Federal Recommendations

Like so many sectors of the economy, the infusion of federal funds from the CARES Act and subsequent relief legislation staved off a financial crisis for higher education. The cost of rapidly shifting instruction online and purchasing personal protective equipment, sanitization, and testing supplies—paired with revenue losses from enrollment declines, fewer auxiliary activities, housing refunds, and more—could have been the nail in the coffin for many institutions that already survive on narrow budget margins, had the government not provided relief funding and flexibility with existing federal dollars. But it was not just institutions that received help. Students received emergency grant aid to cover unexpected expenses, and low-income students were extended help to purchase food and broadband internet. Student borrowers were given a pause on interest and payments on their federally held student loans for approximately 18 months (at least).

Looking forward, the federal government has an opportunity to significantly change American higher education for the better. Through additional proposed relief packages, other legislation, and executive authority, policymakers can make changes to improve higher education for students, families, and taxpayers. In this section we outline our recommendations for how the federal government can do so through five areas: funding and affordability, accountability, transparency, the digital divide, and student support. Higher education can be more affordable, accessible, and equitable if we address systemic funding inequities on racial and socioeconomic lines, improve quality throughout the system, and provide support to students.

Establish a Federal-state Partnership

Similar to past economic crises, the pandemic has revealed the shortcomings of the uncoordinated—yet interdependent—national approach to higher education financing. The public health emergency reduced economic activity, leading to less available state revenue for public programs and services, including higher education.¹ Colleges, meanwhile, faced considerable new expenses and sharp losses in revenue, particularly from campus auxiliary services. Congress passed a series of relief packages to stave off institutional losses and state budget cuts in the near-term, with the relief packages including modest “maintenance of effort” provisions to keep states from supplanting state funding with federal dollars.

However, structural reforms are needed to maintain state funding for public higher education and college affordability, especially through the economic recovery but even over the long-term. Over the past several decades, public colleges and universities—which educate nearly three in four college students—have had their per-student funding reduced by the state, shifting the cost to students and families, often in the form of student debt. The federal government has increased funding for Pell Grants, but those increases have not kept pace with rising college prices stemming from state budget cuts. Even middle-income families are being squeezed by the rising cost of higher education. A state-federal partnership that provides federal grants to incentivize state funding for public higher education—and that allows the federal government to shoulder more of the burden during times of national crisis like the current pandemic and recession—will help keep college affordable and restore balance and alignment between state and federal financing of higher education.

President Biden has proposed enacting tuition-free community college in the American Families Plan, his vision for securing and advancing the economic future for families, including key provisions for educational opportunities after high school.² This proposal would likely be enacted through America’s College Promise, an already-proposed legislative effort to make two years of community college free for students, a federal-state partnership itself.³ Tuition-free community college is an important first step towards improving affordability for millions of students, but still does not fully address affordability at four-year institutions. A federal-state partnership that addresses affordability at all public colleges and universities is the best way to put higher education within reach for all students.

Invest in Minority-Serving Institutions

Similar to other colleges, minority-serving institutions (MSIs) faced budget cuts and financial uncertainty as a result of the pandemic-induced economic downturn. However, minority-serving institutions, including historically Black colleges and universities (HBCUs) and tribal colleges and universities (TCUs), have been historically underfunded and have often done more to support students with fewer resources. During the pandemic, many MSIs saw their already skinny budgets slashed, which made it difficult for them to support their students, who are more likely to be low-income and first-generation, in a time of crisis.

Beyond the federal-state partnership we propose, additional investment in Minority-Serving Institutions is necessary to remedy this historic underfunding and to enable these colleges to better support their students. Many of the students who attend MSIs suffered the greatest losses during the pandemic and will need support to start or complete their education. The American Families Plan would go a long way toward addressing systemic institutional funding inequities. First, it would allocate $39 billion to subsidize two years of tuition at MSIs for students from families earning less than $125,000 annually. Second, it includes a $5 billion expansion of existing institutional grants, which would help alleviate those inequities.

Revive and Redesign the TAACCCT Program at Community Colleges

During the Great Recession, the Obama administration sought to invest in community colleges to build the institutions’ capacity to provide new programs, along with better support services, through the Trade Adjustment Assistance Community College and Career Training (TAACCCT) program. Community colleges received almost $2 billion in grants so that they would have the resources to support the growing demand for training as the economy recovered. Research has shown that the TAACCCT investment paid off.⁴ A meta-analysis of 36 final evaluations showed that participants completed their programs or earned a credential at nearly twice the rate as other students. And those who completed their programs were nearly 30 percent more likely to either get a job or a wage increase than other students.

Workers without any education after high school have been hit hardest by the economic downturn, so Congress must make investments to address these disparities. Community colleges will be essential in terms of equipping workers with the education and skills necessary to find a well-paying job.⁵ But community colleges have been systemically underfunded, a problem that will be exacerbated by the double-digit drop in enrollment they saw in the pandemic.⁶ Congress should revive and redesign the TAACCCT program so that community colleges have the capacity and resources to meet the demand for high-quality training that leads to positive labor market outcomes for workers.

Help Low-income Students by Reinvesting in the Pell Grant

The Pell Grant program—a cornerstone of college access—provides well-targeted financial assistance to low-income undergraduate students. However, increases in the maximum award have not kept pace with increases in tuition, particularly at four-year colleges.⁷ Just 15 years ago, the maximum Pell Grant amount covered 79 percent of the average tuition and fees at public four-year institutions. But challenging economic circumstances and diminishing state investments in higher education mean that last year, it covered just 59 percent. At private four-year colleges, the grant covered an even smaller portion of the cost (from 22 percent of average tuition and fees in 2003 to 17 percent a decade and a half later).⁸

The pandemic has exacerbated inequities in the economy and highlighted the importance of higher education for finding a well-paying and stable job. Low-income families who have suffered the most in the economic downturn, as well as workers who have lost their jobs and are returning to school, will need the Pell Grant program even more in order to access and afford higher education. Congress should restore the purchasing power of the Pell Grant program by substantially increasing funding for the program and increasing its total value, helping low-income students take on less debt and making college more affordable. Additionally, Congress should permanently reinstate the annual inflationary increase to the maximum Pell Grant so that the program keeps pace with growing costs.

Carefully Monitor Clock-hour Programs Engaged in Distance Education

Most clock-hour programs are vocational training ones, often tied to a specific state or industry requirement for a certain number of hours of training, in fields like health care and cosmetology. Prior to the pandemic, clock-hour programs were not permitted to offer distance education. After all, who wants their blood drawn by a phlebotomist who has been trained entirely virtually? During the pandemic, however, some clock hour programs did go virtual, while others shut down temporarily. Regulations finalized in late 2020 and scheduled to take effect on July 1, 2021 will permit clock-hour programs to operate virtually—both synchronously, where the instructor and students are logged in at the same time, and asynchronously, where they are not—for the first time. The U.S. Department of Education should carefully monitor institutions engaging in this practice, which may have repercussions for students’ learning, success, and potentially for a college or university’s ability to meet licensure and/or accreditation requirements. In addition, the Department should require institutions offering clock-hour programs to disclose when they offer such programs virtually, and to provide details about their strategies for ensuring student attendance and measuring student progress.

Stop Predatory Recruiting Practices

During the Great Recession, for-profit colleges engaged in a host of aggressive and sometimes predatory or misleading strategies to recruit and enroll students. Between 2006 and 2010, enrollment in for-profit colleges jumped by 76 percent.⁹ The pandemic-fueled recession is still in its early stages, but enrollment in for-profit colleges is again up, even while community colleges face double-digit declines in enrollment.¹⁰ The Education Department needs to take steps to monitor these trends, hunt down and put an end to the use of predatory recruiting practices. By monitoring schools with especially steep enrollment growth, looking for evidence of predatory practices (perhaps through a “secret shopper” program in which reviewers pose as students), and enacting strict penalties, the Department can not only avoid the mistakes of the last recession, but also protect students from facing such harm in the first place.¹¹

Require Accrediting Agencies to Increase their Reviews of Colleges

Throughout the pandemic, institutional accrediting agencies have largely sought to step out of the way of colleges so that colleges have flexibility to respond to the crisis. Yet most students whose colleges transitioned online say the quality of their education was worse as a result.¹² Accrediting agencies must step up to ensure quality and better protect students enrolled in higher education. For instance, accrediting agencies should closely monitor when institutions cease using pandemic-related distance education, and ensure added oversight for institutions that first began to offer online education during the pandemic and plan to continue using it. Accreditors should communicate expectations to institutions about their instructor capacity and skill, as well as requirements that faculty regularly interact with students on course content. (New regulations for these “regular and substantive interaction” requirements take effect on July 1, 2021.) Accreditors should monitor colleges’ use of online program management companies especially carefully, since contracts may lock schools into problematic or costly terms and outsource key academic functions to unaccountable, unaccredited private companies.¹³ Finally, accrediting agencies should ensure adequate oversight of institutions’ finances and—importantly—take action when colleges appear at risk of closure. On too many occasions, accreditors have done little more than ask for a plan in the event of closure; when the closure comes, the plan has too few details to be actionable. Agencies need to increase the rigor of their oversight of college closure planning, even while they seek to ensure colleges do not have to close.

Restore Federal Accountability to Higher Education Programs

During the last recession, for-profit colleges flooded the market with low-quality credentials, sometimes through deceptive marketing practices, that left students worse off for having returned to school during a time of sky-high unemployment. In response, the Obama administration implemented a host of federal regulations designed to protect students’ and taxpayers’ dollars. The gainful employment regulations required for-profit colleges and non-degree public and nonprofit programs to meet minimum standards for providing credentials of value. The borrower defense rules provided students with relief on their loans if their schools were found to have lied to them, with the colleges on the hook for their bad actions. The Trump administration, however, rescinded the gainful employment rules entirely and greatly weakened the borrower defense rules. Those regulations will be needed now more than ever, as higher education begins to follow its typical counter-cyclical patterns of high enrollment during high unemployment and as more federal aid begins to flow to and through colleges. The Biden administration should act quickly to restore strong gainful employment and borrower defense regulations.

Improve Monitoring of Colleges’ Finances and Prepare for Possible Closures

At the outset of the pandemic, higher education experts predicted that a large number of colleges would likely be forced to shutter permanently, thanks to a combination of enrollment declines, financial hits to students and their families, and the pivot to remote learning.¹⁴ More than a year into the national crisis, only around a dozen colleges have closed, largely thanks to the tens of billions of dollars in federal relief Congress provided colleges to stave off more serious financial catastrophe. But the worst has not necessarily passed: as federal relief money dries up and enrollment patterns potentially shift due to the pandemic, closures and consolidations are still possible.

The Education Department is ill-equipped to deal with a possible wave of college closures. Its monitoring of college finances lags behind what is actually happening at many institutions as it waits for annual audited financial statements, and it does not always exercise precautionary consumer protection measures even if schools appear to be at high risk of closure. Now is the time for change.¹⁵ The Department should immediately begin monitoring schools at the highest risk of possible closure—those in dire financial straits before the pandemic, and those that have seen the most substantial declines in Title IV aid or enrollment since—using timely financial reporting, rather than just audited statements. Colleges at high risk of closure should be required to take immediate steps to protect their students, including developing teach-out plans (or, for the highest-risk, teach-out agreements with nearby institutions) and recording management plans. The Department should also ensure students receive fair warning and clear communications about any possible closure and their eligibility for a closed school student loan discharge.

Analyze and Publish Details of How Colleges Spent COVID Relief Funds

Throughout the pandemic, Congress has provided more than $75 billion to colleges for expenses and for emergency aid to students through three rounds of COVID relief packages. Yet relatively little is known about how institutions have allocated or spent those dollars, which came with virtually no requirements or strings attached, especially for such a significant amount of money. The Education Department has required quarterly public reporting detailing how both institutional and student relief aid has been spent but has not yet centralized that reporting anywhere for analysis. Colleges and universities recently submitted their annual reporting on expenditures, but the Department has not evaluated or published these reports. It should move quickly to analyze that information and better understand how colleges spent these dollars. Were institutional relief funds spent purchasing technology or personal protective equipment, hiring more instructors, or reimbursing students’ housing and other expenses, for instance? Were grants to students awarded based on application, Pell Grant status or income, or both? How quickly were those dollars spent? Policymakers are still in the throes of legislating a response to the pandemic, and this information is needed to help shape this response. The Department should publish this information in an electronic and searchable database.

Improve the Collection of Data on Distance-education Programs and Higher Education Broadly

As the pandemic forced schools to shutter quickly and millions of students moved online overnight, one thing was glaringly apparent: our higher education data infrastructure could not keep up. Most information on distance-education students is reported through the Integrated Postsecondary Education Data System (IPEDS), where data are reported in aggregate. Reporting happens long after the fact; the effects of the pandemic will appear in the IPEDS data roughly three years after the start of the national emergency. Federal administrative data sources lack information on distance education status, race/ethnicity, and other student characteristics that could have helped measure the effects of the pandemic on formerly-in-person students and Black and Latinx students almost in real time. Those data would have informed policymakers’ efforts to develop solutions for students as the pandemic wore on. In fact, federal data did not even keep track of the names or numbers of institutions that moved to remote learning in response to the pandemic (or when they reopened).

Still, the fallout from the pandemic will continue for years, and it is not too late to improve the data collection. Congress could also pass the College Transparency Act, a bipartisan bill led by Senators Elizabeth Warren and Bill Cassidy, which would help to plug many of the gaps in existing federal data that undermine the utility of those data. And the Education Department should take whatever steps it can in the meantime to improve the collection and use of its data, including beginning to gather information about federally aided students’ distance-education status and ultimately publishing information about those students’ successes in higher education.

Rescind Guidance and Promote Transparency on Transcript Withholding

The Education Department can—and should—strongly signal that it stands with students, not institutions, when it comes to transcript withholding for unpaid debts.¹⁶ Currently, the Department explicitly states that institutions can withhold academic transcripts until a defaulted federal student loan is satisfied. The Department should revoke this guidance and help answer questions about how widespread these practices are by making transcript withholding a reporting requirement. Colleges should be required to disclose whether they withhold transcripts if a student defaults on a federal student loan and/or owes a sum to the institution. The Department should analyze and publish this information and clarify that institutions that withhold transcripts over defaulted federal loans should cease doing so and encourage institutions to cease the practice more broadly (for example, due to institutional debts).

The administration can also think more broadly about opportunities to provide incentives to colleges to adopt more student-focused behavior. For instance, the Department of Veterans Affairs runs the Principles of Excellence program, which requires institutions to commit to certain policies and practices (like heightened transparency and an end to aggressive recruiting practices) in exchange for access to G.I. Bill dollars. An agreement to stop transcript withholding practices should be added to the Principles of Excellence.

Make the Emergency Broadband Benefit Permanent and Reduce the Burden of Verification for Pell Grant Recipients

During the pandemic, Congress created the Emergency Broadband Benefit (EBB) program at the Federal Communications Commission (FCC). The EBB takes a remarkable step in helping low-income and struggling households afford broadband and access technology through a $50-a-month subsidy. And it will include Pell Grant recipients as eligible beneficiaries. However, with fewer than $10 billion provided for the EBB program, it is clear that the funds will run out quickly, and not all eligible low-income households will be served. And once the pandemic is over, the need for affordable broadband access will not subside. Congress should move to make the EBB a permanent program and increase its funding. And lawmakers and the Education Department (among other federal agencies) should act to make the benefit as easy to use as possible, ensuring information about the program is readily accessible. The Department should continue outreach to current Pell-recipients to inform them how they can access the benefit. The Department and other federal agencies should also ensure that verification is, to the extent possible, accomplished through administrative data-matches that automate what might otherwise be a burdensome and time-consuming process.

Pass Legislation Supporting College Students’ Internet Access

Broadband access problems, while in the spotlight during the pandemic, are not solely a pandemic problem. Today’s college students require broadband access to participate in coursework, complete assignments, and prepare for the jobs of the future. Yet low-income, rural, and tribal students, in particular, face persistent challenges in accessing broadband services and high-speed internet connections. In addition to making a broadband subsidy program permanent, the Accessible, Affordable Internet for All Act, introduced this spring by Senator Amy Klobuchar and House Majority Whip James Clyburn, would invest in expanding the nation’s broadband infrastructure and make affordable internet service a priority in the long term.¹⁷

Build on Safety Net Expansions for College Students

In December 2020, Congress passed a second coronavirus relief bill that expanded the Supplemental Nutrition Assistance Program (SNAP) to make college students eligible if they are enrolled at least half-time and otherwise meet the income and eligibility requirements.¹⁸ Many college students faced food insecurity before the pandemic, but the pandemic exacerbated those struggles as many Americans lost jobs and income. A survey New America conducted in August 2020 in partnership with Third Way found that 46 percent of college students were worried about being able to afford necessities like food and housing in the next few weeks to a month.¹⁹

This expansion of food benefits was a significant step in addressing the basic needs of college students, but there is more that can be done. Unfortunately, the SNAP expansion expires 30 days after the end of the emergency. Congress should make this benefit permanent so that students are not faced with hunger after the pandemic. Congress should also expand other safety net programs to help college students. The Temporary Assistance for Needy Families (TANF) program currently counts postsecondary education towards a recipient’s work requirement for only one year, which is certainly not long enough to complete a degree. Even during that time, education can count towards the work requirement only after a recipient has worked at a “real” job for 20 hours a week. A student working that many hours is more likely to attend college part time, which extends the time required to earn a degree. Congress should change this law and allow education to count towards TANF work requirements for more than one year.

Provide Institutions Permanent Flexibility to Use SEOG Funds for Emergency Aid

When Congress passed the CARES Act, it allowed colleges to use their Supplemental Educational Opportunity Grant (SEOG) funds as emergency grant aid for students. This evidence-based intervention has been shown to help students succeed.²⁰ Today’s students, even outside the pandemic, can quickly find themselves off-track if an unexpected emergency occurs. A broken-down car, a family medical emergency, child care falling through, or other financial hardship can prevent students from continuing with their studies, even when they have been successful in the classroom. The flexibility in the CARES Act helped support students in response to the pandemic. Congress should permanently give institutions the flexibility to use SEOG as a pool of money to provide emergency funding for students.

Support Student Parents through Child Care Investments

Roughly one in five undergraduate students have children, and these student parents faced particular challenges during the pandemic when nearly one in four associate degree students and one-third of bachelor’s degree students considered stopping out because of child care responsibilities.²¹ These challenges will continue after the pandemic and getting student parents back on track to complete their credentials will be even more essential. While colleges can do more to make student parents aware of services and benefits that can help them to pay for child care expenses while they are in school, Congress also needs to take steps to better support these students.²²

The Child Care and Development Fund program (CCDF) provides block grants to states to support low-income working parents, including those who attend a postsecondary educational program.²³ Yet many states, which determine the eligibility criteria, have placed additional restrictions on those parents that make accessing child care funds while in school difficult, such as limiting the type of degree the parent can be seeking and the time frame for which student parents can receive funds, as well as requiring a minimum number of hours spent in education each week.²⁴ All of these restrictions can make it even more challenging to access reliable care that will help student parents complete their credentials. Lawmakers should invest more in these federally funded child care programs, and limit states’ ability to further restrict eligibility for student parents. States also often require parents to fill out onerous paperwork. This process should be streamlined through data-matching and partnerships with institutions. And programs like the Child Care Access Means Parents in School (CCAMPIS) program should be expanded to support more on-campus programs. CCAMPIS is a small program that provides grants to colleges and universities to help low-income students afford child care through the use of a sliding fee scale based on income. Both undergraduate and graduate students are eligible to participate, as are students taking online courses. CCAMPIS funds can be used to support on-campus child care centers, or can be directed to off-campus child care programs.