The most important charge of the Advisory Committee on Student Financial Assistance is to make recommendations to Congress and the Secretary of Education that will lead to the maintenance and enhancement of access to postsecondary education for low- and middle-income students. In fulfilling that charge, the Committee makes regular formal recommendations to Congress and the Secretary in the form of yearly reports, reviews legislative proposals, comments on proposed regulations, and provides a source of objective analytical expertise designed to inform and enhance the federal student aid policymaking process. Regardless of venue, the ultimate goal is always the same: maintaining and improving access through the expansion and improvement of the federal need-based Title IV student aid programs.

It is very important that the Advisory Committee continue to play an active role in ensuring that the higher education community conduct an open and honest dialogue about the current condition of access before focusing attention on other matters, because the nation has yet to truly solve the access problem. This point was made emphatically at the Committee's meeting in Oxford, Mississippi, last April by David Breneman, Dean of the Curry School of Education at the University of Virginia. He warned that keeping federal and state policy focused on access was an uphill battle against long odds and suggested strongly that the Advisory Committee, due to its unique charge, was perhaps the last defense protecting the interests of the poorest students against politically popular competing priorities.

The highlight of that Oxford meeting was the Committee's first round table discussion on ensuring access for low-income students B its most important legislative charge. The purpose of that discussion was to review carefully where the nation stands on its fundamental commitment to maintaining and enhancing access for low-income, disadvantaged, and minority students. The Committee's upcoming April meeting in Boston will take a careful second reading. It will seek to establish once again, empirically, that there is still considerable room for improvement for the nation's lowest income students. The discussion will center on:

• postsecondary participation by low-income students;

• Title IV student aid, net price, and unmet need;

• state and institutional aid; and

• stratification of students by institution/program type.

Ideally, by creating and using a strong empirical consensus, the Committee can begin to identify and formulate a broad federal, state, and institutional strategy to ensure access in the 21^st century. The overall goal of the meeting is to create broad consensus on the dimension and priority of the access problem as well as the best way to solve it in the long term.

Despite broad agreement that the federal Title IV programs have been immensely successful in providing access to tens of millions of Americans over the past decade, during the 1998 reauthorization of the Higher Education Act, Congress and the higher education community confronted assertions that the programs were fundamentally flawed and produced serious negative consequences for higher education. These assertions based on fundamental misperceptions will likely continue to affect federal access-related policy discussion over the next decade.

At the meeting in Oxford, Mississippi last April, the Advisory Committee conducted a round table discussion among national experts on misperceptions related to college cost, student aid, and family contribution (and unmet need). The experts included:

• Dr. James V. Koch, President and Professor of Economics, Old Dominion University, Norfolk, Virginia;

• Dr. David Breneman, Dean of the Curry School of Education, University of Virginia;

• Dr. William Troutt, President of Belmont University, Nashville, Tennessee;

• Dr. William Hiss, Vice President, Administrative Services, Bates College, Lewiston, Maine;

• Dr. J. William Wenrich, Chancellor, Dallas County Community College District; and

• Ms. Toni E. Larson, Executive Director, Independent Higher Education of Colorado.

The broad implications of these misperceptions for federal policymaking were also discussed.

The panel of experts was asked to confront head-on much of what passes for the conventional wisdom about college cost, student aid, and unmet need summarized in Exhibit One. The argument starts with the conventional complaint that postsecondary education is simply not affordable for middle-income American families. Often this includes a strong feeling that college costs are out of control and that one of the major culprits is federal student aid. This, in turn, leads to speculation that Federal student aid, including unsubsidized loans, is largely self-defeating, merely driving up tuition B especially in the private college sector B because it pays for colleges to raise tuition to capture more federal dollars.

Further exacerbating public disillusionment and dissatisfaction are four additional charges: the lowest income, lowest ability students get all the subsidies; scarce need-based aid funds are being wasted on students who are unprepared for college, especially those taking remedial courses; merit is not rewarded nearly enough; and federal need analysis undermines family saving.

Finally, there is the belief that public institutions regularly meet full need for the lowest income students and that private colleges do the same through "need-blind" admissions and "full-need" aid policies.

About College Costs

• Postsecondary education is not affordable for most American families.

• Title IV student aid serves to drive up tuition, especially in the private sector.

• Colleges have raised tuition primarily to capture federal student aid.

About Student Aid

• The lowest income, lowest ability students get the largest educational subsidies.

• Need-based student aid is inefficient because it increases remediation.

• Merit-based aid is a better investment of taxpayer dollars than need-based aid.

About Family Contribution and Unmet Need

• Federal need analysis discourages saving for college by taxing assets heavily.

• Public institutions regularly meet full need for the lowest income students.

• Private colleges have Aneed-blind@ admissions and "full-need" aid policies.

These faulty arguments taken together serve to erode the primacy of access as a federal and state goal and, accordingly, the targeting of available resources on the poorest students through need-based student aid. They often provide the rationale for a redirection of scarce student aid funds to a range of competing uses: ensuring affordability, providing middle-income tax relief, rewarding merit, ensuring educational quality, and other secondary goals.

In response to these arguments, after considering a broad range of data (See Appendix C, pages 15-16), the experts helped paint a very different picture for the Committee at the April meeting. It begins with a fundamental proposition about access B as measured by participation B best summarized in the following finding by McPherson and Shapiro in The Student Aid Game:

Against that sobering participation backdrop, panelists agreed with the following conclusions:

• College is indeed affordable for most middle- and upper income families.

• Overall rates of college attendance for middle- and upper-income families are at an all-time high.

• There is absolutely no evidence that student aid drives up tuition.

• The wealthiest and brightest students, in fact, receive the greatest subsidy.

• Remediation is a sound and necessary investment that must accompany need-based student aid to ensure access.

• There is no shortage of merit-based aid for academically gifted students.

• Federal need analysis does not undermine saving; it virtually ignores the assets of most middle-income families.

• Low income students face the highest unmet need.

• Low income students often face Aneed-aware@ admission and aid policies.

The experts thus insisted that the picture painted so often by critics is largely unsubstantiated by existing theory, empirical data, and analysis; and that it serves to produce confusion about the true nature of postsecondary participation and student aid. This picture can erode public support for the Title IV programs and undermine the pursuit of access. (See Appendices A and B for a sample of panelists' and Committee members' comments from the Oxford meeting.)

More importantly, the experts noted that such erroneous criticisms have in the past been used to justify a wide range of formal proposals for legislative and regulatory changes that would not be in the interest of low-income students. The following are examples:

• federal cost controls on college tuition,

• restrictive loan limits on students,

• restrictions on the receipt of need-based aid by institutions and students,

• introduction of merit-based components into the Pell Grant program,

• making certain remedial courses ineligible for Title IV funding,

• mandatory outsourcing of remediation,

• elimination of assets entirely from federal need analysis, and

• redirection of grant aid to ensure affordability for middle income families.

Each of these proposed changes would make the pursuit of access - i.e., increased postsecondary participation - for low-income students through need-based aid much more difficult.

It was clear to the experts and Advisory Committee members at the conclusion of the April meeting in Oxford that maintaining and enhancing access in the twenty-first century would require that the higher education community do a much better job of communicating the facts to the public, the press, and legislators. It was also clear that the policy research community must base their public statements as well as their legislative proposals on the facts and put aside impressions and gut feelings.

Most important, there was unanimous agreement that the Department of Education should refocus its attention and policies on access through the strengthening of its need-based programs and take the initiative to actively oppose misguided proposals that would undermine access. Otherwise, the considerable investment made in the structure of need-based student aid over the last three decades could be easily swept away by legislative changes that are neither in the interest of low-income students nor the nation.

The entire morning of April 12 will be devoted to a comprehensive discussion of the condition of access for low-income students. There will be two panels: in the first, research analysts will present data on four critical dimensions of access; and, in the second, another group of panelists will respond to the data from a policy perspective.

The first panel will examine the condition of access from the following perspectives:

• postsecondary participation of low-income students;

• Title IV student aid and unmet need;

• state and institutional aid; and

• stratification of students by institution/program type.

The panelists have been instructed to minimize overlap and coordinate their remarks to ensure a comprehensive picture that will lead to a productive round table discussion in panel two.

Tom Mortenson, Senior Scholar at the Center for Opportunity in Education, will present the most recent evidence on:

• income distribution of low income students;

• racial and ethnic characteristics of the low income population;

• patterns across family income in high school graduation rates, college continuation rates, and chances for college enrollment;

• trends in those data from 1970 and 1997; and

• academic preparation by income and race/ethnicity.

In general, Tom Mortenson will show that there are significantly large and persistent (and possibly increasing) differences in high school graduation rates, college continuation rates, and chances for college by family income and race/ethnicity. These are caused by differences in income and academic preparation. Thus, in spite of the progress made, the nation has much more to do to ensure access for low income students.

Larry Gladieux, formerly Executive Director for Policy Analysis at the College Board and now an independent consultant, will present the most recent evidence on trends in:

• the amount and type of federal student aid relative to college cost;

• the resulting impact on unmet need for low-income students; and

• the amount of resources available for early intervention (academic preparation).

In general, Larry Gladieux will show that, over the past two decades, federal student aid has drifted from grants to loans, and the maximum Pell grant has dwindled relative to the costs of attending higher education. This has meant higher unmet need for low-income students relative to middle- and upper-income students. This means that low-income students' debt burden is higher on average than that of the high-income student and that debt often discourages low-income students from even considering postsecondary education.

More ominously, he will show that the focus of federal policy has gradually shifted toward providing relief for those who probably would go to college without such support--most dramatically in the tuition tax credits that were enacted as part of the Taxpayer Relief Act of 1997.

The good news is that there appears to be an increasing awareness at the federal level of the need for early intervention in both the TRIO and GEAR UP programs.

Don Heller, Assistant Professor, Center for the Study of Higher Education at the University of Michigan, will present the most recent data on:

• trends and developments in state financial aid spending; and

• trends and developments in institutional financial aid spending.

In general, Don Heller will show that, at the state level, the trend in new spending is strongly away from need-based aid toward ever-increasing merit-based aid. At institutions, there is an increasing emphasis on merit-based aid as well. These trends, together with the shift in federal student aid to dependence on loans, imply a serious across-the-board impact on low-income participation, unmet need, and loan burden.

Jaci King, Director of Federal Policy Analysis at the American Council on Education, will present the most recent data on the impact of all of the above on patterns in:

• the level of enrollment by institutional and program type; and

• financing choices by income, race/ethnicity, and gender.

In general, Jaci King will show that there are markedly different responses by students to higher unmet need with regard to choice of (a) program, (b) level of enrollment, (c) institution type and (d) whether he/she chooses to work or borrow. Most important, these differences seem to imply that many low-income students are choosing programs, paths, and financing alternatives that may not be conducive to academic success, persistence, and ultimately, degree completion.

Taken together, the presentations in panel one will demonstrate that:

• differences in income and academic preparation continue to seriously undermine access for low-income students;

• limited availability of federal student grant aid has prevented the minimizing of unmet need, work, and loan burden of low-income students; and

• state and institutional grant aid is not making up for, and may indeed be exacerbating, the effects of the shortfall in federal student aid.

Most seriously, low-income students appear to be responding to these negative trends - through their choice of institution, program, level of enrollment, and means of financing - in ways that reinforce rather than mitigate the powerfully pervasive effect of income and academic preparation on academic success, persistence, and, ultimately, degree completion.

After the first panel presents the data on postsecondary participation, federal student aid, unmet need; state and institutional aid; and stratification of students by institution/program type, a second panel will discuss the implications of those data. Comprised of college presidents from HBCU and HACU institutions and the Boston area, the second panel will attempt to forge agreement on the data and conclusions where possible and identify a broad federal, state, and institutional strategy that combines all forms of student aid in an effective approach to access.

The second panel will include five college presidents, each of whom has extensive experience with low income, disadvantaged, and minority students:

• Dr. Mary F. Fifield, President, Bunker Hill Community College;

• Dr. Elson S. Floyd, President, Western Michigan University;

• Dr. George E. Martin, President, St. Edward's University;

• Dr. Piedad F. Robertson, President, Santa Monica College; and

• Dr. Kathleen A. Ross, President, Heritage College

The panel will also include several important leaders in higher education with directly relevant backgrounds, experience, and commitment:

• Ms. Ann Coles, Vice President, TERI;

• Ms. Jane Oates, Senior Education Advisor, Senate Health, Education, Labor and Pensions Committee;

• Dr. Gary Orfield, Professor of Education and Social Policy, Harvard University;

• Ms. Jamie Pueschel, Legislative Director, United States Student Association;

• Ms. Clayton Spencer, Associate Vice President for Higher Education Policy, Harvard University; and

• Ms. Barbara Tornow, Executive Director, Office of Financial Assistance, Boston University.

The second panel discussion will be driven by a set of suggested policy questions.

The questions and discussion (see Exhibit Two on page 12) will be divided into three broad areas in which the higher education community must reach consensus:

• the condition of access for low-income students;

• program and/or funding changes likely to improve access; and

• program and/or funding changes unlikely to improve access.

The following brief statements elaborate on the central issue behind each question, in light of the data to be presented in the first panel. The statements are illustrative only - a possible starting point - and are not meant to direct or limit the discussion in any way.

• Has participation improved? Is it likely to improve in the future?

• Is Title IV funding sufficient to maintain and improve low-income access?

• What will be the likely future contribution of state student aid to access?

• Is institutional student aid likely to improve access?

• How important is the Pell Grant Program and how might it be improved?

• Is the SEOG Program key to access and how should it be related to Pell?

• How important are the CWS and Perkins Programs?

• What overall priority should be placed on the TRIO and GEAR UP programs?

• Can the LEAP (SSIG) program be improved in some way to expand access?

• Can tax credits be modified to help low-income families?

• Are new federal programs the answer to improving access?

• Are any of the following specific changes likely to improve access:

  • -- federal cost controls on college tuition?

  • -- more restrictive loan limits for low-income students?

  • -- conditioning receipt of federal student aid on graduation rates?

  • -- adding merit-based components to the Pell Grant program?

  • -- making remedial courses ineligible for Title IV funding?

• Is low-income student access compatible with middle-income affordability?

"Until someone comes up with a better way . . . we should stick with remediation. I strongly believe these programs would pass a well done cost-benefit analysis ."

"While we have come a long way over the last three decades in making postsecondary education accessible to the majority of American youth, . . . there is still considerable room for improvementCespecially for the nation's very lowest income students."

"Maintenance of access, to our Committee, meansCat a minimumCdoing no harm as measured by the out-of-pocket expenses facing low-income students. Improvement of access means lowering those expenses."

"It has been my experience that families who have had the least access to higher education are disproportionately affected by the thought of debt."

"I think at the University of California the average family income is higher than at private institutions in California. This means that the wealthy at UC are being subsidized more than are middle- and low-income students. I think that complicates the issue."

"The less you subsidize higher income students at higher priced institutions, the more you can subsidize lower income students."

"While I understand that middle-income students can have unmet need, I feel that unmet need is very serious at the low-income level."

"It is amazing the length to which parents will go to borrow in order to make that education possible. There is a lack of recognition of the cost to families, particularly loans to parents with more than one student in the family. Even at the publics, it is quite large."

"There is another phenomenon . . . the move in the public sector, particularly at the state level, toward merit-based aid . . . [and] we know what population will be served by increased merit-based aid. I think that is an important factor."

"One thing we need to convince people of is that college is affordable. ACE's data has shown how widespread the misperception about affordability really is for many families."

"After a period of decline in the 1960s and 1970s, average tuition, room, and board at public institutions rose to 15 percent of median family income in 1993 and has remained stable ever since," The Condition of Education, p. 70.

"Despite the concerns we have noted about the impact on access of the recent rise in college costs for low-income students, the high overall rates of college attendance in recent years point to considerable success in making at least some form of postsecondary education financially accessible to a very wide range of Americans," McPherson & Shapiro, The Student Aid Game, p. 42.

"In our study on tuition increases at four year public colleges and universities for school year 1980-81 through 1994-95, we found that the two major factors associated with these increases were the rise in schools' expenditures and schools' need to increase tuition revenue to make up for smaller increases in state appropriations," GAO, page 1.

"The Commission finds no evidence to suggest any relationship between the availability of federal grants and the costs or prices in these institutions. . . . The Commission has found no conclusive evidence that loans have contributed to rising costs and prices," The Cost Commission, page 11.

"The American system of selective admission . . . tends to sort students with the highest academic qualifications and promise into the institutions with the most ample resources with which to subsidize the students' education," McPherson & Shapiro, The Student Aid Game, p. 143.

"The considerable increases in net tuition for low-income students have led to a growing gap between enrollment rates for high-income and low-income students and to an increased concentration of low-income students at the least costly institutions. With merit aid increasing at a faster rate than need-based aid, these trends seem likely to be exacerbated in the future,"

"Remediation is a core function of higher education . . .. There is no evidence that remediation is expanding in size or scope. . . . The financial costs of remediation are modest," Institute for Higher Education Policy, College Remediation, page 5.

"We believe that remedial education would pass the basic cost/benefit test required of any efficient social program. True, it would be far better if all high-school students with college aspirations prepared themselves adequately for college-level work while in high school. . . . But, in the short run, what is the alternative to remediation?," Breneman & Haarlow, page 3.

"Admitting a low-income student to Bates [College] does not mean a federal aid windfall. It means an initial $20,000 commitment from our own scholarship budget," William Hiss, page 2.

"We found no evidence that . . . private institutions increased their tuitions when they received more federal student aid. . . . Given the tuition increases that have occurred since (the mid-1980s)

. . . we would not be surprised to discover that the effect of federal aid on public tuition has been substantially attenuated by now," McPherson & Shapiro, The Student Aid Game, page 84.

"Using more recent data, the Coopers & Lybrand LLP report could not find evidence to support

. . . [the] finding that federal student assistance resulted in tuition increases at public four-year institutions," Pearson & Baldi, page 95

"We found that private institutions tended to increase their spending on institution-based aid when federal student aid increased," McPherson & Shapiro, The Student Aid Game, page 84.

"Average unmet need was about $6,200 ($3,800) for full-time dependent undergraduates from low income families attending private . . . [public] 4-year institutions," The Condition of Education, page 4.

"The prevalence of large amounts of unmet need--net prices frequently exceed EFCs, especially for students in the lower income categories--suggests that net prices may be rising faster than most families' ability to pay," Institute for Higher Education Policy, Grants, page ix.

"Differential treatment of students within the aid-eligible population is very common (including) making admissions "need-aware . . . differential packaging . . . gapping . . . admit-deny (and) need-aware second review," McPherson & Shapiro, The Student Aid Game, pages 94-95.

"Families with incomes of $70,000-79,999 had an average EFC of $12,300, enough to cover the price to attend a public 4-year institution without aid. Families with incomes of between $100,000 and $124,000 had an EFC about equal to the price to attend a private, not-for-profit 4-year," The Condition of Education, page 4.

"When Congress decided to write the need analysis rules directly into the 1992 legislation, it made those rules significantly more lenient with respect to middle- and upper-middle-income students," McPherson & Shapiro, Priorities, page 143.

"In 1993-94, the net value of the principal residence and the net value of a family farm on which the family resides was eliminated from all EFC formulas . . . . The formulae for calculating the EFC provide for asset reserves that >protect= a portion . . . of assets when determining the contribution from assets," End of Year Report, page 75.