Student-Aid Administrators Try to Repair Their Image

After loan scandals, group turns to outsider for new leadership

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By KELLY FIELD

Washington

Almost 30 years ago, The Chronicle described the National Association of Student Financial Aid Administrators as the most powerful higher-education lobbying group in Washington.

Today not even the association's new president would use that superlative.

While Nasfaa remains respected for its technical expertise, its influence on Capitol Hill has waned. Stung by last year's student-loan scandal, it is struggling to repair its reputation while reasserting itself in national policy debates.

Now the association's first new president in more than three decades is on a mission to restore the group's former prominence. Philip R. Day, who takes over for Dallas Martin in March, says he wants Nasfaa to rethink its relationships with lenders and re-establish itself as the premier advocacy organization for student aid.

"People have been wondering where we are," said Mr. Day, now chancellor of City College of San Francisco, in an interview earlier this month. "We need to ramp it up."

But some lobbyists say change won't come easy at an association that has had the same leader for 32 years. Many of Nasfaa's employees and members have worked only with Mr. Martin, and it is unclear whether they will embrace an outsider like Mr. Day, who has led four community colleges but never worked in a student-aid office.

Others wonder whether the association will have the resources necessary to expand its lobbying. The group has been operating under a smaller budget since it scaled back lender sponsorships in response to pressure from Attorney General Andrew M. Cuomo, of New York, whose investigation into conflicts of interest in the student-loan industry led to the firing or resignation of six student-aid administrators.

Still, most everyone agrees that Mr. Day will bring energy and a fresh perspective to Nasfaa, which has long been led by former financial-aid officials.

"It's sort of a new era for Nasfaa," said Becky Timmons, assistant vice president for government relations at the American Council on Education.

Rethinking Ties With Lenders

In the wake of last year's investigation, Nasfaa has already cut some ties with the embattled student-loan industry, adopting ethical guidelines that ended lender sponsorship of social events and meetings at the association's annual conference and cost Nasfaa $80,000 in revenue.

Lenders continue to be allowed to pay for sessions promoting their products to conference attendees. Lenders can also be members of Nasfaa, though they don't have voting rights and cannot sit on its policymaking committees. Lenders currently make up 2 percent of Nasfaa's membership and provided $162,400, or 4.4 percent, of its revenue from membership dues in 2007.

Critics say Nasfaa should do more to distance itself from lenders, and Mr. Day agrees.

"We've taken a hit on this and it's made us wary, and when that happens, you reassess," Mr. Day said.

While Mr. Day was careful to stress that he needs to learn more about Nasfaa's relationship with lenders, he said, "It's something I don't feel 100 percent comfortable with."

John Dean, special counsel to the Consumer Bankers Association, said his group's members have been expecting Nasfaa's new leader to establish "more of an arm's-length relationship with lenders" and that he is not troubled by that direction.

But the attorney who spent last year helping Nasfaa defend itself from allegations concerning abuses, Sheldon E. Steinbach, of the Washington-based Dow Lohnes firm, said Nasfaa has already made enough changes in its relationship with lenders.

"For 20 or 30 years, yeah, they got bought by the [lending] community," Mr. Steinbach said, referring to instances in which college financial-aid administrators accepted airfare, hotel rooms, and other personal gifts from the lenders they recommended to their students.

But now, Nasfaa has adopted a "code of conduct" that eliminates virtually any gifts by lenders to financial-aid administrators, and requires that any donations by lenders to Nasfaa are listed without publicly identifying the amount, he said.

"He's walking into a cleaned-up shop," Mr. Steinbach said of Mr. Day.

Lobbyists Sidelined

In some ways, the decline of Nasfaa's influence in Washington reflects the general struggles of many higher-education groups, which are having a harder time making their voices heard on Capitol Hill, several Washington lobbyists said.

"Increasingly, it seems that Congress just marches to the beat of its own drummer," said Patricia Smith, policy scholar in residence at the American Association of State Colleges and Universities, who has worked in Washington for 30 years.

Congressional observers say Nasfaa's star began to fade in the 1990s, with the advent of direct lending. The addition of a new federal loan program divided Nasfaa's members into often-warring factions, with some direct-loan institutions forming a splinter group.

"They became less able to have a unified voice," said Jane Oates, a former longtime aide to Massachusetts Sen. Edward M. Kennedy, a Democrat, who now works as executive director of the New Jersey Commission on Higher Education.

She was quick to add, however, that "when they could talk about things as a unit, they were still the most competent voice on student-aid packaging issues."

While the battles over direct lending have died down in recent years, Nasfaa's withdrawal from public-policy debates has continued. Although Nasfaa remains well represented on the rule-making panels that hammer federal laws into regulations, it has become less visible on Capitol Hill, focusing instead on providing training and regulatory assistance to its 2,860 members.

One aide on the House education committee said that the last time she spoke to Nasfaa was a year ago, during the chamber's consideration of legislation to halve the student-loan interest rate. Fellow lobbyists and Congressional staff members say the organization was missing from many of the recent meetings on the renewal of the Higher Education Act.

Larry Zaglaniczny, director of Congressional relations for Nasfaa, said his association has made "no conscious decision to scale back" its lobbying. He said Nasfaa attended all the meetings it was invited to, though it may not have been notified of some meetings on the Higher Education Act.

Still, he said, "you can always do better. There's no question."

The Congressional aide said the committee has made no attempt to exclude Nasfaa from meetings and said she would welcome more interaction.

But some lobbyists believe that the association has become persona non grata on Capitol Hill as a result of the recent student-loan controversies.

"To some extent, the association became radioactive," said one higher-education lobbyist who wished to remain anonymous for fear of angering Capitol Hill staff.

Thomas Culligan, an aide to Rep. Thomas E. Petri, a Wisconsin Republican and member of the House education committee, said Nasfaa "has some serious work to do to restore its credibility."

An Outsider

The decision by the association's search committee to hire Mr. Day came as a surprise to many Nasfaa members and higher-education lobbyists. They had expected the group to choose an insider like Mr. Martin, who had worked in both college financial-aid and student-services offices.

George Chin, a nationally prominent financial-aid director who was nominated for the job, says members were divided over whether the association should choose "one of them" or "someone from the outside with managerial skills."

Mr. Chin, who plans to retire soon from the City University of New York, said Mr. Day's experience as a college president will be a plus.

"At the end of the day, Phil Day can probably do a far better job of managing an organization than I could," he said.

But some lobbyists privately wondered whether Mr. Day, who says he has never attended a Nasfaa meeting, has the technical know-how to lead an association that has built its reputation on its ability to explain complicated federal policy. Mr. Martin, in contrast, is known for his encyclopedic knowledge of higher-education law.

Mr. Day readily acknowledges that he is hardly an expert on the intricacies of federal student aid. And he says he has no intention of becoming one.

"One of the questions I got in my interview is 'How long do you think it will take you to get up to a level of technical speed?'" Mr. Day said. "I said, 'I hope never.' Because I think that's not what this institution needs now. What they need is somebody who can advocate and focus on issues at the 10- to 15,000-foot level."

Mr. Day promises Nasfaa won't abandon its "core job" of educating financial-aid administrators. He just wants the association to engage more on "bigger picture" debates over issues like how to rein in college costs, improve retention and graduation rates, and increase accountability. He says Nasfaa has for too long relied on others, particularly the American Association of Collegiate Registrars and Admissions Officers, to speak for it on these crucial public-policy matters.

"They seem to have allowed others to do their bidding for them," Mr. Day said.

While Mr. Day has never worked in government relations, he has served on the boards of the American Association of Community Colleges and the American Council on Education, and led the policymaking committee of the community-college association.

He has also lobbied several state legislatures to increase their budgets for higher education. He is the third-highest-paid community-college leader in the country, earning $403,441 per year. Nasfaa would not say how much Mr. Day will be paid in his new job.

David S. Baime, vice president for government relations at the community-college association, describes Mr. Day as an energetic, driven, and driving person who will not "unreflectively accept the status quo."

"He is a doer," Mr. Baime said. "His fingerprints will be on things."

Paul Basken contributed to this article.