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The "Why" of the Senate Bill Affecting Pell Grants for Online Learners

In my comments pointing to Russ Poulin's blog on a Senate Appropriations bill provision that would eliminate living and personal expenses from the Pell Grant need calculation for fully online learners, I highlighted that Russ and I wondered about the rationale for the provision, but didn't have anything more than speculation at that point. This morning, Inside Higher Education kindly answered that question for us, indicating that their analysis of the conference report for the bill  (see pp. 190-191; note that the report attempts to justify the provision by essentially equating online learning with correspondence courses) shows concerns about financial aid fraud as driving the provision. (For more on concerns about financial aid fraud related to online distance learning programs, please see my earlier posts on the subject.) However, to say that this is throwing the baby out with the bath water is something of an understatement.

As I mentioned in my comments from yesterday, the proposed change in the financial need calculation for fully online students seeking Pell Grants would have the effect of denying students with demonstrated financial need under the regular formula access to Pell funds for which they would otherwise be entitled solely on the basis of the learning modality in which they engage (and in which they have to engage in many cases if they have any realistic hope of pursuing higher education). And that's the real hole in the logic of those who push restricting federal student aid for online learning students on the basis that they don't need support for living and otherwise allowed personal expenses. If the formula that determines financial need in relation to Pell Grants indicates that a student has such need, then by definition s/he has the stated financial need (unless of course s/he is committing fraud, which I'll address in a moment). What does the way in which the student receives instruction have to do with it?

Two students--one attending a commuter campus and another taking all of her courses online--may have identical living arrangements, work identical jobs for the same number of hours per week, have the same number of dependents of the same age, receive identical amounts of financial support, if any, from their families, and find themselves with identical amounts of financial need as calculated by the relevant formula. But under the Senate provision, a thumb would be placed on the scale to the detriment of the fully online student because she doesn't take any face-to-face classes, even though that has no bearing on the financial situation which led her to qualify for a Pell Grant in the first place. And in fact, as I read the Senate provision, the other student could conceivably take almost all of her instruction online, but avoid the impact of the provision by taking one face-to-face course. The potential distortions this might introduce into distance learning programs that serve significant numbers of Pell Grant recipients are dizzying to contemplate.

The Senate provision undermines the potential of online learning to help the nation achieve its college access, affordability, and completion objectives just at the time when accomplishing those objectives is most needed, and it sets a precedent that might further undermine that potential in relation to other forms of federal student aid. It apparently does this in the name of fighting financial aid fraud in relation to online distance learning. Reducing financial aid fraud as much as reasonably possible is a totally laudable goal. Every dollar lost to such fraud is a dollar that could help a legitimate student achieve his or her academic goals, and thus advance the national goals I mentioned.

However, by the same token, denying legitimate students federal student aid to which they would otherwise be legitimately entitled on the basis of demonstrated financial need in order reduce the potential for financial aid fraud, which though serious still comprises a relatively minor percentage of federal student aid awarded, is like treating a localized skin infection with amputation. We have other treatments we can and should try before taking such drastic measures. As Russ notes in the IHE article, eliminating lump-sum disbursements in favor of distributing funds to students over a period of time is one avenue, since it denies potential fraudsters the ability to "take the money and run"--the longer they have to maintain the fraud that they are real students seeking an education, the greater the potential they will get caught, and thus the less attractive the fraud scheme is. Some institutions have also linked disbursement over a period of time to the fulfillment of certain course requirements or milestones, again generating more work and greater exposure to risk than most fraudsters might reasonably stomach. I have previously highlighted community efforts around identity verification and management that would likely make it much harder to perpetuate fraud in addition to assisting institutions and legitimate students in more effectively and efficiently meeting a variety of needs related to admissions and financial aid. And I am certain there are other, perhaps even better approaches that EDUCAUSE members and admissions and financial aid professionals who work on such matters every day might suggest.

But saying that a certain amount of a student's financial need will not be counted--not because the standard forumula indicates s/he doesn't have the need, but because we assume s/he shouldn't have the need based on the learning modality in which s/he is engaged, and thus we think we can sacrifice that student's financial aid to help with stopping someone else's crime--strikes me as contrary to both the principle of fairness the nation has tried to follow in its federal student aid programs as well as its pressing higher education goals.