Joint Hearing of the Committee on Homeland Security and Governmental Affairs of the U.S. Senate and the Committee on Veterans’ Affairs of the U.S. House of Representatives at 1:00 p.m. CDT.
Witness Testimony of Susan C. Aldridge, Ph.D., President, University of Maryland, University College, Adelphi, MD, on behalf of American Association of State Colleges and Universities
Potential negative impacts on veteran students of H.R. 2301, “Streamlining Education Claims Processing Act of 2011”
- Registration holds due to unpaid balances that would have to be resolved manually on a case-by-case basis
- In states where public institutions are not legally permitted to allow students with unpaid balances to register for a subsequent semester/quarter, mandatory interruption of studies until VA paid the institution
- Inability to receive refunds (for veteran students who also receive other forms of financial assistance than Post-9/11 GI Bill funds) to pay for college expenses unrelated to tuition and fees since students would show an account balance due until VA paid the institution, creating considerable financial hardship
- Potential requirement to pre-pay tuition and fees and be reimbursed when VA paid the institution a month after each semester/quarter/term, creating considerable financial hardship
- Increased confusion regarding benefit eligibility under the Post-9/11 GI Bill since payments would be for the previous semester/quarter/term
Potential negative impacts on higher education institutions of H.R. 2301, “Streamlining Education Claims Processing Act of 2011”
- Violation of state laws in states where public institutions are already required to prevent students with unpaid balances from registering for subsequent terms
- Potential violations of state accounting rules for public institutions and/or previously established state accounting policies (particularly if forced to carry unpaid balances between fiscal years)
- Cash flow problems, particularly for institutions with large veteran student populations
- Increased Post-9/11 GI Bill processing burden on school certifying officials as well as financial aid offices, bursar/cashiering offices, accounting offices, and other institutional personnel, particularly in understanding H.R. 2301’s concurrent impact with the “net cost” provision of Public Law 111-377, “Post-9/11 Veterans Educational Assistance Improvement Act of 2010,” also effective August 1, 2011
- Increased infrastructure and staffing expenses since institutions would be required to either modify existing electronic registration, payment, and fund balance systems or to process all veteran student accounts by hand each term
- Unclear financial impact on institutions of students who drop out mid-term given the shift in payment date by VA under H.R. 2301—will institutions be paid for the instruction that they have delivered up to that point?
Chairman Stutzman, Ranking Member Braley, and distinguished Members of the Subcommittee, my name is Susan Aldridge and I am president of the University of Maryland, University College. Today, however, I am here to present the perspective of the American Association of State Colleges and Universities (AASCU). This statement is related to the potential effects of legislation currently being considered by this subcommittee on its 420 institution and system members located in 49 states, the District of Columbia, Puerto Rico, Guam, and the Virgin Islands. Thank you for holding this hearing and providing the opportunity to present this testimony.
In addition, AASCU is the contract administrator for the Department-of-Defense-funded Servicemembers Opportunity Colleges (SOC). The SOC Consortium is a network of approximately 1,900 colleges and universities offering educational services to our nation’s Armed Forces and veterans. In order to be included in the Consortium, an institution must establish flexible policies appropriate for the unique demands on servicemembers and dependents. These policies address items such as enrollment, credit evaluation of military training, and transfer of credit.
The legislation that AASCU would like to focus its comments upon today is H.R. 2301, the “Streamlining Education Claims Processing Act of 2011.” While AASCU agrees in principle with the concept behind H.R. 2301—to simplify the payment process of Post-9/11 Veterans Educational Assistance Act benefits, which has been arduous for higher education institutions and veteran students alike—this particular legislation will not simplify the funds payment process. Unfortunately, it will complicate it even further and cause even more delays for veteran students in receiving the benefits to which they are entitled.
As AASCU testified to the Subcommittee on Economic Opportunity of the Committee on Veterans Affairs in September 2010,[i]the VA’s problems in implementing the Post-9/11 GI Bill are well-documented in both prior hearing testimony and the press. VA itself has gone on record that its previous performance was unacceptable. The GAO’s February 2011 report on VA education benefits and its May 2011 report specifically on the administration of the Post-9/11 GI Bill program provide further documentation of this state of affairs.
H.R. 2301, however, would not fix VA’s processing issues. Instead, it would financially penalize institutions and veteran students for a problem they did not create. AASCU is fully cognizant that VA is experiencing a historic culture shift (some might say culture shock) in terms of veteran education benefits processing and that the VA was originally given very little time to implement the Post-9/11 GI Bill. We have acknowledged this in previously published testimony and policy briefs. However, making veteran students and institutions of higher education bear the brunt of the VA’s inevitable adjustment process hardly seems equitable. Other ways can—and should—be found to alleviate Post-9/11 GI Bill payment delays.
For instance, it would seem reasonable for the VA to seek further assistance in managing the Post-9/11 GI Bill program from the U.S. Department of Education, another Cabinet agency that long ago managed a large-scale transition to electronic processing involving all Title IV-eligible institutions of higher education. In fact, the May 5, 2011 GAO review of the Post-9/11 GI Bill program, Veterans’ Educational Benefits: Enhanced Guidance and Collaboration Could Improve Administration of the Post-9/11 GI Bill Program, concluded that “VA may be able to achieve greater efficiencies by building stronger partnerships with schools, Education, and other expert external organizations. For instance, Education has learned many management lessons and overcome some of its management challenges over the years by refining its systems and administrative processes for delivering student aid.”[ii]
However, the report also stated that “VA did not continue its coordination with Education because of the limited applicability of Education’s systems and procedures, according to VA officials.”
Notwithstanding the obvious statutory differences between Title IV financial aid and Chapter 33 veterans education benefits, this statement from VA that the established Department of Education (ED) computer systems enabling the disbursement of billions of dollars to tens of millions of Title IV aid recipients are of “limited applicability” does not take into account that, according to the National Center for Education Statistics (NCES), 16% of military undergraduates (including veterans) received federal Pell Grants in 2007-08.[iii]Therefore, veteran students are not completely isolated from ED systems and procedures.
Given that veteran students can qualify for both ED and VA funds and that institutions are well-versed in ED’s electronic processing methods, it would seem reasonable for VA to more seriously explore adapting pre-existing systems such as ED’s Common Origination and Disbursement (COD) system used by financial aid administrators, loan servicers, and other appropriate stakeholders to administer Title IV grants and loans. A separate GAO review of VA’s implementation of its own IT system to support the Post-9/11 GI Bill[iv]suggested technological areas in need of improvement, so it also seems reasonable that exploring adaptations and management techniques ED used during its earlier construction of the COD would benefit VA in this process.
While VA’s response to the GAO review of Post-9/11 GI Bill implementation stated that “VA will again contact ED and the higher education community to determine the applicability of any of their processes in VA’s administration of the Post-9/11 GI Bill,” H.R. 2301 seems to inadvertently discourage VA from working collaboratively with other Cabinet agencies to ease its own burdens and deliver educational funds to veteran students and institutions in the most efficient, cost-effective way possible. Given the budget crisis facing this country, we do not consider this a judicious mode of action.
That overall comment being made, AASCU would now like to address some specific logistical concerns regarding the detrimental impact of H.R. 2301 on higher education institutions and veteran students. Our colleagues at AACRAO, NACUBO, and NASFAA—to name a few higher education associations with particular subject matter expertise in admissions and registration, business and finance, and financial aid—could provide even more nuanced critiques of H.R. 2301’s potential impact on their constituencies. We encourage the Subcommittee to also call upon them for comment and analysis.
The first detrimental impact of H.R. 2301 concerns tuition and fee payment deferment at registration. In general, higher education institutions can permit students to register for a term and have their tuition and fees (and room and board, where applicable) “deferred” in full or in part based on expected financial aid from all sources. These sources are generally federal, state, institutional, or third-party aid such as employer reimbursements or external scholarships.
However, the student is ultimately responsible for the unpaid tuition and fee balance should any deferred aid not arrive. And if that aid does not arrive before the end of the term, the student is normally barred from registering for any subsequent term until the debt is satisfied. Some states specifically forbid public institutions of higher education to register students who have unpaid balances from a previous term.
Florida is one such example. According to the Florida State University System Board of Governors’ “7.002 Tuition and Fee Assessment, Collection, Accounting and Remittance” regulation[v] (bolding AASCU’s), state colleges and universities are required to:
“establish by regulation, procedures for the payment of tuition and associated fees. Such regulation shall provide that a student’s course schedule will be canceled if payment, or appropriate arrangements for payment, has not occurred by the deadline set by each university, which shall be no later than the end of the second week of classes….However, the president may choose to temporarily suspend further academic progress in lieu of canceling a student’s course schedule in those cases where the student has partially paid tuition and the university guarantees full payment from an authorized and existing fund before the submission of the final student data course file or the end of the semester, whichever is later; otherwise, the student credit hours shall not be counted for state funding purposes. Suspension of academic progress shall preclude students from receiving grades, transcripts, or a diploma and shall deny registration for future terms until the student’s account has been settled in full.”
Therefore, if H.R. 2301 is made law, particularly at public institutions governed by state laws forbidding students with unpaid balances to register, institutions would be faced with the unpalatable prospect of either
- carrying veteran students’ unpaid account balances from term to term and possibly fiscal year to fiscal year—which is not only a cash flow problem for all institutions of higher education, but may even be illegal for individual state colleges and universities depending on their state accounting rules and procedures, or
- requiring veteran students to pay up front for courses and be reimbursed whenever the VA pays the school.
Both of these prospects are unfair not only to veteran students, but the institutions serving them. The first could force public institutions—depending on the state—into a conflict with state debt management and collection policies in order to accommodate veteran students receiving Post-9/11 GI Bill funds. Even if institutions did not find themselves in violation of state law, they would most likely be forced to carry unpaid balances on their ledgers from fiscal year to fiscal year given institutions’ different fiscal year closing dates versus the iron-clad payment time frame set up by H.R. 2301. They would also encounter cash flow issues stemming from the delayed payments by VA.
In addition, if VA were permitted to send payments one month after the end of each semester, the bursar and cashiering offices at institutions would then be forced to process all veteran students’ Post-9/11 GI Bill payments at once rather than receiving a steady flow of payments for veteran students during each semester. This would create further delays for veteran students in receiving refunds.
The second prospect could restrict veterans’ access to college and ability to use their Post-9/11 GI Bill benefits either for their own education or that of their eligible spouses and dependents—not because institutions do not want to educate veterans or their families, but because institutions would not be fiscally able to indefinitely “front” their tuition and fee bills for term after term. Instead, institutions would have to ask veteran students to pay and be reimbursed, which is contrary to the entire purpose of the Post-9/11 GI Bill.
In addition, the payment change in H.R. 2301 would create yet another unfunded mandate for higher education institutions. Institutions’ computerized billing, payment, and refund systems would either have to be reprogrammed—at significant extra cost to institutions—or staff would have to spend extra hours processing manual payments and overrides for veteran students on top of the long hours they already spend counseling veteran students on their benefit eligibility and resolving over- and underpayments by VA. Given the regulatory and counseling burden on higher education as a whole, and the fact that many school certifying officials perform these duties in addition to other job duties, this prospect is daunting.
The January 2011 amendments to the Post-9/11 GI Bill specifically restrict the use of the $12/student fee paid to schools by the VA for processing veteran students’ registration and enrollment. (As noted in AASCU’s previous testimony, institutions serving large numbers of veterans have voluntarily hired extra staff, created new veterans’ centers, and incurred expenses often far exceeding these monies received from VA.) Therefore schools would be unable to use these fees to partly defray the overall infrastructure expenses necessary to accommodate H.R. 2301. Given the well-publicized finance issues in public higher education in particular, H.R. 2301 would thus place an especially unfair compliance burden on public institutions.
For example, 3 of the 7 brick-and-mortar campuses reported by the VA as having enrolled the most veteran students using Post-9/11 GI Bill benefits in 2009-10 were AASCU members (Old Dominion University, Troy University, and University of Maryland – University College). These institutions enrolled over 5,000 of the 12,000+ veteran students on the 7 campuses. The University of Maryland – University College alone enrolled over 3,000 veteran students in 2009-10; it currently enrolls over 4,500 veteran students. Forcing these institutions to perform manual billing and registration overrides for thousands of veteran students would be cumbersome, expensive, and labor-intensive—in addition to not being in the best interests of veteran students.
Therefore, public colleges and universities that enroll veteran students, befitting their mission as public taxpayer-supported institutions serving the public good, would be consistently financially penalized for these enrollments if VA were permitted to delay payments 30 days after the end of each semester. In addition, they would most likely be forced into conflict with their states’ debt management and collection policies.
The second detrimental aspect of H.R. 2301 is its concurrent impact with the “net cost” provision in Public Law 111-377, which amended the original Post-9/11 GI Bill. This provision requires institutions to subtract certain forms of financial assistance awarded to students by states, institutions, the federal government, or other third parties from their tuition and fee charges reported to VA for Post-9/11 GI Bill payments.
When AASCU last testified before this committee, our representative stated that the net cost provision would inflict “intolerable chaos…on both veteran students and program administrators.” The provision was nevertheless signed into law and is scheduled to take effect August 1, 2011. Given how complicated the new process will be for students and program administrators compared to the original Post-9/11 GI Bill payment structure—and how many unforeseen complications will undoubtedly occur after it takes effect—delaying tuition and fee payments for 30 days after a semester will create even more problems for both veterans and institutions.
The third detrimental impact of H.R. 2301 is its potential impact on payment for students who drop out during a term after attending classes. Under the current Post-9/11 GI Bill payment process, funds flow to the institution during the period of enrollment after a certificate of eligibility has been issued by VA for a veteran student and the institution has certified that veteran student’s enrollment.
VA has strongly encouraged institutions to certify veteran student enrollment as early as possible—even prior to a semester when the veteran’s actual tuition and fees are unknown.[vi] Institutions thus often have to submit two enrollment certifications for one veteran, the first with zero tuition and fees and a second amended enrollment certification with the actual tuition and fees when the veteran registers. If a veteran drops or adds courses later in the registration process, the original enrollment certification must be amended. This has created more challenges for both institutions and VA in terms of processing.
Delaying payment for 30 days after the end of a term, for every term, thus creates uncertainty about whether institutions will be paid by VA if a veteran student drops out partway through a term after having attended classes that the institution has delivered in good faith. H.R. 2301 does not address this issue, and clarification would be necessary for institutions on this point.
While AASCU has expressed significant concern about H.R. 2301’s effect on higher education institutions in this testimony, we would like to state for the record that our member institutions—as well as those public institutions who belong to the Association of Public and Land-grant Universities (APLU) and the private nonprofit institutions belonging to the National Association of Independent Colleges and Universities (NAICU), which is also testifying in front of this body—are proud to serve veterans and active-duty military students. We all understand these students’ challenges and support their using college education benefits they have earned through their military service. Their success is very important to not only our institutions, but our country.
In addition, we would like to state that the higher education community has repeatedly reached out to the VA during the Post-9/11 GI Bill implementation process to offer expert guidance, assistance, and cooperation. Veteran students are not only veterans, but our students.
The enactment of H.R. 2301 into law would not only place a further burden on students and institutions struggling to understand and implement the cascading set of Post-9/11 GI Bill amendments currently taking effect. It would also be contrary to the entire intent of not only the Post-9/11 GI Bill but the original GI Bill, because it would effectively penalize veteran students and institutions alike for problems not of their making.
We stand ready and willing to partner with VA in creating better processes to deliver Post-9/11 GI Bill funds to veteran students and institutions. But H.R. 2301—though well-intended—will harm veteran students and institutions of higher education alike rather than streamlining the process by which these funds are delivered.
[i] American Association of State Colleges and Universities (AASCU) “Testimony on Post-9/11 GI Bill Benefits Program,” presented by Dr. Alan G. Merten, President, George Mason University, September 16, 2010. Retrieved July 1, 2011 from http://www.congressweb.com/aascu/docfiles/AMerten%20Testimony%20Veterans%20Cmte%2009162010.pdf
[ii] Veterans’ Educational Benefits: Enhanced Guidance and Collaboration Could Improve Administration of the Post-9/11 GI Bill Program, GAO-11-356R, p. 3. Retrieved July 1, 2011 from http://www.gao.gov/new.items/d11356r.pdf.
[iii] Issue Tables: A Profile of Military Servicemembers and Veterans Enrolled in Postsecondary Education in 2007-08, Table 5-A. Retrieved July 1, 2011 from http://nces.ed.gov/pubs2009/2009182.pdf.
[iv] Veterans Affairs Can Further Improve Its Development Process for Its New Education Benefits System, GAO-11-115, “Highlights.” Retrieved July 1, 2011 from http://www.gao.gov/new.items/d11115.pdf.
[v] State University System of Florida Board of Governors Regulations, Chapter 7, “Tuition and Fees,” Section BOG 7.002, “Tuition and Fee Assessment, Collection, Accounting, and Remittance,” sec. (7). Retrieved July 1, 2011 from http://www.flbog.org/about/regulations/regulations.php.
[vi] U.S. Department of Veterans Affairs School Certifying Official Handbook, 1st ed., May 15, 2011, p. 37. Retrieved July 1, 2011 from http://gibill.va.gov/documents/job_aids/SCO_Handbook_v1.pdf.