Office of Planning and Budgeting

The College Board announced today that it would begin the process of overhauling the SAT. While no details have been published yet, David Coleman, the new president of the College Board, has indicated that the test would be adjusted to more closely mirror—and better prepare students for—the expectations of a college classroom. In the past, Coleman has been critical of the SAT writing section, introduced in 2005, saying that the opinion-based writing style the test demands is not comparable to the evidence-based style required in college. Coleman also claimed that changes to the test would improve the transition from high school to college, better align the test to the core high school curriculum, and increase equity and fairness. 

Some experts believe the SAT is being revamped because of increased competition from the ACT. This year, for the first time since the tests were created, the number of students taking the ACT exceeded the number taking the SAT by about 2,000 students. The ACT has traditionally been favored in the Midwest, and by students who do well in rigorous courses but have more trouble with high-stakes aptitude tests. Now, many students take both tests, and students from all regions are considering the ACT as an option. The SAT overhaul may therefore be an effort to make the test more relevant and re-establish the SAT’s dominance in the college admissions testing field.  

Check out Inside Higher Ed’s article on the potential new SAT, or read Coleman’s letter for more information.

The National Student Clearinghouse recently released an interactive map that illustrates the experience of students who were first time freshmen in 2006. The map shows six-year graduation rates broken down by institution type, student age, and part-time or full-time status. Washington’s level of college completion was higher than average—Washington’s six-year graduation rate for the 2006 first-time freshman cohort, across all types of institutions, was 66.3 percent, while the national average was 60.6 percent.  Interestingly, full-time students at four-year public institutions in Washington had a much higher six-year graduation rate, at 86.4 percent, compared to 81 percent nationwide. Unfortunately, Washington students who enrolled part-time had completion rates below 19 percent at four-year publics and below 13 percent at two-year schools. Furthermore, non-traditional students (first-time freshmen 25 years old or more) were much less likely to graduate in six years than their younger counterparts.

To learn more, or to see how Washington compares to the rest of the United States, check out the interactive map featured on the Chronicle’s website or read the NSC’s report.

Although there are many types of financial aid, it is typically awarded on the basis of either need or merit. Need-based aid is largely a result of a federal calculation and is somewhat predictable:  to ensure access, students with more financial need receive more financial aid of various forms. And, although there is no universal definition of the merit aid, it traditionally describes scholarship money used to attract top academic achievers. However, Kevin Carey, director of education policy at the New America Foundation, asserts in a recent commentary for The Chronicle that a significant portion of merit aid is actually used to attract “academically marginal students with wealthy parents.”

Carey cites evidence of this trend. A 2011 U.S. Department of Education study found that of the full-time students at four-year institutions who received “merit” aid in 2007-08, almost 20 percent had entered college with a combined SAT score of less than 700 and 45 percent had scored below 1000 (out of a possible 1600). The study also shows that although the percentage of private college students receiving need-based aid showed a slight decline from 1995 to 2007 (going from 43 to 42 percent), the proportion receiving “merit” aid nearly doubled during that time span (from 24 to 44 percent).   At public universities, the percentage of students getting need-based aid increased from 13 to 16 percent, but the growth in merit aid outpaced it, going from 8 to 18 percent.  Thankfully, as discussed in a previous post, a group of private-college presidents has been calling on its peers to limit the amount of financial aid awarded on criteria other than need.

The National Association of State Student Grant and Aid Programs’ (NASSGAP) Annual Survey Report on State-Sponsored Student Financial Aid and Brookings’ Beyond Need and Merit: Strengthening State Grant Programs provide corroborating evidence that merit-aid is becoming more prevalent, while need-based aid is diminishing.  However, neither discusses the academic strength of the students receiving merit aid.

So why is this happening?  If a college offers good scholarships and financial aid packages to an affluent family, it may incentivize them to choose that school.  Even though that family’s son or daughter may be a low academic achiever who has a decent chance of dropping out, it is still lucrative for the school to attract those students.  Noel-Levitz, a higher ed consulting firm, revealed that one of its client colleges was able to generate over $10,000 more per low-achieving student than they could per top-achieving student.

Carey hopes that as taxpayers, the news media, and affiliates of universities become aware of this trend, their vigilance will keep institutions in check.

Many of the white papers sponsored by the Bill & Melinda Gates Foundation’s Reimagining Aid Design and Delivery project have focused on modifications to the Pell program and/or student loans and repayment (including the two I summarized previously, found here and here). However, the white paper released on Wednesday by the Center on Postsecondary and Economic Success takes a different approach.  It argues that by making tax-based student aid more beneficial to low and middle-income students, the federal government could save billions of dollars, direct those savings to the Pell program and improve the financial aid system as a whole.

Current tax-based financial aid provides high-income families with much larger tax deductions, since the value of the deductions is linked to a family’s marginal tax rate. As The Chronicle notes, “a $100 tax deduction, for example, is worth early $40 to a high-income household but only $10 to a lower-earning family.”  To remedy this issue and refocus the benefits of aid onto low-income families, the Center proposes increasing the refundable portion of the American Opportunity Tax Credit (AOTC). The Center also recommends eliminating nonrefundable tax credits, such as the Lifetime Learning Credit (LLC), since they do not benefit households that pay no income tax (i.e. low-income families).

The table below shows the percent distribution of student aid by type and income category in 2013. As you can see, Pell Grants (in blue) primarily benefit low-income families, whereas tax-based student aid (in purple) does the opposite.  Another interesting table from the Tax Policy Center can be found here.

The paper includes three alternative proposals for making tax-based aid more helpful to low-income students and simultaneously boosting college access and completion.  It also discusses three options for improving performance measures used in student-aid policies.

On Tuesday, February 12, President Obama discussed higher education briefly in his State of the Union Address. The President repeated a popular refrain, calling on colleges to restrain soaring tuition costs in light of the fact that Americans with some higher education are more likely to maintain steady employment and earn a comfortable income (or, as the President declared, be part of the middle class). As have many others when discussing this topic, the President juxtaposed college access and affordability against college costs without making the important connection to overall funding. As is clear at the University of Washington (UW) and many of its public peers, public funding (both state and federal) that traditionally provided the financial backbone for such institutions has become unstable, showing precipitous declines. It is in this context that tuition and other forms of auxiliary support have increased to maintain some semblance of consistent funding.

After having evaluated the scorecard,  the following two key points are worth noting and exploring.

  1. Obama’s suggested HEA reauthorization policy that would tie federal financial aid to “affordability” runs the risk of disenfranchising students studying in states that cannot or will not support higher education. It may also force institutions in those states to reduce the quality of their educational offerings in order to enable their students to maintain access to federal aid dollars.
  2. Although the UW looks relatively good in comparison to other institutions now, we cannot be comfortable with the comparison because we were advantaged by the particular time period for which data were available. The UW is vulnerable to faring poorly in these comparisons in the future as data from the past couple of years, in which we were forced to increase tuition at higher rates in order to compensate for dramatic reductions in state support, are used.

Please see a full Planning & Budgeting brief on line.

After many years, immigration reform seems to be back on the table: both President Obama and Congress have indicated that they intend to take on immigration reform this year. A bipartisan group of senators released their draft of an immigration bill, which focuses on increasing border security, giving DREAMers (children brought to the United States illegally at a young age) and agricultural workers a faster path for citizenship, and fixing the administrative processes that make getting visas cumbersome. President Obama released a similar plan, and last summer issued an executive order giving DREAMers temporary relief from deportation.

In Washington State, two bills have been proposed to reform Washington’s policies toward undocumented students. Washington’s undocumented student population has increased in recent years, as undocumented workers form a large part of the state’s agricultural industry. Currently, undocumented students in Washington are eligible for in-state tuition as long as they graduate from a Washington high school and have lived in the state for two years.  Republicans and Democrats in the Senate, however, have introduced competing bills concerning undocumented students who want to pursue higher education at Washington’s public colleges and universities. Don Benton, a Republican from Vancouver, introduced SB 5087, which would prevent undocumented students from qualifying for resident undergraduate tuition, even if they graduated from a Washington State high school and have lived in the state for many years. SB 5655, introduced by Ed Murray, D-Seattle, takes a different approach, making undocumented students eligible not only for resident tuition, but also for the State Need Grant and the College Bound Scholarship. Neither bill has yet been scheduled for a hearing. The first legislative cutoff date is February 22nd, after which all bills that have not been scheduled for a hearing are unlikely to progress.  

To read more about the President and Congress’ plans for immigration reform, check out Crosscut’s analysis here and here.

Aligning the Means and the Ends: How to Improve Federal Student Aid and Increase College Access and Success” is the Institute for College Access & Success’s (TICAS) white paper for the Reimagining Aid Design and Delivery project, sponsored by the Bill & Melinda Gates Foundation (see our recent post for more information). Some of the report’s suggestions have been echoed in other white papers and publications, such as simplifying the federal financial aid application process, making the Pell program a mandatory federal budget item, and fostering more understandable and comparable reporting of college costs. The paper’s others recommendations include:

  • Holding colleges accountable not only to the percentage of student borrowers who default on loans (represented by the currently-used cohort default rates), but also to the percentage of students who take out loans in the first place. TICAS proposes denying federal aid to colleges that score below a certain threshold on a combined index of the two measures. The group also recommends increasing federal aid to colleges scoring above a certain threshold. The amount of additional aid would be determined by how much Pell funding their students receive.
  • Shoring up the Pell Grant. TICAS proposes doubling the maximum Pell grant award, to about $11,000 a year, and extending the eligibility timeframe from 6 years to 7.5.
  • Creating a single federal student loan with no fees and a fixed interest rate. The rate would be low while students are in school and would rise, by a fixed amount with a cap, when they leave.
  • Streamlining repayment plans, replacing multiple options for income-based plans with only one. Delinquent borrowers would automatically be placed in the income-based plan; but, a non-income-based option would be available to other borrowers. TICAS wants to leave borrowers with a choice, but argues they need real counseling—not just disclosure—to help them decide.
  • Eliminating higher education tax benefits and sending the savings to Pell Grants and monetary incentives for states and colleges.  If tax benefits are preserved, the group recommends restructuring them into an upgraded American Opportunity Tax Credit aimed at helping low- and moderate-income students.

TICAS’ paper outlines a few ways the government could fund these proposals in addition to potentially eliminating higher ed tax benefits.  As The Chronicle nicely summarized, those options include, “limiting the benefit of itemized tax deductions, taxing private equity and hedge-fund income like other income, and removing or reforming tax-exempt bonds for private nonprofit colleges.”

Back in November, the American Council on Education (ACE) revealed a “wide-ranging” project to evaluate MOOCs’ academic potential and determine whether some MOOCs should be eligible for college credit. Our previous blog post provides additional background information. In the 11 weeks since that announcement, ACE reviewed five MOOCs offered by Coursera (one of the largest MOOC providers) and, today, announced it has recommended all five MOOCs for credit.

The endorsed MOOCs are:

  • “Pre-Calculus” and “Algebra” from the University of California at Irvine;
  • “Introduction to Genetics and Evolution” and Bioelectricity: A Quantitative Approach” from Duke University; ” and
  • “Calculus: Single Variable” from the University of Pennsylvania.

Courses were reviewed on their substance, quality of educational experience, and the value and security of their tests and assessments tools. To meet standards for the latter, Coursera established a series of identity verification measures and partnered with a remote monitoring service called ProctorU. Some MOOCs use peer assessments to score student work, a method which has been criticized for uncertain reliability. But given the STEM focus of these five courses, they all rely on objective scoring systems rather than peer assessments.

Although ACE’s validation of the MOOCs is noteworthy, it’s up to the Council’s 1,800 member colleges to individually decide whether they’ll actually offer credits for the courses.  For now, students at Duke, Irvine and Penn will not receive credit for taking their institutions’ ACE-approved courses. Inside Higher Ed reports that UC-Irvine does not consider its MOOCs to currently be worthy of its credit because neither the learning environment nor the academic commitment of a course’s thousands of students can be controlled. “Those anybodies can influence negatively the learning environment of students who are serious about taking it,” said Gary Matkin, UC-Irvine’s dean of continuing education. Similarly, Duke believes its traditional courses offer “an entirely different kind of educational experience” than MOOCS, including “substantial interactions between students and the faculty member.”

While other colleges decide whether to accept Coursera’s MOOC certificates for credit, ACE is reviewing courses from Udacity (another MOOC provider) for possible credit recommendations.

As The Seattle Times reported today, “For the first time ever, three Washington colleges swept the nation in their respective size categories for having the most participants in the Peace Corps.” The UW topped the large-schools list with 107 volunteers (tied with the University of Florida), Western Washington University led the medium-schools list with 73 volunteers, and Gonzaga University came in first on the small-schools list with 24.

Carrie Hessler-Radelet, acting director of the Peace Corps, traveled from D.C. to attend a news conference here on campus today. She personally congratulated the three schools on their rankings and said the achievement reflects Washington’s dedication to innovation and helping the poor.

The UW also topped the large-schools list between 2007 and 2010.

The Gates Foundation has joined the nation’s financial aid conversation and is attempting to rethink how policies and practices can not only help maintain access (in the face of flagging state support and rising tuition prices), but also help students succeed. In September of last year, the Gates Foundation launched its Reimagining Aid Design and Delivery project, which provided 16 organizations with funding to develop and publish innovative financial aid strategies aimed at encouraging college completion. One of the 16 organizations, the New America Foundation, recently released its white paper, which recommends bolstering Pell Grants, limiting student loan options, and removing higher ed tax benefits.

To improve “both the effectiveness and sustainability of Pell Grants,” the New America Foundation recommends:

  • Making the Pell program a mandatory federal budget item;
  • Increasing the maximum grant faster than is currently scheduled while restoring summer grant support;
  • Limiting Pell eligibility to 125 percent of a program’s length;
  • Providing additional federal funding to public and private-nonprofit colleges that have a large proportion of low-income students and high graduation rates; and
  • Requiring four-year colleges that enroll a small percentage of low-income students and charge more than $10,000 per year (after financial aid) to match some of the Pell dollars they receive with need-based aid from institutional funds.

The plan, which is intended to be “budget neutral,” recommends that the Pell Grant changes be funded by:

  • Eliminating the American Opportunity and Lifetime Learning tuition tax credits, tax-advantaged savings plans for education, and the student loan interest deduction;
  • Ending the Supplemental Educational Opportunity Grant program; and
  • Encouraging borrowers to refinance old student loans into direct lending.

The authors also recommend consolidating federal student loan programs into a single, “enhanced” Stafford Loan sys­tem as a means of simplifying the student loan system and reducing the potential for default. This would involve:

  • Automatically enrolling all federal student loan borrowers in income-based repayment plans;
  • Eliminating subsidized undergraduate loans;
  • Setting student loan interest rates via a fixed formula that adjusts to market conditions;
  • Ending the Grad PLUS and Parent PLUS loan programs;
  • Increasing borrowing limits slightly to $40,000 total for undergrads and $25,500 per year for grads; and
  • Limiting federal student loan eligibility to 150 percent of a program’s length.

Although some (if not many) of these ideas are politically unpopular, the authors argue that their recommendations must be implemented together in order to be effective. However, it seems more likely that Congress will cherry-pick specific suggestions to pursue or perhaps ignore the report’s policy proposals altogether. The Gates Foundation hopes their project will, at the very least, stimulate discussion about reforming financial aid.

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