Recommendations for sweeping reforms in student financial aid were announced at a Steinhardt Institute for Higher Education Policy meeting on February 26, 2009. Speaking to an audience of policymakers, faculty, and university financial aid officers, economists Sandy Baum and Michael McPherson called for major changes to simplify the federal financial aid system, improve the student loan process, and promote access and success for children from low-income families. “The recommendations in this report dovetail with new directions now being announced by President Obama. If implemented, they represent the most comprehensive federal initiative to assist low income families and improve both access and college achievement in the last 25 years,” said Steinhardt Institute director and professor of higher education, Ann Marcus.
Baum and McPherson spoke on behalf of the “Rethinking Student Aid Study Group,” a panel of researchers and higher education professionals convened to study the efficiency and effectiveness of federal student aid. The proposals aim to improve the transparency and predictability of the financial aid system, simplifying, in particular, policies that affect low-income families. The study group advocates the creation of federally-supported savings accounts for children from low-income families similar to existing “529” tax incentive programs that currently benefit middle-class and upper-income families. These accounts, which would be created for children from low-income families, could significantly raise post secondary expectations and aspirations by signaling early to low-income families that funds are available to pay college. The group further recommends simplifying the process for applying for aid, calling for the elimination of the daunting and complex Free Application for Federal Student Aid (FAFSA). Data already collected by the IRS for income tax purposes could provide sufficient financial information about families to determine eligibility for Pell Grants. This proposal has already gained support from law makers in Washington and is under consideration by the Obama administration.
Both Baum and McPherson have considerable experience studying student financial aid. Baum, a senior analyst at the College Board is the author of two major annual reports: Trends in College Pricing and Trends in Student Aid. McPherson, now president of the Spencer Foundation, has served as president of Macalester College, and has authored several books and articles on student aid and access to higher education.
(photo: Michael McPherson and Sandy Baum)