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A SYSTEM IN NEED OF REPAIR: Federal Student Financial Aid System Must Be Changed to Focus on Completion, Not Access, Says New Alliance Report

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“In working to ensure that all high school students graduate ready for college and careers, the Alliance believes all students need a proper financial aid foundation to build upon their high school experiences.”

A new report from the Alliance for Excellent Education outlines serious problems with the current federal student financial aid system and calls on policymakers to simplify both the process and the programs and shift the system’s emphasis from simply access to providing the overall support resulting in postsecondary degree completion.

“In working to ensure that all high school students graduate ready for college and careers, the Alliance believes all students need a proper financial aid foundation to build upon their high school experiences,” said Bob Wise, president of the Alliance for Excellent Education and former governor of West Virginia. “But if the federal student aid system continues to focus only on increased postsecondary access and not on completion, individuals and the country as a whole will bear economic and social impacts.”

The report, A System in Need of Repair: An Examination of Federal Student Aid for Postsecondary Education, provides a brief overview of legislative changes that have altered the structure and focus of the system and turned them into a complicated web of Pell Grants, federal student loans, tuition tax credits, and campus-based aid programs that is unnecessarily convoluted and daunting for parents and students to navigate.

The system—intended to increase access to higher education for students who would otherwise be unable to attend—has instead become a significant barrier for many. According to the report, 750,000 students submitted a Free Application for Federal Student Aid (FAFSA) in 2009 to receive financial aid, but had it returned for insufficient data and then failed to resubmit it. The report notes that the process should be simplified and streamlined to ensure students—particularly low-income and first-generation college-goers—are not barred from access to higher education.

Failing to fix the financial aid system will have significant repercussions for the nation’s economy. As the report notes, the United States is projected to need 22 million new workers with college degrees by 2018, but it is projected to miss that mark by more than 3 million. Conversely, helping more students attain postsecondary degrees will ensure that they fare better in tough economic times and contribute more to the economy in both tax revenue and purchases.

A System in Need of Repair recommends simplifying the federal student financial aid process and providing clearer information to parents and students earlier in the K–12 system. It identifies problems with how federal policymakers have addressed student aid in the past, including a failure to emphasize completion and a shortsighted fragmented approach that made incremental changes to individual programs. Instead, the report encourages policymakers to think holistically about how all of the pieces of the student aid system could combine to become larger than the sum of their parts.

“The federal student aid system can and must work better,” Wise said. “Americans must demand a system that offers returns on the national investment in higher education and gives incentives and assistance to help students to complete postsecondary degrees.”

In January 2013, the Alliance will release a related report that will include detailed recommendations for reforming the federal student aid system to significantly increase the rates at which students enroll in and complete postsecondary programs. The current report, A System in Need of Repair: An Examination of Federal Student Aid for Postsecondary Education, is available here.

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