Office of Planning and Budgeting

As reported on the UW Office of Federal Relations blog, President Obama made a splash in the higher education community last week when he outlined new proposals for higher education reform in his State of The Union Address and in a speech at the University of Michigan. Many are praising the President’s focus on the value of higher education in today’s economy, and in particular, the importance of high quality, affordable higher education. However, a proposal to more closely tie federal financial aid funding  to some kind of institutional performance measures has proved more controversial.

In what the Administration is calling a Blueprint for College Affordability, Obama has proposed that Congress significantly increase available federal campus-based aid (primarily Perkins loans) and distribute the funds based on three institutional performance measures, including relatively low net tuition levels or low tuition growth, providing a good value to students, and serving low-income students. Until a detailed policy proposal is unveiled (likely after the election), it is difficult to know how substantial a shift this may be for institutions, but it is clearly an attempt to send a message to institutions about cost control. Obama stated, “If you can’t stop tuition from going up, then the funding you get from taxpayers each year will go down.”

Other proposals included in Obama’s blueprint, include:

  • Creating a $1 billion Race to the Top program to reward states for making systemic changes in education policy and funding to increase efficiency and effectiveness.
  • Creating a $55 million First in the World competition to provide seed funding for institutions or other nonprofits to innovate.
  • Publishing a ‘College Scorecard’ for each institution, which will provide clear, comparable information on college costs, financial aid, graduation rates and, if these data become available, potential earnings.
  • Asking Congress to make the American Opportunity Tax Credit permanent, extend the lowered federal student loan interest rate (3.4%), and double the number of federal work study jobs.

Without policy details it is hard to know how these reforms might affect specific institutions, but because it marks a shift from previous federal efforts to facilitate attainment by increasing federal aid and easing federal loan repayment pressure, it is an important development and one that we will keep a close eye on.

A new report put out by the National Science Foundation examines math and science education at the elementary, secondary and post-secondary level. In general, the news is sobering: elementary and secondary proficiency in science and math is languishing below 40 percent nationwide. Chapter 8 of the report focuses on state indicators, featuring state-by-state breakdowns of science and math education. Important indicators include the number of Bachelor’s degrees conferred, the proportion of degrees in science and engineering (S&E) fields, state expenditures on higher education, and the prevalence of S&E jobs in the workforce. Interesting findings include:

  • In 2009, 1.6 million bachelor’s degrees were conferred in the United States, up 29 percent since 2000. Of these degrees, more than 501,000 were in S&E fields. In Washington State, 32.9 percent of degrees conferred were S&E degrees.
  • During 2010, the annual sticker price for a public 4-year education was $15,014, which represents a 43 percent increase since 2000 (after adjusting for inflation). This does not represent net price, since this number does not include financial aid.
  • In 2009, undergraduate education at a state institution consumed 35.7 percent of a Washington resident’s disposable income. Note that this number does not account for the 20 percent tuition hike in 2010.
  • State funding for major public research universities per student enrolled in 2000 was $10,107, which dropped to $8,815 in 2009.
  • In Washington, 32.5 percent of 25-44 year olds hold a bachelor’s degree.
  • 5.83 percent of Washington’s residents in 2009 were employed in S&E fields, up from 5.16 percent in 2000.
  • Washington has one of the highest rates of patents awarded per worker in S&E occupations in the US—28.2 patents per 1000 S&E workers.

The report indicates that research is flourishing and that Washington is increasingly awarding more degrees in S&E fields, but also that state funding for higher education and affordability have decreased dramatically. We will explore this report more in future posts. To read more about the report, check out the Higher Ed Chronicle post or read the full report.

New OPB Brief

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This week, UPenn’s Institute for Research on Higher Education (IRHE) released a report assessing the state of higher education policy in Washington State. While satisfactorily describing the key facts and long-term trends and potential future problems for higher education in Washington State, the report is somewhat unrealistic in its recommendations. It seems to assume that, absent any change in state funding trends, policymakers can dramatically alter educational attainment via structural changes in governance.

Read the latest OPB brief for more information.

With the special legislative session wrapped up here in Washington, and regular session not set to begin until January 9th, here is some of what has been happening in higher education elsewhere.

Federal Budget Agreement Preserves but Alters Pell Grants: It appears that a last minute FY2012 budget agreement in Washington DC will avert a federal government shutdown. It is reported that this agreement, which cuts billions of dollars and increases NIH funding by a modest one percent, preserves the maximum Pell Grant amount of $5,500 (a priority for Democrats), but alters eligibility. Under this language, Pell grants could only be used for 12 total semesters, not 18. Additionally, the annual income threshold at which a student is automatically determined to have zero Expected Family Contribution (EFC) is lowered from $30,000 to $23,000. Stay tuned to the Office of Federal Relations  for frequent updates on these budget negotiations.

Berkeley Unveils New Aid Program: UC Berkeley made big news this week for announcing a new financial aid program aimed at middle class Californians. Students from families making up to $80,000 per year already attend UC schools tuition-free in California. Under this new plan, UC Berkeley students from families making between $80,000 and $140,000 will have to contribute a maximum of 15 percent of annual income toweard the total cost of attendance at Berkeley (currently $32,000, including room and board). The student would also have to contribute about $8,000 per year via loans, work study or scholarships. According to the New York Times, based on current costs, this programs represents a discount ranging from 10 to 37.5 percent for families that fall within the specified income range. A number of private insitututions have similiar programs, but Berkeley is reported to be the first large public institution to follow suit.

Lariviere Out, Berdahl in at Oregon: After less than three years, Richard Lariviere has been fired by the Oregon State Board of Higher Education as President of the University of Oregon following a year in which he found himself at odds with the state System as he pushed for greater independence for the University of Oregon. The controversial move to oust a President who enjoyed student, faculty, and alumni support, was immediately followed by the appointment of Robert Berdahl as interim president. Berdahl is a former long-time University of Oregon professor and Dean, and has also served as the President of the University of Texas, and UC Berkeley Chancellor, among other roles. Berdahl recently ended his tenure as AAU President and took a highly publicized position as a part-time advisor to Lariviere at the University of Oregon.

More Higher Ed Cuts in CA: California Governor Jerry Brown announced another billion dollars in mid-year state  budget cuts this week as yet another growing budget deficit loomed. The mid-year cuts include another $300 million reduction for the state’s three higher education systems (UC, CSU, and community colleges), which comprise the largest public higher education system in nation. While UC hopes to use temporary funds to bridge this latest cut for a year, further capped enrollments and tuition increases may be likely throughout the system.

VA Announces New Investments in Higher Ed: Meanwhile, Virginia is one of the only states increasing higher education funding. Governor McDonnell announced a new $100 million in funding for higher education, alongside new capital funding for longer term growth. The money is intended to support the goals contained in legislation passed last year, including increasing college attainment in Virginia, increasing affordability, and increasing the number of STEM and health related degrees awarded.

Last year, Washington State Senate Bill 5182 abolished the Higher Education Coordinating Board and created a Higher Education Steering Committee to assess the state’s need for a redesigned statewide coordinating agency for education. The 13 person Committee met four times and was chaired by Governor Gregoire, and also included UW President Michael Young.

The Final Report, released today, determined that a statewide education coordinating agency in Washington should be singularly focused on increasing educational attainment (at all levels). The report recommends the creation of an Office of Student Achievement, overseen by a majority citizen Advisory Board. This Office would be responsible for:

  • Setting and monitoring short and long term statewide goals for educational attainment
  • Engaging in strategic planning to meet attainment goals
  • Developing performance plans and incentives
  • Engaging in education system design and coordination
  • Providing educational data, research, and analysis in partnership with the existing Education Research and Data Center (ERDC)
  • Developing budget recommendations into the future
  • Setting minimum college admission requirements
  • Administering programs that provide outreach and education to students to increase educational persistence
  • Addressing issues affecting student retention at major transition points (e.g. high school to college, and two-year to four-year)
  • Administering student financial aid programs
  • Serving as the primary point of contact for public inquiries on higher education

The report presents two options for the focus of the Office of Student Achievement. In Option A, the Office would coordinate among and between all state educational entities at every level. In Option B, the Office would focus directly on coordination between secondary and postsecondary education. Governor Gregoire announced today that she was endorsing the adoption of Option B outlined in the Committee’s Final Report and would present implementation legislation shortly.

A new report by the Georgetown Center on Education and the Workforce finds that higher education is becoming increasingly integral to earning a middle class wage. The Center predicts that, in 2018, while there will still be jobs for high school dropouts and workers with only a high school degree, good jobs for these candidates will be scarce and an associate’s degree, and for many, a bachelor’s degree will be necessary.

The report seeks to paint a picture of the likely employment landscape in 2018, including those job fields (or “clusters”) that are expected to be growing and pay higher wages. It further analyzes what educational qualifications jobs in that cluster will require, finding that upward mobility for workers without higher education will be difficult to achieve—most workers do not stay in the same job for very long and most higher-paying jobs require more education, not simply more experience. Other key findings include:

  • In 2018, 37 percent of jobs are expected to require a high school diploma or less. Of these jobs, however, only one third will pay over $35,000 a year (defined here as the Minimum Earnings Threshold necessary to enter the middle class) and will be concentrated in the areas of Transportation, Distribution and Logistics, Architecture and Construction, and Manufacturing. The higher paying clusters are also heavily male-dominated, making higher education even more determinant for women seeking higher paying employment.
  • Completing any degree significantly improves a worker’s job prospects and earnings. 54 percent of workers with an A.A .degree earn more than $35,000 a year, as do 69 percent of workers with B.A.s and 80 percent of workers with M.A.s.
  • Health Sciences, Information Technology, Law, Public Safety, Corrections and Security are career clusters defined by this report as High Wage, High Demand, and High Skill. This means that wages are higher than the average wage, employment is growing quickly (more than 10 percent expected between 2008 and 2018), and most workers in these industries hold a postsecondary degree.

To read more about the report, refer to the Executive Summary or the Full Report. Also see the Chronicle of Higher Education’s article on the topic.

As we continue to experience a very slow recovery from a deep recession, the ideas of long-time critics of modern, inclusive American higher education who question the value of college for many have gained traction and blossomed into widespread public speculation about whether undergraduate education might be the next economic bubble to threaten the US economy. We explore this topic in the latest OPB brief and hold that, in the context of data, the ‘bubble’ metaphor, though effective at capturing public attention in an economic climate characterized by fear and uncertainty, is ultimately inaccurate, misleading, and harmful.

We would love to hear your feedback on this topic!

The US Department of Education’s Stats in Brief from October 2011 entitled “Borrowing at the Maximum” investigates the percentage and demographics of students who take out federal subsidized and unsubsidized Stafford loans, and how this has changed over time. The report also seeks to differentiate between those who take out the program maximum loan amount and those who take out their personal maximum amount (adjusted for their financial need and the cost of their education). Some interesting findings include:

  • the proportion of borrowers has increased significantly over time, from 27 percent of students receiving federal Stafford loans averaging $7,200 (inflation adjusted) in 1989/90, to 46 percent borrowing an average of $10,300 by 2007/08.
  • 43 percent of those borrowing in 2007-08 took out the program maximum Stafford loan amount, while 60 percent took out their personal maximum amount (which can equal the maximum amount for some).
  • 30 percent of those taking out Stafford loans also took out private loans, whereas only six percent of students not taking out federal loans did. Furthermore, 16-18 percent of the parents of those students borrowing through the Stafford program also took out Parents PLUS loans.
  • Students taking out Stafford loans to help finance their education were less likely to have full-time jobs.
  • 73 percent of students who took out Stafford loans also received grants.

To read more about the findings or methodology of this report, check out the full report here.

Georgetown University’s Center on Education and the Workforce has published a report entitled “The College Payoff” which calculates the lifetime median earnings of workers at various levels of educational attainment. As could be expected, the more degrees a worker has, the more they will earn, on average, in their lifetime. This holds true even for workers with different degrees in the same jobs: An accountant with an associate’s degree will make $1,636,000 in their lifetime, while earnings for the same position rise to $2,422,000 for a worker with a bachelor’s degree, and to $3,030,000 for those with a master’s degree. Other notable findings included:

  • Holding a Bachelor’s degree results in a median lifetime income of $2.8 million, 84 percent higher than a worker with a high school diploma
  • Workers with a professional degree make almost four times as much as workers without a high school diploma in their lifetimes ($3,648,000 versus $973,000)
  • Women working full-time, full-year make 25 percent less over their lifetimes than men with the same level of educational attainment. In order to make more than a man with a bachelor’s degree, a woman must hold a doctoral or professional degree.
  • Latinos make on average 34 percent less than white workers, African American workers make 23 percent less, and workers of other races and ethnicities (Native American, Pacific Islander) make 22 percent less. Asian Americans, however, make roughly the same amount as white workers.

To read more about the report, check out Inside Higher Ed’s analysis: “Degrees of Wealth.” Also read our previous blog posts about the Center’s two preceding reports on this same topic: Help Wanted, and The Undereducated American.

Education Sector, an education policy think tank, recently released a report entitled “Debt to Degree,” which measures the ratio of student and parent, government-backed loans taken by students to the number of credentials awarded by an institution per year.  Based on this, the report concludes that:

  • Across all institutions and sectors, for each degree awarded in 2008/2009, $18,102 was borrowed
  • Degree to credential ratios varied considerably across institution types:  On average, families at four-year public institutions borrowed $16,247 per degree, compared to $21,827 at private four-years, and $43,383 at for-profit schools
  • Among elite research universities, Princeton, with its no-loan financial aid policy, had the lowest debt to credential ratio ($2,385), while NYU had the highest ratio ($25,886), due to its small endowment and less wealthy student body
  • Washington state has one of the lowest borrowing to credential ratios in the nation, with debt to degree ratios in the $5,000 to $9,999 range

Note that the study excluded private loans and Perkins loans, which some argue might mask even larger debt burdens, particularly at for-profit schools where institutional financial aid is limited. To read more about the study, including its limitations, check out the Chronicle’s and Inside Higher Ed’s articles.

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