Students say “Don’t raise our tuition!”

OCTC wants ideas for strategic plan

The Companies That Colleges Keep

President Bush Calls for Increase in Pell Grants

Congress to Get Report on Simplifying Student-Aid Process

Hazard Herald
January 26, 2005

Students say “Don’t raise our tuition!”

More than 200 Hazard Community and Technical College students showed their concern about the rising tuition costs by participating at a hearing on Thursday, Jan. 20 at the Technical Campus of HCTC. A total of 19 students publicly voiced their opposition to the rising costs, many of whom said if the costs keep increasing, they would have to quit school. The student comments were limited to three minutes each but the sheer volume of speakers demonstrated the point on the effects of the rising tuition costs.

“Tuition goes up but the Pell grants don’t increase,” noted Kevin Holbrook of Leatherwood. “Please don’t raise the tuition any more. I can’t even get my books (for my classes) right now,” Winston B. Neace of Knott County told the crowd. Beverly Campbell is a mother of two who is in nursing classes from 8 a.m. to 3:15 p.m. each day, and then works a full time job. “I want to have a future for my kids,” she said. Another mother of two, Martha Thornsberry, said she would have to drop out of school if the tuition increased any more.

The tuition has increased because state budget allotments have decreased by $18 million in the last four years. In 2003-04 alone, $5.9 million was cut. The Kentucky Community and Technical College System (KCTCS) colleges are still the cheapest for tuition at $92 per credit hour, but students say the gap is too narrow with other colleges. Morehead State University, for instance, charges $160 per credit hour.

“What do we prosper as a student if you raise tuition?” asked Martinsville resident Kathy Messer, noting that students haven’t seen an increase in any services even though tuition is increased each year. Misty Baker of Perry County echoed that comment when she came to the podium. “We’re paying more; we should be gaining more!” Rosanna Garland of Knott County also asked what students were getting out of such increases, and she questioned how the KCTCS budget was being spent. Carolyn Short of Hindman made note of the new Knott Opportunity Center where HCTC classes are held. “You might as well tear down that beautiful building in Hindman if you aren’t going to have any students who can afford to go there.”

“How are you going to take a more proactive approach to this?” asked Donny Combs of Red Fox. Another student told the crowd she didn’t have a rich Mom or Dad and was working at a grocery store making $5.50 an hour and can’t afford to get the car repaired. “If tuition goes up, fewer people come, you still get less money—so what’s the point?” she asked.

“I don’t know how I can keep going if you raise tuition,” Jason Couch of Leslie County told the crowd.

Cynthia Osborne, the student representative to the KCTCS Board of Regents, noted that an additional 113 students wanted to be at the hearing but were unable to attend because of classes scheduled during the hearing, or work or family responsibilities.

Dr. Jay K. Box, president/CEO, served as the moderator for the hearing. He told the crowd the comments were recorded and would be presented to the KCTCS Board of Regents. After the meeting, Dr. Box stressed that the college is not receiving a much larger budget because of the increase in tuition. “The students are paying with tuition what the state once paid from tax dollars,” Dr. Box said.

Messenger-Inquirer
January 27, 2005

OCTC wants ideas for strategic plan

It all started last summer. That's when Owensboro Community and Technical College set the wheels in motion for a new five-year, strategic plan.

Now, college leaders are asking area residents to help them shape the plan.

"We're involving community leaders, our board, faculty and the public so that everyone who has to make it happen will have a voice," President Jacqueline Addington said.

The college is finishing its last five-year plan, and the only item left undone was the opening of an advanced technology center.

"That is at the top of the list," Addington said. "The center clearly will transform many of the opportunities in this community not only in attracting new industry, but also in enhancing credentials for students."

Other academic programs in the works include increasing allied health offerings. The college expanded the nursing program last year with financial help from Owensboro Medical Health System, Addington said. About 45-50 nurses are enrolled in May and December graduating classes.

"We're coming close to meeting the local need for nurses, and so we also will focus on expanding our respiratory therapy and medical technology programs," Addington said.

The new plan includes growing partnerships with Western Kentucky University, Brescia University and Kentucky Wesleyan College to create more four-year college degree opportunities.

OCTC will push for public transportation to its main campus, Addington said. Students can ride city buses to the downtown campus, but don't have public transportation to continue their studies at the main campus, she said.

Other goals include providing more opportunities for students to study abroad through the sister cities program, expanding the Discover College program to get more high school students into college, and building business and industry partnerships.

Getting more public participation is the latest stage of the plan, said Dean of Students Kevin Beardmore.

The public can participate in the visioning process by answering two key questions, he said:

n In the year 2010, OCTC is a more effective, efficient and student-focused college. What makes it so?

n What would you like to see change at OCTC in the next five years?

Last summer's retreat involved the college's board of directors and college and community leadership. Students participated last fall. Then in January, a planning meeting drew about 120 faculty and staff members.

Another makeup strategic session for about 40 faculty and staff members was held Wednesday.

"It's an involved process," Beardmore said. "I tell people that we want to do four things: first look back at what we've done, and then look around at how we compare locally and nationally. We also need to look forward at what we can and should do, and then prioritize."

The new strategic plan is for 2006-10 academic years.

The Chronicle of Higher Education
January 28, 2005

The Companies That Colleges Keep
From food services to bookstores to campus security, outsourcing has become the way to do business

Follet runs the Stanford Bookstore. Aramark prepares the meals at Yale University. And Barnes & Noble manages the Harvard Coop. The nation's most prestigious universities -- and many others in academe -- increasingly contract out portions of their campus operations. The trend is being fueled by cutbacks in federal and state support for colleges, by a growing consensus that colleges should focus on teaching and research, and by corporations that see an attractive market opportunity on the nation's 3,500 college campuses.

The economics of outsourcing can be compelling for colleges, and in the past decade many college officials have changed their thinking about it. Fears of a corporate intrusion into the halls of academe have given way to soul-searching over whether the typically higher costs of self-operation are worth continuing.

"Eight or nine years ago, everyone was asking the question, Should we contract out or shouldn't we?" says David Lord, business manager at Colorado College. "Now outsourcing is definitely a reality, and the conversation has changed to, How do we do it well?"

The trend is changing the nature of the jobs held by people who oversee campus auxiliaries, which account for more than 10 percent of revenue at four-year institutions. When Mr. Lord arrived at Colorado, a decade ago, he was a full-time, hands-on manager of people. Now the college contracts out many of its auxiliary functions -- including food service, custodial services, real-estate management, laundry, and vending -- and he has become largely a deal maker and a liaison to outside companies. "My job is now a lot more about managing contracts," Mr. Lord says. "I like it a lot more. I'm at a small school, and running housekeeping and food service is probably not the best thing for me and others on the management team to be spending our time on."

Comprehensive data about outsourcing is hard to come by. Colleges contract out dozens of functions, and no association compiles data for all of those areas.

In many operations -- including food service, bookstores, printing, vending, laundry, parking, and security -- outsourcing has become relatively common. More than 1,400 college stores (the vast majority are bookstores) are run by outside companies, nearly twice as many as in 1992, according to the National Association of College Stores. And about 60 percent of the food and beverage sales on college campuses in 2004 were handled by contract operations, according to the National Restaurant Association.

Corporations are making inroads in other areas, too, like information technology, facility maintenance, and the financing, construction, and management of student housing. Colleges have also experimented with outsourcing in other functions, including student health services, alumni relations, and business offices, but the results are mixed.

Money is the No. 1 reason that colleges contract out an operation. In a recent survey of outsourcing trends at 325 colleges conducted by an administrator at Jacksonville State University, in Alabama, college officials named "costs savings" and "revenue generation" as their top two reasons for outsourcing.

Small colleges may have the most to gain from outsourcing because they often lack both the financial resources and the staff expertise to handle auxiliary operations on their own. But large public universities, which have generally seen the portion of their budgets covered by state appropriations drop sharply, have embraced the trend as well.

The University of Georgia contracted out its first major campus function this year, handing its bookstore over to the Follett Higher Education Group. In the fiscal quarter that ended in September, Georgia's bookstore was $300,000 ahead of where it had been in the same quarter in 2003, when it posted a loss. One possible explanation: In October Follett had 70 percent of inventory on display; a year earlier Georgia's own managers had 70 percent of inventory in storage. The greater visibility may have helped increase sales.

"We have one bookstore; Follett has hundreds," says Henry M. Huckaby, senior vice president for finance and administration. "They have the marketing and purchasing power to make the bookstore a success here."

The pitch from corporations can be hard to resist: Give your management headaches to us. We'll buy your inventory (Georgia netted $5-million from Follett). You'll benefit from our ability to buy in bulk and our expertise from operating on dozens, if not hundreds, of other campuses. And we'll do it all with cheaper labor, which means bigger profits to share with you.

When the bookstore at the University of South Carolina at Columbia was self-operated, the managers kept the same size staff year-round, despite the peaks and lulls inherent in a campus-bookstore business. As state employees, the workers enjoyed generous health-care and retirement benefits. "Labor was eating us up," says Richard D. Wertz, a professor of higher education at the university who served as vice president and director of business affairs for 18 years. "We were paying a tremendous amount of money for people that we wouldn't always use."

Before South Carolina contracted out the bookstore, to Barnes & Noble, in 1992, it rarely netted as much as $100,000 per year. Now it nets about $500,000 per year, through a deal that guarantees the university a cut of gross sales.

South Carolina also outsources food service, vending, arena concessions, and trademark and copyright protection. "You start looking around, and you say, Who needs this?" Mr. Wertz says.

He is most proud of a deal he struck to outsource the functions of the campus office that sells items like notebooks and pencils to professors. The operation had an annual payroll of $250,000 and an inventory of $1-million. Forms & Supply, a company based in Charlotte, N.C., offered to absorb the payroll, buy the inventory, and give professors and other employees a 50-percent discount on every item sold."That one was a no-brainer," Mr. Wertz says.

W hile some scholars still lament the "corporatization" of higher education, the main arguments against outsourcing these days have shifted to the impact on the salaries of the relatively low-income employees who work in many auxiliary services. On several campuses, including Colorado College, the University of Michigan's Medical Center, the University of New Orleans, and Wesleyan University, students have aligned with food-service workers fighting for better pay or benefits.

In 2003 a student group called Colorado College Fair Labor persuaded the college to commit to a "living wage" -- a minimum of $9.64 an hour -- for every worker on the campus, including those employed by contractors. Previously the food-service contractor, Sodexho Campus Services, had been paying some entry-level food-service workers $5.15 per hour, the federal minimum wage.

The student group was so pleased with the new contract that it issued a release calling Sodexho "a good choice for universities who want to do business with an ethical company." Mr. Lord, the business manager, says the college now offers better pay for food-service and janitorial jobs than any other employer in Colorado Springs, which enables the college to hire and retain good workers.

But the costs were largely passed along from Sodexho and the local custodial contractor to the college, which means that the bulk of the increase eventually falls on the students. "Now students will come in and ask me why it is so much cheaper to get food downtown at McDonald's," Mr. Lord says.

Sodexho's willingness to renegotiate its contract with Colorado reflects a growing awareness among corporations that one-size-fits-all doesn't sell in the higher-education market. Sodexho and Aramark, the two biggest operators of campus food services, each conduct in-depth surveys of students' food preferences before they craft menus for a new client. Aramark has an organic-food program at Yale and buys milk from a campus dairy operation at Middle Tennessee State University. Sodexho has developed its own branded restaurants, like Jazzman's Cafe and Pandini's, which charge colleges lower commissions than national franchises and allow a campus to retain a unique look.

"You have some clients who don't want a national brand on their campus," says Tatjana Keuper, senior vice president for marketing at Sodexho. "They might not want it to look like an airport lounge."

The bookstore contractors at Harvard (Barnes & Noble) and Stanford (Follett), meanwhile, have made their corporate presence largely invisible, since the universities themselves have greater name recognition than the companies. "The Stanford Bookstore -- what better brand is there?" says Scott Deaton, executive vice president for marketing at Follett. "In the eyes of students, it's just a better bookstore. They don't know we're involved at all."

A few companies that specialize in building and managing college housing have agreed to subcontract "residential life" activities back to their college clients, since many colleges view that area as central to the student's educational experience. "When you carve out the residential-life function, there's a lot of logic to hiring someone to manage the maintenance of the housing," says Bill Harris, vice president at Allen & O'Hara Education Services, a development-and-management company, based in Memphis, that specializes in college housing.

Outsourcing has seen its share of failures. In 1997 the University of Pennsylvania signed a 10-year deal with the Trammell Crow Company to have it manage and maintain campus buildings as well as off-campus properties owned by the university. The arrangement, which quickly soured, ended in 2002, when the company saw less profit than expected, and the university decided that it could manage the operation more efficiently on its own.
In 2001 Wallace's Bookstores, which at the time was the nation's third-largest college bookseller, with operations on 74 campuses, declared bankruptcy. Several colleges were forced to put up their own money to keep their shelves stocked with textbooks after publishers refused to sell to Wallace's on credit.

In the mid-1990s student-health clinics seemed a ripe area for outsourcing. An upstart company, Collegiate Health Care, promised better service than college clinics typically provided and signed up at least 10 clients, including Oberlin College and Radford University. The company went bankrupt in 2001, forcing many of its clients to scramble to provide health services to students.

Most of the colleges said they were happy with its performance to the very end. "There just wasn't any return on investment for the company," says Stephen D. Blom, director of health services at Colorado State University (which had no relationship with Collegiate Health) and a former executive director of the American College Health Association. "College health clinics," he explains, "are doing mostly primary health care for a fairly healthy population, a lot of whom are uninsured or underinsured." For now, he adds, outsourcing of college clinics is "just not happening."

Georgetown College signed an unusual outsourcing contract in 2000, hiring a close neighbor in Kentucky, Host Communications, to handle alumni affairs. The deal dissolved after less than a year, and Georgetown now has one of its own alumni running the office. "We decided it would be better if it were done from within," says Jim Durham, a college spokesman. "You really do need people who know the school to reach out and touch the alums."
Even when outsourcing is successful, it can be full of challenges. In October, while presenting a study on outsourcing at the annual meeting of the National Association of College Auxiliary Services, Joe Whitmore, director of planning and analysis at Jacksonville State, told a story about a plan hatched by Sodexho some years ago to "change the color concept" in the university's cafeteria. The switch from red and white -- the team colors, which appear in high-profile areas around campus -- to yellow and orange was imminent when word got back to Mr. Whitmore. In lengthy talks with Sodexho, he fended off the change.

"But it turned into a three-week ordeal, and there's a cost associated with that," says Mr. Whitmore, who makes clear that he is happy with Sodexho's management of the university's food service. "I was spending time I could have been spending on something else trying to keep mustard-yellow paint off the walls."

In Mr. Whitmore's study of outsourcing, the most common misgiving about contracting out an operation -- voiced by 92 percent of the campus officials who responded -- was "loss of institutional control."

Just such a concern has led Bowdoin College, which is ranked No. 2 by the Princeton Review in a student-satisfaction survey examining food quality, to insist on operating its own food service. (The other two in the top 3 -- in Illinois and Colby College outsource their food services, to Bon Appetit Management Company and Sodexho, respectively.)

Mary McAteer Kennedy, Bowdoin's director of dining services, notes that some food-service contractors have signed exclusivity deals with food-and-drink producers that may lower some costs but also limit the number of vendors with which they can work. Bowdoin and nearby Bates College have joined with the Maine Sustainable Agricultural Society to buy produce directly from local farmers. Bowdoin buys ethnic ingredients for special meals from a store in Portland, and fish and shellfish from local vendors. The college trims all its own meats, grinds its own hamburger, and occasionally cooks whole pigs.

While the vast majority of Bowdoin's 1,700 students live on the campus, 97 percent of the 125 off-campus students participate in the college meal plan, Ms. Kennedy says. The food-service operation generates enough revenue to meet the college's goals, including covering administrative costs and debt service.

"I don't think we'd see any additional financial contribution from contracting it out, and there would probably be less satisfaction from the students," Ms. Kennedy says.

Stephen Mead, business manager at Wheaton, which ranked No. 1 in the Princeton Review survey, notes that some contractors, too, are nimble enough to work with local producers. On the Web site of the Bon Appetit Management Company, which works with Wheaton, the company says it buys "millions of dollars worth of products each year from local farmers and artisans."

Bon Appetit's food is clearly a hit with students, and Mr. Mead describes the relationship as "comfortable and successful." But he also likes knowing that he could sever the relationship if the company's performance ever slipped. That would be a more difficult step to take if food service were handled by college employees. "Sometimes when you have an operation in house -- whether it's food service or something else -- people defend it to the bitter end even if there are other options that should be explored," he says.

The second-greatest concern cited about outsourcing in Mr. Whitmore's study was "loss of potential revenue." Indeed, while most colleges that enter into outsourcing contracts look to save money, others are strong advocates of self-operation because they fear that outsourcing will set them back financially. If Company X can make a healthy profit and still afford to share revenue with us, they reason, how much more money would we make if we operated this thing on our own?

The first president at California State University at San Marcos set a goal of having the institution operate its own food service when the institution was founded, in 1989, even though he didn't think the university could afford to go that route at the time. Over the years, however, San Marcos steadily set aside reserves collected from its contract with Aztec Shops Inc., a nonprofit company at San Diego State University that runs that campus's bookstore and food service and various other businesses.

Two years ago the food-service operation at San Marcos finally made a break from Aztec (the company continues to operate the campus bookstore). The university evaluated offers from other companies but eventually hired one of its own staff members to take over the operation. The university spent nearly $1-million that it had been keeping in reserve to upgrade its offerings -- it added a Starbucks and a convenience store, and modernized the main kitchen -- and officials believe that those investments will pay off over time.

"In four years, we think we'll be ahead of where we would have been with an outside vendor," says Marti Gray, executive director of the Cal State San Marcos Foundation, which handles auxiliaries for the university.

Of course, the financial benefits of self-operation exist only if a college can run a service as well -- or nearly as well -- as a company that specializes in that business. More and more colleges are unwilling to make that bet.

The Georgia Institute of Technology is in the midst of $190-million project to expand its campus across a busy freeway into midtown Atlanta. The project includes a new hotel and campus bookstore, and retail space to be leased out.

Georgia Tech had been making a profit on its old bookstore, but the new one is designed to appeal to nonstudents as well, putting it in head-to-head competition with existing city bookstores. That's why the university brought in Barnes & Noble.

"We know how to run a college bookstore, but we are not retailers in the sense of competing in the larger market," says Rosalind Meyers, associate vice president for auxiliary services. "We wanted a company that understood retailing and the marketplace, and that could operate a superstore to bring people to the other retail shops that we have there."

Some outsourcing advocates believe that university administrators should bring that perspective to every auxiliary function: If you can't provide best-in-class service, get out of the business and find an outfit that can.

The City Colleges of Chicago announced in 2001 that it would outsource its finance department to American Express Tax and Business Services, as part of a broad reorganization that also involved contracting out information technology and some building maintenance.

American Express now handles budgeting, financial reporting, general accounting, grants, accounts payable, purchasing, payroll, and student aid for the college system. A company employee, Abe Eshkenazi, even serves as vice chancellor and chief financial officer of the system, participating in meetings involving the president and other top officials.

Mr. Eshkenazi concedes that his is an unusual case: Since the CFO is heavily involved in strategic planning, most colleges are unlikely to outsource the job. But he thinks that many other operations in the finance office -- even student aid, an area in which many colleges promote the personal touch -- are ripe for outsourcing.

"Everybody thinks they're unique," Mr. Eshkenazi says. "That's what really challenges the outsourcing process. If you think you're unique -- you think nobody else can do what you do -- you'll never consider outsourcing."

President Bush Calls for Increase in Pell Grants

Speaking at Florida Community College at Jacksonville, Mr. Bush made clear that he did not plan to include additional money for those goals in his 2006 budget request. Instead, he said, he would ask Congress to generate savings by making changes in the federal guaranteed student-loan program, which relies on banks and other types of lenders to deliver money to students.

"I'm going to reform the student-loan program to make it more -- or ask Congress to reform it -- to make it more effective and efficient," the president said. Money saved from the changes "will be plowed into the Pell Grant program," he said.

Mr. Bush did not provide details of the kinds of changes he will propose. But according to a fact sheet that the White House released after the talk, the savings would come from "reducing excessive subsidies and program costs."

"The current student-loan programs do not make loans available to students in a cost-effective manner, and a disproportionate amount of benefits are provided to borrowers out of school rather than those currently attending school," the document stated.

David Ward, president of the American Council on Education, called Mr. Bush's announcement "extraordinary news."

"While we still must learn the specific details of the president's proposal," he said, "I applaud the president for his strong commitment to our nation's neediest students and families."

Skeptical Opposition

Democratic lawmakers and student advocates were more skeptical about the president's promises on Pell Grants, the government's primary source of aid for low-income students. They noted that a $500 increase in the maximum award over five years would not significantly improve the purchasing power of the grants, given that college prices are projected to continue to rise by two to three times the rate of inflation.

What's more, they warned, in order to pay for his plan, Mr. Bush would probably propose cuts in other student benefits. The critics were particularly concerned that the administration would embrace a proposal by key Republican lawmakers in the House of Representatives that would save money by making a federal program for consolidating student loans less attractive to borrowers.

"If the president's plan would rob Peter to pay Pell, it would be unacceptable," said Rep. George Miller of California, the top Democrat on the House committee in charge of higher-education policy.

In his remarks at the Jacksonville college, President Bush said he believed it was important to increase spending on Pell Grants because they "make it possible for people to go to school who otherwise won't go."

During his first term, Mr. Bush asked Congress to increase appropriations for Pell Grants by 47 percent. But the maximum grant has remained at $4,050 for the past three years because the appropriations have not been enough to keep up with an unexpected surge in demand for the awards in the past several years. Although the grant program was not created as an entitlement, it functions like one: Grants are awarded to all eligible students, even if the program runs in the red.

Significant Change

Administration officials and Republican Congressional leaders have been reluctant to call for increases in the maximum award until the program's deficit is covered. But now the administration appears to have found a creative way to overcome that problem. If enacted by Congress, the proposals would significantly change -- at least temporarily -- the way the maximum grant is set.

Currently it is up to Congressional appropriators to set the maximum award each year. Under the president's proposal, the Pell Grant program would operate more like a true entitlement program, such as Medicare or Social Security, with scheduled increases in the top grant -- of $100 a year for five years -- taking effect automatically.

It is unclear whether Congress will agree to the changes Mr. Bush has proposed, particularly if powerful loan-industry officials, who are generous donors to Republican Congressional leaders, object to the plan.

For now, lenders are uncertain what to expect. They fear that the president's plan to "reform" the guaranteed-loan program could mean deep cuts in the subsidies they receive from the government.

"We really don't know what's coming," said one loan-industry official, who wished to remain anonymous to avoid offending the White House. "Everybody's fearing the worst."

Congress to Get Report on Simplifying Student-Aid Process
Dozens of proposals in much-anticipated document carry a high price tag for the government

The two proposals, offered by the Advisory Committee on Student Financial Assistance, are among dozens of recommendations contained in "The Student Aid Gauntlet: Making Access to College Simple and Certain."

The report, which was ordered by Congress, is part of a continuing effort to simplify the federal student-aid application process and make college more affordable for low-income students. Many of the proposals could be considered as part of the reauthorization of the Higher Education Act, which lawmakers are expected to take up this year.

Under one proposal, Congress would raise the income cutoff for automatic eligibility for the maximum Pell Grant from $15,000 to $25,000, increasing the number of students who qualify for the maximum grant of $4,050 by 700,000.

The $25,000 cutoff would also align eligibility for the maximum Pell Grant with eligibility for other federal means-tested programs, like the school-lunch program and welfare, making it easier to notify students in middle school or earlier about their potential eligibility for a grant.

Now students from families with incomes of between $15,000 and $25,000 must complete nearly the entire Free Application for Federal Student Aid, or Fafsa, answering more than 100 questions. That form, says Michael Milkie, principal of Noble Street Charter High School in Chicago, is "very, very complicated, and incomprehensible for most kids. They just have no clue what to do, nor do their parents."

Under another proposal, Congress would raise by $1,000 the amount of student income that is excluded from the federal analysis of financial need, while lowering the assessment rate on student earnings above the cutoff from 50 percent to 40 percent. Dependent students can now earn up to $2,420 before a portion of their income is counted in the needs-analysis formula, while independent students can earn up to $5,490. Once a student's earnings exceed those amounts, 50 percent of his or her income is considered available for college expenses, and counted against the student in the formula.

Catch-22

Higher-education advocates have long complained that this cutoff creates a Catch-22 for students, penalizing them for working, then forcing them to work more to make up for lost aid.

"Students are working themselves out of eligibility," said Jimmy L. Tadlock, program director for the CollegeBound Foundation, a nonprofit college-access foundation that serves the Baltimore area. "They find they're trying to work full time, their grades suffer, they get discouraged, and because of debt load, many students give up."

Increasing the amount students can earn -- known as the income-protection allowance -- while lowering the assessment rate on earnings above that cutoff would reduce the "work penalty," allowing students to work longer hours without losing their eligibility for aid. The dual changes would also result in 270,000 students becoming eligible for the Pell Grant and 2.8 million students receiving higher awards.

The committee also waded into the controversial topic of allowances for state and local tax payments, proposing a future elimination of the allowances, coupled with an increase in the income-protection allowance. The tax allowance forgives most families for their state and local tax payments when determining how much income the families have left over to pay college costs.

The administration created an uproar late last year when, for the first time in a decade, it updated the tables it uses to determine the tax burden, disqualifying thousands of students from the Pell program and reducing grant awards for thousands more. Supporters say eliminating the tax allowance in the future will provide more consistent Pell Grant awards, since tax rates fluctuate year to year.

But none of the proposals comes cheaply. According to Education Department estimates provided to the committee, increasing the Pell cutoff would cost $319-million, while the work-penalty-reduction plans would cost $815-million combined.

Replacing the state- and local-tax exemption with an increased income-protection allowance would make more than 150,000 additional applicants eligible for a Pell Grant, while increasing the program's costs by $700-million. The committee did not solicit an estimate of how many of these newly eligible recipients would have already qualified for a Pell Grant under the proposed increases in the amount students can earn.

The committee acknowledges that eliminating the state- and local-tax exemption would be costly, and suggests that if funds are not available to increase the income-protection allowance to a level that would ensure that few students lost their grants, then future updates of the tax tables should be phased in gradually.

Longtime Goal

Efforts to simplify the byzantine financial-aid-application process date back to the 1992 and 1998 reauthorizations of the Higher Education Act, when Congress and the Education Department created Fafsa, along with two simplified formulas to analyze the needs of moderate- and low-income students: the Simplified Needs Test, which excludes assets from what families are expected to contribute, an amount known as the EFC; and the automatic-zero test, which assigns a zero EFC to the poorest students. The committee's recommendations would expand the use of both tests to more students.

Many higher-education advocates have also called for tailoring Fafsa to individual students' circumstances. Now Fafsa filers are required to answer 20 nonfinancial questions, many of which pertain only to students living in particular states. That's because Congress, in an effort to streamline the financial-aid process, has allowed the states to add questions to the form that help them assess eligibility for state and institutional aid.

As an aide to Sen. Lamar Alexander, Republican of Tennessee, put it at an advisory-committee hearing last year, "It's almost as if, if you don't live in California, you can skip half the form."

But state financial-aid administrators have cautioned against removing the state-specific questions, warning that their elimination could force states to create supplemental application forms.

"If you simplify to the point of oversimplification, it's not going to work," said Maureen Laffey, director of the Delaware Higher Education Commission and past president of the National Association of State Student Grant and Aid Programs. "It's going to double the process for students."

Phasing Out Paper

To balance those concerns, the committee suggests phasing out the paper form over five years and redirecting students to the electronic form, where questions could be tailored to a student's state of residence.

To ensure that low-income students without computer access would not be left out of the simplification process, the committee proposes a paper "EZ Fafsa" to complement the electronic version. The shortened form for low-income filers would allow them to provide only the information required for determining their expected contribution under the simplified formulas, though they would still have to answer the state-specific questions.

The committee also suggests striking questions about prior drug convictions and Selective Service registration from the application, along with some of the 30 questions about nontaxable and excludable income, such as the earned-income tax credit, welfare benefits, and untaxed Social Security benefits.

The report calls for allowing students to apply for aid earlier, so they don't miss deadlines for state and institutional aid. Students now cannot apply until January 1. The report proposes a pilot program that would allow students to apply for aid during their junior year.