Financial Aid/Student Outcomes Debate

January 30, 2013

Jillian Klein, senior policy analyst for Capella University, is today’s guest blogger. She will share her thoughts from time to time on higher education and financial aid policy:

Inside Higher Ed published an article last week exploring Title IV policy changes and

Jillian Klein, Sr. Policy Analyst – Title IV

Jillian Klein, Sr. Policy Analyst – Title IV

what we have learned from the history of financial aid. The article references a paper published by the National Bureau of Economic Research which suggests, in part, that funding tied to academic performance “produce larger effects” than the current model that exists in the Stafford Loan and Pell Grant programs. In response, Sara Goldrick-Rab has suggested that there simply isn’t enough research in this area to warrant tying a significant policy change to performance.

The idea of tying aid to student outcomes is intriguing, and one that Capella has suggested in the past as a potential financial aid policy change to explore. Like Goldrick-Rab, however, we also recognize that substantial study in this area hasn’t existed in the past. In the federal aid system, the short-lived Academic Competitiveness Grant (ACG) and National Science and Mathematics Access to Retail Talent (SMART) Grant existed as part of the Title IV program for a subset of students, and were tied almost entirely to GPA thresholds. The TEACH Grant currently exists for students who intend to teach in a high-need field at a Title I school, and who meet certain academic achievement requirements. Unfortunately, all three of these recent examples of performance-based Title IV funding have left a lackluster legacy behind. I would argue that this has less to do with the merit-based funding model, and more to do with the operational issues that schools faced in implementing these complicated programs.

Still, we believe there is something to the idea of outcomes based funding, either at the school or the student level. For example, at Capella, we are currently offering new learners in the Bachelor of Science program who pass their first course and carry at least 7 credits in each of the next six quarters an institutional grant towards the cost of their tuition. We believe strongly that students who are able to consistently make progress in their coursework are more likely to achieve academic success and complete their program. This is a different, creative slant on the idea of connecting outcomes and funding, but represents one of the hundreds of different models that potentially exist as we think about what financial aid in the future might look like. The point is, an urgency around financial aid policy reform exists, and it’s time that we stop holding on to how financial aid has always looked and dare to believe that we can build a more innovative, effective model of funding for our students. At Capella, we are interested in being part of that solution and look forward to the dialogue that will occur as part of the upcoming Reauthorization of the Higher Education Act.

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