Developing New Models of Student Financial Support COSUAA Conference May 7, 2013 Presented by 7 May 2013 Zakiya Smith Strategy Director, Lumina Foundation

About Lumina Foundation The nation’s largest private foundation focused exclusively on getting more Americans into and through higher education. Goal: To increase the proportion of Americans with high-quality degrees, certificates, and other credentials to 60% by the year 2025.

About Lumina Foundation: Strategic Priorities Mobilizing to Reach Goal Building a Social Movement 2.Mobilizing Employers, Metro Areas, and Regions to Increase Attainment 3.Mobilizing Higher Education to Increase Student Success 4.Advance State Policy for Increased Attainment 5.Advance Federal Policy for Increased Attainment Designing a 21 st Century Higher Education System 6.New Models of Student Financial Support 7.New Higher Education Business and Finance Models 8.New Systems of Quality Credentials

Why Develop New Models? Attainment imperative Challenges with efficacy of current models even for their original purposes Changing nature of the student body National concern about cost (this time is different) Focus on learning

Identifying the Problem/Barriers Price Increases Uncertainty/Information gap Complexity Causing Confusion Debt without Degree/Debt Unconnected to Value of Degree 5

Identifying the Problem/Barriers Not enough flexibility Difficulty determining need Equity/Fairness generally 6

Public Perception/Institutional Leadership Gallup Survey: “Do you think higher education is affordable for everyone who needs it?” General Public: 74% say “no”. College presidents: 50% say “yes”. (And 25% ‘strongly agree’ that it IS affordable)

So What?

Design Principles 1. Make college more affordable for low-income students 2. Make the cost of college more predictable and transparent 3. Provide incentives to students and institutions to increase completion and lower princes 4. Align federal, state, and institutional policies and programs Generally, all changes should be based on evidence about what works; and policy should seek to build evidence in cases where none exists. 9

Design Principles 1. Make college more affordable for low-income students  Family income should not be a barrier to enrolling in or completing college. Subsidies should be prioritized on needy (low-income) students.  Responsible student loan debt should not be a deterrent to enrollment or completion—student loans should be easy to repay, and default should not be common.  Aid should be flexible enough to meet unique needs that may come up throughout a student’s term. 10

Design Principles 2. Make the cost of college more predictable and transparent  Students and families should be provided with clear information on which to make decisions about enrolling in college. − Information should be structured in such a way that students are encouraged to choose a college where they are likely to complete a timely manner, with a high quality credential.  Students and families should be informed about financial aid early and often 11

Design Principles 3. Provide incentives to students and institutions to increase completion and lower prices.  Incentives should build on the base subsidy provided by need-based aid, and be clearly communicated to students and institutions  Any financial aid incentives should be included in as many aid programs as are practicable, not only on those targeted to low-income students. 12

Design Principles 4. Align federal, state, and institutional policies and programs  States and institutions should be encouraged to offer low tuition options for students so that price increases don’t dwarf available aid.  Federal investments should supplement, not supplant state and institutional investment.  States and institutions should be held accountable for completion. 13

Initial Areas of Exploration Affordability: What does it mean? How is it defined? Is it too complex to try to define? If so, how do we know if policy is successful? State Policy: How can state financial support systems be improved to become more efficient? Would a federal/state partnership for aid be more effective at making college affordable? Passive Repayment: What does a fair and effective income-contingent/income-based loan repayment program look like in the United States?

Also Interested In: Information Barriers Simplification Effective Institutional Aid Practices (Completion Management) Specific Federal Policy Recommendations Ideas for pilots

Policymaker Interest Cost/Quality/Completion Regulatory Burden Competency Based Education Solving Budget Gaps (hopefully with the least harm to students)

Moving Forward: What To Expect Additional Concept Papers Reauthorization “Blueprints” Hearings on Reauthorization-related areas

Contact Information Zakiya Smith Strategy Director Lumina Foundation