Even with increased federal grant funding, loan-grant imbalance is likely to exist for most college students for the foreseeable future.
Increasing Access by Reducing Loan Fear
Reauthorization is looming once again, and policies surrounding academic standards, accountability and access are shaping up as major discussion issues. The topic of financial access-or, more accurately, the growing lack of access-to higher education was the focus of several presentations at a recent American Student Assistance (ASA) symposium held in Massachusetts.
Many policy analysts, including Brian Fitzgerald, staff director for the Advisory Committee on Student Financial Assistance who presented at the symposium, believe the crux of the access issue is Pell Grant funding. According to Fitzgerald, inadequate grant funding coupled with increased levels of unmet need, are creating a "core financing problem" in higher education today. Because Pell Grants are targeted to help low-income students pay for college, many of whom are also minority students, lack of Pell funding directly impacts access to higher education for this distinct population.
This is a problem not only from an ethical standpoint, but also because the number of low-income and minority students is on the rise. According to Fitzgerald, by 2015, of the 5 million new college-aged students in this country, 80 percent will represent minority groups and 50 percent will come from low-income families.
The financial aid community is not the only group concerned about lack of higher education access for this growing population of students. In a recent report called "Investing in People," the Business-Higher Education Forum called for several measures, including increased Pell Grant funding, to help ensure diversity on campuses and in the workplace. "We are convinced that racial and ethnic diversity is absolutely necessary to excellence in education...to economic competitiveness, to success in the workplace, and to the very vitality of our democracy."
Is Increased Funding Alone the Only Solution?
Most members of the financial aid community (including students) agree that increased federal grant funding for higher education is imperative, particularly for low-income and minority students. The $250 boost to a maximum $4,000 annual Pell Grant in 2002-03 is welcome, but will hardly make a dent in what could be a record year for tuition hikes, especially at public institutions. Looking further down the budget road, the picture for financial aid isn't very rosy.
Other policy consultants believe that early academic preparation through programs like GEAR UP is what's needed to help underprivileged students get into and through college. Despite some debate over which approach is better for improving access-early intervention or Pell Grants-most members of the aid community support increased funding for both. Unfortunately, both types of programs also face a similar battle for part of the shrinking federal budget earmarked for education.
Changing the Spin on Student Loans
Even with increased federal grant funding, loan-grant imbalance is likely to exist for most college students for the foreseeable future. That said, it bears taking a closer look at how student loans are presented to and perceived by college-bound students and families, and how changing the spin on student loans can help improve access to college.
Historically, student loans have been portrayed as the "bad boys" of financial aid-or not even aid at all. This negative rap is the result of many factors, including increased average loan debt among graduating students, increased credit use and consumer spending, and record numbers of younger adults filing for bankruptcy. In response, the financial aid community has become so concerned about warning students against over-borrowing that we've created a mass of cautionary literature, which often frightens more than it informs. According to Advisory committee spokesman Fitzgerald, "The more information we give, the more depressing the picture." This over-abundance of caution particularly influences low-income families, many of whom don't have a lot of financing experience.
Educating students and families about their legal obligations in taking a loan is essential. But we could better serve many families of college-bound students by equally highlighting the positives about student loans, including these important facts:
Perhaps the most important message we need to communicate to families is that taking a loan(s) to finance higher education is a good investment. It's common knowledge that having a college degree greatly enhances employment opportunity and lifetime earnings potential. The College Board cites that "People with a college degree earn 81 percent more on average than those with only a high school diploma. Over a lifetime, the gap in earnings potential between a high school diploma and a BA is more than $1,000,000."
Research also shows that being college-educated positively impacts one's personal and physical well-being, which in turn enhances the well-being of society. Student loans are an important part of that positive return on investment.
Without question, providing more federal grant assistance to prepare students for college and to help them pay for it are desirable goals. Yet the reality is-even with increased funding-many families are still going to need loans to help finance college. It's time we put a positive spin on student loans as part of a nationwide effort to ensure access for all to higher education.
Kathleen Gibbons is editor and program manager for Nellie Mae, a leading originator of federal and private education loans. She can be reached at firstname.lastname@example.org.