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,” 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.
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. 
“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.
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.
 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).
 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.
Accenture recently released the results from their annual college graduate employment survey. The survey polls more than 2,000 students, including recent graduates and prospective graduates. Similar to last year’s findings, the 2014 report claims that on average, prospective college graduates are overly optimistic when it comes to their opportunities for training and prospective level of compensation.
- While 80 percent of recent grads expect to receive formalized training from their employer, just 48 percent of 2012/13 grads received such training.
- 43 percent of 2014 survey respondents expect to earn more than $40,000 at their first job, but only 21 percent of employed 2012/13 grads are actually earning that much.
- 46 percent of 2012/13 grads feel that they are significantly underemployed, compared to 41 percent last year.
Despite their optimism, it seems college students have also become more practical when it comes to choice of major. Seventy-five percent of students graduating in 2014 claim they took job prospects into account when they chose their major, up from 65 percent in 2012. Furthermore, nearly three-quarters are willing to move out-of-state in order to land a job.
Accenture recommends that employers reassess their hiring strategies in light of these results. Instead of searching for the perfect candidate for an entry-level position, the company should invest in training and education programs that will help retain the employee and help them grow. Furthermore, given the willingness of recent grads to relocate, companies should consider advertising for their positions outside of their local area in order to attract the best talent.
To read our post about last year’s report, please click here. Or, check out the full 2014 Accenture report.
On Tuesday, Stanford’s Board of Trustees announced it “will not directly invest in approximately 100 publicly traded companies for which coal extraction is the primary business, and will divest of any current direct holdings in such companies.” Furthermore, Stanford stated it would encourage its external investment managers to avoid investments in such companies.
The decision was made at the recommendation of the university’s Advisory Panel on Investment Responsibility and Licensing (APIRL), which had spent several months analyzing a petition by a student group called Fossil Free Stanford. After conducting an extensive research-based review of the issues, APRIL concluded that sufficient coal alternatives exist and that divestment “provides leadership on a critical matter facing our world and is an appropriate application of the university’s investment responsibility policy.”
This issue has arisen several times at the UW, which (like Stanford) is a leader in environmental stewardship and sustainability. Stanford’s decision may set a precedent for other universities, including the UW, that have grappled with this issue.
The U.S. Department of Education recently released a list of 55 colleges and universities that are being investigated for possible violations of Title IX, particularly in regards to their handling of sexual assault investigations. Title IX is a federal gender-equity law that applies to all institutions receiving federal funds. Recently, several universities have come under scrutiny for alleged mishandlings of sexual assault cases and investigations.
The list comes on the heels of the Obama administration’s recent unveiling of new, tougher guidelines for handling sexual assault on college campuses. The report encourages universities to:
- create “climate surveys” designed to measure the prevalence of sexual assault on college campuses;
- better train college officials in responding to survivors of sexual assault;
- change certain confidentiality provisions in order to facilitate reporting; and
- amend campus disciplinary policies to be closer aligned to those put out by the Department of Education.
The administration has also signaled that it will step up its enforcement of Title IX provisions. Student activists seemed encouraged by the news, those some claimed the administration did not go far enough to ensure that colleges are punished for Title IX violations.
To see the list of institutions facing Title IX investigations, click here. To read more analysis about the inquiry, check out this article in the New York Times.
The Council of Graduate Schools (CGS) released its annual survey of international student applications on Thursday, which revealed that the number of international student applications to U.S. graduate schools increased by 7 percent in 2014 and, for the second year in a row, Chinese applications fell slightly, while those from students in India soared.
Chinese graduate applications (and enrollments) had steadily increased for the better part of a decade. But, in 2013, the number of graduate applications from China dropped by 3 percent and, this year, that number fell by another 1 percent. Meanwhile, Indian applications increased by 22 percent in 2013 and by an even more impressive 32 percent in 2014.
“The distribution of applications by country of origin… remains a concern,” the CGS report states, noting that Chinese applications trends have historically been more stable than Indian applications trends. Past fluctuations in Indian applications appear to have primarily resulted from changing economic circumstances and exchange rates; however CGS’s president, Debra W. Stewart, attributed the recent increase to tightening student-visa rules in the U.K.
The number of new Indian students at English universities dropped by half since 2010-11, which observers partially ascribe to the elimination of post-study work opportunities for international students and, as Inside Higher Ed notes, other U.K. immigration policy changes that have made the U.K. appear less welcoming of international students.
According to an article by The Chronicle, “Stewart said she worries that unless American lawmakers reform the visa system to make it easier for international students to stay and work after graduation, the United States could lose whatever edge it may have.”
The Chinese slowdown is likely a more permanent change resulting (at least partially) from China’s push to improve its own research universities. The report’s other noteworthy findings include that Brazilian graduate applications increased by 33 percent—which could be due in part to the Brazilian government’s massive scholarship program—and that graduate applications from Africa, Europe and the Middle East (the three world regions reported on) all showed increases as well.
Figures for 2014 are preliminary and subject to revision in a CGS report planned for August.
Over the past few months, we have been following the Department of Education’s attempts to overhaul the controversial gainful employment rule legislation on this blog. This week, the Department moved closer to releasing a final version of the law. Its new set of draft rules is very similar to that released in December, in that individual programs would be judged on a set of debt-to-earnings ratios and a program cohort default rate (CDR). Specifically:
- For debt-to-earnings ratios, a program would fail if its graduates’ loan payments equal more than 12 percent of their incomes or more than 30 percent of their discretionary incomes. If a program failed both the annual and the discretionary standards twice in three years, it would lose eligibility for federal financial aid.
- For the program CDR, a program would lose federal aid eligibility if 30 percent or more of its graduates who entered repayment defaulted on their loans within three years.
As with the previous draft, these two tests would operate independently from one another, meaning a program that passes one would not be safeguarded if it failed the other.
Although this is all consistent with the previous draft, there were a few noteworthy changes, including:
- In order for a program to be held annually accountable to the debt-to-earnings measures, it must have at least 30 graduates—rather than 10, which was in the previous draft. Smaller programs will still have data aggregated over four years, thus accountability isn’t removed for them, just delayed.
- Instead of assuming a 10 year repayment period for borrowers across the board, the new proposal extends it to 15 years for bachelor’s and master’s programs, and to 20 years for doctoral programs.
As a result of these two changes, the new proposal is very similar to the 2011 law; however, the inclusion of the cohort default rate remains an important difference. The 2011 law was struck down by a judge because the default calculation used in the original rules was deemed “arbitrary and capricious.” The Department believes the new policy will be more resilient to legal challenges because it holds programs to the same CDR standards to which institutions are held by the Higher Education Act.
Ed Central provides a very thorough analysis of some of the more subtle changes, and is an excellent resource for additional information.
Secretary of Education Arne Duncan estimates that under these rules, roughly 20 percent of current vocational programs at for-profits and community colleges would fail and 10 percent would be in “the zone”—meaning a program would have to warn its students that it could become ineligible for federal aid.
As can be expected, the for-profit sector was strongly opposed to the new rules, claiming they would limit access and opportunity for the neediest students. Community colleges, however, were happy to see the proposal would allow “in the zone” programs to appeal if less than half of its graduates take on debt.
Now that the rules have been released, there will be a 60 day public comment period on the draft legislation. The Department hopes to release its final proposal in a few months.
*Although the conference budget cuts state funding by $7.3 million, it also reduces the amount employers can spend on benefits per employee per month to $622, which essentially offsets the cut.
† The $1,200,000 figure is an estimate until OFM sends additional instructions.
Yesterday, March 4th, President Obama submitted his fiscal year 2015 budget request to Congress. The Institute for College Access & Success (TICAS) has published their analysis of the budget as has the Education Policy Program at New America.
TICAS states that the President’s proposal “takes important steps towards making college affordable for Americans by reducing the need to borrow and making federal student loan payments more manageable.” Specifically, his budget:
- Invests in Pell Grants and prevents them from being taxed. The budget provides funds to cover the scheduled $100 increase in the maximum Pell award, raising it from $5,730 in 2014-15 to $5,830 in 2015-16. TICAS notes that although this increase will help nearly 9 million students, “the maximum Pell Grant is expected to cover the smallest share of the cost of attending a four-year public college since the program started in the 1970s.”
- Makes the American Opportunity Tax Credit (AOTC) permanent. TICAS supports making the AOTC permanent as they note research suggests the AOTC is the most likely of the current tax benefits to increase college access and success. New America, however, recommends the administration convert the tax credit to a grant program as they state researchers have found grants to be a more effective way to deliver aid to low-income families.
- Improves and streamlines income-based repayment (IBR) programs. Under the President’s budget, more borrowers would be eligible to cap their monthly payments at 10 percent of their discretionary income and have their remaining debt forgiven without taxation after 20 years. The budget also adjusts the IBR programs to prevent debts forgiveness for high-income borrowers who can afford to pay their loans.
- Requests funding for the College Opportunity and Graduation Bonuses. The budget proposes establishing College Opportunity and Graduation Bonuses, which would reward schools that enroll and graduate low-income students on time. Both TICAS and New America note that, unless this proposal is thoughtfully designed, it could incentivize schools to lower their academic standards in order to make it easier for Pell students to graduate. Further, as this proposal is one of several different efforts to reward colleges that provide affordable, quality educations, it is unclear how its goals and formulas would interact with those of initiatives like the Postsecondary Education Ratings System.
The UW’s Federal Relations blog notes that the budget also proposes $56 billion for an “Opportunity, Growth and Security Initiative,” which “aims to effectively replace the remaining FY2015 sequestration cuts for nondefense discretionary programs – the programs we care about the most.” Please stay tuned to their blog for more information and updates.
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