On Thursday, the American Association of State Colleges and Universities (AASCU) released a policy brief examining the potential consequences of Pay It Forward (PIF) (please see our previous blogs for background information). The AASCU brief summarizes other, similar approaches to paying for college and analyses PIF as a potential state approach to financing public higher education.
The report describes the following “13 Realities of PIF College Financing Proposals”:
- Most students could pay more, not less, for college.
- Considerable uncertainty would be introduced into campus budgeting and planning efforts.
- The majority of college costs are not covered.
- Students from sectors with the heaviest student debt burdens would be ineligible to participate.
- The class divides in public higher education, and more broadly, in American society, could intensify.
- Costs borne by students pursuing privately financed degrees and higher-paying careers would increase dramatically.
- PIF is duplicative—there are existing public and private programs that calibrate student debt to earnings.
- PIF’s start-up costs would be enormous.
- Payment collection would be costly and challenging.
- Campus and state leaders would have strong incentives to promote programs leading to high-paying occupations, to the possible detriment of the liberal and applied arts, humanities, and public service careers.
- Underlying college cost drivers would not be addressed.
- Support for state and institutional student financial aid could dissipate.
- Support for maintaining existing state investment in public higher education would erode, creating a pathway to privatization.
In addition, the authors discuss “The Unknowns of ‘Pay It Forward’”:
- How will institutional financing gaps be addressed?
- How would payments be collected?
- Who would control PIF funds?
- How would PIF’s structure and revenue generation differ from campus to campus?
- How would PIF complement or conflict with federal higher education programs?
- How would transfer students be integrated into PIF?
- What would be the consequences for noncompleters?
- How would college savings change under PIF?
- How would PIF affect campus philanthropic campaigns?
The report’s conclusion reads, “Creating a lifelong tax and privatizing public higher education through pay it forward is not the solution to addressing college affordability.”
I recommend that readers review AASCU’s full report.
On Thursday, the American Association of State Colleges and Universities (AASCU) released its most State Outlook. According to the report, state operating support for public four-year colleges and universities is 3.6 percent higher for FY 2015 than it was for FY 2014. Of the 49 states that have passed a budget thus far, support for higher education increased in 43 states and decreased in only 6 states. Of those 6 states that reduced funding, all were under 3 percent: Alaska, Delaware, Kentucky, Missouri, Washington (0.8 percent decrease) and West Virginia.
There was a relatively small amount of variation between states in terms of their year-to-year funding changes. For FY 2015, the spread between the state with the largest gain and that with the largest cut was only a 24 percent—this is compared to 57 percent, 25 percent and 46 percent, respectively, in FYs 2012, 2013 and 2014. The report notes that this decreased volatility likely indicates “a continued post-recession stabilization of states’ budgets.”
Charitable contributions to U.S. colleges and universities increased 9 percent in 2013, to $33.8 billion—the highest recorded in the history of the Council for Aid to Education (CAE) Voluntary Support of Education (VSE) survey. In addition, college and university endowments grew by an average of 11.7 percent in FY 2013, according to a January 2014 study released by the National Association of College and University Business Officers and the Commonfund Institute. This represents a significant improvement over the -0.3 percent return in FY 2012.
The report also describes ten highlights/trends from states’ 2014 legislative sessions, those being:
- State initiatives linking student access to economic and workforce development goals.
- Tuition freezes or increase caps in exchange for state reinvestment—this occurred in Washington and another example is discussed in our previous post.
- Performance-based funding systems that attempt to align institutional outcomes with state needs and priorities.
- Governor emphasis on efforts to advance state educational attainment goals.
- Interest in policies related to vocational and technical education, including allowing community colleges to grant certain four-year degrees (as described in our previous post).
- Efforts to develop a common set of expectations for what K-12 students should know in mathematics and language arts.
- STEM-related initiatives, including additional funding for STEM scholarships in Washington.
- Financial support for the renovating and/or constructing of new campus facilities—unfortunately, Washington’s legislature did not pass a capital budget.
- Bills allowing individuals to carry guns on public college and university campuses—as of March 2014, seven states had passed such legislation.
- Legislation that extends in-state tuition or, as occurred in Washington, state financial aid to undocumented students.
Other noteworthy policy topics described in the report include:
- Student financial aid programs—some states broadened their programs while others limited them;
- Online and competency-based education reciprocity agreements;
- “Pay It Forward” Funding Schemes; and
- Consumer protection as it pertains to student recruitment, advertising and financial aid at for-profit colleges.
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.”
With graduation season upon us, the Pew Research Center has created a roundup of “5 Facts About Today’s College Graduates.” The article draws from several national databases and surveys, including the National Center for Education Statistics, Federal Reserve Bank of New York, and Pew surveys.
1. Only about 56% of students actually graduate within six years. Students at four-year, private, nonprofits schools have the highest graduation rates (72.9%) while those at public, two-year schools are least likely to complete their degree program (39.9 %) within six years.
2. Business tops the list of most popular major, again. Since 1980-81, business has been the most common major. In 2011-12, one fifth of Americans earning bachelor’s degrees majored in business.
3. Many recent graduates have trouble finding full-time jobs that require a college degree. In 2012, the Federal Reserve Bank of New York found that 44 percent of recent graduates were underemployed (i.e., working jobs that did not require a college degree). Of that group, only 36 percent made more than $45,000 per year.
4. Despite this, college graduates continue to make more than people without degrees. A Pew study of Millennials who worked full-time found that the median salary for college graduates was $45,500, while those with some college made just $30,000 and those with a high school diploma made just $28,000. The gap has continued to widen over the years, as described in our recent post.
5. Graduates still say that college was worth it. 88 percent of Millennial college graduates believe their degree either has paid off (62 percent) or will pay off in the future (26 percent). Among those with advanced degrees, 96 percent say their education was worth the investment.
To read the full Pew Center article, please click here.
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.”
In an effort to boost international student retention, a new survey by the NAFSA: Association of International Educators seeks to understand why international students drop out or transfer before earning a degree. The survey asked 517 international undergraduate students, of which 110 had either transferred or were planning to transfer, about their college experience and their reasons for changing schools. In a parallel survey, about 500 international education professionals were asked why they thought international students transferred.
The students who participated in the study cited financial factors as the top reasons for their dissatisfaction:
- Limited access to jobs and internships (37 percent)
- Affordability (36 percent)
- Dearth of scholarship opportunities (34 percent)
- Meal plans (26 percent)
- Quality of housing (17 percent)
Interestingly, the factors that educators believe are hurting international student retention are quite different. Although nearly two-thirds of international education professionals named “financial problems” as a primary cause of attrition, the other top reasons they listed focused more on academic preparedness and fit:
- Finding a “better fit” institution (67 percent)
- Financial problems (64 percent)
- Academic difficulties (62 percent)
- Inadequate English language skills (40 percent)
- Dissatisfaction with location (34 percent)
The findings suggest that there is a disconnect between the expectations of international undergraduates and those of college administrators. Inside Higher Ed quotes Rahul Choudaha, the report’s principal investigator, as saying, “Students may be underestimating the academic preparation expected to be on a campus and they are overestimating the availability of jobs, availability of scholarships, availability of financial aid and so on.” College recruiters, thus, should help manage international students’ expectations by recognizing and being upfront about the availability of job and scholarship opportunities on their campus. In addition, as international students may be underestimating the level of academic and language preparedness necessary to succeed at American universities, special tutoring and academic advising services may be required to help them succeed and stay. Together, these approaches could help boost retention and clarify expectations, so both administrators and students have a better experience.
To read the NAFSA findings, click here. Or, check out the Chronicle or Inside Higher Ed articles on the issue.
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.
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