Office of Planning and Budgeting

The Obama administration has introduced a plan to bring back year-round Pell Grants and to create a $300 bonus for Pell recipients taking at least 15 credits a semester. Both elements of the plan are designed to incentivize students to graduate faster and accrue less debt in school. The plan would cost $2 billion over the next year, according to the Department of Education.

The year-round Pell Grant program was initially put in place by President Bush in 2008 but was cut in 2011 as a budget-saving measure. While the effort to reinstate the program will likely face significant Congressional opposition, there is some bipartisan support. Senator Lamar Alexander (R-LA), Chair of the Senate education committee, and Democratic Senator Michael Bennet of Colorado are cosponsoring legislation to reintroduce year-round Pell Grants. “We have long supported providing students a more flexible Pell Grant program and hope this is one of many areas Congress and the administration can work together to strengthen higher education,” a Republican education committee spokesman was quoted as saying in Inside Higher Ed. Even with this bipartisan support, however, the administration faces a difficult task in getting the legislation through a very budget-conscious Congress.

The $300 bonus, dubbed “15 to finish” by education non-profits, is also somewhat controversial, though the division is between a different set of stakeholders than the Pell Grant expansion. Many college completion non-profits support 15 to finish, saying that encouraging 15 credit semesters is an important tool in incentivizing Pell recipients to graduate on time. The plan has drawn criticism, however, from community college leaders and adult student advocates, who contend that 15 credits is too many for students who are busy working or who have come into higher education unprepared for college-level work.

See the UW Federal Relations department post for further information on the Pell Grant proposal.

New York state has recently instituted the “Get on Your Feet” loan forgiveness program in an effort to keep young college graduates living and working in the state. The program, originally introduced as a part of Governor Cuomo’s 2015 Opportunity Agenda, is designed to help struggling recent graduates in the state pay back their student loan debt. Get on Your Feet is the most recent extension of NY state’s financial aid to its college graduates, which includes loan forgiveness for several public service professions and need-based state grant programs with awards of up to $5,165.

There are a number of eligibility stipulations for the program, including that the graduate be enrolled in the federal Income-Based Repayment plan or the Pay As You Earn plan, that they are making less than $50,000 per year, that they work and have graduated in-state, and that they have received their degree during or after the 2014-15 academic year. Get on Your Feet also only applies to federal loans; private loans are ineligible for relief through the program.

The plan, which has been covered by CNN Money, the Huffington Post, Forbes, and the Washington Post, is not without controversy – recent graduates who do not qualify for Get on Your Feet are upset because they feel they are paying for others’ college costs while reaping none of the benefits of the loan forgiveness. The program is financed through the state’s General Fund, for which the primary sources of revenue are in-state taxes.

The Washington Post article above (linked again here) lists some of the other states that have forms of student loan forgiveness. Forty-five states and the District of Columbia offer some form of loan forgiveness for its residents, according to the article, but New York is the only state that specifically targets lower-income graduates. Most programs in other states are concentrated in public-service industries; health, social work, teaching, and public law.

Washington state provides health-care professionals with loan forgiveness of up to $70,000 over two years (details here) and also gives financial assistance in the form of the State Need Grant (SNG), which distributes financial aid awards up to the price of in-state undergraduate tuition—$10,344 at UW—for Washington residents whose families meet the minimum income requirements.

Unfortunately, more than 33,500 students across Washington, 3,500 of whom attend the UW, are eligible to benefit from the SNG but do not because the program has not received sufficient funding from the state.

 

 

The 2016 edition of UW Fast Facts is now available.  You can find it on the OPB website, under the UW Data tab and in the Quicklinks bar on the left, or you can access it directly at UW Fast Facts.

Thank you to OPB’s Institutional Analysis team and to our partners around the UW for their work to gather, verify and crosscheck data; format the document; and pull it all together.

Please contact Becka Johnson Poppe or Stephanie Harris if you have any questions.

United States continues slide in global education rankings: A recent report released by the Organization for Economic Cooperation and Development (OECD) reveals that the United States continues to fall behind in educating its populace. The study shows that the US has dropped to fifth in the percentage of young adults, defined as those between age 25 and 34, who have some sort of higher education degree (46 percent). This drop comes despite the Obama administration’s stated goal of having the highest proportion of young adults with degrees in the world by 2020. The report also noted that the percentage of students who leave their home countries for college in the US has dropped significantly since 2000, from 25 percent to 19 percent, with more students opting for the UK, Japan and Australia than ever before.

Income-based repayment now most popular higher ed federal aid program: The U.S. Department of Education reports that more student debt is now being repaid through the Income-Based Repayment (IBR) Plan and the Pay as You Earn (PAYE) Plan—another form of income-based repayment—than any other type of repayment. The combination of IBR and PAYE accounts for $188 billion out of a total of $586 billion, a dramatic increase from past years; the percentage of loan dollars in these two programs has doubled since 2013. According to Jason Delisle at edcentral.org (article linked to above), this is both good and bad news. On the one hand, it seems that more students are learning of income-driven repayment plans and are attracted to the affordability they offer. On the other hand, it could be that more borrowers are not expecting to get jobs that would allow them to afford more traditional loan repayment programs.

College enrollments continue to decline: 19.3 million students enrolled in higher education institutions in fall 2015, 340,000 fewer than enrolled in fall 2014, according to a recent report released by the National Student Clearinghouse. The drop was most pronounced among for-profit institutions, which saw a decline of over 180,000 enrollees from 2014, and among community colleges, at which 145,000 fewer students enrolled. Given the demographics of the students who are choosing not to enroll—primarily full-time community college students and students over the age of 24—researchers have attributed the drop in enrollment largely to the improving job market. The enrollment levels of public and private 4-year institutions stayed largely the same; for information about enrollment trends at the UW, please visit UW Profiles’ enrollment dashboard.

Last week, Congress passed a bipartisan bill to extend the Federal Perkins Loan Program, which had expired in September.

The bill authorizes new undergraduate applicants to join the program through September 2017, but only if they have exhausted all other federal borrowing options first.  New graduate students will not be able to join the program, but those who already have Perkins loans can continue to receive them through September 2016.

In the current academic year, over 3,200 University of Washington students have received approximately $12 million in Perkins loans.  These low-income, high-need students, rely on Perkins loans to cover any financial gap that remains after grants and scholarships have been applied to their tuition.

More information on the Perkins extension is available at Inside Higher Ed and The Chronicle.

Undergraduates who graduated with student loan debt from four-year colleges in 2014 owed an average of $28,950, according to a recently released report by The Institute for College Access and Success (TICAS).[1][2] 69 percent of graduates have loan debt, the same figure as last year and slightly higher than it was in 2004 (65 percent). The average amount of debt per borrower is up 56 percent from 2004 – more than double the inflation rate over the same period – but only up 2 percent from 2013.

A number of factors have contributed to the rising student debt load over the past decade. States have decreased their investment in public higher education over the last ten years, causing students at public institutions to bear a higher percentage of the funding burden. Since 2004, the share of public higher education funding provided by states has dropped (from 62 percent to 51 percent) and the share paid by students and their families (in the form of tuition) has increased (from 32 percent to 43 percent).

In addition, the growth of Pell Grants has not kept up with rising costs. The TICAS report shows that between 2004 and 2012—the last year in which data is available—recipients of Pell Grants at public four-year colleges saw average cost of attendance rise by $7,400 and grant aid rise by just $2,900. At private, non-profit colleges the gap is even wider; costs rose by $14,400 and grants increased by $8,700.

Washington state is performing well with regard to student loans: only 58 percent of Washington bachelor’s degree recipients who graduated in 2014 had loans, and those who did had an average of $24,804, more than $4,000 below the national average. The University of Washington also looks good by these metrics: thanks in large part to the University’s commitment to institutional aid through programs such as Husky Promise, less than half of all UW undergraduates who graduated in 2014 had student debt and the average debt burden was $21,558, well below the state and national averages.

While Washington’s performance relative to its peers is laudable, student debt is still a major issue for many students. The TICAS report offers a series of proposals to mitigate the student debt load, among them doubling the size of Pell Grants, simplifying income-driven repayment plans, and improving student loan servicing to make it easier for students to pay back their loans. It is important that policymakers remain focused on reducing the student debt burden and continue working with institutions to make higher education accessible and affordable for all students during and after graduation.

 

 

 

[1] It’s important to note that borrowing rates and debt levels vary widely by state, college and sector.

[2] Because the federal government does not require colleges to report debt levels for their graduates, data in the TICAS report is based on voluntary reporting by institutions. Hardly any for-profit colleges voluntarily report their graduates’ average debt, so this year’s debt figures are for public and nonprofit colleges only.

The Department of Education recently released their annual report detailing the 3-year cohort default rate (CDR)—a metric that measures what percentage of postsecondary students default on their loan payments within the first three years of entering repayment—and the data are encouraging: the 3-year CDR for FY 2012 is 11.8 percent, almost two percent lower than the previous year and three percent lower than FY 2010.

While reasons for the drop are uncertain, administration officials have credited the increased enrollment in income-based repayment plans as partially responsible. Secretary of Education Arne Duncan has cheered the lower default rate but cautions that there is more work to do. “There’s no real reason why we can’t significantly reduce default rates even further,” he told reporters in a statement reported by Inside Higher Ed. “We’re going to keep working to hold schools accountable.”

The report also breaks down the CDR by school, state, and institution type. Below is a breakdown of the most salient statistics.

National statistics:

  • Public four year institutions saw their 3-year CDR drop to 7.6 percent, down from 8.9 percent last year.
  • Private non-profit four year institutions’ default rate also dropped, to 6.3 percent from 7 percent.
  • Private for-profit four year institutions’ CDR dropped to 14.7 percent, down from 18.6 percent last year.

State statistics:

  • Schools in Washington state have an average 3-year default rate of 10.1 percent, slightly below the national average.
  • The University of Washington performed exceptionally well by this measure: the 3-year CDR for UW dropped to 2.7 percent, almost 5 percent lower than the national average for public four year universities and down from 4.3 percent last year.

As previously stated, the declining CDR average nationwide is a hopeful sign for the future of student loan repayment. Nevertheless, loans remain a massive strain on millions of college students and graduates and more must be done to alleviate the student debt burden. The CDR itself has come under fire as a flawed metric; it only measures those students who default on payments and does not take into account the almost one in three borrowers who make payments but cannot make any progress on paying down their debt or the share of students at a given institution who borrow. Some in the education policy world have called for using loan repayment rates, rather than default rates, as the primary metric for gauging an institution’s ability to prepare its students for repayment.

 

Reuters recently ranked the UW as the fourth most innovative university in the world among public and private institutions, surpassed only by Stanford, MIT and Harvard.  When looking at public institutions alone, however, the UW topped the list.

As the Seattle Times noted, “The ranking takes into account academic papers, which indicate basic research performed at a university, and patent filings and successes, which point to an institution’s interest in protecting and commercializing its discoveries.”

In addition to the innovation ranking, Washington Monthly recently ranked UW Seattle as the #1 “Best Bang for the Buck” among Western institutions.  Institutions are scored on “’Net’ (not sticker) price, how well they do graduating the students they admit, and whether those students go on to earn at least enough to pay off their loans.”  For more information about the “Best Bang for the Buck” rankings, please see the companion article.

Leadership in the House Appropriations Committee released a third operating budget proposal today in the form of 2P2SHB 1106 and PSHB 2269. This proposal still differs from the Senate budget proposal SB 6050 and varies from the previous House operating budget P2SHB 1106.

All of higher education (including financial aid) would receive nearly $3.348 billion (8.8 percent of near general fund appropriations). Under this proposal, the UW receives a total appropriation of $650.5 million, of which $598.19 million is from Near General Fund account.

Here are some of the key points from the House Budget (2P2SHB 1106) released today :

  • Tuition – This budget assumes tuition rates remain at the levels charged in 2012-2013. Funding is provided to freeze resident undergrad tuition in the first year; however, funding in the second year is provided in HB 2269 (see below).
  • Compensation Increase – This budget proposal is similar to prior proposals, authorizing a 3% and 1.8% for FY16 and 17 respectively; in addition, this budget provides limited funds for the UW’s contracts with SEIU and WFSE.
  • WWAMI – This budget contains a proviso to transfer $4.68 million a year from WSU to the UW to maintain WWAMI and support expansion of this program to 60 students.
  • O&M Funding – $1.762 million over the biennium to cover the Operating and maintenance cost of UW Bothell Discovery Hall which is the same as the House budget, but slightly higher than the Governors funding.

HB 2269 was introduced alongside the primary appropriations bill and would fund the following activities:

  • Medical Residencies – HB 2269 appropriates $8 million over the biennium for medical residencies.
  • Computer Science – This budget provides $8 million over the biennium to increase bachelor’s degrees awarded in computer science.
  • Computer Science Building – This budget appropriates $32 million over the biennium from State building construction account.

We anticipate significant activity this week and will post additional updates to the blog.

Leadership in the Senate Ways and Means Committee released a new Operating budget proposal on May 28th 2015 in the form of Senate Bill 6050. This proposal makes significant changes to the engrossed Senate operating budget, ESSB 5077 and continues to differ from the engrossed House operating budget, ESHB 1106.

Though the 2015 legislature is scheduled to adjourn today, no compromise operating or capital budget exists. Thus a second special session will be required.

All of higher education (including financial aid) would receive nearly $3.6 billion or 9.2 percent increase from the Governor and House budgets. UW receives a total appropriation of $685.7 million of which $666.36 million is from Near General Fund account.

Here are some of the key points from the Senate “Offer “Ways & Means Budget proposal:

  • Tuition affordability program– This budget reduces the operating fee portion of resident undergrad tuition to 14 percent of the State’s average annual wage in FY16 and FY17. It provides $107 million to offset the reduction in operating fees and an additional funding to backfill the foregone tuition revenue. In spite of the above funding, UW anticipates a shortfall of $3.7 million over the biennium.
  • WWAMI – Senate budget provides $9 million over the biennium for continued operations of the WWAMI medical school program, and the bill requires that the state cost per student per year not exceed $45,000 in Spokane.
  • O&M Funding – $1.762 million over the biennium to cover the Operating and maintenance cost of UW Bothell Discovery Hall which is the same as the House budget, but slightly higher than the Governors funding.
  • Compensation Increase – “Like the House proposal, this budget authorizes 3% and 1.8 % increases for FY16 and FY17, respectively. However, this budget would only partially fund the cost of those increases”.

Please refer to our OPB Brief for more information about the special session senate chair budget. Special session house budget is expected to be released Monday.

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