Thank you for the generous introduction. As someone who has spent much of a career immersed in federal education policy, it is a thrill to have a large audience of people who won't bolt for the door if I talk about things like ISIRs, dependency overrides, and Experimental Sites.
But I want to use this occasion today to step back from the nitty-gritty of financial aid and to reflect for a moment on why we care about our work. Many outside this room think of financial aid administrators as focused on forms and formulas and rules. It is important, of course, to have integrity and distribute financial aid equitably, abiding by the appropriate regulatory and ethical guidelines. But the forms-processor image sells the profession short.
You know that financial aid helps students realize the American dream, opening the door to opportunity for low-income students, immigrants, first-generation college students, and others who without your help would never be able to get a college education.
In America, no matter what your race or income or zip code, everyone is supposed to have the same opportunity to a quality education. And that notion is not just a rhetorical abstraction for you.
Whether you are at a community college, or a graduate research institution, your work helps transform the trajectory of students' lives. You've heard the shouts of joy when a student learned they were getting the financial aid they need at your school. Or you've seen the tears of happiness and the proud hugs for a student who is the first in their family to graduate from college.
I can assure you, the role that you play is not an abstraction in the White House either. The First Lady, Michelle Obama, was a scholarship student whose father worked at the local water filtration plant to support his family. The First Lady has spoken movingly of having to overcome the doubts of skeptics who didn't think she could cut it at Princeton University.
The President himself is the son of a teenage mother and absent father. He, too, was raised under modest circumstances by his mother and grandparents—and the government put his grandfather through college on the GI Bill after the end of World War II. And don't forget that Vice President Biden's wife, Dr. Jill Biden, is a longtime community college faculty member who works with many immigrants and students from low income families.
The President, the First Lady, Dr. Biden—they all get the vital importance of what you do.
Far from functionaries, you are really more like engineers. When an engineer builds a bridge, they have to follow all the rules of engineering. They have to build to code and the bridge has to pass numerous inspections.
But their goal is not just to avoid a bad inspection—they want to build a bridge that gets people to the other side. And that is what your work is ultimately about. You are building a bridge that helps thousands—millions—of students realize their dreams. It is invaluable work.
So if you find yourself mired in the details, take a step back. It is not only validating, it may inspire a change in strategy, a new approach to engineering that bridge.
President Obama has set an ambitious higher education goal for the nation. He wants America to regain its place of preeminence in the world as the country with the highest proportion of college graduates. To reach that goal, he wants every American to commit to advanced training programs of at least a year beyond high school.
To reach this goal, an unprecedented number of Americans will have to enroll in—and complete—college.
We are going to have to increase college access, constrain costs, and do a much better job of ensuring college completion—and do it all at the same time.
We have adopted this ambitious agenda at a time when state and local support for community colleges, universities, and other postsecondary institutions has been rocked by the recession. For the foreseeable future, higher education can no longer expect to rely on the traditional strategy of sustained economic growth and increased government revenues to pave the way for expanded enrollment.
Meeting the president's challenge is not just about higher education, however. Many of the most important determinants of success in college are decided long before students arrive at the door of your institutions. Students who are well-prepared academically and who set realistic goals are much more likely to persist in college than others, even if they come from modest means.
A dismaying number of students graduate from high school unprepared to do college-level work. Freshmen required to enroll in remediation as soon as they arrive on campus are much more likely to strain the financial aid system and complicate your lives. They stretch college out for years—often dropping out along the way, or saddling themselves with steep debts yet without the credential and job that can help repay those loans.
For all these reasons, the quality of the K-12 educational pipeline to college is critical. Let me tell you briefly what the administration is doing to improve the porous pipeline to college.
The American Recovery and Reinvestment Act (what many call the stimulus bill) provided unprecedented funding for education, dwarfing previous reform efforts.
Secretary of Education Arne Duncan has said we now have the "perfect storm for reform." And by that he means that we have a once-in-a-lifetime opportunity to push for far-reaching K-12 school improvement.
The secretary and President Obama have outlined four core reforms that states and districts need to adopt to compete for more than $5 billion in reform dollars in the Race to the Top fund.
I should note that these four reform elements in some respects parallel the improvements we will be encouraging through our programs that focus on colleges.
First, to vie for Race to the Top funds, states need to move toward adopting rigorous, internationally-benchmarked K-12 standards that prepare students for college and career.
Second, states and districts have to create much better data systems that will track whether students are moving toward being college-ready. These new data systems will also help school administrators and teachers gauge the impact of teachers on student achievement. And they will help teachers identify shortcomings in classroom instruction.
Because teachers have such a singular impact on student achievement, the administration is also going to be pressing states to develop plans to recruit and retain effective teachers—and this is obviously something you can help with at your institutions. We want to make sure that many of those talented teachers are working in classrooms where students are most in need of help.
Finally, we're asking states to take far more ambitious measures to turn around their lowest performing schools, with an eye toward eventually transforming the worst five percent of schools. As it turns out, a relatively small number of high schools account disproportionately for America's high dropout rate. That's why these failing high schools are known in their districts as "dropout factories."
It doesn't take a lot of imagination to connect the dots here. All of the administration's core K-12 reforms are important to sealing the leaks in the college access pipeline. They all go toward increasing college readiness, decreasing dropout rates, and helping students most at risk of falling behind. It's true that we are pursuing a reform agenda that is aggressive. But I don't want to leave the impression that it is utopian.
If you had asked me a year ago, whether there was any chance that 46 states would sign a compact agreeing to develop common college-ready standards in English and math, I would have thought it extremely unlikely. Yet that is exactly the agreement announced earlier this year at a National Governors' Association conference.
If you had asked me a year ago "will states opposed to charter schools lift or remove caps on their development?" I would have thought it unlikely. Yet, here we are a year later, with states like Illinois, Tennessee, Rhode Island, and Indiana moving to lift charter school caps and increase charter school funding in order to be eligible for Race to the Top funding.
For that matter, I doubt there is anyone here who imagined two years ago that the next president of the United States would be an African-American with a last name of Obama.
I mention these examples to point out that it is not just rhetoric to talk about a perfect storm for reform. Secretary Duncan has reason to be optimistic about the capacity for real change in the education system.
I don't want to sound naïve about the challenges we face. But I reject the idea that we have to think small.
If you take the long view of the history of higher education, you can't help but be struck by the fact that the federal government has played a powerful role. Look back to the nineteenth century and it was President Lincoln who established the land-grant colleges.
After World War II, the GI bill created a new middle class by sending millions of veterans to college. After Sputnik, President Eisenhower helped transform research universities into centers of scientific study.
In the 1950s and early 1960s, following on President Truman's initiative, community colleges expanded rapidly—and in the 60s and 70s student loans and the Pell Grant made the federal government the major provider of student aid.
All of these government interventions led to transformational change in higher education. And while I grant that President Obama's goals for higher education are ambitious, I also know they are attainable.
I have talked about achievement in K-12 schools, but I also want to talk about the achievement gap that persists in college.
Barely half of high school graduates from lower income families attend college.
Even worse, too few of them complete college. Only about one in four low-income college students who start full-time graduate within six years.
This achievement gap is not new but it has become more problematic because of the new demands of the global economy. By 2016, just seven years from now, four out of every 10 new jobs will require some advanced education or training. Thirty of the fastest growing fields will require a minimum of a bachelor's degree.
These profound shifts in the economy drive the administration's determination to make higher education more affordable, accessible and more cost-effective.
I take pride in the fact that the department's budget, together with the Recovery Act, provides the largest commitment to higher education funding since the GI Bill.
Next year, under our budget, the department will be administering nearly $130 billion in new grants, loans, and work-study assistance to help more than 14 million students and their families pay for college.
That is an increase of a third over the amount that was available in 2008. And the President stuck by this unprecedented commitment even in a very tough fiscal climate.
While the maximum Pell Grant was flat for a number of years, we are increasing it by more than 10 percent, boosting the number of recipients by more than a million students.
And for the first time ever, we want to index the size of Pell awards to the Consumer Price Index, plus an additional one percentage point. After nearly 35 years of uncertainty, it's time to at least index Pell Grants to inflation.
One of the more disturbing recent trends has been the growth in private student loans, which are more expensive and carry fewer consumer protections than federal loans. To stem this trend, we are proposing to provide you with more flexible loan funds through a dramatic increase in the Perkins loan program, from about $1 billion to $6 billion a year. Through this expansion, and by making the loans easier for you to administer, we can reach as many as 2.7 million more students and as many as 2,700 additional postsecondary institutions.
This expansion is not an invitation to increase tuition, however. We want these low-interest loans to go to colleges that are successful in graduating Pell Grant recipients, schools that don't let tuition go through the roof and that offer need-based aid to prevent excessive indebtedness.
Of course, we need to make sure that families can rely on the federal student loan program in the first place. Last year, due to problems in the credit market, students and parents faced the realization that colleges in the FFEL program did not have dependable access to loans.
Quick action by Congress and the Administration averted a calamity—but the solution was a temporary band-aid.
Our proposed move to direct lending achieves two important goals: ensuring a secure source of stable funding, and freeing up billions of dollars for investing in Pell Grants and innovative efforts at colleges to improve student persistence and completion.
Over the past year hundreds of schools switched to the direct loan delivery system for their Stafford and PLUS loans. They have been schools large and small, public and private, highly selective and open enrollment.
And the feedback we have gotten could not be more positive: their transitions went smoothly, and the new approach turns out to be no greater burden. As one financial aid administrator relayed to his colleagues at other schools: "the water's safe, come on in!"
And we continue to work to make it easier to switch your campus to direct loans. As you may know, we will soon be setting up for you the electronic accounts that allow you to send and receive Direct Loan records. This eliminates one step in the process.
We are taking the same customer-focused approach in our revamp of the FAFSA form: finding ways we can eliminate unnecessary steps.
Take a look at this example, Lauren, a dependent student whose parents earned $45,000. Even using the current Web-based form, the look and feel of the page is oppressive. All that text, and no sense of how long the ordeal will go on. And it does go on… and on, and on, and on, and on.
Now here is our draft of the approach that will come online this January. The page itself is much cleaner and friendlier, with instructions when the user needs them, not crowding the page. It is dynamic, so Lauren knows where she is in the process. And after just two screens answering questions that don't require any digging, Lauren already gets some positive feedback indicating that she meets the basic eligibility requirements.
Applicants will be able to enter their college choices next, and when they are selecting the college name they will see the most recent student retention and graduation rates for that institution.
The pages of financial data are still somewhat overwhelming. But overall, by using better skip logic, the experience for Lauren will be much improved, with a 25% reduction in questions and 70% fewer web pages to navigate.
That's not all. To help with those financial questions, applicants who apply during the award year will have the option of importing their tax data from the IRS. These are the draft two screens they would see. The first one verifies their identity with the IRS; the second one brings up the data that can then be imported directly into the FAFSA form.
There are people in this audience who told me that this partnership between the Education Department and the Treasury Department would never happen. But it has.
I'd like to close on a cautionary note and with a challenge to you and to your presidents and chancellors. Despite the new—and in some respects, unprecedented—federal resources for student aid and institutional improvement, government resources are not limitless. As we all know, states in particular play a crucial role in funding higher education, and states across the nation are facing severe budget crises.
Tight funding is likely to persist for the foreseeable future, even as the demand for higher education expands. And that mismatch of supply and demand will likely cast a renewed spotlight on the performance and accountability of postsecondary institutions.
The day-to-day questions your presidents grapple with will begin to subtly shift. You will be probed on whether your institution kept tuition costs in control and made its program more affordable and cost-effective. Compared to the college down the road, how accessible are you to low-income students? What is your graduation rate for students from different backgrounds? How many graduates land jobs related to their training, or enter graduate school within a year?
I recognize that reform in a world of limited resources is no small challenge. But I am encouraged by your presence here—and by your commitment to improving the financial aid system. Few professions offer a greater reward. I have the deepest appreciation for your work—the work of opening the door to college for millions of students, of building that bridge to the other side.
Thank you for your attention.
Before we open up for questions, I would like to thank the largest contingent at the conference, 30 Department of Education employees. I have been extremely impressed with the caliber of the career staff at the Department. Also, I would like to ask Bill Taggart to join me up here. Bill is the brand-new Chief Operating Officer of our Federal Student Aid division. He brings years of experience in the financial services industry, and while he's only been with us for two weeks, he bravely agreed to be up here with me for the Q&A.