Christy Gullion, Director of Federal Relations, recently provided an update on the sequester–the large, automatic federal spending cuts originally scheduled to take effect January 1st of this year, but delayed until March 1st thanks to a last-minute, bipartisan deal.
For background information, please see our most recent post on the topic as well as the brief put out jointly by the UW offices of Federal Relations, Planning & Budgeting, and Research.
Dartmouth will stop granting college credit for students with high AP test scores beginning with the class of 2018, which will enter in the Fall of 2014. Currently, Dartmouth students with scores of four or five (out of five) on an AP test can have certain lower-level courses waived, earn placement into higher-level courses, or receive credit toward their degrees. When the new policy takes effect, the first two of options will still be available, but students will not be able to earn credits. Dartmouth’s Committee on Instruction proposed the change in policy and the faculty passed it with an “overwhelming majority,” according to Inside Higher Ed. However, faculty members say they “still value AP courses – just not as a replacement for a college classroom.”
Dartmouth changed the policy after its psychology department performed an experiment to assess the college-level competence of top AP scorers. Students who had earned a five on the AP psychology test were asked to take a placement exam based on the final for intro psychology; 90 percent of those students failed, according to the college. The researchers also found that the students who failed and then chose to take intro psychology did not perform better than their peers who had never taken AP psychology or who had scored less than a five. These results challenge those of an independed study published by College Board. College Board officials say they question Dartmouth’s results and believe the college has an obligation to share the details of its experiment.
There are concerns that the college’s change in policy will discourage high school students from accepting the challenge of an AP course and/or could keep students on campus longer than they would if college credit were granted for their scores. Dartmouth’s Committee on Instruction plans to review the policy in three years.
In Washington, RCW 28B.10.053 requires that institutes of higher education “recognize the equivalencies of at least one year of course credit and maximize the application of the credits toward lower division general education requirements that can be earned through successfully demonstrating proficiency on examinations, including but not limited to advanced placement and international baccalaureate examinations.”
Last Thursday, California Governor Jerry Brown released a proposed 2013-14 budget that includes substantial increases for higher education—made possible by the passage of Prop 30. For the UC and CSU systems, the proposal provides an ongoing increase of $125.1 million each. This includes $10 million each to expand the delivery of courses through technology and is in addition to the $125 million that UC and CSU will each receive in 2013‑14 for not increasing tuition and fees in 2012‑13, as required by the 2012 Budget Act. In sum, the proposal says “the state’s General Fund contribution to UC and CSU will increase by 5 percent per year in 2013-14 and 2014-15 and by 4 percent in each of the subsequent two years.”
Both higher ed systems had asked for more; but, according to The Chronicle, Gov. Brown said “the gap between what we’re going to give them and what they say they’re going to need” would have to be made up through efficiencies. Cal State system’s chancellor that Mr. Brown’s proposal at least “heads us in the right direction.”
However, in exchange for new money, state institutions are expected to keep tuition and fee levels stable over the next four years. The institutions are required to increase access to online courses and limit resident tuition rates to the first 150 percent of credits needed to graduate. This limitation is an attempt to encourage timely degree completion, reduce student debt, and free up classroom space for other students.
At a news conference Thursday, Governor Brown stated that he would be attending UC and CSU board meetings in the hopes of encouraging both systems to keep tuition prices stable.
Two years ago at the annual Council of Independent Colleges, a group of private-college presidents advocated for limiting the amount of financial aid awarded on criteria other than need—usually referred to as “merit-based” financial aid. Although the presidents received an enthusiastic response from the Council, little action followed. However, last Saturday at this year’s Council meeting, the conversation was revisited and two encouraging developments suggest progress may be more conceivable this time.
First, the presidents unveiled a draft “statement of principle,” which they hope will unite colleagues who believe that meeting financial need should be the highest priority of aid policies. Titled “High Tuition/High Discount Has No Future,” the statement articulates that the merit-aid/tuition discounting model is unsustainable and those signing their support acknowledge they’ve contributed to the problem. The statement cites a 2009 study that found “the increased use of merit aid is associated with a decrease in enrollment of low-income and minority students, particularly at more selective institutions.”
Second, David L. Warren, president of the National Association of Independent Colleges and Universities, revealed information from preliminary conversations with U.S. Justice Department officials regarding ways in which groups of presidents could discuss their tuition and/or financial aid policies without penalty and, hopefully, reach collective agreements to make college more affordable. This is significant as the Overlap Group, a set of elite universities that joined forces on admissions and financial-aid decisions for several years, faced antitrust charges by the federal government in 1991. The federal case effectively ended any meaningful collaboration on such topics, keeping schools in the dark about each other’s financial aid and admissions strategies.
“The fear, obviously, is that unilateral disarmament” in the merit-aid race won’t work, said one of the efforts’ leaders according to The Chronicle. Presidents worry that increasing need-based aid and decreasing merit aid, which is used to attract top students, will result in less robust enrollment and less prestige. But hopefully between the statement of principle, which could align presidents behind common goals, and discussions with the federal government, which could result in permissible collaboration, some progress will be made and the game of financial-aid chicken can end.
Yesterday, the Senate and House of Representatives approved legislation to avert the fiscal cliff. The deal postpones the automatic, across-the-board spending cuts—known as “the sequester”—by two months and increases tax rates only for individuals earning over $400,000 and couples earning over $450,000. The bill also preserves funding for Pell Grants and extends for five years the American Opportunity Tax Credit (AOTC), which allows students and their parents to claim up to $2,500 a year for tuition and college expenses.
For details, please see the blog post provided by Christy Gullion, Director of Federal Relations, and the articles provided by Inside Higher Ed and The Chronicle
A bill introduced to the House of Representatives earlier this month by Rep. Thomas E. Petri, a Wisconsin Republican, would overhaul the federal student-loan programs. Under the proposal:
- Monthly payments would be capped at 15 percent of discretionary income—the new income-based repayment program currently caps payments at 10 percent of discretionary income.
- Payments would be withheld directly from paychecks—essentially eliminating the potential for defaulting, a welcome thought for schools with high default rates (predominately for-profits) which are at risk of losing eligibility to participate in federal aid programs.
- Interest accrual would be capped at 50 percent of a loan’s total at the time of graduation—good news for borrowers, often low-income, who take upwards of 10 years to repay loans.
- Subsidies would be eliminated that currently pay interest while undergraduates are in college—a means of offsetting the cost of capping interest, but potentially detrimental to low-income students.
- Loan forgiveness after a certain number of years (usually 20 or 25) would be eliminated—this could dissuade students from entering public-service careers for which loans are currently forgiven after 10 years.
The proposed system resembles those used in the U.K., Australia, and New Zealand. If passed, the new rules would only impact new loans.
While some components of the bill could be beneficial, such as the cap on interest accrual, many other components appear problematic. The Chronicle reports that the National Association of Student Financial Aid Administrators expressed support for the proposal saying, “We need to make it as easy as possible for borrowers to stay on the straight and narrow.” But others, such as the advocacy group Institute for College Access & Success, worry the bill would “take away some key tools for managing federal student debt,” such as forbearance and deferments.
Since similar proposals from Rep. Petri have had little success in the past and since his latest bill has no cosponsors, the bill is unlikely to be passed. However, it could be discussed during next year’s Congressional debate over reauthorizing the Higher Education Act, which expires at the end of 2013.
The NY Times reports that although the federal government’s recently-expanded income-based repayment program is more affordable for some students, it may come with a hefty, and unexpected tax burden. The federal government will generally forgive whatever loans are left after 10 to 25 years of income-based payments; however, unless you attend a program for teachers or take a job in public service, you will have to pay income taxes on that forgiven debt. For someone who attended graduate or professional school and racked up six-figures of debt, the tax could easily be five-figures and, perhaps most worrisome, would be due immediately.
So, how many people could have to face this formidable tax and what would it amount to for the average borrower? The Education Department estimates that approximately two million people had applied for income-based repayment as of Oct. 31. About 1.3 million of those applicants qualified for reduced payment, another 440,000 applications were still pending. According to the article, “400,000 borrowers from 2012 through 2021, each with a beginning average loan balance of about $39,500, would each eventually receive loan forgiveness of about $41,000.” The amount forgiven can be larger than the original balance because of accrued interest payments. Depending on your tax bracket, the federal tax on $41,000 of forgiven loans could amount to over $10,000 and, if you live in a state with income taxes, you’d need to deal with those as well.
That said, since $41,000 is more than double what is given to the average Pell recipient over four-years, a $10,000 tax payment could be considered fair. The New America Foundation and others have argued that the new repayment program provides only marginal benefits to low-income borrowers, but “generous benefits to borrowers with higher federal loan balances” who have the potential to earn high incomes later on. As The Quick and the Ed notes, someone who earns $400,000 at the high-point of their career may still receive over $80,000 in loan forgiveness. In the latter situation, a large, lump-sum tax payment is likely very fair.
The article provides some useful resources for those who are participating in the income-based repayment plan and those who are considering it, including:
The Wisconsin Education Approval Board, which oversees all for-profit colleges located in the state and any online-learning programs offered to its residents, may require that those institutions achieve specific performance standards in order to operate within Wisconsin. Specifically, that board is proposing to require that at least 60 percent of a college’s students complete their studies within a certain time-frame and at least 60 percent of its graduates have jobs. Public universities and private nonprofit colleges are not under the board’s jurisdiction and would therefore be exempt from the requirements.
The board already collects and publishes data on its institutions. According to those reports, average completion rates fell from 82 to 59 percent over the last six years and the percentage of graduates who were employed during a given year dropped from 44 to 22 percent (in the same time frame).
The Chronicle reports that the board is basing its standards on what they believe “Wisconsin consumers would find ethical, responsible, and acceptable for institutions choosing to enroll them.” However, for-profit colleges have already submitted letters to the board arguing that the proposed standards are “arbitrary and should not be broadly applied to a diverse set of programs, which often enroll underserved populations.”
While the federal government’s “gainful employment” rule is similar to Wisconsin’s proposal, it is unusual to see a state attempt this type of regulatory system. Some states have increased their requirements for online and for-profit institutions—but Wisconsin’s proposal is especially aggressive. For-profits that wish to operate in Washington must receive authorization from the Washington Student Achievement Council, which considers institutions; “financial stability, business practices, academic programs, and faculty qualifications”—but does not yet hold them to specific graduation or employment standards.
On Wednesday, Wisconsin’s board voted unanimously to postpone a final decision until a team made of board members, representatives from colleges and universities, and State legislators can review the proposal more thoroughly. The team is scheduled to make recommendations to the board in June of 2013.
Yesterday, the Office of Financial Management, in partnership with the Council of Presidents and the Department of Enterprise Services, published an updated version of the Statewide Public Four-Year Dashboard. The Dashboard displays institution- and state-level data on student enrollment, progress, and degree production to help better inform policy makers and the general public.
More information about the Dashboard and the data it displays (drawn from the Public Centralized Higher Education Enrollment System) is available in two OPB briefs:
Here is a quick look at some recent happenings in the world of higher education:
- The College Scorecard confuses students and lacks desired information, says a report released today by the Center for American Progress (CAP). The College Scorecard, which President Obama proposed last February, is an online tool to help students compare colleges’ costs, completion rates, average student-loan debt, and more. The CAP asked focus groups of college-bound high-school students for their opinions on the scorecard’s design, content, and overall effectiveness. Student responses indicated that they did not understand the scorecard’s purpose; they would like the ability to customize the scorecard according to their interests; they want more information on student-loan debt; and they would prefer seeing four-year graduation rates, rather than six-year rates. The CAP report includes recommendations for improving the readability and usability of not just the scorecard, but of government disclosures in general.
- The U.S. House of Representatives passed the STEM Jobs Act on Friday by a 245 to 139 vote. The bill would eliminate the “diversity visa program,” which currently distributes 55,000 visas per year to people from countries with low rates of immigration to the U.S. Those visas would instead go to foreign graduates from U.S. universities who earn advanced degrees in science, technology, engineering or mathematics (STEM). Proponents of the Republican-backed bill say it would keep “highly trained, in-demand” workers in the U.S., boosting the nation’s economy and preserving its global competitiveness. While the White House and most Democrats support the expansion of STEM visas, they oppose the bill’s attempt to eliminate the diversity visa program. Consequently, the measure is unlikely to pass the Democrat-controlled Senate.
- The overlapping agendas of Texas, Florida, and Wisconsin governors could signal a new Republican approach to higher education policy, says Inside Higher Ed. The three governors agree on cost-cutting strategies such as requiring some colleges to offer $10,000 bachelor’s degrees; limiting tuition increases at flagship institutions; linking institutions’ graduation rates to state appropriations; and letting performance indicators, such as student evaluations, determine faculty salaries. Although the governors’ proposed reforms appeal to some voters, “actions taken by all three have been sharply criticized not only by faculty members and higher education leaders in their states, but also by national leaders, who view the erosion of state funding and increased restrictions on what institutions can do a breach of the traditional relationship between state lawmakers and public colleges and universities.”
← Previous Page — Next Page →