‘Ability to benefit’ students lose federal aid

College doors will shut for the neediest students on July 1, when federal aid is cut to would-be students who lack a high school diploma or GED. Currently, these students can take a basic skills test to prove their “ability to benefit” from college classes or successfully complete six credits. The new federal budget cuts off aid to these students to save Pell Grant money, notes Inside Higher Ed.

College administrators say they worry the new policy will shut out older students seeking training to find a new job, immigrants, and students in states where money for basic adult education has been cut in budget crises.

Either those students will turn to riskier private loans, they say, or — more likely — they’ll just give up on pursuing higher education.

Community colleges and for-profit colleges enroll the most “ability to benefit” students, though the total amounts to only 1 percent of the community college population. The new policy “runs counter to the missions of many of our colleges,” said David Baime, vice president for government relations at the American Association of Community Colleges.

Only a third of high school dropouts without a GED earned a college credential in six years, according to a study by the National Center for Education Statistics. That’s no worse than students who’d completed a GED.

“Ability to benefit” students are more likely to default on student loans. As a result two major for-profit educators, Kaplan and Corinthian Colleges, no longer enroll “ability to benefit” students.

GOP bill would limit Pell eligibility

The House Republicans’ omnibus spending bill keeps the maximum Pell Grant at $5,550 for fiscal 2012, but limits Pell eligibility to cut costs, reports Community College Times.

Under the bill, students without a high school diploma, GED or homeschooling certification could not qualify for student aid by passing an “ability-to-benefit” (ATB) test showing they can do college-level work. Graduation rates are poor for ATB students. The change would affect 1 percent of community college students and 3 percent of students at for-profit institutions.

In addition, students could collect grants for only 12 semesters or six years, down from 18 semesters. Although that will affect some part-time students, it’s a very modest proposal compared to an earlier idea that was rejected: Limit Pell Grants to full-time students to raise graduation rates.

Currently, a student automatically receives the maximum Pell grant with family income of $30,000 or less. That would be cut to $23,000.

Overall, the changes would trim $11 billion over 10 years, according to an outline of the bill from House Republicans, which noted the “common-sense reforms” would ensure the program’s financial stability.

The bill also proposes small cuts in job training programs, except for the Veterans Employment and Training Services program, which would receive a small increase.

For-profits cut off low-skilled applicants

With many students defaulting on federal loans, two for-profit educators, Corinthian Colleges and Kaplan will deny enrollment to high school drop-outs who pass a basic-skills test known as an “ability to benefit” test, reports the Chronicle of Higher Education.

Kaplan discontinued the tests last year at some institutions citing poor student performance. Corinthian announced it will drop the tests because “ability to benefit” students default on their loans at twice the rate of other students.

Starting in 2014, “the Education Department will hold colleges accountable for defaults of student cohorts for three years after the students graduate or leave college, a year longer than under current law,” reports the Chronicle of Higher Education.

About 15 percent of Corinthian’s students in the last academic year used the ability-to-benefit test. The company, which operates more than 100 campuses across North America, estimates it will lose 16,000 potential students and about $120-million in the next fiscal year as a result of this decision, but it will also lose the risk of higher default rates those students would bring. The 15-percent enrollment of ability-to-benefit students was a decrease from 24 percent the previous year, credited to a greater focus on default management at Corinthian, as well as the growth of its online division, which does not enroll such students.

If colleges can’t help ability-to-benefit students succeed, it’s not far to load them up with debt, said Deborah Cochrane, program director at the Institute for College Access and Success.

Last year, a GAO report found “testing officials at a for-profit college helped students cheat on an ability-to-benefit test, the Chronicle reports. The Education Department said it would strengthen monitoring.

People who’ve failed to complete high school or a GED are likely to be weak in persistence as well as reading and math skills. If they’re cut off from for-profit options, they can try adult education or community colleges: Their success rate will be low at lower cost.