In order to decrease skyrocketing student debt and provide incentive for universities to boost graduation and employment rates, President Barak Obama proposed a new system to allocate federal financial aid to higher education institutions.
According to director of the Office of Student Financial Assistance Brent Shock, the new method, which was proposed Aug. 22 and is still in the works, will function by rating universities based on four general criteria: average tuition, amount of low-income students enrolled, how many students graduate each year and rate of employment for each class post-graduation. The federal government will then distribute financial aid to each university consistent with its ratings under the criteria.
“Obama has directed the Department of Education to develop a new ranking system, which will tie in the types of financial aid institutions receive,” Shock said. “That takes an act of Congress to change that because it is federally controlled by the House of Representatives, which controls the money.”
Shock explained that Obama crafted the system as a means for universities to improve on overall student success.
“He is very interested in seeing schools on a process of performance and improvement, being innovative,” Shock said. “He wants students to be aware of loan repayment available as well.”
As a whole, Shock said he expects Miami to rank well under the criteria the president has put forth.
Shock noted that each year, on average, 76 percent of Miami students receive some sort of federal financial aid, and 24 percent of all campuses receive pell grants, or a kind of federal scholarship that doesn’t need to be repaid.
$20 million in pell grants are awarded to students and $1.5 million in campus based aid, such as work study.
While such a large percentage of Miami students receive financial aid, vice president for Finance and Business Services David Creamer said the amount of low-income students that the university enrolls is low.
“We are a more expensive institution, so we tend to have students that are better prepared and they tend to have fewer financial issues,” he said.
As far as graduation rates go, Shock noted that 79 percent of Miami students graduate. According to director of University News and Communications Claire Wagner, that percentage places the university as the 19th highest in four-year graduation rates amongst public universities.
“The plan is to reward a university that actually graduates its students and teaches them and allows them to succeed and go on to have meaningful careers,” she said. “We shine for our retention and therefore our graduation.”
Shock added that 95 percent of graduated students will be employed or attending grad school in one year and will be able to pay back any financial aid received in a timely fashion.
For these reasons, Creamer said he believes Miami will profit from the proposal, if it does go into effect.
“We want to be successful and we will benefit from these changes,” he said. “We are committed to good outcomes for our students.”
However, he said issues with federal financial aid allocation and the rising student debt will always remain.
“The hard part to overcome is that there is never any new money, so we are trying to package the same dollars in different ways to produce better to results,” he said. “Can we have some success that way? I think so. Can we overcome all the obstacles? I don’t think so.”