Gail daMota: Higher Ed Financing, Pell Grant Increase, Financial Aid Resources

Hayley Spira-Bauer: Welcome back everybody to the Learning Can't Wait podcast. I often feel like the guests that come on this podcast are so incredibly brilliant that not only are the audience members gaining new knowledge, but I myself am growing six new levels of intelligence from having them on. I am so eager to introduce you to another one of those guests. Today we have Gail daMota, the president of the Education Finance Council joining us today. Gail, welcome.

Gail daMota: Thank you, Hayley. I'm really happy to be here and to join you today.

Hayley Spira-Bauer: I feel honored that you're spending your time with us here on the Learning Can't Wait podcast, and as I mentioned just in your introduction a moment ago, I am hoping my brain will grow on this conversation. I know that my brain will grow. I will say that as I told you before we started recording finance, college financing post-secondary education is not a topic we talk about extensively here, which is why your presence is even more important, because I think in the coming years it's going to be even more important than ever before. So thank you for doing that and I'm going to jump right in with my very first question, which is, Gail, how did you come to be the personal and professional version of yourself?

Gail daMota: I actually kind of fell into it. I always tell folks, once you get into higher ed, you never get out, but I actually began in a trade school working with a trade school, and then I moved into being a financial aid servicer for various types of trade schools. And then I moved into the Federal Family Education Loan Program, which used to be the loan program, and then eventually Education Finance Council. And we are a very niche part of the higher education finance sector, so our members are all nonprofits or state-based agencies. They are mission-driven, so they're in business to serve the communities and their states and the people in their states are going to school in their states. So once I met these guys, I kind of stuck with them because I'm very passionate about their mission and very proud of the work that they do and the number of people that they help.

Hayley Spira-Bauer: It's funny. I had a question specifically about this level of passion because you've been in various roles at EFC over the years, so what helps you sustain that passion? I mean, you mentioned some of the people, but can you share a little bit about the work and how that inspires you to have stayed at EFC and continue to grow with the organization?

Gail daMota: Part of it's my background. I am first generation American. I am first generation female college. My brothers were also first generation, and so for us, education is a way to succeed in life. We relied on financial aid to be able to get our degrees into our education, and because of that, it changed our lives and I have seen it change the lives of so many other people.It's one of the few investments in life that is an appreciating asset.It alters your life for the better as long as you plan and do it smartly.

Hayley Spira-Bauer: Yeah. Before we get into some of the challenges and pitfalls, let's talk a little bit about the members that are part of EFC. You mentioned they're nonprofits, they're very mission driven. Can you maybe give an overview of the types of organizations that are component to EFC and how they're focusing on helping families plan and pay for college?

Gail daMota: Sure. Because they really hone in on the needs of the individuals within the states that they serve. So it's very specialized for those needs. So for example, the member, we have Massachusetts MEFA, Massachusetts Educational Financing Authority. They will have very different needs in that area, new England than somebody for example in New Mexico and our member in New Mexico, all of our members provide support services that are for free. They're a great resource to help you think about going to college and planning for college. They'll help you with the FAFSA. They'll help you understand your award letters. They will help you analyze different loan options. They are there to serve the folks in their state, and they offer a wide variety of services. Many of them administer the state 529 College saving plans. Some of them administer the state grant and scholarship programs, and they themselves have scholarship programs, and they also, quite a few of them also offer a low cost private loans, much lower than the family, the Federal Direct PLUS Loan program, the Parent PLUS program, much lower interest rates and affordable repayment plans as well. They're kind of like a one-stop shop

[05:00] **Hayley Spira-Bauer:** And covers such complexity on the topic of getting to college and supporting your own financial success through to and through college. Can we jump in on FAFSA for a minute? There's been a lot of discussion about the transparency of FAFSA and the simplification of FAFSA. How does the Education Finance Council feel about the state of FAFSA today and where we're going from here?

Gail daMota: Last year was a fiasco.I've been in higher ed for over 35 years. I've never seen a year like we saw last year, and it was quite frankly shameful.It never should have happened, Okay. FAFSA was simplified through the FAFSA Simplification Act. It used to have quite a few more questions. It was very complicated, and the Act was intended to make it shorter and more simple and easier for families to complete. Last year was the launch of the new simplified FAFSA. Unfortunately, it was launched without being properly tested. The system crashed. Many people could not get their FAFSA out on time and states had to extend when they provided state grants, people were not finding out what financial aid they were eligible for on time. And so schools had to extend out when the deadline date was for accepting their offers. And it was probably one of the worst rollouts of a FAFSA that I have ever seen. So after this, we call it the FAFSA fiasco. After this mass, the Department of Education committed to make sure the rollout for the FAFSA this year is not wrought with all the problems that they had last year and some of those problems and frustrations last year kept people from completing the FAFSA. ([12:35](https://www.google.com/url?sa=E&q=https%3A%2F%2Fwww.rev.com%2Ftranscript-editor%2Fshared%2FYmWys_PpzQCVPtruPuaeXcalbhRXFlzcc4lBU3eqVapk1RwGeggO2wUpA48kOyEhrYJ8gimA67zmP8CV4seEWi9fueQ%3FloadFrom%3DDocumentDeeplink%26ts%3D755.68)): We are encouraging you to please fill it out this year. It is the starting point of all financial aid, both federal and state, and so it is really important that you do complete it. Right now, the Department of Education is putting it through a beta site right now, and it's being thoroughly tested. It is scheduled to launch by December one, but later this month, you'll be able to log in and apply for complete the FAFSA before December one through one of these beta sites, and you will not have to recomplete it later on. It'll be good. It'll be valid. And so we do encourage you to please fill out that FAFSA.

[13:00] **Hayley Spira-Bauer:** So just putting some hard numbers behind what you shared here about last year's rollout, Chalkbeat reported in July that the completion of FAFSA, which by the way I'm definitely saying it wrong, was down 11.6% and then that could have resulted in less kids going to college. Did we see a lower enrollment in college post-secondary degrees this fall as a result of that, or are we still waiting to find out?

Gail daMota: I think there was a bump down initially, particularly in the freshmen class and in some cases even for the returning students. I think there was also transfers from some of the more expensive colleges to lower cost colleges because people were just uncertain about what their financial aid was going to be and what their affordability was going to be. But I think it's going to level out. I think it will level out. We're just trying to make sure folks know that we don't expect a repeat of next year. And despite any frustrations they may have experienced or have heard about, the FAFSA still is the first place they need to start in terms of thinking about financing their education.

Hayley Spira-Bauer: A lot of our listeners are K-12 school leaders, superintendents, principals, and various personnel that are in the administrative roles in K-12 institutions. They're listening to this in many cases, and they are providing supports for students and families as they complete, or sorry, as they prepare for post-secondary life. How does EFC and some of the component nonprofits help schools as they enable families to jump into this next stage of their child's life?

[15:00] **Gail daMota:** Almost all of our members have attend the career nights and provide counseling for students to plan and help them figure out how to pay for college. Quite a few of them also provide materials and in some cases, training for high school counselors to be able to provide information to families as well. I would encourage 'em to go out to our website, efc.org, click on students and families, and then click on Get Expert Help that will identify the members we have in each of the states that can provide them with some assistance or at least help guide them to where they can get direct students to get free assistance.

Hayley Spira-Bauer: I'm thinking back to my days in K-12 institutions, and I remember our first graduating class of 12th graders as they were going to college. All of them were accepted to two or four year colleges. It was a huge accomplishment. We were a charter school in Harlem, and I'm thinking about a lot of the financial struggles that students encountered that didn't have to do with the actual tuition had to do with their living, their food, just everything else beyond paying for their bill that came from their institution. Can you talk a little bit about how some of the work that you're doing support students in the ancillary financial issues that they encounter?

Gail daMota: Sure. Those issues still exist. Unfortunately, they are still there and they are still deal. And so when they get a financial aid award package, it's not just tuition and the sticker price of tuition isn't necessarily what they pay. There is tuition discounting. It's very real, but part of that is the total cost of education, and it includes money for food and transportation and things that is part of the budget that is packaged for that. And in some states there is some grant money to provide for that gap. But it is something that we are advocating to see more happen, particularly in the states, particularly in some of the real rural communities where it's particularly difficult for them to get the transportation because perhaps the closest institution is over an hour away. So when they're looking to fund that unmet need, and that is you have your cost of education that is calculated by the institution, and then you get your aid. ([18:06](https://www.google.com/url?sa=E&q=https%3A%2F%2Fwww.rev.com%2Ftranscript-editor%2Fshared%2FTVUufdTvnHW61pUUhDQPLh60qNOmfDeyv29Ub5J8zRWnA810LXOlUQz2BDnmcgHtvBlxhMvsE4tnoB0KQz48FlUZ8ss%3FloadFrom%3DDocumentDeeplink%26ts%3D1086.18)): So the FAFSA will tell you if you're eligible for the Pell Grant, if you're eligible for the federal student loan program, and the state will take that data and also look at whether you're eligible for any grants or scholarships through the state. And of course, folks should always do scholarships, searches and not pay for 'em. They're free. Do a scholarship search and try to get as much scholarship money as they can. But then there's generally always a balance left, an unmet need left to fill that gap. And so that's where I think we could come in. We did a white paper on it, a little research brief, and we found that a lot of people were turning towards a very expensive for-profit private loans, or worse yet, they were paying for the unmet need with their credit cards at a 29% interest rate ([19:00](https://www.google.com/url?sa=E&q=https%3A%2F%2Fwww.rev.com%2Ftranscript-editor%2Fshared%2FHhG94gzhe9pOGUYCOlSnxQmYaic-LVI5vm8XNzg-wEc0KgqVzxqBQhcSIC1_m3Xqbgi08yV4WBrF9rbYywgUg-bAcfs%3FloadFrom%3DDocumentDeeplink%26ts%3D1140.18)): Or some schools were packaging them for the Federal Parent PLUS loan, which is a loan that the parent takes out. That PLUS loan is not held to the Truth in Lending Act standards, and it has a very high origination fee and it has a very high interest rate. And so we also tell folks to please check the nonprofit sector. They offer low cost student loans that don't have origination fees, they have favorable repayment terms and they have much lower interest rates. So do your homework and do your shopping, and that can help some of that gap fund that gap that they'll need.

Hayley Spira-Bauer: I'm going to switch direction a little bit and talk a little bit about policy here. I know that you mentioned briefly in a prior part of our call today that you did a webinar with the federal government talking about FAFSA. What policy changes are you eager at EFC to see at the federal level to improve access to affordable higher education?

[23:00] **Gail daMota:** First, we'd love to see the Pell Grant increased. It hasn't kept up with the cost of living, and I think it needs to be expanded. There needs to be more funds available for students with need. We also would like to increase focus on simplification. Sorry, focus on repayment. Simplification. Right now, the loan program is one of the most complex repayment plans that you can see. There's so many options. It's very confusing and difficult to navigate. We'd like to see that more simplified and easier to understand and navigate. We also would like to see the government held to the Truth in Lending Act with their loan programs, particularly the Parent PLUS Loan program that does not have a ability to repay component when determining eligibility for it. And so parents at times are taking on debt that they have no hope of being able to repay. ([25:06](https://www.google.com/url?sa=E&q=https%3A%2F%2Fwww.rev.com%2Ftranscript-editor%2Fshared%2F_YytnFKUh5s_XEbD2Z9ZaCeDF0vtLN9kUncWvKG0dj9cklZ92GVVunZK-gcUaL65yzXt4xabYFTwzB1jIA26CYsFAAQ%3FloadFrom%3DDocumentDeeplink%26ts%3D1506.17)): We feel that's predatory. We'd like to see colleges not be allowed to automatically package the Parent PLUS Loan program and have to at least reveal their APR and other terms of that loan. We would also like to see a standardization in the financial aid award letters that families receive so that it is easier for them to compare the different offers to actually determine how much that college is going to cost. As I stated earlier, tuition discounting does happen, and that can be a big part of the package. So sometimes a higher cost college can actually come in at a very comparable rate as a lower cost college. So having standardized terms and the way they present some of this information can make it easier for families to really compare. And we'd like to see the free aid that does not have to be repaid, completely separated out from the loan programs that the person is borrowing from, and so that there's an understanding that this isn't free. ([26:26](https://www.google.com/url?sa=E&q=https%3A%2F%2Fwww.rev.com%2Ftranscript-editor%2Fshared%2F5Bp2IErnUJ3d8GrLtfZd6B9zNKEDsCEe6odQQ6F0Zoze8are0967zDE-KwVcLYZFVQhBA6mlkyIA3Q3QDLPX9Y9u24I%3FloadFrom%3DDocumentDeeplink%26ts%3D1586.99)): You have to pay this part back. This part you don't have to repay, and I think that's important as well. The other thing we want to see, and we have been very supportive of is what's called career-connected learning, education-to-employment pathways. A lot of our members are looking for ways to help people take some alternative routes rather than just the traditional college. There are a lot of career programs, apprenticeship programs, internships that we would like to see more funding and availability for that, and also help students figure out upskilling. There's some of our members offer programs that will allow people to take some of the certificate programs that they need to upskill their degrees, and those specialty programs can really make a difference on their income as they move forward. So we'd like to see some support for those types of programs as well.

[27:00] **Hayley Spira-Bauer:** You gave basically a playbook here. I know we have a new administration coming into office in just few months, and so I'm curious if the work that you're doing today is going to be how you think it'll be impacted. Everybody's impacted right in all sectors in all ways. How you think the work you're doing today and even some of the topics that you just raised here as suggestions for policy at the federal level, how it might be impacted by the new administration?

Gail daMota: I think that's a question all of us are asking right now. I have not seen a definitive set of proposals from them. I do think we might see a little bit more of a focus on college accountability and a little bit more transparency on the return on investment in some of the colleges or programs. Maybe on a program level, I would imagine that there's been a lot of litigation surrounding loan forgiveness with the current administration. I would suspect that some of that is going to be resolved under the current administration. I don't know that they're going to focus so much on the forgiveness piece. We are hoping that they'll consider the simplification of the repayment plans. There's been some discussion of that as well, but right now we don't have enough information to know what's going to be coming down the pike. It's just what we're hopeful for, but a little bit of a stay tuned. Yeah, it's still very early in the process and there hasn't been a lot of discussion about it, so we're just kind of hopeful and following closely.

Hayley Spira-Bauer: Yeah, I read a piece the other day that was pretty just bold about saying Anyone who thinks they know what will happen, I think really has to wait. We need more information pretty much across the board to figure out even, I mean, I live breathe K-12 education, and there are some proposed potentially very dramatic changes happening in this space, but we don't know yet. So I'll be staying and waiting with bated breaths beside you, Gail, as we see how and what changes, come down the line and then react accordingly.

[30:00] **Gail daMota:** Yeah, exactly.

Hayley Spira-Bauer: Gail, the time has flown here. I feel like, again, I definitely feel like I learned a lot from this conversation, and I hope our audience has to. I'm confident that they have, but I do have to ask my final question here today, which is wild because the time has really gone quickly. But I'm curious, Gail, what advice you would give a student who is maybe doing this somewhat on their own is starting to embark upon the next phase of their journey, including post-secondary education, who might not have all the supports in place and from their family for a variety of reasons. What advice would you give them?

Gail daMota: Don't give up if it gets frustrating. There is funds out there, college or training, any type of education after high school is available to you, and there are ways to have that happen. I would encourage them, if they really don't know where to begin in the process, reach out to one of our members. Again, that help is free for them. And if nothing else, they can get guidance on where to get some of those support services. Even for example, like the transportation or the food insecurity that you spoke of earlier, they might be able to help direct them to other state agencies that could provide additional support for them. They can walk 'em through the FAFSA completion process. And even some of our members have support services for once they get into school to help navigate through that whole experience. Or they can help connect them with coaches that might be able to help guide them through that. So I would just say don't give up. It can be frustrating and scary. Do your homework. Check out different types of loan programs. If you have to go and borrow from the private sector, do your shopping, but reach out to one of our members for the free help. I think that you can't go wrong with getting free help. Right. Yeah,

Hayley Spira-Bauer: No. And first of all, I just want to say I really appreciate the work that you're doing at EFC and the work of your component nonprofits. I know from my own experience working in schools how difficult this process and confusing it can feel, but there are incredible resources as you've shared here today, that can make it easier for students to pursue and have choice. I think more than anything in education, I want students to have choice, and it sounds like you're doing the work to ensure equitable choice for students all over the US. Thank you for that. And thank you, Gail.

Gail daMota: Thank you for giving me this forum to talk about the great work our members do. And again, colleges is affordable, higher education, post-secondary education.It's there for you and it's still worth it.

Hayley Spira-Bauer: Oh, I love that. As an ending. I'm going to stop right there. It's still worth it. Gail, thank you so much for spending your time with us today. It was a pleasure having you on the podcast.

Gail daMota: Thank you.