Office of Planning and Budgeting

The U.S. Supreme Court heard oral arguments on Monday in a pivotal copyright-infringement case over whether textbooks from foreign markets can be imported to the U.S. and resold without the publisher’s permission. The Court’s decision in the case, Kirtsaeng v. John Wiley & Sons, may have major consequences for publishers, academic libraries, museums, and others who resell, lend, or display copyrighted material made and purchased outside the United States.

The case arose when Supap Kirtsaeng, a U.S. college student originally from Thailand, re-sold textbooks that his friends and relatives shipped to him from abroad. In response, publisher John Wiley & Sons sued him for copyright infringement. Mr. Kirtsaeng’s defense centers on the first-sale doctrine, which permits the buyer of a copyrighted work to lend or resell it without permission. However, the Copyright Act states that the first-sale doctrine applies only to goods “lawfully made under this title,” which may or may not include foreign products. In August 2011, the U.S. Court of Appeals for the 2nd Circuit upheld a lower court’s decision that only domestic works are protected under the first-sale rule, nevertheless the Supreme Court may have a different ruling.

As the NY Times reported, much of Monday’s discussion involved what lawyers call the “parade of horribles”—the worst-case scenarios that could result from a ruling in favor of the publishers. For example, libraries could theoretically be prohibited from distributing foreign-made books, owners of foreign cars could be barred from re-selling them as used, and more. The publisher’s attorney stated that there might be provisions allowing for some gifts and re-sales, such as the “fair use” doctrine which lets copyrighted works be reproduced if they are to be used for research, critique, or similar purposes. However, Chief Justice John G. Roberts Jr. countered, “It seems unlikely to me that, if your position is right, a court would say, it’s a fair use to resell the Toyota, it’s a fair use to display the Picasso.”

Justice Elena Kagan, considered by many to be the crucial swing vote in the case, actively questioned both sides, but did not reveal her leanings. Otherwise, the justices appear divided, according to The Chronicle. A ruling in the case is expected by the end of the court’s term, in June.

One of several recent Pell Grant changes has made it harder for some students to finish school and earn a degree, according to Inside Higher Ed. Effective July 1st this year, the federal government decreased the duration of Pell eligibility from 18 semesters to 12 semesters as a means of both cutting costs and incentivizing students to graduate on time. While most students take less than 12 semesters to earn their bachelor’s degree, existing Pell recipients (who expected to receive 18 semesters of eligibility) were not grandfathered in when the changes took place.

Of the estimated 62,000 students affected by the change, colleges say the hardest hit were transfer students and students who have attended some college, but never earned a degree. More specifically, many impacted students seem to be those who:

  • Left school before graduating, but have returned to complete their degree;
  • Transferred, or “swirled,” between multiple schools—a growing trend in higher education;
  • Enrolled with a for-profit institution, but transferred elsewhere before graduating; and/or
  • Changed programs multiple times within the same school.

According to an “informal tally” by the California State University system, about 6,100 of the system’s students (4 percent) lost Pell Grant eligibility because of the new 12-semester limit.

Since some students who lose eligibility may not be able to afford to continue their education and earn a degree, this change could conflict with the government’s emphasis on improving graduation rates and increasing the number of degree-holders. However, as Congress gears up to deal with impending sequester cuts, the financial benefits of these types of tough decisions are increasingly likely to outweigh the nonfinancial costs.

The U.S. Supreme Court heard arguments yesterday in the landmark affirmative action case Fisher v. University of Texas (UT) (please see our previous blog for more information). Four Justices will need to support UT if it and, potentially, public colleges across the nation are to continue using race and as a factor in admissions decisions. Three justices hearing the case have historically supported affirmative action. A fourth supporter, Justice Kagan, recused herself because she played a role in preparing the Obama administration’s UT-supportive brief. The other five justices have typically expressed doubt over affirmative action’s value. Of these, Justice Kennedy is regarded as the most plausible swing vote. A 4-4 tie would uphold the federal appeals court ruling that UT’s program is constitutional.

Justices seeming to favor Fisher questioned:

  • If UT could know it had achieved a desired level of diversity without setting a target and verifying its students’ self-reported race; and,
  • Whether an admission process is truly fair if it benefits minority students from affluent backgrounds as much those from poverty. Justice Alito Jr. said: “I thought the whole purpose of affirmative action was to help students who come from underprivileged backgrounds.”

Justices seeming to favor UT questioned:

  • Whether Ms. Fisher’s suit is even legal, given UT’s statement that she would have been rejected regardless of race considerations; and,
  • Why the Court should change its 2003 decision on Grutter v. Bollinger—“A case into which so much thought and effort went and so many people around the country have depended,” said Justice Breyer.

Both sides agreed that the Court may have led colleges astray in 2003 by ruling that applicants’ race could be considered in order to assemble a “critical mass” of minority students. They said the term “critical mass” (defined by Grutter as the sufficient number of minority students to ensure they feel comfortable speaking out, not isolated) encourages colleges to aim for some numerical threshold of minority students, but such an approach could violate the Court’s ban on college’s use of quotas. After the arguments, the esteemed SCOTUSblog offered that: “Affirmative action is alive but ailing, the idea of ‘critical mass’ to measure racial diversity is in very critical condition, and a nine-year-old precedent may have to be reshaped in order to survive.”

The Court is expected to decide the case in spring or summer of next year.

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:

Nationally

  • 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.

Locally

  • 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.

On October 10th, the U.S. Supreme Court will hear arguments in Fisher v. University of Texas (UT)—the first Supreme Court case on the use of race in higher education admissions since Grutter v. Bollinger in 2003. The case asks that the Court either declare UT’s admissions policy to be in violation of Grutter v. Bollinger or entirely overrule their 2003 decision that race could play a limited role in universities’ admissions policies. An overruling of Grutter could effectively end affirmative action at public universities.

Although around 80 percent of UT’s admissions decisions are made via a unique, race-blind method called the Top 10 Percent Plan, the case challenges whether UT’s “holistic file review” system (which is used to fill the remaining 20 percent of openings) exceeds their right to consider race and ethnicity. Under the holistic file review system, admissions officers and hired readers assess the full application submitted, reading essays and recommendation letters, assessing writing skills, and importantly, seeking to understand the context in which SAT scores and GPAs were earned. Race is one of many contextual factors considered. The UW adopted a race-neutral version of the holistic approach when it became clear, several years after the passage of I-200, that a composite score admissions platform (which essentially scores applicants based on GPA and SAT or ACT scores) insufficiently accommodated diverse applicants. Over time, the UW’s holistic review, even without a race factor, was found to significantly increase the diversity of entering classes.

In fact, schools across the country use similar systems to foster diversity in their schools, and many have voiced their avid support for UT. In August, the American Council on Education filed a brief on behalf of itself and 39 higher education groups backing UT. The Obama administration also filed a UT-supportive brief, as did a group of U.S. senators, and a number of states (including California, where voters barred public universities from considering race in admissions).

However, last Friday, opponents of UT’s holistic review caught a break when the Brookings Institute, a nonprofit public policy organization based in D.C., presented new research suggesting that eliminating the consideration of race would have a lesser impact on minority students than some believe. In addition, their research implies that under affirmative action, minority students may actually achieve less academic success than they would otherwise. The studies received criticism for their methodology and lack of peer-review, but have still caught the attention of the media and public.

Debates will likely continue through next month. If the Court rules in favor of Fisher, the use of holistic review across the country may be called into question, although the UW’s race-neutral model should be significantly less vulnerable.

As a recent post discussed, if you attend college, you are more likely to earn more money. But, as you might imagine, the financial value of higher education depends on what program you choose and where.

Information on the annual earnings of students from different programs and institutions is exactly what Sen. Ron Wyden, a Democrat of Oregon, and Sen. Marco Rubio, a Republican of Florida, hope to provide. Their recently-introduced “Student Right to Know Before You Go Act” proposes creating a state-based, individual-level data system linking the average costs and graduation rates of specific programs and institutions to their graduates’ accrued debt and annual earnings.

Although useful, Senator Wyden acknowledged that such information is limited and that focusing on financial indicators alone could undermine the importance of liberal arts—whose graduates may not earn large salaries right after college. He stated that the bill’s intention is “to empower people to make choices.” However, “people” include not just students, but policy makers—such as Florida’s Governor Rick Scott who sparked controversy last October when he asserted that state money should go to job-oriented fields, rather than fields like anthropology which, he said, do not serve the state’s vital interest.

Regardless of the bill’s success, about half of the states already have the ability to link postsecondary academic records with labor data. And some, such as Tennessee, have already done so. Here in Washington, the Education Research and Data Center is in the process of connecting certain employment and enrollment data for schools, such as the UW, to analyze in the coming months.

All this begs the question: Is college chiefly for personal economic gain?

A recent report by the College Board highlights both the financial and nonfinancial payoffs of college. Additionally, David A. Reidy, head of the philosophy department at University of Tennessee Knoxville, stated in a recent Chronicle article that four-year degrees, particularly in liberal-arts, are not solely for job training. “The success of the American democratic experiment depends significantly on a broadly educated citizenry, capable of critical thinking, cultural understanding, moral analysis and argument,” he wrote. Philosophy and other core disciplines help nurture such a citizenry, he continued, “And the value there is incalculable.”

Now that both Democrats and Republicans have adopted party platforms at their respective conventions, what do we know about their plans for higher education? Below is a quick overview of each party’s higher education goals and associated action steps (past, present, or future) adapted directly from the parties’ formally-adopted platforms:

DEMOCRATIC PLATFORM

GOAL 1: To make college affordable for students of all backgrounds and confront the burden of loans.

  • Removed banks as student loan middlemen, saving more than $60 billion.
  • Doubled investment in Pell Grant scholarships.
  • Created American Opportunity Tax Credit of up to $10,000 over a 4 year degree.
  • Working to help student loan payments be only 10% of a student’s monthly income.
  • Pledged to incentivize colleges to keep their costs down.
  • Invested over $2.5 billion into strengthening our nation’s Minority Serving Institutions.

GOAL 2: To recognize the economic opportunities created by our nation’s community colleges.

  • Invested in community colleges and called for business-college partnerships to train 2 million workers.

GOAL 3: To make this country a destination for global talent and ingenuity.

  • Will work to help foreign students earning advanced degrees stay and help create jobs here.

REPUBLICAN PLATFORM

GOAL 1: Improve our nation’s classrooms.

  • Address ideological bias that is deeply entrenched within the current university system.
  • Protect the public’s investment in state institutions from abuse by political indoctrination.
  • Call on State officials to ensure that public institutions be “places of learning and the exchange of ideas, not zones of intellectual intolerance favoring the Left.”

GOAL 2: To address rising college costs and get back to programs directly related to job opportunities.

  • Expand new systems of learning (online universities, community colleges, etc.) to compete with traditional 4-year colleges.
  • Advance the affordability, innovation, and transparency needed to make lower cost alternatives accessible to everyone.

GOAL 3: To get federal student aid onto a sustainable path.

  • Provide families with information necessary to making prudent choices about a student’s future.
  • Shift the federal government’s role in student loans from being the originator of loans to an insurance guarantor for private sector student loans.
  • Welcome private sector participation in student financing.
  • Reevaluate any regulation that drives tuition costs higher.

Voters’ choices on November 6th will determine which party, and consequently which platform, has the greatest impact on the UW. In the meantime, any relevant updates or changes will be added to OPBlog.

The Pell Grant program, the largest federal student grant program, was expected to be $20 billion short of the $40 billion price estimated for FY12 (which ended July 1). However, the Department of Education surprised many with newly-released data showing the federal government not only spent well under that estimate at only $33.4 billion, but in fact $2.2 billion less than FY11.

Recently, Pell eligibility increased dramatically as college enrollments rose and the recession continued to impact family/student income. This trend continued in FY12 and, interestingly, the dip in Pell spending occurred despite a 58,000 increase in Pell recipients—to almost 9.7 million. In fall 2011, nearly one quarter of UW freshmen were Pell eligible.

Reasons for the decline in Pell spending include:

  • The elimination of the year-round, or summer, Pell Grant, which allowed students to qualify for two awards in a year.
  • More students attending college part time as part-time status reduces Pell award amounts.
  • Fewer students attending for-profit institutions, which tend to enroll students who qualify for larger awards. Recent bad press and slumping enrollments have hit for-profits hard. Consequently, the number of Pell recipients at for-profits declined by 108,000 students, to roughly 2.1 million, and accounted for $1.4 billion of the decrease.

The drop in Pell expenditures is a relief for most lawmakers as they face next year’s “fiscal cliff” and must address both the impending tax hikes (when Bush tax cuts expire) and the automatic spending cuts (as mandated by the sequester). The Obama administration and congressional Democrats have resisted financial aid-related budget cutting, maintaining the maximum Pell award of $5,550 and writing specific protection for Pell Grant funding into the Budget Control Act. However, recent financial straits have already caused the federal government to eliminate several student loan programs such as the previously-mentioned summer Pell Grant, the six-month grace period for loan repayment, subsidized Stafford Loans for graduate students, and incentives for early loan repayment. With the sequester and difficult budget decisions looming on the horizon, it is safe to say that no funding is safe.

The US Departments of Treasury and Education teamed up to analyze higher education and economic data, and released a short report that highlights the following familiar points:

  • Education is correlated with higher earnings: median weekly earnings for a worker with a BA degree are now 64% higher than for a worker with only a high school degree.
  • Education is key to socio-economic mobility: almost half of children born into the bottom income quintile remain there as adults compared to only 20% of those who receive a degree.
  • Funding cuts result in higher tuition: Public funding for institutions has, on average, declined from 60% of revenue to less than 40% over two decades while tuition revenue has increased by almost the same amount of the decline.

As a result of the above, federal financial aid has become an increasingly important contributor to college affordability, comprising over half of all grants and loans awarded to students. While protecting and increasing federal funding for aid is imperative, the report makes clear that states and institutions will have to make changes as these trends continue or broad access to higher education in the US will be at serious risk.

The US Department of Education released their second annual ranking of universities by costUsers can rank institutions by tuition rate (sticker price) or by a net cost of attendance measure. Institutions are also ranked by annual percentage increases in these measures. The Department presents these data as a tool to help students and families find good educational and financial fits when selecting an institution, and also aims to publically identify and shame institutions that increase tuition the most.

While any attempt to centralize and simplify higher education data to facilitate easier consumer evaluation and comparison is an important effort, there are many potential unintended consequences relating to both the measures used and in aggregating this type of information across such a large, varied set of institutions. Economists Robert Archibald and David Feldman address some of these problems in an Inside Higher Ed piece published today.

← Previous PageNext Page →