Office of Planning and Budgeting

It will soon be easier for students and parents with adverse credit histories to qualify for federal PLUS loans.  Under new the Education Department’s (ED’s) new rules – which were released on Wednesday and are expected to take effect in March – ED will review only two years (rather than five) of a prospective borrower’s credit history to determine loan eligibility, and will excuse up to $2,085 in certain types of delinquent debt when running initial credit checks.

ED agreed to revisit the rules following pressure from many colleges and families who were angered after ED tightened the PLUS loan standards in 2011. The 2011 changes resulted in thousands of sudden loan denials and, consequently, enrollment declines and revenue losses at some institutions. According to Inside Higher Ed, department officials expect that the new standards will allow an additional 370,000 applicants to pass the initial credit check for PLUS loans.

Representative Chaka Fattah – Pennsylvania Democrat and co-chair of the Congressional Black Caucus Education Task Force – lauded the new standards; however others connected with historically black colleges have criticized ED for not moving quickly enough.  Meanwhile, some policy analysts and consumer advocates argue that ability-to-pay criteria are necessary to prevent borrowers from being saddled with unmanageable debt, and that the new rules don’t do enough to safeguard against default.

If defaulting becomes an issue as a result of the new standards, the silver lining is policymakers will at least know about it and, hopefully, be able to do something. As part of ED’s changes to the PLUS program, the department will begin calculating and publishing annual cohort default rates for institutions receiving PLUS loans.[1] That information should help illuminate whether borrowers are getting in over their heads.

Ultimately though, as EdCentral points out:

“The Department must do a better job reaching out to parents and helping them understand the terms and conditions of their loans, including the ability to repay their loan as a percent of their income if they consolidate into a Federal Direct Consolidation Loan. Better counseling won’t solve all the issues with the PLUS loan program. But it’s a start until we can ensure PLUS loans are a safe product for families and we can improve access to better aid options like grants for low-income families.”



[1] ED currently only calculates cohort default rates for colleges that receive Stafford loans.

The U.S. Department of Education (ED) recently released its annual update on federal student loan cohort default rates (CDRs), which measure the frequency with which student borrowers at all levels (undergraduate, graduate, etc.) default on their federal loans. Although the UW’s CDR rose while the national CDR declined, the UW’s rate still remains well below that of the nation.

ED is in its first year of using only the more accurate three-year CDR measure – as opposed to the two-year CDR. Thus, this year’s report only includes the FY2011 three-year CDR, which represent the percentage of student borrowers who entered into repayment in FY2011, but failed to make loan payments for a 270-day period within three years of leaving school.

The Department provides breakdowns of its data by institution type, state and school. Here are some key findings:

  • The national three-year CDR declined from 14.7 to 13.7 percent overall.
  • The three-year rate decreased over last year’s rates for all sectors:
    • Public institutions decreased very slightly from 13.0 to 12.9 percent,
    • Private nonprofits decreased from 8.2 to 7.2 percent, and
    • For-profits’ whopping 21.8 percent rate decreased to 19.1 percent.
  • The UW’s three-year CDR increased slightly from 3.9 to 4.3 percent, but this is still nearly 10 percentage points below the national average

While this is good news, many students still struggle to afford ever-increasing tuition fees and/or to repay their student loans. The UW reaches out to our former students at risk of default on their Stafford Loans and helps identify federal repayment options that could benefit them. Former UW students who are in default or experiencing difficulties repaying their loans can contact the Office of Student Financial Aid for assistance (osfa@uw.edu, 206-543-6101). Students can also visit studentloans.gov to explore their repayment options.

On Monday, Kaplan University launched “Open College” which is intended to help adult students earn a Bachelor of Science degree in Professional Studies by offering credit for a combination of competency-based course assessments, experiential learning, and external exams (AP, IB, CLEP, DSSTs, etc.). Open College will include free online courses and mentoring to help prospective students identify and organize prior experience that could qualify for college credit. Once students enroll and have their prior skills assessed for credit, they will pay a subscription fee of $195 per month, an assessment fee of $100 per each of the remaining 35 “course equivalents” needed to earn a degree, and a $371-per-credit fee for a final six-credit capstone course.

According to The Chronicle:

“A student entering with no credits who pursued the program for 48 straight months could earn a bachelor’s degree for about $15,000. Students who earned credits based on their prior experience would end up paying less than that. Officials expect that such students would typically enroll with about 60 credits, take 24 to 30 months to complete a degree, and pay about $9,500.”

Kaplan’s administration sees Open College as the newest candidate in the hunt to create a $10,000 bachelor’s degree and as a new, flexible way for adults to advance their career.  While Open College’s structure and pricing may work well for some students, a few things should be considered before rushing to enroll in Open College.

First, students at Open College will receive little, if any, financial aid.  Open College’s website says it will not participate in federal student aid programs; it also gives no indication that students will be eligible for state financial aid or that it will offer any form of institutional aid. Therefore, although comparisons are difficult and potentially problematic, it’s worth noting that in 2013-14, resident students at public four-year institutions paid an average of $3,120 in annual net tuition and fees (published tuition and fees less grant and aid scholarship from federal, state or institutional sources).[1] If we assume, as Kaplan did, that a student entering with no credits would take 48 months to earn a degree and that tuition and fees would not increase during those four years, then a resident student who enters a public four-year with no previous credits would pay roughly $12,480 in tuition and fees to earn a four-year degree, compared to a similar student at Open College who would pay $15,000. Of course, this total does not consider the cost of rent or room and board, which can be very expensive; but neither does Open College’s estimate, even though a student earning a degree through their program would presumably still be spending money to eat and live while earning a degree.

Second, employer doubts about the quality of an online degree may impact graduates’ employability. According to the results of two surveys released last fall, only 41 percent of hiring managers believe that online programs are of the same quality as traditional, in-person programs.

The Equity Line, among others, highlights how the recent NYT rankings of colleges by enrollment of Pell Grant recipients is a nice gesture, but lacking in many ways. The University of Washington (and most public institutions!) was not evaluated as part of the effort, though one-quarter of its undergraduate population received Pell Grant funding last year.

Equity Line contributor Jose Luis Santos notes that, “…the rankings only capture a tiny number of undergraduates enrolled in four-year colleges who receive Pell Grants (just 1.6 percent!), leaving out more than 4.2 million students. This distorts the picture of low-income enrollment, and it distracts the public and policymakers from the real problems with higher education access and success.”

US News & World Report released its much anticipated set of annual rankings this week; the UW fared better this year. Additional analysis about the UW’s position in US News will be posted to the blog as it becomes available.

Posted by Corrin Sullivan, Intern at the Office of Planning & Budget and Educational Policy student through the month of July 2014. My focus is on higher education access and policy. I look forward to sharing newsworthy events in the higher ed world with you.

Let’s start with a quick summary of two articles from this past week in higher ed news.

Selected California Community Colleges May Soon Offer a Baccalaureate Degree

The California State Assembly Committee on Higher Education approved Senate Bill 850 (SB850) this past week, which launches a pilot program offering fifteen community colleges the opportunity to offer a four-year degree program as soon as January 1, 2015. The Community College Board of Governors and chancellor, in consultation with the California State University (CSU) and University of California (UC) systems, will consider a variety of colleges and select fifteen districts based on four-year degree proposals that meet a variety of criteria; most notably, degrees not available at any of California’s four-year schools and that address the state’s unmet workforce needs. Although the UC system has yet to comment on SB850, California’s Community College Chancellor, Brice Harris, commends the Assembly Committee’s approval of legislation stating that it has the potential to broaden higher educational access and offer more job training opportunities for Californians.

North Dakota Board of Higher Education Unanimously Approves Budget Requesting System-Wide Tuition Freeze

The North Dakota Board of Higher Education recently approved its biennium budget request, which asks for an approximate 14 percent increase in funding in exchange for freezing tuition rates among its eleven colleges and universities for the coming biennium (2015-17). Based on a new funding formula instituted in the 2013 legislative session that relies largely on credit-hour completion, the budget’s $774 base request reflects a $94 million dollar increase from the previous year’s request. The $94 million dollar increase includes a $49 million dollar request to cover operating costs associated with additional credits taken at the state’s colleges and universities. In addition to the $94 million base increase, the board has also requested $9.5 million dollars to cover sums “students would have to cover without a freeze,” compounded with several smaller requests to meet institutional equipment and staffing needs. The Board states that they will freeze tuition rates at all colleges and universities from 2015 through 2017 if and only if, the legislature agrees to fully fund the base budget and increase employee salaries and benefits. Noting affordability as an issue in declining student enrollment numbers, the freeze aims to decrease tuition so that rates are competitive with the state’s regional counterparts.

While the Board has frozen tuition rates at the state’s two-year schools for four of the past six years, this request to freeze tuition for all North Dakota higher education institutions is unprecedented. The budget is before Governor Jack Dalrymple, pending recommendations, prior to advancing to the state’s legislature.

As the UW’s Office of Federal Relations reported on their blog, yesterday Senate Democrats released plans to reauthorize the Higher Education Act (HEA). Their proposal focuses on four main goals:

  • Increasing affordability and reducing college costs for students,
  • Tackling the student loan crisis by helping borrowers better manage debt,
  • Holding schools accountable to students and taxpayers, and
  • Helping students and families make informed choices.

In addition, today the House Committee on Education and the Workforce introduced reauthorization-related bills of their own, including:

For more information, check out the Federal Relations blog and a recent article by EdCentral.  We’ll post more information on OPBlog over the coming weeks.

On Monday, The Equity Line posted the following piece about how the U.S. compares to the other World Cup countries in terms of degree attainment.

More Than Just a Game: Degree Attainment Around the World (Cup)

Posted on June 16, 2014 by Kaylé Barnes and Joseph Yeado

“Defying commentators, critics, and prognosticators, the U.S. has already performed quite well against the other nations competing for the 2014 World Cup. Yes, the competition on the field only started last Thursday and the Yanks have yet to kick things off today, but the U.S. is beating most of the competition in another competition: college attainment.

Among the 32 teams competing in Brazil, the United States ranks third for the percentage of adults with a 2-year or 4-year college degree.

It may look like America has trounced the competition, but there are two important facts that put these figures into perspective.

In 1990 the United States soccer team qualified for its first World Cup after a 40-year drought. Though it failed to win a game and was sent home, the U.S. was ranked first in the world in four-year degree attainment among young adults. Since that time, our men’s national soccer team has steadily improved, but our college attainment rates have not. The United States now ranks 11th among developed nations for young adults with college degrees.

The U.S. may compare favorably to other World Cup countries, but the data still mean that only 2 in 5 adults have some kind of a college degree. In fact, just 59 percent of students at a 4-year college will earn a bachelor’s degree in six years – not to mention that black and Latino students complete at even lower rates (40 percent and 52 percent, respectively). Ranking well relative to other countries doesn’t mean much when we are leaving so many of our students behind.

Third place is not good enough. More important to our country’s well-being than winning the World Cup is whether we have an educated population prepared to face the challenges of the new global economy. Higher education leaders and policymakers should look to the example of the colleges and universities across the country that are leading the way to improve student success and proving that low graduation rates are not inevitable.

The expectations of American soccer supporters have risen steadily since 1990, and millions are tuning in to watch our boys play in Brazil. It’s time that we raise our expectations about college attainment and the equity in attainment levels.

Only then can the United States realize its gooooooaaaaals of being first in the world on the fútbol pitch and in degrees.”

Here’s a quick roundup of some of this week’s headlines in higher ed news.

Report Argues Gainful Employment Rules Could Hurt For-Profits’ Students 

According to a study commissioned by the Association of Private Sector Colleges and Universities, up to 44 percent of students at for-profit colleges could lose access to federal financial aid under the latest “gainful employment” proposal. The authors of the report—Jonathan Guryan, an economist at Northwestern University, and Matthew Thompson of Charles River Associates, a consulting firm—argue that since for-profits tend to serve students who have fewer financial resources and less academic preparation, the proposed rules would leave students without other options. Additionally, the report asserts that the rules should not be based on short-term measures of earnings and student debt, as such metrics tell an incomplete story. The Department of Education released the proposed rules in March. The window for public commenting closed on Tuesday.  This report was part of a final lobbying campaign by both sides.

Startups Playing Matchmaker with Students and Employers

Several startups have begun serving as matchmakers between community college students and employers. One of the startups, called WorkAmerica, states that it will provide students with a legally binding job offer before they enroll at one of the startup’s partner colleges. WorkAmerica has already started placing students into trucking programs, and plans to expand to other “high churn” employers, such as those that hire welders, IT technicians, and medical assistants.  Another similar startup, called Workforce IO, connects employers with “trainers”—which can include community colleges, in addition to nonprofits and other mentoring agencies. The company uses a library of 275 job-skills “badges” to vouch for its workers’ skills. In an era when students are increasingly concerned with their post-graduation employment opportunities, it’s possible that such a model could be applied to some programs at four-year institutions.

Data Say College is Worth More Than Ever

Research shows that not only is a college degree is worth the time and money it takes to earn one; it’s worth more than ever.  According to analysis of Labor Department statistics by the Economic Policy Institute, the pay gap between college graduates and those who either never went to college or never graduated from college, reached a record high last year. The NY Times article summarizes, “Americans with four-year college degrees made 98 percent more an hour on average in 2013 than people without a degree. That’s up from 89 percent five years earlier, 85 percent a decade earlier and 64 percent in the early 1980s.”

The College Board recently released a new report, entitled “Redesigning the Pell Grant Program to Boost Access and Completion,” which provides numerous recommendations for improving the Pell Grant. The report is part of the Bill and Melinda Gates Foundation’s push to research financial aid improvements prior to the reauthorization of the Higher Education Act. The main recommendations involve making the eligibility process simpler by streamlining the FAFSA. The report claims that limiting the necessary financial information to Adjusted Gross Income (AGI) and family size (two measures that are easily obtained from a tax return) would boost completion of the FAFSA and improve access to college. Such an approach would also allow colleges to report average net price for students within given AGI and exemption ranges on their websites, making it easier for students and their families to plan for the future.

The College Board also recommends basing eligibility on “prior-prior year tax data,”[1] meaning families would not need to update their financial information each the spring. This change would help prevent low-income families from missing financial aid priority deadlines which often fall before the current year’s tax data are available. Furthermore, students whose parents did not need to file a tax return in the prior year would automatically be awarded the maximum Pell Grant without needing to enter financial information.

One of the more ambitious proposals in the report is the creation of government-funded savings accounts for families whose income would qualify them for the Pell Grant. Given that many studies find that early communication and college savings are crucial to increasing the number of low-income students enrolled in college, this program would seek to engage students and their parents at a young age. Under the proposal, low-income children around the ages of 11-12 would receive federal education accounts in which the government would deposit up to 10 percent of the maximum Pell Grant each year. The account would earn interest until the child turned 18, at which time he or she could begin to withdraw 25 percent of the balance per year (if enrolled in a four-year degree program). Any unused funds would be returned to the treasury when the student turned 24. The report estimates such a proposal would cost $3.5 billion to implement.

Washington State has long recognized that early communication and engagement are key to expanding college access. The state’s College Bound Scholarship program is a means-tested program that promises four years of free tuition and a book allowance to any Washington State student who is in foster care, whose family is low-income, or who qualifies for free and reduced-priced lunch in middle school. In 8th grade, students sign a pledge to graduate high school with a 2.0 GPA or better, to not commit a felony, and to submit a FAFSA.  The program has been hugely successful, with ever-increasing numbers of students applying for and using their College Bound Scholarships each year.

To read more about the College Board’s proposal, check out the full report here.


[1] Data from the year before the year currently used to determine federal aid eligibility

Temple University recently created a new partnership between students and the university to help students graduate on time and limit the amount of debt they accrue. Under the program, called “Fly in 4,” if an undergraduate student fulfills a set of requirements aimed at promoting on-time completion, but is still unable to graduate within four years, the university will pay for any remaining coursework (tuition and fees).  Additionally, in each incoming class, 500 students with financial need will receive “Fly in 4 grants” of $4,000 per year to help reduce the hours they must put toward employment and increase those they can devote to studying. [1]

“What we’ve found is that students from low- and middle-income backgrounds tend to take longer to complete their degrees, in part because they spend a lot of time working,” Temple President Neil D. Theobald is quoted as saying.

Starting in Fall 2014, all incoming freshmen and all incoming transfer students who enter on track to graduate on time are eligible for the program; however, only those with demonstrated financial need are eligible for the $4,000 grants. To remain eligible for the grants and/or for Temple to pay for any remaining coursework, students must:

  • Meet with an academic advisor each semester;
  • Register for classes during priority registration;
  • Advance annually in class standing; and
  • Complete a graduation review at or prior to completing 90 credits.[2]

President Theobald made six commitments to the Temple community in his October inaugural address, the first of which was to reduce student expenses. Fly in 4 is a part of that commitment.

“For nearly 50 years, researchers have shown that college students employed more than 15 hours per week during the school year earn much lower grades than do those working fewer hours for pay,” Theobald said. “In addition, time-to-graduation has become the primary determinant of student debt.”

To help fulfill its commitment and ensure students graduate on time, Temple has also invested heavily in advising (hiring 60 new full-time advisors since 2006, including 10 this year), created four-year graduation maps for every major, and trained faculty members to assist students with academic and career planning.



[1] For context, Temple’s 2013-14 undergraduate tuition rates were approximately $14,100 for residents and $23,400 for non-residents (depending on program and year of study).

[2] Contrary to a number of media reports, it does not appear that students are required to commit to working 10 hours per week or less in order to be eligible for the Fly in 4 grants. Temple University’s website makes no such statement.

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