Legal Issues in Financial Aid Meghan Campbell and Alexander Devers EDS 370 October 28, 2013

History of Financial Aid •  The first law Establishing Financial Aid in the United States

was passed by Congress during the Presidency of Lyndon B. Johnson it was called The Higher Education Act of 1965 or HEA

•  This law was passed as part of Johnson’s “Great Society” program o  Other Great Society Acts were

§  Civil Rights Act of 1964 §  Voting Rights Act of 1965 §  Elementary and Secondary Education Act of 1965

(Cooley, 2011)

History of Financial Aid •  The HEA was designed by LBJ to promote economic

growth and development within the social policy agenda of his administration.

•  The HEA was designed to make higher education more

accessible to populations who were previously unable to attend higher education institutions.

(Cooley, 2011)

History of Financial Aid •  The HEA provided grants to institutions of higher

education for: o  Research o  Needs based aid in the form of scholarships and

loans •  Attempted to link improvements in Higher Ed. with K-12

through support for teacher preparation.

(Cooley, 2011)

History of Financial Aid •  In 1972 the HEA was amended to comply with the Patsy

T. Mink Equal Opportunity in Education Act or Title IX.

o  Title IX prohibited discrimination based on sex

(Cooley, 2011)

Legal History of Financial Aid •  Title IX and Financial Aid have been intertwined since

the late 1970’s •  Grove City College V Bell (1984) The court ruled that

Title IX could also be applied to private schools that do not get direct loans, but who have students who get Federal Aid.

(Cooley, 2011)

Legal History of Financial Aid Recent US Supreme Court Cases that pertain to issues of

Financial Aid •  Gratz V. Bollinger (2003) •  Gutter V. Bollinger (2003) •  Fisher V University of Texas (2012)

(Cooley, 2011)

Legal History of Financial Aid

•  Financial Aid is currently facing court cases and challenges over Affirmative Action and Intellectual Property.

(Cooley, 2011)

Salem State University •  Mission of Salem State University-

o  Salem State’s mission is to provide a high quality, student-centers education that prepared a diverse community of learners to contribute responsibly and creatively to a global society, and serve as a resource to advance the region’s cultural, social and economic development.

(Salem State University, 2013)

Salem State University •  The Vision of the University-

o  We put students first in all that we do and are committed to their success

o  We are a community of learners where all facility, staff, and student have the opportunity to grow as individuals

o  We are innovators, offering a unique brand of public higher education that inspires students to reach higher and achieve more.

o  We remain true to our heritage as a liberal arts university while preparing students for today’s workforce.

o  We serve the communities of the North Short while we create an ever more globally aware and culturally diverse campus environment.

(Salem State University, 2013)

Salem State University

(Fogg, 2013)

Salem State University

(Fogg, 2013)

Salem State University

(Fogg, 2013)

Salem State University •  Student Financial Support

o  Freshmen Class §  Freshmen Filing for financial Aid: 92% §  Freshmen receiving any grant aid: 72% §  Freshmen receiving any loan aid: 79%

o  Total Number of Students on any sort of aid §  Between 75% and 85%

SSU Financial Aid ❏  Staff Associate ❏  Responsible for

❏  Financial Aid File Review ❏  Alternative Loan Processing ❏  Satisfactory Academic Progress Appeals ❏  Return of Title IV Funds ❏  Fresh Start Appeal Reviews ❏  Writing & Maintaining Financial Aid Policy & Procedures ❏  Federal Compliance Issues ❏  Website Maintenance

Practices Subject to Scrutiny According to College Board’s Manual on Federal Law and Financial Aid the

following practices are often subject to strict scrutiny: ❏  Race and Ethnicity Conscious Policies

❏  Scholarships for International Students ❏  Scholarships for Native American and Native Hawaiian Students

❏  Policies that confer benefits or opportunities based on race or ethnicity ❏  Need based aid ❏  Merit based aid

(Coleman, Palmer, Richards & Holland & Knight LLP, 2005)

US Department of Education Policy Guidance

•  The 5 principles set forth set forth by the department reflect the only available comprehensive statement of Federal policy applicable to the use of race or ethnicity in Financial Aid and Scholarship decisions.

o  Financial aid for disadvantaged students o  Financial Aid authorized by Congress o  Financial Aid to remedy past discrimination o  Financial Aid to create diversity o  Private gifts restricted by race or national origin.

(Coleman, Palmer, Richards & Holland & Knight LLP, 2005)

Need- Based Aid College Board -- “designed to provide financial assistance to students based on the difference

between their projected expense budget and the expected family contribution” (Coleman, Palmer, Richards & Holland & Knight LLP, 2005)

❏  Overall cost of attendance at SSU (Tuition, Fees, Room & Board, Transportation,

Books & Personal Expenses) subtracting the Estimated Family Contribution (EFC) that FAFSA calculates.

❏  Remaining = student’s need ❏  Packages awards based on formulas pre- programmed (EFC, cost of attendance,

the amount of need) ❏  State & Federal Funds have set EFC ranges

❏  Federal Pell Grants & Mass Grant $0 - $5081 ❏  Other State & Federal SSU has discretion - uses sliding scales based on EFC

❏  EFC $ 0 - 15, 000 & 1-2 funds up to $24, 000

Merit- Based Aid College Board -- “designed to provide financial assistance to students based

on certain characteristics or aspects of their background that are important to the awarding institution”

(Coleman, Palmer, Richards & Holland & Knight LLP, 2005)

❏  formula pre-loaded into award system ❏  awarded on a scale of $500 - $3000 ❏  based on Federal Need, High School GPA, & SAT/ ACT scores

Findings ❏  Blind System - computer generated - rarely hand packaged ❏  Funds awarded on first come first serve basis- priority deadline March 1st ❏  Heavily Relies on FAFSA & EFC ❏  Unaware of how the formulas are calculated ❏  No way of measuring the type of aid a certain group of students is getting

(i.e. grants vs. loans) ❏  University Scholarships are a separate process- not reviewed by financial

aid - private donors ❏  Individual interviewed did not share the office’s definition of diversity ❏  Work Study awarded last- grant, scholarship, & loan FIRST, then if there is

remaining unmet need apply workstudy

Best Practices: CAS General Standards

Part 6: Law, Policy and Governance ❏  “Programs and services must be in compliance with laws,

regulations, and policies that relate to their respective responsibilities and that pose legal obligations, limitations, risks, and liabilities for the institution as a whole.

❏  Programs and services must regularly review policies. The

revision and creation of policies must be informed by best practices, available evidence, and policy issues in higher education.

❏  Staff members must be knowledgeable about internal and external

governance systems that affect programs and services” (CAS, 2012)

Best Practices: CAS General Standards

Part 7: Diversity, Equity, and Access ❏  “Within the context of each institution's unique mission and in accordance with institutional policies and all

applicable codes and laws, programs and services must create and maintain education and work environments that are: welcoming, accessible, and inclusive to persons of diverse backgrounds and equitable and non-discriminatory.

❏  Programs and services must not discriminate on the basis of ability; age; cultural identity; ethnicity;

family educational history; gender identity and expression; nationality; political affiliation; race; religious affiliation; sex; sexual orientation; economic, marital, social, or veteran status; or any other basis included in institutional policies and codes and laws.

❏  Programs and services must:

❏  Modify or remove policies, practices, facilities, structures, systems, and technologies that limit access, discriminate, or produce inequities.

❏  Address the characteristics and needs of a diverse population when establishing and implementing culturally relevant and inclusive programs, services, policies, procedures, and practices.

❏  Respond to the needs of all students and other populations served when establishing hours of operation and developing methods of delivering programs, services. and resources.”

(CAS, 2012)

Best Practices: College Board’s Principles and Practices of Financial

Aid Administration “The CSS Assembly of the College Board endorses the following principles to guide institutions in the development of

their financial aid policies: ❏  In identifying institutional goals and making resource allocation decisions, each college or university has an

obligation to support access for students who could not otherwise attend the institution. This is achieved by committing to the primacy of need-based aid in the institution's student aid portfolio and by making every effort to assist students with financial need through equitable packaging policies.

❏  The institution has an obligation to provide high quality consumer information to students and their

families, fully disclosing realistic educational costs and aid renewal policies at the time if the initial assistance. ❏  Each institution has the responsibility to make clear to students and their families whether offered funds

are awarded based on financial need or other grounds. ❏  The institution should advocate for the importance of need-based aid at the federal, state, and

institutional levels as a primary means of expanding access to higher education.”

(College Scholarship Services Assembly of the College Board, 2004)

Best Practices: College Board’s Principles and Practices of Financial

Aid Administration “The CSS Assembly of the College Board endorses the following principles to guide institutions in the development

and implementation of their need analysis policies: ❏  A need analysis system should provide a comprehensive measurement of family financial strength. Both

income and assets contribute to the family’s financial strength and both should be considered when measuring any family’s ability to pay. A family’s ability to pay, not willingness to pay, is measured by the need analysis system.

❏  The ensure equity, a recognized standard need analysis formula should be applied consistently across

the institution’s full population of student financial aid applicants. This need analysis determination should not consider academic ability and potential character, or other criteria that an institution may employ in selected financial aid recipients.

❏  Equitable need analysis relies on sound and accurate data collection.”

(College Scholarship Services Assembly of the College Board, 2004)

Legal Implications •  If Federal or State aid policies are not followed the following can happen:

o  The Office of Civil Rights(OCR) can file a Civil Rights case against your institution

o  A student can file a Civil Rights case against your institution. •  If found in violation of State or Federal regulations the State and/or Federal

Government can take away your institution's ability to give out financial aid.

Recommendations 1.  More training on State and Federal Regulations regarding Financial Aid. 2.  Knowledge on State and Federal mandated formulas for awarded funds. 3.  Develop an office mission statement and statement on diversity.

a.  Diversity training for the office. 4.  Consider a different way to augment the data collected by the FAFSA for

the EFC. 5.  Consider changing the weight of SAT/ACT scores in merit based aid. 6.  Consider creating financial literacy courses for students and families.

Limitations ❏  Only 1 individual interviewed (Staff Associate) ❏  Not privy to how the generated formulas are formed ❏  Do not know how EFC ranges are determined ❏  Lack of knowledge on Federal and State Financial Aid policies.

Further Research ❏  What are the State and/or federal policies on need-based and merit-based

awards? ❏  How does the FAFSA affect low income, first-generation students’ need-

based aid at Salem State University? ❏  How does utilizing GPA and ACT/SAT scores for merit-based aid

discriminate against minority students at Salem State University? ❏  How does using a “blind award system” negatively/ positively affect

minority students?

References CAS. (2012). Cas general standards. Council for the Advancement of Standards in

Higher Education , Retrieved from http://www.cas.edu/getpdf.cfm?PDF=E868395C-F784-2293-129ED7842334B22A

Coleman, A. L., Palmer, S. R., Richards, F. S., & Holland & Knight LLP, (2005). Federal law and financial aid: A

framework for evaluating diversity related programs. College Board, Retrieved from http://www.collegeboard.com/prod_downloads/diversitycollaborative/diversity_manual.pdf

College Scholarship Services Assembly of the College Board. (2004). Principles and practices of financial aid

administration. College Board,Retrieved from http://www.collegeboard.com/prod_downloads/prof/principlesandpracticesofFA.pdf

Cooley, A. (2011, May 01). Higher education act of 1965. Retrieved from

http://lawhighereducation.org/75-higher-education-act-hea.html?newsid=75&seourl=higher-education-act-hea

Fogg, W. N. (2013). Salem State University Factbook. Retrieved from

http://www.salemstate.edu/assets/documents/IRA/Fact_Book_-_Fall_12.pdf

Kevin DeRousi, Interview, October 22, 2013

Questions?