Lots of stuff is affordable — but not college

This chart shows why America’s low- and moderate-income families can afford flat-screen TVs but can’t afford to pay for their children’s college education, writes Grace at Cost of College.

20140503.COCCollegeInflationPoorPeople1

Don’t underestimate the value of career education, writes a New Orleans student.  Employability is the “ultimate prize,” writes Milan Miller, whose family members benefited from vocational education.  Developing a skill set valued by employers is possible with a bachelor’s degree, “a two-year degree, an online degree, work experience” or self teaching.

$10K degree isn’t impossible after all

When Gov. Rick Perry challenged Texas’s public universities to craft four-year degrees costing no more than $10,000, many said it was impossible, recalls Thomas K. Lindsay, director of the Center for Higher Education at the Texas Public Policy Foundation. Three years later, 12 Texas universities have announced $10,000 bachelor’s degrees and the idea has spread to Florida, Oklahoma and Oregon.

The rapid expansion of $10,000 degree offerings has not satisfied the “It’s impossible” critics. They note that the fledgling programs are limited to a few subject areas, mostly the applied sciences, and argue that the same model cannot work in other fields. Moreover, they point out, a number of the new offerings charge students $10,000 but do not actually reduce their schools’ cost of instruction and materials.

That’s a valid critique, writes Lindsay. The current $10,000 degree programs reduced the price charged to the student but ignored Perry’s suggestion to cut costs by using online learning and competency-based exams.

However, that’s changing.

Three higher-education partners — Texas A&M University-Commerce, South Texas College, and the Texas Higher Education Coordinating Board (THECB) — just launched the “Affordable Baccalaureate Program,” the state’s first public university bachelor’s degree combining online learning and competency-based standards. Developed by community-college and university faculty . . . a new degree in organizational leadership can cost as little as $750 per term and allows students to receive credit for as many competencies and courses as they can master each term.

According to THECB’s website, students arriving “with no prior college credits should be able to complete the degree program in three years at a total cost of $13,000 to $15,000.” Students who enter having already satisfied their general-education requirements can complete the degree in two years, while those entering with “90 credit hours and no credential” can complete the degree “in one year for $4,500 to $6,000.”

Nationwide, college tuition and fees have risen 440 percent over the past 25 years, roughly four times the rate of inflation and nearly twice the rate of health-care cost growth, writes Lindsay. Total student-loan debt has risen to $1.2 trillion. Increasing federal subsidies so students can borrow more to pay higher tuition is fiscally unsustainable. So is increasing state subsidies for higher education.

Making college affordable

Are there better ways to pay for higher education? The Lumina Foundation has commissioned papers on new models of financial aid by a wide array of authors.

In Redefining College Affordability, Education Optimists Sara Goldrick-Rab and Nancy Kendall propose offering two free years at a public college to every high school graduate.

• All eligible students can attend any public college or university (2-year or 4-year) for free for the first two years

• Through a redirection of current federal financial aid funding, the federal government pays tuition for all students, and provides additional performance-based top-up funding for institutions that serve low-income students.

• Participating institutions cannot charge tuition or additional fees to students

• State funding for higher education will be redirected to cover books and supplies for all students

Student living expenses would be covered by a state and local stipend, a federally funded work-study job and access to federal loans.

California Competes’ College Considerator “tells users how likely they are to graduate and how long it will take based on a combination of their own self-described backgrounds and plans (such as working, or going part time) and the colleges’ graduation rates.”

The Considerator estimates “debt hazard” and predicts the “break-even age” – how old the graduate would be when the cumulative benefits of college surpass the costs.

Several papers looked at income-based repayment schemes:

· Can Income-Driven Repayment Policies be Efficient, Effective, and Equitable? Nicholas Hillman, University of Wisconsin-Madison, Jacob Gross, University of Louisville

· Estimating the Costs and Benefits of Income-Based Student Loan Repayment Systems: Beth Akers, Brookings Institution, Matthew Chingos, Brookings Institution

· From Income-based Repayment Plans to an Income-based Loan System: Robert G. Sheets, George Washington Institute for Public Policy, George Washington University, Stephen Crawford, George Washington Institute for Public Policy, George Washington University

· Should All Student Loan Payments Be Income-Driven? Benefits, Trade-offs, and Challenges: Lauren Asher, The Institute for College Access & Success (TICAS), Diane Cheng, The Institute for College Access & Success (TICAS), Jessica Thompson, The Institute for College Access & Success (TICAS)

In I’ll Pay for College, But It’s Not a Loan, National Journal looks at proposed legislation letting students fund their college costs by selling investors a percentage of future income for a fixed period. Because the money isn’t a loan, the petroleum engineering major who decides to become a poet couldn’t default. 

Myth: Community colleges are inefficient

It’s a “big fact” that the economic returns to college are high, write Clive Belfield and Davis Jenkins in a Community College Research center paper. It’s a “big myth” that the “college affordability crisis is actually an efficiency crisis caused by wasteful spending by colleges.” That’s especially true for community colleges.

Neglect of this fact and acceptance of this myth have impaired policymaking, resulting in reduced state funding and new practices (more adjuncts, larger classes, online courses) that cut spending and lower quality.

If colleges invest in improving quality, they’ll improve efficiency as well, write Belfield and Jenkins.

Community colleges serve many underprepared students who need substantial support, they point out. Educating college-ready students is cheaper and easier. 

Reforms to remediation, which likely require more (not less) resources, are therefore essential, as are reforms that provide a better articulation between high school and college. Much of the potential efficiency gain would come from improvements at the high school level.

For students already in college, barriers to completion include no-credit remedial courses, college-level courses that don’t meet degree requirements at transfer destinations and “the earning of extraneous credits outside a program area.”

Reforms should include creating more educationally coherent program pathways that lead to student end goals, building on-ramps to help students get into a program of study quickly, and tracking student progress and providing feedback using information technology and reorganized advising.

Low-income and first-generation students, who disproportionately enroll in community colleges, need more information on the returns to college, write Belfield and Jenkins. They also need more “structure and guidance” to succeed in college.

Feds could make public colleges tuition free

Public colleges and universities could be tuition free for $62.6 billion, writes Jordan Weissmann in The Atlantic. That’s how much tuition state schools collected from undergrads in 2012, according to Department of Education data. That’s less than the $69 billion the feds spent last year “on its hodgepodge of financial aid programs, such as Pell Grants for low-income students, tax breaks and work study funding,” writes Weissmann. “And that doesn’t even include loans.”

Washington could make public college tuition free with the money it sets aside its scattershot attempts to make college affordable today.

. . . rather than simply using our resources to maintain a cheap public system (and remember, public schools educate 75 percent of undergrads), we spill them into a fairly wasteful and expensive private sector. At one point, a Senate investigation found that the for-profit sector alone was chowing down on 25 percent of all federal aid dollars.

Actually, the feds would spend less than $62.6 billion to cover tuition because most of the $21.8 billion in Pell Grants is spent at state colleges and universities, Weissmann writes. However, state and local governments would have to continue their higher education subsidies.

Students at residential colleges would have to pay for room and board. Those choosing the private sector . . . Well, this plan would wipe out all but the elite, well-funded private nonprofit colleges and nearly all the for-profit sector.

California expands transfer degrees

transfer degrees

California will require community colleges to offer transfer degrees in all majors, reports the Ventura Star. Students who earn a transfer degree will be admitted to a California State University campus as juniors. They also would get priority admission to their local CSU campus.

The bill signed by Gov. Jerry Brown will make transfers “efficient, cost effective and achievable,” said the Campaign for College Opportunity.

Gov. Brown also signed a bill letting six community colleges charge higher tuition for winter or summer “intersession” classes. A typical three-unit class that costs $138 during the regular academic year would cost $600 during the special sessions.

Colleges that decide to participate would have to use one-third of the money they collect on financial aid for low-income students.

Brown said the pilot program “seems like a reasonable experiment” that would let campuses “offer students access and financial assistance to courses not otherwise available.”

‘Value’ plan leaves out learning

President Obama proposes rating colleges and universities on access, graduation rates, graduate earnings and affordability, writes Richard Hersh in an essay on Inside Higher EdWhat about learning?

Myriad studies over the past several decades document that too little “higher” learning is taking place; college students do not make significant gains in critical thinking, problem solving, analytical reasoning, written communication skills, and ethical and moral development.

Institutions respond to rewards, Hersh writes. Linking federal student aid to easily measured goals “will steer colleges and universities further away from higher learning.”

Hersh is co-author of We’re Losing Our Minds: Rethinking American Higher Education.

Vedder: College costs will keep rising

College costs will keep rising under the Obama plan, predicts economist Richard Vedder, director of the Center for College Affordability and Productivity.

“Colleges’ exploitation of young Americans through rapidly rising and increasingly exorbitant fees is a national scandal,” writes Vedder on Bloomberg News. After promising “tough love” for higher ed for the last two years, President Obama has a plan.

Some of what he proposes is good in principle; some is very bad.

He wants to expand access to information on colleges by having the Department of Education issue a ranking of institutions relating outcomes to costs. The government has the power, via the Internal Revenue Service, to get some interesting data on college graduates’ earnings, and providing that data to consumers would be useful.

. . . Tying federal funding after 2018 to the new federal ratings, which in turn incorporate performance measures such as graduation rates, may be a step toward giving colleges incentives to take cost reduction seriously. But the potential for unintended and damaging consequences is high: If the key to federal funding is raising graduation rates, colleges may lower already abysmally low standards.

Funding educational innovation sounds like a good idea, but previous efforts haven’t paid off, Vedder writes. A better approach would be to stop accrediting agencies from stalling the “cheap or free online courses” that are being created without federal involvement.

The president’s “very bad idea” is to link loan repayments to income, letting millions of students avoid repaying part of their obligation, writes Vedder.

So why not major in fields the economy values least — anthropology or drama instead of engineering or math — if you don’t have to worry about earning enough to pay off your student loans over a certain period?

The idea simply raises incentives for future students to borrow more money, if they know their obligation to pay it back is capped. That, in turn, allows colleges to keep raising costs.

Federal aid has soared from $56.8 billion in 2001-2002 to $173.8 billion a decade later, Vedder writes. That’s fueled tuition increases — without improving access for low-income students.

Obama: Link aid to college value

“A higher education is the single best investment you can make in your future,” President Obama told University of Buffalo students. But, “the soaring cost of higher education” has “become a barrier and a burden for too many American families.”  The president announced a plan to rate colleges “on who’s offering the best value so students and taxpayers get a bigger bang for their buck.”

The rankings would start as a consumer tool showing tuition, student loan debt, graduation rates and graduates’ earnings. Eventually, “Congress will be asked to change the federal financial-aid program so as to reward higher-performing colleges by giving students at those institutions larger Pell grants and lower-cost loans,” writes Jon Marcus on the Hechinger Report. However, it’s not a sure thing. “A previous similar proposal, to punish universities with the highest annual increases in tuition, hit snags and has been stalled.”

The president also proposes to raise the maximum Pell grant, the principal federal financial-aid program, by more than $900, to $6,450 per year, and expand tax credits for families paying tuition, ideas that face challenging legislative prospects in an era of austerity.

Students who take out loans to pay for their higher educations would be allowed to cap their repayments at an amount equal to no more than 10 percent of their income, an option now available to only a small number of borrowers.

Obama also will ask for $1 billion for grants to public universities and colleges that meet performance goals and for additional money to reward colleges and universities that graduate the largest numbers of low-income students.

The president pledged to cut off federal aid to students who don’t make “satisfactory academic progress.” (It’s already the law, but it’s loosely enforced.) Pell Grant money — now disbursed in a lump sum at the start of the semester — would be doled out in small increments to discourage students from enrolling, collecting the money and dropping out. The plan also includes Pell eligibility for low-income high school students taking college courses.

Encouraging colleges to innovate will cut costs, the president said.

The plan mentions so-called competency-based degrees, in which college credits are based not on the hours students spend in classrooms, but on how much they can show they know.

Another approach mentioned in the plan is online education through what have become known as “massive open online courses,” or MOOCs, which are mostly free. Mr. Obama also urged consideration of three-year degree programs and dual enrollment programs in which high school students can begin to earn college credits.

So far, though, the administration “has failed to persuade Congress to pay for Race to the Top competition for higher education, under which grants would go to those colleges with promising approaches,” notes the New York Times.

The president promised regulatory waivers to innovative colleges.

The American Association of Community College Trustees praised the president’s “plan to align federal aid disbursement based on academic progress and persistence,” but warned “there may be complexities in implementing this system based on the currently available information.” In other words, community colleges have very low graduation rates if transfers and certificate earners aren’t counted.

Nearly all colleges that admit large percentages of low-income, minority and first-generation students have very low graduation rates. In addition to community colleges, linking student aid to success rates could hurt the historically black colleges. Expect lots of pushback.

Obama’s plan gets an F from Jennifer Rubin, a Washington Post columnist. She quotes Molly Corbett Broad, president of the American Council on Education, who warns, ‘This is extraordinarily complicated stuff, and it’s not clear we have the complete data or accurate data.”

57% of students get federal aid

For the first time, a majority of undergraduates — 57 percent — are receiving Pell Grants and other federal student aid, reports Libby A. Nelson on Politico. In addition, 41 percent are taking out student loans, up from 35 percent four years ago.

The National Postsecondary Student Aid Study was released days before President Obama starts a bus tour dedicated to talking about holding down college costs.

“Federal grants and loans help students realize the American dream,” said U.S. Education Secretary Arne Duncan, who noted that Pell Grants are going to twice as many college students.

But “increasing federal student aid alone will not control the cost of college,” he added, calling on state policymakers and colleges and universities to hold the line on rising college tuition. “Together we can take collective action to help make college more accessible, affordable, and attainable for middle class Americans across the country.”

Increasing student aid enables colleges to increase tuition, economists argue. “Colleges often deliberately raise their prices when aid is available, in essence ‘capturing’ the aid,” wrote Robert Martin and Andrew Gillen in 2011.

Pell Grant spending has skyrocketed, notes Politico.

About 41 percent of all students received the grant in 2011-12, a 14 percentage point increase. Congress expanded the grant program several times between 2007 and 2009. As the economy faltered and incomes fell, spending on Pell grew from $12.8 billion in 2007 to $35.6 billion in 2011 before falling slightly last year.

For-profit colleges enroll many low-income, minority and adult students who are reliant on federal aid.

More than three-quarters of students at for-profit colleges granting associate or bachelor’s degrees received federal student aid. And an additional 10 percent of students at for-profit colleges granting bachelor’s degrees received veterans’ benefits — a higher proportion than at public or private nonprofit colleges.

Including state aid and college scholarships, 71 percent of students receive help paying for college. Colleges use some scholarship money to help needy students, but just as much goes to academically strong students from affluent families, the report found.

Under pressure from historically black colleges, the Obama administration made it easier for parents with shaky credit histories to take out Parent PLUS loans, notes EduBubble.

Kelly Field at the Chronicle of Higher Education calls this a “victory.” And it is, for the colleges. But what about the students sucking down the outrageous amounts of debt? What about their parents?

These high-interest loans are not a good deal — especially for parents who’ve had financial problems in the past and have kids going to colleges with low graduation rates.