monitoring period to prove that they can’t repay their loans. The department is waiving these reporting requirements for three years. And finally, the department is announcing that it will be pausing collections and waving interests for defaulted FFEL borrowers. As I mentioned earlier, those borrowers whose loans aren’t held by the federal government aren’t eligible for the payment interest suspension, but this does help those who have defaulted. Next slide.
Wesley Whistle
And that brings us to today, certainly a lot has happened over the last 13 months, however, that still leaves much to be done in higher education at the federal level. Next slide. So in the infrastructure package recently announced from the Biden Administration, they propose providing $12 billion to community colleges, I believe through grants to the states, to invest in their infrastructure and to address access issues, particularly in education deserts.
Wesley Whistle
Biden is also said to be announcing another proposal and then next coming weeks and that is reportedly going to include tuition free community college, but we still haven’t heard the details on that proposal yet. And we are currently waiting for the administration to release their skinny budget, which will outline their proposed discretionary spending priorities. Next slide. Looking to Congress, hope for a comprehensive reauthorization of HEA seems unlikely. Much of the policy focus is likely going to be centered on economic recovery, and with a Senate divided on the tightest margins possible, it would be difficult to get major legislation passed that can avoid a filibuster. But still there are things that can happen in higher education either in spending or recovery packages or from the executive branch. Next slide.
Wesley Whistle
So thinking about the issues to be addressed, student loans are obviously a big one. I mentioned servicing earlier, that’s going to be an important piece. The question that’s in the news most often these days is around forgiveness there, but questions remain around how, about how much and for whom. Biden has called for providing $10,000 in forgiveness through Congress, Senator Warren has called for $50,000 via executive order. There’s still questions about the existence of that authority, but Biden has asked administration officials to look into it. Another big issue will be around borrowers reentering repayment when the payment pause ends, regardless if that is in September or sometime later. We’ve previously seen that when borrowers have been in forbearance due to natural disasters, they have often defaulted when payments restart, either because their finances still haven’t recovered or because they aren’t used to paying the loans and budgets haven’t adjusted. And those instances affected much smaller numbers of borrowers, so Congress and the administration are going to have to make sure that a restart of repayment doesn’t send millions of borrowers into default.
Wesley Whistle
Obviously much of the talk about higher education in the last decade, at least, has focused on affordability, many of you said that was a priority. It was much of the conversation of the democratic presidential primary and it’s something that I think needs to be addressed. Biden has proposed doubling the Pell Grant, and like I said earlier, he said to be considering tuition free community college. Others have also just called for a more general federal state partnership to improve affordability, to help incentivize states to invest while providing some federal support as well. I think there’s a big opportunity here, Democrats may not control Congress in two years, so it’s possible they will seize that opportunity [inaudible]. Next slide.
Wesley Whistle
As I said at the beginning, there’s great variability in the quality of education programs and the outcomes of students, this was a concern before the pandemic, but it could get worse, so there’s a lot that can be done. While I think there are opportunities to address accountability across higher education, there are a couple of for-profit accountability issues that do stand out. One is gainful employment, for decades, HEA has specified the programs at for-profit colleges, which started as career programs, must lead to gainful employment and an occupation but that didn’t really define what that meant. So, the Obama administration implemented their gainful employment rule, which was essentially a debt-to-income ratio. If students weren’t earning enough to pay back their debt, these programs, upper schools, could no longer receive federal loans and grants.
Wesley Whistle
The Trump administration did away with a rule, but Biden has said he wants to bring it back. We saw that the rule worked, it shut down bad programs and it even shut down some programs that weren’t failing yet, but were approaching that threshold. Additionally, like I mentioned, closing the 90/10 loophole will have to be implemented over the next two years. Another opportunity is around transparency, for example, I think we want to know more about how many students are learning online now and we want to look at that going forward. And many of us want to see the College Transparency Act pass so that we can have better data to truly understand how college budgets are serving their students. Next slide.
Wesley Whistle
And with the recession, there are already calls for job training and workforce development and of course, community colleges are a big part of that. Some folks are pushing to open up Pell Grant dollars to extremely short job training programs, they hope that people can enroll in a program and in just eight weeks, leave with the training necessary to find a good job. We at New America think that’s a bad idea because Pell isn’t designed in a way to ensure quality for those types of very short job training programs, and nearly all the evidence shows that they mostly lead to low income jobs. And those results are also the worst for women, generally, and for men of color, and the lowest paying jobs that from those programs are occupied predominantly by women of color.
Wesley Whistle
We support things like apprenticeships, which may not be as short, but people can get paid while they’re training and then find a better job after they complete. And we hope for another investment in community colleges, like the TAACCCT program, which, in the last recession, pumped in $2 billion to increase capacity at community colleges to support high quality job training and they had tremendous results. I think another opportunity is just to rework the campus-based aid programs, SEOGs formula doesn’t exactly make sense, so I think it could be reconfigured in a way to help the schools and students who need it most. I would argue that we should make the changes from the Cares Act permanent so that schools can use SEOG funds for emergency grants in the future. And it’s an evidence-based intervention that has been proven to improve student success. Next slide.
Wesley Whistle
Those are just some of the issues that I think can be tackled right now, it’s definitely not all of them, but I hope that new investments are made to improve affordability, but I also hope that we can take steps to improve quality as well. So happy to take any questions.
PJ Tabit
Thanks, Wesley, that was a great address. And I’ll remind the audience, you can submit your questions in that Slido area underneath multimedia viewer. You just need to click the link to connect and then you can submit your questions there. So I’ll kick it off with one. I mean, you talked about the frequency of HEA reauthorization and from 1965 through 1998, it was reauthorized, give or take, every four to six years. And then it was 10 years between 1998 and 2008 and we’re going on 13 years, and as you said, it’s unlikely we’ll see reauthorization of this congress. So is that just what we should expect going forward? Is it likely that certain provisions will get extended in a piecemeal fashion, but we’re unlikely to see a sort of wholesale reauthorization [inaudible] HEA?
Wesley Whistle
I hope not. I mean, I think it’s very possible, very partisan and [inaudible], but I hope going forward, we can get to a point where we can do comprehensive every authorizations. I mean, obviously Senator Alexander’s gone and he and Senator Murray had a great relationship, but it wasn’t that long ago they reauthorized the Every Student Succeeds Act, well, that was [inaudible]. So I think it’s possible, obviously there’s a lot of things to overcome. Yeah.
PJ Tabit
One of the questions submitted by the audience was about the transition back into student loan payments, so you flagged the concerns about the rate of default among students that transition out of forbearance program. So what do you think the right approach is to that? How do you prepare people to transition back into payments?
Wesley Whistle
Yeah, I mean, I think the big part is going to be about communication and servicers doing outreach to borrowers and making sure they know their options, they know if their income has changed for the worst they, they can enter in income-based repayment. That’s, I would say, for most borrowers is the preferred option if they’re struggling, but it’s just also just making sure that they know. There was a few data, I believe, before that showed people were unsure about when the suspension was expiring, which we’ve moved the deadline multiple times now so there’s no surprise there, I think. So I think making sure the borrows just know when payments will restart in the first place is going to be an important piece all in its own.
PJ Tabit
You talked about Pell related to short term training programs and on the first day of this series, we had a panel about income share agreements. And one of the selling points that was advocated for around ISAs was that they’re well suited for these kinds of programs that may not be eligible for other kinds of federal aid. So do you, or do New America, have a viewpoint on the appropriateness for ISAs for those sorts of things?
Wesley Whistle
Yeah, I mean, I think ISAs, it’s a complicated topic and I personally have concerns around them generally, though my concerns in higher ed are different than the ones in the workforce. I think my preferred option would be to really invest in WIOA and do it in a way that works to improve quality. I mean, I do worry about giving a lot of debt to people and I think, Income Share Agreements, depending on how the agreement is written in the contract, it can have not great incentives. And especially, for the borrowers who their training pays off the most, they end up paying the most and I think I have concerns about the ability to build a wealth there, but I think it makes more sense there definitely than in higher education.
PJ Tabit
We talked a little bit about the prospects for HEA reauthorization, and I want to ask just specifically with regard to COVID, do you think the experience in the last year, the last 13 months, is there more of an appetite for bold and maybe experimental policy proposals than there was pre COVID, especially regard to higher education?
Wesley Whistle
I mean, I think we have seen it so far, at least, in Congress that they are willing to do more and they’re recognizing the recession. I don’t know that we’ve seen a ton of the policy specific to higher ed other than just helping with funding issues, which is really important. I do think people have noticed concerns around online learning because people have experienced it in a way that others hadn’t before. And so many people who otherwise might have said online learning is the future are now saying, “No, it’s not the future and this is not what people want to do.” But I think it has, on the institutional side at least, made them hopefully be a little more responsive to certain needs of students. But I think it’s too early to tell, we haven’t seen a ton of the change in higher ed policy yet. I think opinions about higher ed will be interesting going forward and how that could actually shape policy will be an interesting thing to watch.
PJ Tabit
An audience question asked about whether post September 30th of this year phasing in repayment for federal student loan borrowers, they said they heard that would happen in a phased approach. Do you know anything about how that might work?
Wesley Whistle
I’m not sure. I mean, I don’t think I’ve heard about a phased approach, maybe I’m missing something.
PJ Tabit
Yeah, I was unfamiliar with that also, so I thought maybe [inaudible]. Well, I think we have time for one more question. So I ask this whole conference series is about innovations in financing post-secondary education. We’ve heard about ISAs and apprenticeship programs or work colleges, today, we’re going to talk about a match savings program. So, of the menu of ideas and new proposals that are out there, which do you think are most likely to get picked up in sort of wholesale reauthorization of the HEA?
Wesley Whistle
I mean, I think probably the thing, on the federal scale, that has the most broad support is probably around apprenticeships. I think there’s differences around exactly how to do that, but we’ve seen great results where people have been able to get job training and make money while doing it. I’m from Kentucky, I’m a big fan of Kentucky FAME, it’s a great program in advanced manufacturing, has done wonders and people have made great salaries, have good jobs and they can go on and continue to learn more and build on their degrees that they earn. I mean, I think that is the one that makes the most sense, especially because all of the workforce development needs that are going to exist and apprenticeships, I think, are the ones that make the most sense.
PJ Tabit
Cool. Well, Wesley, thanks for doing this and I appreciate all of your expertise.
Wesley Whistle
Yeah, thank you.