At 514 colleges, defaults exceed graduation rates

Default rates are higher than graduation rates at 514 colleges and universities nationwide, according to an analysis by Education Sector and USA Today. Nearly half of the “red flag” institutions are operated by for-profit colleges and about one-third are community colleges.

 “These colleges should set off a red flag in the minds of prospective student borrowers — and their parents,” says Andrew Gillen, research director for Education Sector, a non-profit, non-partisan think-tank on education policy that gathered the federal data. “Many students at these colleges will no doubt take out loans, graduate and get good jobs. But the high default rates and lower graduation rates suggest that many will not.”

In Debt and In the Dark, a new Ed Sector report, identified colleges where the percentage of borrowers who started repaying loans in 2009 and had defaulted by 2012 was higher than the schools’ graduation rates. At 256 of these, at least 30 percent of students take out loans.

Some 117 for-profit institutions — most offering four-year degrees — made the list. ITT Educational Services, which has 145 technical institutes nationwide, operated 45 of them. In addition, the analysis found 88 community colleges where default rates were higher than graduation rates, though most students don’t borrow and those who do take out small loans.

At New River Community and Technical College in Beckley, W.Va., administrators attribute the 5% graduation rate and 25.7% default rate to several factors, including high unemployment and the residual effect of a period of years when loan amounts were inflated because an incorrect formula for awarding aid was used. That attracted a number of students who had “no intention of completing their education,” says Barbara Elliott, director of public relations. Even for those who did earn a degree, “the payments were so high that they may have had trouble making them.”

The Education Sector report argues that default data would be more useful if it provided information about defaulters, such as whether they also received federal aid for low-income students and which fields they were studying. That would help students determine the likelihood they would default if they borrowed, Gillen says.

Default data should provide more information, including whether which types of students are prone to default and their field of study, argues In Debt and In the Dark. “Given the importance of defaults, and the recent jump in their numbers, it makes sense for the government to provide more detailed information on defaults, not just as an accountability lever but as a basic consumer right,” writes Gillen.

Online completion gap is narrowing

The completion gap between online and traditional courses is narrowing, reports a Instructional Technology Council survey on Trends in eLearning at community colleges.  Nearly half of colleges surveyed said online students are as successful as students in face-to-face courses, reports Fred Lokken, dean of the WebCollege at Truckee Meadows Community College.

Distance education enrollments at community colleges continue to grow, with a move to “blended” or “hybrid” courses. However, the rate of growth has slowed, concludes the survey, which was released at the annual meeting of the American Association of Community Colleges in San Francisco.

While community colleges are “exploring ways to use massive open online courses and open educational resources in their curriculums,” many distance education administrators remain “skeptical,” reports Scott Jaschik on Inside Higher Ed.

Both MOOCs and OERs have been promoted as ways to help cash-strapped community colleges educate more students, many of whom themselves are cash-strapped.

On MOOCs, the survey found that only 1 percent of community colleges are offering course credits or certificates for MOOC completion. While another 44 are “beginning to explore options” that might incorporate MOOC content into programs, 42 percent reported that they had no plans to do so.
“As would be expected with something so new, campuses are cautious in their approach. Many community colleges are skeptical that a large-enrollment solution is appropriate for campuses that believe in smaller, more personalized instruction,” says a report on the survey.

Only 36 percent believed open educational resources would have a “significant impact” at community colleges. Two-thirds of respondents said faculty members weren’t aware of OERs and lacked the time to locate and evaluate them. Many also worried about the credibility of some resources.

MOOC mockers don’t understand the potential of online learning, writes Geoff Cain, director of academic technology at Humboldt State, here and here.

State U Online, a new report by Education Sector and the New America Foundation, outlines five steps to implementing successful distance education programs.

California pilots $150 online courses

For $150 per online course, California students will be able to earn college credit as part of a partnership between San Jose State University and Udacity, a Silicon Valley MOOC start-up, reports the New York Times. Remedial algebra, college algebra and introductory statistics will be the first courses offered.

The pilot won’t be massive:  It will be limited to 300 students from San Jose State, local community colleges and nearby high schools. San Jose State professors will design the courses, which will include interactive quizzes. Udacity will provide the platform and the support services, such as online mentors.

Ellen N. Junn, provost and vice president for academic affairs at the university in San Jose, said the California State University System faces a crisis because more than 50 percent of entering students cannot meet basic requirements.

“They graduate from high school, but they cannot pass our elementary math and English placement tests,” she said.

California Gov. Jerry Brown kicked off the partnership with a phone call to Sebastian Thrun, one of Udacity’s founders.  Brown hopes low-cost online courses will lower costs and speed graduation for thousands of California students who now have trouble getting into the classes they need.

EdX, a MIT-Harvard collaboration, will begin offering “blended” classes at  two Massachusetts community colleges this month, reports the Times.

Recently edX completed a pilot offering of its difficult circuits and electronics course at San Jose State to stunning results: while 40 percent of the students in the traditional version of the class got a grade of C or lower, only 9 percent in the blended edX class got such a low grade.

Unlike the blended class, the Udacity pilot will require students to work entirely online.

If student success rates are high in the pilot courses, the $150 courses could be opened to high school and community collegestudents across the country by this summer, reports the San Jose Mercury News.

It’s not a sure thing, said Thrun at the press conference. “There’s a big if here because we are very skeptical ourselves whether this actually works,” he said. “We set it up as an experiment of scale, but we don’t know if this is a viable path to education.”

“Failure is the precursor for success,” said Brown, vowing to learn from setbacks.

“I hope this will be such a game-changer,” said Mo Qayoumi, San Jose State’s president.

Online outreach has boosted retention rates for online courses offered by the University of Georgia’s eCore, reports Education Sector.

College without crushing debt?

Affordable At Last, a new Education Sector report, calls for linking all student loans to borrowers’ income. This would “end all federal student-loan defaults forever,” writes Erin Dillon.

President Obama has issued an executive order making the current income-based repayment plan more generous: Borrowers would pay 10 percent of discretionary income for up to 20 years, then be forgiven the remainder of the loan, if any. That’s a good step, writes Kevin Carey, but the U.S. needs a simpler, British-style repayment plan.

 One recent study found that the majority of American borrowers—56 percent—struggled with loan payments in the first five years after college. In Britain, by contrast, 98 percent of borrowers are meeting their obligations.

Few borrowers here use income-based repayment, dubbed Pay As You Earn by President Obama.  “The program is administratively complicated, involving income-eligibility caps and requiring students to reapply every year,” writes Carey.  Ed Sector envisions graduates repaying their loans as part of paying income tax.

However, making it easier for students to repay loans won’t help unless the administration takes steps to control ever-increasing college costs, writes Carey.

. . . people require a college degree in order to pursue a decent career. Unemployment rates during the great recession have been catastrophic for the uneducated even as graduates have mostly kept their jobs. So students and parents have little choice: pay what colleges choose to charge you, and if you don’t have the money in the bank, take out a loan.

To be sure, some students make bad choices, borrowing too much money to attend second-rate colleges or pursue majors with little value in the job market. But that just points to the folly of building a higher education system that depends on wise financial-decision making by 18-year olds, and makes learning for the sake of learning a luxury that only the wealthy can afford. Colleges that allow students to take such loans and happily cash their checks, meanwhile, deserve a measure of moral condemnation.

While community colleges provide a low-cost option, but most students never earn a degree, “in part because state governments brutally shortchange the two-year sector, giving them pennies on the dollar compared to flagship universities where the privileged send their children to school.”  

While the Obama admnistration has taken over student lending, gone after for-profit colleges and pumped more money into Pell Grants, the administration hasn’t taken action to control “the rapidly escalating price of higher education.”

Without such reforms, all that new financial aid money will disappear like water tossed into the ocean. Far more must be done to create innovative new low-cost higher education models that can compete with traditional institutions on price and quality at the same time. At the same time, the prestige-obsessed market dynamics of higher education need to be altered by giving students and parents much more information than currently exists about which colleges actually provide a high quality education at a reasonable price.  

It won’t be easy, Carey writes. “If legislators can get away with balancing budgets on the backs of low- and middle-income college students, they will.”

Low-income students ‘maximize debt’

Inspired by Education Sector’s Debt-to-Degree report, the Flint (Michigan) Journal looked at   how much local students are spending per degree.

At Flint’s Mott Community College, dividing total degrees awarded by total undergraduate debt, yields a debt load of $10,171 per degree for 2007-09.  That’s better than Henry Ford Community College ($22,691) but much higher than Southwestern Michigan College ($81.19). 

Unemployment is high and incomes are low in Flint. “Some students take longer to get a degree, stopping and starting school several times because of jobs or families,” reports the Journal. “Some use college loans to pay life expenses as well as tuition.”

MCC Spokesman Michael Kelly said Genesee County’s economy is a big culprit. Many low-income students have their tuition covered by the Pell grant, but still take out loans for other expenses, he said.

“This is also being perceived as a revenue stream, as a source of income,” Kelly said of loans. “They’re taking out more money than education expenses require and using it for rent, groceries and car payments.

“They’re maximizing their debt.”

He said MCC officials last year tried to reduce the amount students borrowed but were told by U.S. Department of Education officials that that wasn’t an option.

Borrowing to pay living expenses is a very dangerous strategy for high-risk students. Student loans can’t be discharged in bankruptcy.

“If students are going to borrow money and pay those loans back, they need to get a degree,” said Education Sector policy director Kevin Carey. “The job market doesn’t give partial credit for going to college and not graduating.

Brandon Kreiner, 24, dropped out of University of Michigan at Flint after three years because of poor grades, then spent three years at Macomb Community College to raise his grade point average. Now back at UM-Flint, he’ll need three more years to complete a degree in secondary education. He expects he’ll owe $30,000 in student loans, despite receiving Pell Grant aid.  “As long as I can get a job, I’ll be able to pay it back,” Kreiner said, “but the teaching industry isn’t great in Michigan right now.” Even if schools are hiring, a would-be teacher with poor grades will be competing with stronger candidates.


Pomp, circumstance and then what?

High schools should track graduates’ college experience to see whether they need remedial courses and whether they earn a degree, argues the Data Quality Campaign. The group co-sponsored a meeting in Washington, D.C. last week with College Summit to discuss the role of data in advancing the college- and career-ready agenda.

J.B. Schramm, CEO of College Summit and E. Kinney Zalesne, released a paper, Seizing the Measurement Moment (pdf), reports Education Week.

“Only states have the incentive, the means, the impartiality, and the stamina to get this information in the hands of educators,” he said. Some states, with significant federal support, have made progress in building these data systems in the past six years, but more needs to be done, he said.

States must measure students’ postsecondary success, make the data available in a user-friendly format, help schools use the information to improve and reward districts that improve students’ college enrollment and performance, Schramm said.

Only 13 percent of high school educators said they know how their graduates do in postsecondary institutions in a 2010 Deloitte survey.

Knowing how students fare in college can help K-12 identify weaknesses in curriculum, such as the need for more math requirements or more rigorous writing instruction. That information can also relieve colleges from having to invest as much in developmental education and, ultimately, fortify the workforce, the College Summit report suggests.

Most states now have the ability to link K-12 and higher education data.

This year, New York City’s school report cards will show graduates’ college readiness, acceptance and retention.

What Gets Measured Gets Done concludes a Jobs for the Future policy brief, which calls for adding a measure of high school graduates’ college-course completion to K-12 accountability systems.

Another JFF publication, Testing Ground, looks at Florida’s use of a new college placement test to create a sense of urgency for college-readiness reforms.

Education Sector also endorses using outcomes data to measure high school success.

In California, however, Gov. Jerry Brown vetoed a bill that would have added graduation and remediation rates to the state’s high school accountability system. Measuring performance doesn’t improve performance, wrote Brown in the veto message.

The trouble with debt to degree

Education Sector’s Debt to Degree: A New Way of Measuring College Success is commendable for its focus on institutional productivity, writes Robert Kelchen, a UW-Madison educational policy graduate student, guest-blogging on Education Optimists. However, the “borrowing to credential ratio” could reduce low-income students’ access to college, Kelchen fears.

The metric favors selective colleges and universities, which enroll fewer needy students and more well-prepared students likely to earn a degree.  Running the IPEDS data, Kelchen “the more Pell recipients an institution enrolls, the worse it performs on this ratio.”

While even though Carey and Dillon focus on comparing similar institutions in their report (for example, Iowa State and Florida State), it is very likely that in real life (e.g. the policy world) the data will be used to compare dissimilar institutions. The expected unintended consequence is “cream skimming,” in which institutions have incentives to enroll either high-income students or low-income students with a very high likelihood of graduation.

The debt-to-degree ratio doesn’t solely measure college performance, Kelchen concludes. In part, it’s the result of student inputs.

In addition, Ed Sector classifies 60 colleges as four-year institutions even though bachelor’s degrees make up less than 10 percent of credentials awarded.  That’s misleading, Kelchen writes.



Who’s gainfully employed?

Are You Gainfully Employed? In a very useful Education Sector report, Ben Miller explains how proposed for-profit regulations will work. Only 4 percent of programs — 8 percent of bachelor’s degree programs, 6 percent of associate degrees and 1 percent of certificates — will lose eligibility for student loans, he projects. Another 15 percent will face restrictions.

High-tech fields, such as e-commerce or graphic design, and jobs with low starting pay, such as medical assistant or chef, are the most likely to be affected.

About 65 percent of programs will fall in a middle category which requires colleges to post “debt warnings alerting potential students to the likelihood that enrolling could be hazardous to their financial health.”

For associate degree programs, Miller estimated 6 percent will be ineligible for loans, 19 percent restricted, 68 percent eligible with a debt warning and only 7 percent fully eligible.

Bachelor’s programs in accounting, business management, legal assistant/paralegal, and nursing have little trouble meeting the requirements, Miller found.

By contrast, most ineligible programs are in “dream job” areas: they provide training in cutting-edge fields like online businesses and graphic design, or in luxury occupations like interior design or fashion merchandising. These areas are associated with relatively high borrowing levels, but do not offer large numbers of jobs.

Consumers can learn more from repayment rates, debt ratios and cost warnings than they will from graduation rates or job placement data, Miller writes. Providing information on a program-by-program basis, instead of looking at the provider as a whole, is even more helpful.

For-profit colleges offer a wide variety of training programs in completely unrelated fields, so breaking apart the information by program ensures that a nursing student, for example, can see how his or her program actually performed without getting results conflated with business programs that serve students seeking very different careers.

The rule applies to all for-profit programs, except those in the liberal arts, but only to certificate programs at nonprofit public or private colleges. What’s good for the taxed is good for the untaxed, Miller argues. Students shopping for an associate degree in a career field should be able to compare the gainful employment record of the local community college to the for-profit alternative.

Miller also questions the proposed rule’s focus on graduates, ignoring the many borrowers who never complete a program.

One 2005 study found that students who borrowed and did not complete their program were “twice as likely to be unemployed as borrowers who received a degree, and more than 10 times as likely to default on their loan.” A program that fails to graduate large numbers of its students should also be seen as not providing gainful employment.

The rule will not shut down the for-profit sector, Miller writes. Colleges will have several years to adapt to the new rules. They can cut costs to reduce borrowing, or work harder to help students find higher-paying jobs.

Or they can try to sell high-cost training for low-pay jobs without the lure of federal loans.

Update:  Miller’s “guesstimates” on the rules’ impact are way too low, argues the Career College Association, which represents the for-profit sector.

Give me better data and I’ll use it, Miller responds. “If the CCA would like to provide more specific data on exact levels of private and federal student loan borrowing or earnings information for each of its 1,400 member institutions by program, then I would gladly accept that data and run the analysis.”

Regulating for-profits

National Journal’s Education Experts discuss regulating for-profit higher education. One proposed regulation will ban incentive pay based on how many students a recruiter signs up.  Another — held back for further consideration — would cut federal aid to for-profits whose graduates pay more than 8 percent of their salary to service their student-loan debt. The industry is fighting this one very hard.

Steve Peha of Teaching That Makes Sense wonders why regulators are going after the “expensive sham degree from Strip Mall U” and ignoring “an equally useless and perhaps even more costly credential” from a traditional institution.

Drop in at any third-rate state school and I’m sure you’ll find dozens of kids who won’t find work in their fields after paying a pretty penny for the privilege of a few nice buildings, a little green grass, and a better chance of getting laid on the weekend. Out of the last class of pre-service teachers with whom I worked, maybe one or two might have been good enough to get a job and keep it. Not their fault. Or mine. The university sucked them in and immediately struck up the band with “Pomp and Circumstance,” even when it was obvious that many were not up to the task. Kids who can barely speak and write in complete sentences are rushed through their programs before their financial aid runs out — and profs who think they ought not be passed along are discouraged from giving out failing grades, even when their students fail to master crucial material or even to complete minimal amounts of work.

Education Sector‘s Kevin Carey also wants accountability to all higher education sectors.

Once the Department implements the “gainful employment” policy, why limit it to for-profits? As the New York Times recently reported, some private universities think nothing of letting students borrow $100,000 for a bachelor’s degree with limited value in the job market. While the for-profit share of public subsidies is growing, the vast majority of taxpayer support for higher education continues to flow to traditional public and non-profit institutions. Many of them are doing a poor job and have loan default problems of their own. I hope the Department’s actions are a first step toward higher standards for all public support of higher education, for-profit and otherwise.

I agree. But taking a hard look at what college students get out of their degrees — or a few semesters in college with no degree — will be very painful. Should federal aid support poorly prepared students who are unlikely to earn a useful credential? Should grants and loans go to students with academic interests unlikely to qualify them for a job? What about those third-rate schools turning out semi-skilled graduates?

Teaching the iGeneration

Community colleges are facing the iGeneration, writes Community College Week. Wired students expect to learn online just as they do everything else online.

Community colleges must respond to the new learners, said Pamela K. Quinn, provost of the LeCroy Center for Educational Telecommunications, the online arm of the Dallas County Community College District.

They must identify, hire and train distance educators who are comfortable with new technologies. Colleges must demonstrate the capability to respond quickly to students who move through a connected world at warp speed and expect instant responses to their text messages.They must monitor, assess and improve the quality of online courses and resist the temptation to use technology for technology’s sake.

And they must begin in earnest to address connectivity and technical issues in their long-term strategic plans and annual spending plans.

In 2008, 4.6 million students — about one quarter of community college enrollment — were enrolled in at least one online course, a Sloan Consortium  report found. Distance education is growing rapidly at community colleges, up by 22 percent just in 2008-09.

At many community colleges, all the enrollment growth is coming in online classes, concludes an Instructional Technology Council study. Colleges are struggling to recruit faculty with online teaching skills.  Other trends:

  • Blended/hybrid classes and Web-assisted classes represent some of the sharpest increases in distance education.
  • The most difficult courses for students include lab-based science, speech, fine arts, nursing, math and foreign languages.
  • The gap between course completion rates for distance learning (72 percent) and face-to-face courses (76 percent) is narrowing.

Young, tech-oriented students learn by trial and error, says Fred Lokken, ITC chair and associate dean for teaching technologies at Truckee Meadows Community College. “”The whole educational system is predicated on the notion that failure is a bad thing. But failure means nothing to them.”

“It’s not about the distance. It’s about the education,” said Jean M. Runyon, dean of the Virtual Campus at Anne Arundel Community College. “A good teacher is a good teacher. What we have to understand is that technology can be used to support what we are doing in the classroom, and what we need to do. We have access to the bells and whistles, but we need to use them purposefully.”

Education Sector looks at how colleges are using technology — or failing to use it —  in The Course of Innovation. “Even those colleges that have used technology to successfully transform some of their courses have left most of their other classes alone,” writes Ben Miller. “Colleges have yet to decide, en masse, that adopting a proven method to produce better student learning outcomes for less money is the kind of thing they should naturally do on their own.”