How federal aid pushes up tuition
When financial aid flows to affluent students, college raise tuition to capture the dollars, writes Andrew Gillen of the Center for College Affordability and Productivity. However, aid to low-income students, such as Pell Grants, is unlikely to push up tuition, he writes in an Inside Higher Ed essay.
Aid restricted to low-income families allows students who were previously priced out of higher education to attend, without giving colleges the ability to raise tuition without again pricing these students out of higher education. That is not the case with aid given to relatively affluent students who will attend college regardless of price.
Not all colleges will raise tuition, when aid rises, he adds. Instead, “many colleges will instead grow their applicant pool, allowing them to become more selective” and move up in college rankings.
“Don’t leave money sitting on the table” was the ethos, when he attended meetings with university administrators to discuss tuition, writes Peter Wood in a Minding the Campus discussion.
The metaphoric table in question was the one on which the government had laid out a sumptuous banquet of increases of financial aid. Our job was to figure out how to consume as much of it as possible in tuition increases. . . . A substantial portion of the money we captured would be reallocated as “tuition discounts” or “institutional aid.”
. . . And we did all this in the pursuit of educational excellence. It was a large private university in the shadow of world-ranked neighbors and it was attempting to pull itself up in the world of prestige and influence by its bootstraps. There were townhouses that needed buying; laboratories that needed building; faculty stars that needed hiring; classrooms and residence halls that needed refurbishing; symphonies that needed performing; grotesque modern sculptures that needed displaying; and administrators that needed chauffeuring.
Herbert London adds a quote from Derek Bok, a former Harvard president: “Universities share one characteristic with compulsive gamblers and exiled royalty: there is never enough money to satisfy their desires.”
The federal government should provide college aid only to low-income students with performance criteria to weed out mediocre students, proposes Richard Vedder, Gillen’s colleague at CCAP.
Make the college absorb some of the risk for loan defaults — a lesson we should have learned from the financial crisis. Give Pell Grants as vouchers directly to students, not schools. Reinstate private lending options. Unveil new human capital contract approaches that reduce debt reliance. Downsize and reinvent federal programs and allow market discipline to operate more.
Pathways to Success for ’21st century students’
Degree completion is a huge challenge for “nontraditional” college students, concludes Pathways to Success a report to Congress and the U.S. Education Department by the Advisory Committee on Student Financial Assistance. At community colleges, these older students are the norm, now dubbed “21st-century students.”
“Twenty-first century students,” a large and diverse group, aren’t served well by financial aid programs, the report found. National data banks track recent high school graduates, but ignore older students.
At a Sept. 30, 2011 meeting, two panels of experts discussed how federal policy can remove barriers to completion for adult students. In addition to reforming financial aid and tracking the progress of all students, they called for giving credit for prior learning and demonstrated competency, creating career pathways, integrating basic skills education with workforce training and assessing how much students are learning in college.
Adult ed, short-term students seek aid
Expand financial aid to part-time, non-credit students seeking job skills faculty and students told U.S. Education Secretary Arne Duncan at a town hall meeting at Tallahassee Community College last week, reports Community College Times.
President Obama wants two-year colleges to help train an additional two million Americans for jobs.
”I can’t overstate how important the role community colleges are going to play, helping our country get back to where we want to go,” Duncan said.
Many students in adult education and non-credit training programs don’t qualify for financial aid and scholarships, despite their need, said Kristina Pereira, an adult education specialist at TCC.
People seeking short-term job training should be eligible for aid, TCC President Jim Murdaugh told Community College Times. For example, a TCC student was enable to enroll in a certificate course that would have lead to a good job because he didn’t have the $500 fee and didn’t qualify for student aid, Murdaugh said.
“There is no mechanism to provide any help to these folks,” Murdaugh said, noting that current rules on federal student aid eligibility “disadvantage” part-time and non-credit students enrolled in courses that can usually be completed in 90 days with jobs waiting for them. Eligibility requirement should factor in programs that successfully lead to employment.
“That should be the litmus test for success,” Murdaugh said.
Many laid-off workers seek short-term training to get back into the job market quickly.
Obama: Raise tuition, lose federal aid
College affordability was the theme of President Obama’s speech at the University of Michigan yesterday. He called for spending more on Perkins loans and work-study programs — going from $3 billion now to $10 billion – but only at colleges and universities that provide “value.” Students at colleges that raise tuition could lose access to loans and work-study jobs.
In addition, the president’s plan (pdf) includes a $1 billion “Race to the Top for college affordability” and a $55 million “First in the World” competition to encourage productivity innovations, reports the Washington Post.
Higher education — including community colleges and lifelong learning for workers — is “an economic imperative,” Obama said. While he proposed increasing tuition tax credits and keeping interest rates low on student loans, he said that’s not enough. “Look, we can’t just keep on subsidizing skyrocketing tuition.”
So from now on, I’m telling Congress we should steer federal campus-based aid to those colleges that keep tuition affordable, provide good value, serve their students well. (Applause.) . . . If you can’t stop tuition from going up, then the funding you get from taxpayers each year will go down.
If “provide good value” and “serve their students well” means anything, it means the federal government will monitor graduation rates and employment outcomes, as well as tuition, for the entire higher education sector. Currently, “gainful employment” rules, which monitor former students’ earnings and ability to pay back loans, cover only for-profit colleges and community college vocational programs.
Following the speech, Molly Corbett Broad, president of the American Council on Education, issued a statement saying there’s concern that the proposal would “move decision-making in higher education from college campuses to Washington, D.C.”Sen. Lamar Alexander, R-Tenn., a former education secretary, said the autonomy of U.S. higher education is what makes it the best in the world, and he’s questioned whether Obama can enforce any plan that shifts federal aid away from colleges and universities without hurting students.
“It’s hard to do without hurting students, and it’s not appropriate to do,” Alexander said. “The federal government has no business doing this.”
President Obama also touted college “report cards” showing college costs and how well graduates do in the job market.
The U.S. Education Department and the Consumer Financial Protection Bureau are working on Know Before You Owe, a financial aid shopping sheet that will let future students estimate their debt, monthly payment and likely ability to repay loans. Parents and students also have requested a breakdown of college costs and information on repayment rates for graduates at each college.
Aids experts discuss Pell reforms
Pell Grants must change to remain viable, concluded financial-aid experts at the The State of College Access 2012 Forum in Washington D.C., reports Ed Week‘s College Bound. The National Association of Student Financial Aid Administrators (NASFAA), which hosted the event, released an issue brief on the role of Pell Grants in access, persistence, and completion.
If Pell can improve its efficiency and effectiveness, it will be able to make a stronger argument for funding, said Sandy Baum, a higher education policy analyst.
“We need to think creatively about options for the future, not at the last minute, but in advance,” said Baum. “If the program collapses of its own weight, we have a huge problem.”
Pell expenditures have increased six-fold since 1976 in constant dollars as more undergraduates receive the grants, which are capped at $5,550. Now costing $41 billion, Pell escaped serious cuts this year, but could be back on the chopping block next year.
Baum is working with College Board on a Gates-funded analysis of Pell Grants. Several changes are under discussion:
Complexity – To make dollars more effective, let students know ahead of time what they could get, perhaps with a simple table to see how much they qualify for based on income. .
Tax benefits – In reviewing federal student aid, look also at how much subsidy is going to offset college costs with education tax credits for students at all income levels (25 percent of tax deductions benefit families making more than $100,000) and not just Pell Grants that help low- and moderate-income students.
Structure – Think carefully about whether the same criteria and regulations work well for 18-year-old students just out of high school and 30-year-olds looking for short-term job retraining.
Incentives – Find ways to encourage institutions not to just open the doors to college but to accelerate completion.
Savings accounts – Create a college-savings program for the children of low-income tax filers so families have a stake in college education. Consider linking the amount of Pell Grant available to how long families were considered low income.
While the federal government doesn’t track graduation rates for Pell Grant recipients, it’s believed that success rates are low.
NASFAA’s site has advice on applying for federal financial aid.
How to help immigrant students
Community colleges must find ways to serve an increasingly diverse immigrant population with limited funds, urges Increasing Opportunities for Immigrant Students (pdf), a report by the Community College Consortium for Immigrant Education. By 2030, nearly one in five workers will be an immigrant, according to CCCIE.
Some colleges have helped students move quickly to college-level classes by integrating English as a Second Language with academic classwork, but designing “contextualized” ESL classes is challenging the report warns.
Other critical issues include: expanding ESL classroom capacity to meet demand, which, in turn, increases the need for more well-qualified ESL instructors; scheduling classes that can accommodate students’ work schedules and family responsibilities; and providing differentiated ESL curricula and career pathways to accommodate the various English proficiency and educational levels of immigrant students. More comprehensive assessment procedures that reflect immigrant students’ unique needs and strengths are a key prerequisite to developing more targeted curricula and student support.
Community colleges profiled in the report have found ways to expand services to immigrant students through public-private partnerships and collaborations with community groups, CCCIE stresses.
The report urges policymakers to improve access to financial aid by allowing support for noncredit ESL classes, reports College Bound.
Dream Act repeal fails in California
California’s Dream Act, which makes undocumented students eligible for state-funded college aid, will not face a challenge on the ballot. The campaign to overturn what critics called the “nightmare act” failed to gather enough signatures by the deadline.
Some NC colleges opt out of federal loans
Four North Carolina community colleges will not let students apply for federal student loans, fearing they’ll run up debts they won’t be able to repay. Other colleges in the state are considering pulling out of the loan program.
North Carolina legislators passed a law requiring community colleges to participate in the loan program, then reversed the mandate. Gov. Beverly Perdue vetoed the reversal, but the veto was reversed in a special session late in the year.
Central Piedmont Community College started offering the federal student loan program in July. Some 3,168 students have run up $5 million in student loans.
“Our concern is if students take a large amount of debt, once they do finish school it will impact their ability to do things like buy a house or a car,” said Jeff Lowrance, assistant to the president at CPCC.
Leaders are also concerned about new federal laws. In a couple of years, the schools could lose all federal aid, including Pell grants, if a large percentage of their students default on the loans.
“There is no screening process. There is no way to tell if a student is in a good position to pay back those student loans,” Lowrance said.
North Carolina ranks last in the nation in community college students’ access to financial aid, says Debbie Cochrane of The Institute for College Access and Success. There’s little risk community colleges could be barred from Pell Grants because of loan defaults, Cochrane says.
California offers college aid to aliens
California Dream Act Offers Path to College for Undocumented Students is my latest U.S. News story.
At San Jose’s Downtown College Prep, the school in my book, nearly all undocumented graduates enroll in community college, work part time and live at home to keep costs down. The new “Dream Act” will make low-income students eligible for fee waivers and then for Cal Grants when they transfer to a university.
But it’s not just about money, says Jennifer Andaluz, the school’s executive director. Students see the new law as a “symbolic win,” perhaps a step toward a federal law that would include a path to citizenship. And even without that, most believe they’ll find a way to legalize some day, somehow, Andaluz says. “They’re very optimistic, very hopeful, very resilient.”
In most states undocumented students aren’t eligible for state aid or even for in-state tuition. As a result, only 5 percent to 10 percent of undocumented high school graduates enroll in college, estimates the Immigration Policy Center. Those who do are highly motivated.
“They hunger for education in a way that, sadly, some students in our country do not,” says Isa Adney, a student life coordinator at Seminole State College in Florida.
At Downtown College Prep, which sends all its graduates to college, undocumented students are much more likely to earn a bachelor’s degree within six years than their classmates who are citizens or legal residents, says Andaluz. “Their attitude seems to be: ‘My parents sacrificed so much for me. I can’t squander my opportunities. The golden gates are going to open and I need to be ready.’”
Opponents of the law are gathering signatures for a ballot initiative that would repeal what they call the “Nightmare Act.”
Federal aid fuels exploding college costs
Education Secretary Arne Duncan’s approach to controlling college costs is dead wrong, writes Neal McCluskey, associate director of the Cato Institute’s Center for Educational Freedom. More federal aid will fuel exploding college costs, argues McCluskey, author of How Much Ivory Does This Tower Need? What We Spend on, and Get from, Higher Education.
To a system blackout-drunk on taxpayer money, the Obama administration would deliver even more booze while only whispering about tough love.
Speaking at a Nov. 29 Las Vegas gathering of financial-aid administrators, Duncan addressed exploding college costs, a problem highlighted by Occupy Wall Street protesters angry over rising student debt. He lauded loan forgiveness and repayment reduction, and exhorted colleges to do, well, something to become more efficient.
The education secretary inflated the benefits of a college degree — it’s not really $1 million over a working life — and ignored the reason colleges keep raising tuition, McCluskey writes.
Between 1985 and 2010, inflation-adjusted federal student aid rose from about $30 billion to about $140 billion, a 367 percent leap. Pell Grants alone ballooned from $8.1 billion in 1985 to $41.7 billion in 2011.
Add various tax credits and deductions to that, and it’s no wonder college prices have inflated even faster than health care: Government has ensured that ever-higher bills can be paid.
Declining state support for higher education isn’t the reason tuition keeps going up, argues McCluskey. Private colleges are charging more and more too.
President Obama wants to lead the world in college graduates by 2020. That means raising graduation rates for the many students who start college and never finish, often because they’re not prepared for college-level work.
Duncan says the administration will “challenge” schools to improve their graduation rates. Great.
Colleges’ most likely response will be to run warm bodies through to graduation, while giving them few if any college-level skills. Indeed, we’ve been seeing this for years, with literacy for degree-holders dropping and earnings for people with only a bachelor’s degree falling, too.
The only way to make college much cheaper or more effective is “taking the jet fuel — federal student aid — out of college pricing, and being frank about the real value of higher education,” McCluskey writes.
He provides links here to research on the effect of aid on college prices.
Virginia Postrel has more in a Bloomberg View column, including a warning:
A good chunk of the educated public has decided that college educators are decadent and lazy. Many are positively lusting to see higher education get its Detroit-style comeuppance.
This attitude is unfortunate and often unfair, but it’s the direct result of decades of federal policies. Any strategy to reduce college costs needs to look beyond traditional subsidies to remove some of the insulation that stifles innovation and feeds public resentment.
I keep expecting the non-elite private colleges to collapse as students and parents realize that it’s just not worth the money compared to a state university or a community college. If we do see cost controls, they’ll come in the private sector.
