Office of Planning and Budgeting

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.

2014 Sup Budget Comparison v2

*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.

We have updated the OPB brief we posted on February 27th, to reflect additional information regarding the employee health insurance related agency reductions. Both the House and Senate budget would decrease agency contributions for employee health benefits. The House budget cuts state funding by $7.6 million and the Senate budget cuts state funding by $4.4 million. However, both of these reductions are offset by lower per employee spending “limits” on benefits. The House budget would reduce monthly employer funding to $658 per eligible employee. The Senate budget would reduce monthly employer funding to $703 per eligible employee.

As you may have heard, President Obama recently announced his “Increasing College Opportunity for Low-Income Students” initiative, which aims to help more low-income and underrepresented minority students attend and complete college. On January 16th, the White House hosted a summit of the more than 100 colleges, universities, nonprofits, and foundations that made commitments to increase college opportunity. The Chronicle provides a detailed, sortable list of these commitments.

News coverage of the summit and the initiative includes the following:

After years of budget cuts, most higher education lobbyists across the country expect flat or slightly increased funding for higher education during upcoming state legislative sessions. According to a survey by the American Association of State Colleges and Universities, three-quarters of states increased spending on higher education by more than 3 percent in the current fiscal year. Despite these efforts, funding for public colleges and universities is still well below 2008 funding levels. Many experts believe that this may be the new normal—with continued economic uncertainty and many other programs, such as Medicaid, K-12 education, or state pensions, competing for the state’s resources, higher education may have to make do with less.

For those states that are increasing funding for higher education, the money is often coming with more strings attached. About 20 states have implemented performance-based funding, which ties state dollars to the accomplishment of certain goals, such as an increased graduation rate, lower student debt, or more STEM majors. Some states, including Washington, are also limiting tuition increases or requiring universities to divert more money to financial aid. While many higher education administrators welcome the chance to improve institutional efficiency and student outcomes, they are also wary of legislators setting unrealistic goals or failing to appreciate the complexity of their institutions.

Washington seems to be following the national trend, both in the expectation of flat or moderately increased funding in the coming session and in the likely adoption of performance-based funding. Governor Inslee’s proposed supplemental budget includes some modest funding for select UW initiatives, but no across-the-board increase. The public institution-led Technical Incentive Funding Model Task Force is exploring ways to implement performance-based funding in Washington. To read more about either of these, check out our blog post on Governor Inslee’s supplemental budget and the Technical Incentive Funding website. To learn more about state budgets and performance funding nationally, check out this article in the Chronicle of Higher Education and this piece in Inside Higher Ed.

Now that news sources are back from their holiday hiatus, we have a couple of noteworthy stories to bring you.  Both articles highlight the continuing trend toward greater accountability.

Florida’s new rules linking tenure with student success are upheld:  Last week in Florida, a judge upheld new rules by the State Department of Education that require tenure decisions—known in Florida as “continuing contracts”—to be contingent upon professors’ performance on certain student success criteria. The judge also upheld a new requirement that faculty must work for five years, rather than three, before being eligible for the contracts. The United Faculty of Florida had contested that the new rules were beyond the scope of the department’s powers, but the judge rejected that claim.

Senators propose penalties for colleges with high student-loan default rates:  On Thursday, three Democratic senators introduced a bill dubbed “the Protect Student Borrowers Act of 2013,” which would impose a fine on colleges with high student-loan default rates and federal student-aid enrollment rates of at least 25 percent. Penalties would be on a sliding scale. On the low end, colleges with default rates of 15 to 20 percent would incur a fee equal to 5 percent of the total value of loans issued to their students in default. On the high end, schools with default rates of 30 percent or more would incur a 20 percent penalty.  The Education Department currently cuts off federal funds for institutions with high default rates, but the senators argue it punishes only “the most extravagant, outrageous schools.” The Chronicle writes, “The proposed legislation would hit for-profit institutions the hardest, as their graduates have the highest default rates, on average.”

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