Overall student debt levels of recent bachelor’s degree recipients continue to rise according to Student Debt and the Class of 2013, a new report from the Project on Student Debt at The Institute for College Access & Success (TICAS). The report includes 2013 state- and college-level debt data for graduates from colleges that opt to disclose their graduates’ debt. However, since very few for-profit colleges choose to disclose debt data, the report’s figures represent only public and nonprofit colleges.
- At the national level, 69 percent of graduating seniors had student loans and those that borrowed had an average debt of $28,400 – a 2 percent increase over 2012. For comparison, in 2013, 50 percent of UW undergraduates graduated with debt, and those that borrowed graduated with an average debt load of $21,471.
- At the state level, borrowers’ average debt at graduation ranged from $18,656 to $32,795, and the likelihood of graduating with debt ranged from 43 to 76 percent. In six states, average debt was greater than $30,000; in one state, it was under $20,000. Nearly all the highest debt states were in the Northeast and Midwest, with the lowest debt states in the West and South. In Washington, 58 percent of graduates had debt, and those that borrowed had an average of $24,418 in loans. Debbie Cochrane, research director at TICAS and coauthor of the report, says, “The importance of state policy and investment cannot be overstated when it comes to student debt levels.”
- At the college level, borrowers’ average debt at graduation varied widely – ranging from less than $2,500 to more than $71,000 – and the likelihood of graduating with debt also varied – running from 10 percent to 100 percent. At nearly one in five (18%) colleges, average debt rose at least 10 percent, while at 7 percent of colleges, average debt decreased by at least 10 percent. In general, colleges with higher costs had higher average debt at graduation, although that wasn’t always the case.
The authors note that the report’s data have significant limitations, primarily because colleges are not required to report debt levels for their graduates. Only 57 percent of public and nonprofit bachelor’s degree-granting colleges provided data, representing 83 percent of graduates in those sectors. And for-profits, as mentioned, were excluded because hardly any chose to disclose their graduates’ debt. Even colleges that do provide data may understate graduates’ debt loads because they do not include transfer students and are often not aware of all private loans.
Thus, the report’s main recommendation is to get better debt data via federal collection of cumulative student debt data for all schools. The report also makes recommendations about reducing students’ need to borrow, helping students make better-informed college decisions, and simplifying income-driven repayment plans.
See the report or TICAS’ interactive map for more information.
 Federal data for 2012 graduates of for-profit. four-year colleges show that the vast majority (88%) took out student loans and that borrowers graduated with an average of $39,950 in debt—43 percent more than bachelor’s recipients in the other sectors. In addition, students at for-profits tend to default on their loans much more frequently than students in other sectors.
The College Board recently published “Education Pays 2013: The Benefits of Higher Education for Individuals and Society,” which provides data on U.S. adults’ level of education and its impact on earnings, employment, health-related behaviors, reliance on public assistance programs, civic participation, and more. The goal of the report, the authors say, is to highlight the ways in which individuals and society benefit from increased levels of education. The authors note, “Financial benefits are easier to document than non-pecuniary benefits, but the latter may be as important to students themselves, as well as to the society in which they participate.”
Many old trends continue to hold true. Having a college education increases one’s chances of: being employed, earning a higher income, receiving health insurance and pension benefits, climbing the socioeconomic ladder, being an engaged citizen, and of leading a healthier lifestyle. These individual benefits translate to larger, societal benefits, including less government spending on public assistance programs, more tax revenue, and greater civic involvement.
A few noteworthy data points about earnings include:
- In 2011 (the most recent year for which income data is available), the median pre-tax earnings of full-time workers with a bachelor’s degree* were $21,100 higher than those of full-time workers with only a high school diploma.
- As workers age, earnings increase more quickly for those with higher levels of education. For instance, at ages 25-29, full-time workers with a bachelor’s degree earn 54 percent ($15,000) more than their high school graduate counterparts; but at ages 45-49, they earn 86 percent ($32,000) more.
- During a standard 40-year full-time working career, median earnings are 65 percent higher for those with a bachelor’s degree than for those with only high school diploma.
- “Compared to a high school graduate, the median four-year college graduate who enrolls at age 18 and graduates in four years can expect to earn enough by age 36 to compensate for being out of the labor force for four years and for borrowing the full tuition and fee amount without any grant aid.”
The report also provides some interesting facts about participation and success in higher education, such as:
- Large gaps in enrollment rates and patterns persist, particularly with lower income students. However, gaps between the enrollment rates of black and Hispanic high school graduates and those of white high school graduates narrowed significantly between 2001 and 2011.
- Although educational attainment rates are increasing, attainment rates and patterns vary noticeably by demographic groups. For example, the percentage of black females ages 25 to 29 who have a bachelor’s degree doubled between 1982 and 2012—going from 12 to 24 percent—whereas the percentage of black males increased from 11 to 16 percent.
- In the U.S., public funding makes up a smaller percentage of total funding for higher education than in most other developed countries.
* “Bachelor’s degree” means a bachelor’s degree, but not a more advanced degree.
The College Board released its 2013 edition of “Trends in College Pricing” on Tuesday. The report provides information on what colleges and universities are charging in 2013-14; how prices vary by state, region, and institution type; pricing trends over time; and net tuition and fees—what students and families actually pay after accounting for financial aid.
Here are a few noteworthy points about prices at public four-year institutions:
- The average published tuition and fees for full-time resident undergraduatesat public four-years increased by 2.9 percent between 2012-13 and 2013-14, going from $8,646 to $8,893—this is the smallest percentage increase in over 30 years.
- In 2013-14, full-time students at public four-years will receive an estimated average of $5,770 in grant aid and tax benefits.
- Thus, average net tuition and fees for full-time resident undergrads at public four-years will be about $3,120 in 2013‑14—up from a temporary low of $1,940 (inflation-adjusted dollars) in 2009-10.
And a few key points about private nonprofit four-year institutions:
- The average published tuition and fees for full-time students at private nonprofit four-years increased by 3.8 percent between 2012-13 and 2013-14, going from $28,989 to $30,094.
- In 2013-14, full-time undergrads at private nonprofit four-years will receive an estimated average of $17,630 in grant aid and tax benefits.
- Thus, average net tuition and fees for full-time undergrads at private nonprofit four-years will be about $12,460 in 2013-14—up from a temporary low of $11,550 (inflation-adjusted dollars) in 2011-12, but down from $13,600 a decade earlier.
Average net prices in all sectors took a noteworthy dip around 2010 due, in part, to significant increases in Pell Grants and veterans benefits that occurred in 2009‑10 as well as the 2009 implementation of the American Opportunity Tax Credit. However, some of those benefits have been scaled back since their initial launch. Moreover, total state appropriations declined by 19 percent between 2007-08 and 2012-13 and FTE enrollment in public institutions increased by 11 percent over that same time. Consequently, net prices have risen in the last few years for all sectors, but most noticeably in the public sector. It is important to remember that there are many variations by institution, region, and state. Even within institutions, different students pay different prices based on their financial circumstances, program of study, year in school, academic qualifications, athletic ability, etc.
See Inside Higher Ed and The Chronicle for additional analysis and discussion of the report.
The Grapevine project’s annual compilation of data on state funding for higher education shows that 30 states increased their appropriations for higher ed institutions and financial aid from FY12 to FY13. On Tuesday, the
researchers at Illinois State University and the State Higher Education Executive Officers released their tables summarizing initial allocations and estimates reported by states from September 2012 through January 14, 2013. As most states are in the midst of FY13, their budgets for the year are more-or-less finalized; however, some changes could occur due to reporting lag time.
Overall, states are spending just 0.4 percent less on higher education in FY13, compared with FY12—a relatively small decline given that state support for colleges dropped 7.5 percent from FY11 to FY12. The net decrease in this year’s budgets resulted from cuts in just 16 states, with the worst appearing in Florida (8 percent), Alabama (6 percent) and New Jersey (5.5 percent). Another 16 states, including Washington, are showing increases of less than 2 percent, which The Atlantic notes “will likely amount to a cut once inflation takes its bite.” Budgets in the other 18 states indicate more sizable increases, all the way up to 14 percent in Wyoming.
Generally, however, the gains that some universities are receiving this year do little to make up for massive cuts since the recession. States are still collectively spending 10.8 percent less than they were five years ago, when the recession began, and thirty-eight states have decreased their overall higher ed appropriations during that time, according to a Grapevine table. Among those 38, Arizona and New Hampshire cut their budgets by 37 percent and 36 percent respectively and a dozen states, including Washington, sliced funding by over 20 percent.
A news release accompanying the survey data, cited by The Chronicle, states, “Barring a further downturn in the economy, the relatively small overall change … suggests that higher education may be at the beginning stages of a climb out of the fiscal trough caused by the last recession.” However, even if state appropriations continue to stabilize, the Moody’s report discussed in our previous post points out that federal spending, tuition revenue, endowment returns, and other traditional revenue sources for colleges and universities face major challenges in the coming year. We aren’t out of the woods yet.
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.
Massive open online course (MOOC) providers, Coursera and Udacity, are now offering to sell information about high-performing students to employers who have available positions.
Coursera, which is known for working with high-profile colleges, announced its version of the headhunter service on Tuesday. Already some similarly high-profile tech companies, such as Facebook and Twitter, have enrolled in the service. Once an employer signs up, Coursera provides them with a list of students who match the company’s academic, geographic, or skill-based requirements. If an employer sees a profile they like, Coursera emails the student asking if she or he would like to be introduced to the company. Every introduction costs the employer a flat fee, the revenue of which goes primarily to Coursera. However, 6 to 15 percent of the revenue goes back to whichever college(s) offered the MOOC(s) the student attended.
The Chronicle reports that Coursera’s co-founder, Andrew Ng feels “this is a relatively uncontroversial business model that most of our university partners are excited about.” Regardless, Coursera is giving each of its partnering colleges a chance to opt out of the new headhunter service. If a college declines, any and all students enrolled in its MOOCs will be unable to participate in the job-matchmaking program. If a college accepts, its students will still have the option to personally opt out of the service—either altogether or only for courses they are unable to complete.
Udacity, which works with individual professors to offer MOOCS rather than entire institutions, offers a similar headhunter program. So far, approximately 350 partner companies including Google, Amazon, and Facebook have already signed up.
Neither Coursera nor Udacity was willing to disclose the price of their respective services, but both MOOC providers said they give employers more than just student grades. They also collect and share data on students who frequently participate in discussion forums and help answer questions from their classmates. Mr. Thrun, of Udacity, said employers often find those “softer skills” to be more valuable than sheer academic performance as they can be better predictors of placement success.
As a means of both acknowledging and analyzing the recession’s impact on students, this year’s National Survey of Student Engagement (NSSE) included a new set of questions asking how students’ finances affect their stress and academic activities. Approximately 15,000 first-year and senior students from “a diverse group of 43 institutions” responded to the new addendum. The results, which were released last week, indicate that “finances were a significant concern for the majority of students.”
As seen in Table 5 from the official report:
- The majority of students frequently worried about paying for college and regular expenses.
- Roughly 1 in 3 students said financial concerns interfered with their academic performance.
- About 30 percent said they frequently chose not to buy required academic materials due to cost.
- More students looked into working more hours than into borrowing more money as a way to cover costs.
- Approximately 3 in 4 students still agreed that college is a good investment.
In addition to these findings, the study found that over 55 percent of full-time seniors said that their choice of major was influenced by factors such as ability to find a job and/or the prospect of career advancement. Yet, 89 percent of students overall said the most influential factor in choosing a major was still how well it fit with their talents and academic interests.
A landmark study from 1990 classified 212 US institutions as liberal arts colleges, but new research shows a 39 percent decline in that number—only 130 institutions currently meet the original study’s classification criteria. Of the 82 institutions no longer classified as liberal arts colleges, a handful were subsumed by larger institutions, while about half had shifted their mission away from the standard liberal arts definition.
Historically, definitions of liberal arts colleges (including Carnegie Classifications) have highlighted their focus on undergraduate studies; selective admissions; small class sizes; emphasis on nurturing diverse perspectives and personal growth; and de-emphasis on cultivating professional skills. According to the more recent study, however, many liberal arts institutions are now offering more “professional” programs and incorporating more research into their curricula. The authors speculate that liberal arts colleges may be making this shift away from their standard definition in response to economic pressures. For example, schools may be attempting to:
- Offset dwindling revenue streams by attracting new segments of the market;
- Remain competitive in a market flooded by online and for-profit institutions; or
- Accommodate students’ increased focus on vocational preparation.
To expand on that last point, recent federal and state-level preoccupation with graduates’ potential earnings has put liberal arts colleges in a difficult position as degrees in traditional liberal arts fields (i.e. social sciences and humanities) may be less lucrative for graduates than other degrees (i.e. professional or STEM degrees). For example, according to CollegeMeasures.org, the average first-year earnings of a graduate with a four-year degree in the State of Virginia are about $30,000 if the degree was in sociology or about $46,000 if the degree was in civil engineering.
A widely-regarded strength of the US higher education system is its diversity. However, if liberal arts colleges shift their missions to include the research and career-preparatory goals of other schools, the system may become more homogeneous—leaving students with fewer educational options.
For the first time in 15 years, fewer students are enrolling in higher education overall. Enrollments at public four-year and private non-profit institutes actually increased, but falling for-profit and two-year enrollments pulled down the average. According to preliminary data released this week by the U.S. Department of Education’s National Center for Education Statistics, colleges and universities eligible for federal financial aid experienced a 0.2 percent decrease in their total enrollments between Fall 2010 (21,588,124 students) and Fall 2011 (21,554,004 students). Although slight, this drop could indicate that fewer individuals are using some sectors of higher education as a refuge from the recent recession and/or that rising tuition rates are driving students out of some markets. Regardless, the new trend could be problematic for those advocating for higher education attainment as well as for universities hoping to derive more revenue from increased enrollments.
Some specific findings include:
- For-profit institutions were hit the hardest. Enrollments dropped by 1.9 percent at four-year for-profits and by a whopping 7 percent at two-year for-profits. This is likely due to tougher federal regulations on for-profits as well as for-profit institutions deciding to use more selective admissions practices.
- Two-year institutes struggled, while four-year schools continued to thrive. Two-year enrollments (across all sectors) are down by an average of 2.4 percent, while four-year enrollments are up an average of 1.2 percent. Much of the two-year drop was driven by the aforementioned drop in two-year for-profit enrollments; however, California’s recent limit on community college enrollments can also help explain the decrease in two-year numbers.
- Part-time enrollments grew, but full-time enrollments shrunk. About 0.8 percent more students enrolled in part-time programs (across all sectors), whereas 0.8 percent fewer students enrolled in full-time programs. Two possible explanations are that the job market has recovered enough to keep more students employed or that more students now need income to support themselves during school.
UW enrollments reflect those of four-year public institutes across the country. Total enrollments at four-year public institutes increased by an average of 1.5 percent from Fall 2010 to Fall 2011. UW’s total enrollments (undergraduate and graduate students combined) increased by 1.6 percent from Fall 2010 (49,940 students) to Fall 2011 (50,745 students) and by another 1.6 percent from Fall 2011 to Fall 2012 (51,576 students). For more UW enrollment statistics, see the OPB Factbook.
Last Friday, the U.S. Department of Education released its annual update on federal student loan cohort default rates (CDRs) and, although national CDRs are gloomily high, UW’s rates are impressively low. As the Department is in the process of switching to a more accurate three-year CDR measure, this year’s report includes both the FY 2010 two-year and the FY 2009 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:
- The FY 2010 two-year CDR increased from 8.8 to 9.1 percent overall. Public institutions increased from 7.2 to 8.3 percent, private nonprofits increased from 4.6 to 5.2 percent, but for-profits decreased from 15.0 to 12.9 percent (though their two-year CDR is still the highest).
- The FY 2009 three-year CDR is 13.4 percent overall (this is the Department’s first year reporting three-year data) with public institutions at 11 percent, private nonprofits at 7.5 percent, and for-profits at 22.7 percent.
- UW’s three-year CDR is a remarkable 3.1 percent—more than 10 percentage points below the national average.
- UW’s two-year CDR increased slightly from 1.4 to 2.1 percent, but is still well below the national average.
- The State of Washington’s three-year CDR is 11.3 percent—below the national average, but still above approximately half the states.
Unfortunately, the Department does not release loan default rates disaggregated by student demographic (even though it collects this information), which prevents schools from identifying and catering assistance to students with the most need. While third-parties have conducted studies indicating that Pell Grant recipients and Latino students are more likely to default on loans, schools and legislators need better data from the federal government in order to fully identify at-risk groups and mitigate rising default rates.
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