Office of Planning and Budgeting

In anticipation of last Monday’s “Pay It Forward” working conference in Philadelphia, national education groups and nonprofit organizations released a joint statement opposing the proposal. The joint statement is available here. For more information about PIF, please review our post about Oregon legislation requiring “consideration” of a “Pay It Forward, Pay Back” pilot. A comprehensive brief about the proposal’s UW application is available here.

Last week, the College Board released its 2013 Report on College and Career Readiness, which found that the percentage of students who are unprepared for college-level work has remained essentially unchanged for the past five years. According to the College Board, only 43 percent of graduating seniors in 2013 had achieved their “SAT College and Career Readiness Benchmark,” defined as scoring a 1550 or above on the SAT. While there have been some achievements—more minority students are taking the test, and both African-American and Hispanic students are scoring higher—scores are not improving on the whole.

In order to improve students’ college readiness, College Board president David Coleman believes the College Board must partner with schools to implement the Common Core, a set of standardized guidelines detailing what students should learn in each grade. He believes this will help students be better prepared both to take the SAT and to perform at the college level. In addition, the College Board is considering making changes to the SAT. According to a Kaplan Test Prep survey, more than 72 percent of college admissions officers think the SAT should change in order to be better aligned with high school curricula, correct perceived socioeconomic and cultural biases, and make the writing section more relevant. Coleman has promised to address these concerns with an overhaul of the SAT in 2015, which will include a stronger emphasis on analysis, a revamped writing section, and more curriculum-based questions.

As the College Board makes changes to the SAT, the test is becoming ever more similar to the ACT—its biggest competitor—which overtook the SAT in market share for the first time last year, according to the NY Times.  The ACT, which is known for more straightforward questions, emphasizing grammar and mechanics over vocabulary, and testing curriculum-based content, has also made some changes in recent years. The test is now available in a computer-based format and features some free response questions in which students carry out virtual experiments and detail their observations. Experts believe the SAT will likely move towards a computer-based delivery system with its revamp in 2015, and many hope the writing section will be optional, as it is on the ACT.

To read more about the coming changes to the SAT, check out this New York Times article. To read the College Board’s report, please click here.

On Monday, the U.S. Department of Education (ED) 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 both national and UW CDRs rose, the UW’s rates remain well below those of the nation.

As ED is in its second year of switching to the  more accurate three-year CDR measure, this year’s report includes both the FY 2011 two-year and the FY 2010 three-year CDRs. These rates represent the percentage of student borrowers who failed to make loan payments for 270 days within two or three years, respectively, of leaving school.

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

FY 2010 three-year CDR:

  • The national three-year CDR increased from 13.4 to 14.7 percent overall—public institutions increased from 11.0 to 13.0 percent, private nonprofits increased from 7.5 to 8.2 percent, but for-profits’ whopping 22.7 percent rate decreased slightly to 21.8 percent.
  • The UW’s three-year CDR increased slightly from 3.1 to 3.9 percent, but this is still nearly 11 percentage points below the national average

FY 2011 two-year CDR:

  • The national two-year CDR increased from 9.1 to 10.0 percent overall—public institutions increased from 8.3 to 9.6 percent, for-profits increased from 12.9 to 13.6 percent, but private nonprofits held steady at 5.2 percent.
  • The UW’s two-year CDR increased from 2.1 to 3.2 percent, but this is still nearly 7 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 Friday, the Obama administration gave some clarity to the Supreme Court ruling in Fisher v. University of Texas, as the decision had not provided a direct answer about the constitutionality of race-conscious admissions policies in higher education. Instead, the ruling had underscored the necessity of “strict scrutiny”—a term that sparked concern and confusion among some college officials. In a “Dear Colleague” letter, the Education and Justice Departments clarified:

An individual student’s race can be considered as one of several factors in higher education admissions as long as the admissions program meets the well-established ‘strict scrutiny’ standard; specifically, the college or university must demonstrate that considering the race of individual applicants in its admissions program is narrowly tailored to meet the compelling interest in diversity, including that available, workable race-neutral alternatives do not suffice.

In other words, colleges can continue considering race in admissions decisions as long as race-neutral alternatives would not achieve “sufficient diversity,” as Justice Kennedy put it in the case’s majority decision. Determining what constitutes “sufficient” diversity is where much of the remaining ambiguity lies.  However, in their letter, the Departments pledged to provide “technical assistance” to institutions as they interpret the ruling and asserted that previously-provided guidance on affirmative action still holds true.

As Inside Higher Ed reported, legal experts believe the court’s “strict scrutiny” requirement will make it difficult for UT and many other institutions to successfully defend their use of race in admissions. However, the Obama administration seemed to encourage colleges to maintain their diversity efforts. “The Departments of Education and Justice stand ready to support colleges and universities in pursuing a racially and ethnically diverse student body in a lawful manner,” the letter stated.

For more information, see the Departments’ Q&A document and the article by Inside Higher Ed, and stay tuned to our blog for updates.

On Monday, the U.S. Education Department (ED) began formal negotiationson the draft language of a proposed new  “gainful employment” rule. The rule, originally published in 2011, was designed to enforce a requirement of the Higher Education Act that states career education programs—non-degree programs at all colleges and most degree programs at for-profit colleges—must “prepare students for gainful employment” in order to participate in federal student aid programs. The rule was meant to discourage these programs from misusing federal aid dollars and leaving students with debts burdens they are unable to repay. However, in 2012 a federal judge rejected major provisions of the rule, requiring that ED rethink its strategy.

Here’s a summary of the changes:

  • The proposed rule applies to programs with as few as 10 students, whereas the old rule counted only career-focused programs with 30 or more students. Because of this change, ED estimates that the new rule could cover 11,359 programs at for-profit and nonprofit colleges—nearly twice as many as the old rule covered—and that 974 of those programs (9 percent) could fail to meet the proposed standards.
  • The draft regulation omits loan-repayment as a criterion for federal student aid eligibility. The old rule severed federal aid to programs where too few students were repaying their loans or where graduates’ debt-to-earnings and debt-to-discretionary-income ratios were too high. The new rule removes the loan repayment standards, which the courts deemed “arbitrary and capricious,” and relies only on the latter two measures.
  • Debt-to-earnings calculations would be based only on students who receive federal aid, rather than students who complete the program. The old calculations were based on all students who completed the program, whereas the proposed calculations are based on any students who receive federal student loans and Pell Grants, regardless of whether they complete the program. As the rule is designed to ensure that federal aid is used effectively, this seems a more appropriate approach. 
  • Schools would have fewer chances to improve their performance before losing federal aid eligibility. Under the previous rule, programs that failed the measures in 3 out of any 4 years would be ineligible for federal student aid. However, the new rule only lets programs fail in 2 out of any 3 years before they lose eligibility.

For details, see a comparison of the two versions prepared by the Education Department.  Please continue to follow our blog as well as the Federal Relations blog for updates on this topic.

(This piece was originally posted on 07/11/2013, however it was lost due to technical issues and is therefore re-posted here.)

Last week, the Oregon legislature passed a bill that, if signed by the governor, will implement a pilot program to study the effects and feasibility of substituting upfront tuition payments with income-based, post-graduation payments. For 24 years after graduating, four-year college students would pay back 3 percent of their income and community college students would pay back 1.5 percent. Students who do not graduate would pay back a smaller percent determined by how long they were in school.

If, after several years of study, Oregon decides to adopt a plan (or some form of it), it would signify a major shift in the funding paradigm for public institutions. But that’s a big IF. The plan has received considerable criticism due to a multitude of unanswered questions that could pose significant logistical barriers. For example:

  • How would institutions and/or the state pay for the plan’s implementation (i.e. the several years of foregone tuition revenue between when a student enters school and when they graduate and start earning pay)?
  • How would the state efficiently collect accurate income data on students who move out-of-state?
  • How would the state go about collecting and enforcing payments?
  • How would the plan account for and apply to part-time students, transfer students, mid-career students, and other non-traditional students?
  • How would the plan work with federal and state financial aid programs? Would low-income students be accommodated so as to avoid creating barriers to entry?
  • How does one pilot a 24-year repayment program in just 2 or 3 years?

Even if Oregon’s higher education commission, which is tasked with implementing the pilot program, can find viable answers to those questions, the plan still has a number of possible (if not likely) negative consequences. For instance, the plan may:

  • Magnify the public’s view of higher education as a private good (only benefiting the individual) rather than a public good (benefits for many) which, in turn, could spur the continuing and problematic trend of replacing state dollars with tuition revenue;
  • Make institutions even more vulnerable to economic variations and recessions as their revenue would be tied to graduates’ earning and unemployment rates; and
  • Create social and economic imbalance between Oregon and other states since students who expect to earn less—e.g. social science and humanities majors—would be incentivized to go to Oregon, and students expecting to earn more—e.g. engineering and medical students—would likely go elsewhere.

Granted, the idea of basing college payments on graduates’ income is not a new one. Some federal student loans are eligible for income-based repayment and a program similar to Oregon’s already exists in Australia. However, Australia’s version is administered at the federal level, meaning many problems inherent in Oregon’s plan (tracking students who move around the country, imbalance between states, etc.) are avoided.

The Economic Opportunity Institute, a liberal think tank in Seattle, proposed a version of the plan for Washington in October 2012; but, unlike Oregon’s version, it has yet to go anywhere.  We’ll keep you posted.

Last week, President Obama toured several colleges and universities promoting his plans to make college more accessible and affordable for “middle class” students. As he noted during several stops, achieving a higher education remains one of the most critical means by which citizens achieve job security and financial  stability.

For more detailed information about the central themes of the President’s plans, as well as information about which components require action from Congress, please review a brief on the topic, as well as a blog from Federal Relations. Read more about the plans here and here.

 

According to an annual survey released on Monday by the National Association of State Student Grant and Aid Programs (NASSGAP), the amount of state dollars going toward financial aid remained relatively stable between 2010-11 and 2011-12. In 2011-12, states awarded about $11.1 billion in state-based financial aid, a slight increase (0.7 percent) over the $11.0 billion awarded in 2010-11. That growth has not kept pace with rising enrollments or the overall increase in students’ financial need; however, it’s encouraging to see growth of any size given that general state appropriations for higher education fell by 7 percent during that same time period.

The state-by-state data show that Washington, New Jersey, New York and California gave out the most need-based aid on a per-student basis. Oregon more than doubled the amount it spent on need-based grants, to nearly $44-million, and Washington increased its need-based grants by 26 percent. However, 23 states cut need-based aid from 2010 to 2011 and four states reported no need based aid programs at all.

What’s most intriguing, in my opinion, is that even though states collectively put only slightly more money toward their financial aid programs, they shifted a larger portion of those aid dollars toward need-based aid and grant aid (see the tables below). This finding suggests that states are attempting to maintain access in the face of rising tuition rates and to reduce the amount of debt their students accumulate.

Of the $11.1 billion in total state-awarded student aid:

  • $9.4 billion (84%) was grant aid—up 1.7% from 2010-11; and
  • $1.7 billion (16%) was non-grant aid (loans, work-study, tuition waivers, etc.)—down 4.2% from the previous year.

Of the $9.4 billion in state-awarded grant aid:

  • $7.0 billion (74%) was need-based—up 6.3% from last year; and
  • $2.4 billion (26%) was non-need-based—down 9.4%.

Of the $10.1 billion in state-awarded undergraduate aid (both grants and non-grants):

  • $4.7 billion (47%) was exclusively need-based—up 6.0%;
  • $2.0 billion (20%) was awarded on a mix of need and merit criteria—up 1.6% and surpassing, for the first time ever, aid awarded solely on merit;
  • $1.9 billion (19%) was exclusively merit-based—down 1.3%; and
  • $1.4 billion (14%) was special purpose awards and uncategorized aid— a 3.0% drop.
Change in Total State-Awarded Student Aid
Percent change from 2010-11 to 2011-12      
Type of Student Aid Dollar amount Portion of total
Grant aid 1.7% 0.8%
Non-grant aid -4.2% -0.8%
Total aid 0.7%  
     
Change in State-Awarded Grant Aid
Percent change from 2010-11 to 2011-12      
Type of Grant Aid Dollar amount Portion of total
Need-based 6.3% 3.0%
Non-need-based -9.4% -3.0%
Total grant aid 1.7%  
     
Change in State-Awarded Undergraduate Aid
Percent change from 2010-11 to 2011-12      
Type of Undergrad Aid Dollar amount Portion of total
Exclusively need-based 6.0% 2.7%
Mixed need & merit-based 8.5% 1.6%
Exclusively merit-based -6.5% -1.3%
Uncategorized & other -17.4% -3.0%
Total undergraduate aid 0.0%  

Thursday night, time ran out for Congress to reach a deal to keep federally subsidized student loan interest rates from doubling. The Senate adjourned for its Fourth of July recess without voting on a plan; thus, the interest rates on new federally subsidized loans will double to 6.8 percent on Monday July 1st (the same rate as unsubsidized federal student loans).

It is possible, however, that students won’t end up paying the increased rates.  There has been a push from some legislators to enact a one-year fix that would temporarily adjust/lower the interest rates after the fact.  As the lender of the student loans, it is within the federal government’s power to apply such a solution retroactively.

The increase was originally scheduled to occur a year ago.  But, thanks to an election-year alliance of student advocates and the Obama administration, the rate increase was delayed by a year.

For more information, see the Inside Higher Ed article and please stay tuned to the Federal Relations website for updates.

On Monday, the Supreme Court ruled that Fisher v. University of Texas (UT), the case on UT Austin’s race-conscious admissions policy, be sent back to an appeals court for further scrutiny. The case stemmed from a lawsuit by Abigail Fisher, a white applicant to the university who claimed she was unfairly rejected due to UT Austin’s affirmative action admissions program. For more background on this case, please see our previous two posts, found here and here.

The court’s 7-to-1 decision did not provide a direct answer about the constitutionality of UT Austin’s admissions practices. Instead, it ordered the U.S. Court of Appeals for the Fifth Circuit to reconsider the case on the grounds that the appeals court had failed to apply “strict scrutiny” (a rigorous standard requiring that both an important goal and a close fit between means and ends be identified) in its review of the case and subsequent ruling in favor of UT. Justice Ruth Bader Ginsburg was the only dissenting voice; she argued that the appeals court was right to support UT’s policies.

According to the NY Times, Justice Kennedy wrote for the majority that courts reviewing affirmative action programs must, “verify that it is necessary for a university to use race to achieve the educational benefits of diversity.” This necessitates, he said, “a careful judicial inquiry into whether a university could achieve sufficient diversity without using racial classifications.”

The Supreme Court’s ruling did not displace its 2003 decision in Grutter v. Bollinger, which found educational diversity to be of sufficient importance to overcome the government’s standard ban on racial consideration. However, as Inside Higher Ed reports, legal experts believe the court’s demanding “strict scrutiny” requirements will make it difficult for UT and many other institutions to successfully defend their use of race in admissions.

The debates surrounding Fisher v. UT and affirmative action in higher education as a whole are far from over. Many expect the Texas case to return to the Supreme Court after a new review by the appeals court.  We will keep you posted with any updates.

← Previous PageNext Page →