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Make Financial Aid Priority, College Leaders Warned

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University leaders must make student financial aid a priority to avoid putting their institutions at risk, a new report warns.

Over the past two decades, rising tuition, increasing regulations, decreasing federal and state support, and an uncertain economy have greatly changed the way financial aid is awarded. But many colleges have not adjusted their aid policies and practices to keep pace with those changes, the report says.

"Financial aid has been treated as a poor stepchild on many campuses," said Rhonda D. Norsetter, the co-chairwoman of a task force that has been studying shifts in the financial-aid system and their impact on students and institutions.

The task force was convened in 1993 by the National Association of Student Financial Aid Administrators. Its study, "A Report to the Leaders of America's College and Universities: Meeting the Challenge of Student Financial Aid," was scheduled for release this week in Seattle at the annual meeting of the Association of Governing Boards of Universities and Colleges.

The panel includes college presidents, financial-aid administrators, and other representatives of colleges and higher-education groups.

Changing Roles

John T. Casteen 3rd, who led the task force with Ms. Norsetter, said recent changes at the federal level have forced college leaders to reconsider their role in financial aid.

"Until recently, few college presidents needed to bother with details about federal financial-aid programs," Mr. Casteen, the president of the University of Virginia, wrote in a recent issue of Trusteeship, a publication of the Washington-based governing boards' group.

But last year's release of federal regulations creating state review agencies with broad oversight powers over financial-aid practices has forced college leaders to pay attention, Mr. Casteen said.

The report urges college presidents to scrutinize aid practices on their campuses to determine whether they limit students' access to college, their ability to graduate, and their career choices after they graduate.

"For many college-bound students and their parents, footing the bill is a much greater hurdle than getting in," the report says.

Over the past two decades, an increasing percentage of aid has been awarded as loans rather than grants, creating more debt for students when they graduate and discouraging others from enrolling in college.

For example, in 1980, loans represented 65 percent of federal-aid dollars. In 1993, they represented 76 percent. Meanwhile, as aid dollars consume a greater percentage of their budgets, colleges have been forced to raise tuition.

The report also asks college leaders to consider how changes in aid may affect their institutions' financial health and ability to adhere to federal laws.

It provides guidelines for evaluating the overall quality of aid programs, avoiding fraud and abuse, and serving students more effectively.

Arthur Hauptmann, a Washington-based consultant on higher-education policy, said the report is a good reminder for college presidents to re-examine their aid systems.

"It is true that financial aid has taken on an increased importance in the last two decades for both public and private education--primarily private, but also public," he said. "But financial-aid officers are still sort of at the bottom of the pecking order of college officials."

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