Student Aid Rules Get Some Relief Steve Libowitz ---------------------- Editor It may seem like rearranging the chairs on the Titanic, but to university financial aid administrators, the Department of Education's recently announced regulatory relief program is at least some sign that their institutional voices are being heard in Washington. And that's something to be grateful for at a time when Congress is poised to slash the federally funded student loan program. Last week, the DOE announced that 100 colleges and universities, including Hopkins, have been selected for a five-year project to reduce federal student loan regulations. Their goal is to try to relieve regulations which were initially enacted to address student loan default issues. The schools selected for the experimental program were chosen from among those having a proven track record of delivering federal student financial assistance without risk to taxpayers. "There's no doubt we're getting closer to a train wreck in Congress," Student Financial Services director Ellen Frishberg says about the impending congressional cuts to the student loan program, "but the Department of Education is there for us in ways we haven't seen before." The Clinton administration is touting the program as another example of its efforts to reinvent the federal government by cutting more federal red tape. Whether the program is an institutional reward or a feather in the federal government's cap, the action is most welcome in an otherwise hostile financial aid environment. "We're pleased to have been chosen," says dean of enrollment management Robert Massa. "This is recognition of the superb record that our graduates have in repaying their loans. And as a result, regulatory relief will allow us to provide better service to currently enrolled students." At Hopkins, about 50 percent of all undergraduates-- approximately 2,100 students--receive some form of financial assistance, including loans, grants and campus jobs. While Frishberg is understandably distressed about the consequences attending any reduction in federal financial aid support, she is buoyed by the government's recognition of the full range of their concerns. What's happened over time, she says, is that financial aid has grown as a percentage of the federal budget, and there has been an increase in for-profit schools. Along with the growth of these schools, loan default rates have increased, which has resulted in Congress passing a lot of new laws and the Department of Education writing a lot of new regulations, she says. "So we started with a book of regulations with 70 pages to a 500-page document," Frishberg says, many of which didn't apply to Hopkins students or students at our peer institutions. "The DOE says they can't separate schools out, so the regulations were dumped on all of us, in effect saying if you want our money, you have to play by our rules. Some of them made no sense to our student population," Frishberg says. "We've been grousing for years about all the rules that had to be followed, regarding the dispensing of financial aid," Frishberg says. Last April, Frishberg joined a consortium with 29 of her colleagues to put together a proposal that listed 23 items they wanted deleted from the rules. The proposal included items that made sense for schools, such as Hopkins. "They pulled six of the 23," she says and smiles. "It's some regulatory relief." All six exempted regulations, Frishberg says, have existed to try to protect the government against loan defaults, which are less than 2 percent at Hopkins. Still, she says, her office will continue to send materials to students and parents explaining the provisos of the student loan program to reinforce the idea that these are loans that the students are obliged to repay. The regulatory relief program--which went into effect July 1 even though the schools were notified just last week--exempts the university from having to conduct in-person entrance interviews for every student when they first get their loan. We now just have to target those students where there might be a risk for default," Frishberg says. Students will no longer have to endure an exit counseling session upon graduation, during which they have to sign a form attesting to their future plans and intended whereabouts. The school will no longer have to hold on to freshman funds for 30 days, a common practice based on statistics saying students struck out in the first 30 days. "But our students don't," Frishberg says. "In the last two years, we have not had a single freshman student drop out with a student loan," she says. Students graduating in December, or in their ninth semester, if they needed an extra term to graduate, were only allowed to take half the maximum loan amount--$2,750 rather than $5,500 per year. The government felt this halving of the loan lessened the students' debt burden, but Frishberg believes it just adds unnecessarily to their stress at a time when they most likely need the money the most. The university is no longer required to include the 4 percent loan fee in its computation of everyone's cost to attend Hopkins. If the student did not borrow any money, the 4 percent fee had to be backed out of their bill, which created a lot of tedious, unnecessary paperwork, Frishberg says. Finally, the experiment eliminates what Frishberg considers a rather arcane rule that required the student to sign a waiver authorizing the university to pay allowable student fees beyond tuition each time one of those bills had to be paid. Frishberg believes the DOE selected the six regulations from the original 23-item proposal because they thought they could manage them the best and could most effectively evaluate--through annual institutional reports to the DOE--whether or not the relief actually is doing no harm to the default rate, Frishberg says. These measures in and of themselves will not resolve the bigger picture regarding student loans. The budget is still lashed to the chopping block with no sign of a heroic rescue. But Frishberg remains optimistic. "This program gives us a lot more administrative flexibility," she says. Regarding the reduction of federal funding, Frishberg and Massa agree that the university will remain committed to helping students afford Hopkins, and they will work to preserve aid programs.
Go to Gazette Homepage