CC defaults soar, despite low debt

Community colleges are struggling to pay back their student loans, writes Andrew Kelly in Forbes.  While two-year public colleges charge low tuition, the default rate is high.

Only about 20 percent of community college students borrow, and 70 percent borrow less than $6,000. But low graduation rates put even small borrowers at risk of owing more than they can repay.

“Unfortunately, less debt does not equal fewer defaults,” writes Kelly. “And default’s consequences, like wage garnishment and severe credit damage, can hurt borrowers even more than a bloated loan balance.”

Policymakers should turn their attention from total debt to students’ ability to repay, Kelly argues. Income-based repayment plans “try to do exactly this, but they are far too generous to graduate students,” who often have high debts and high incomes.

The “front-end problem” is that “student loan programs encourage attendance at any program, at any college, and at any price.”

That means we subsidize a lot of failure. According to my analysis of the most recent federal data, about 37 percent of loan disbursements in the Stafford and Parent PLUS programs (loans for undergraduates) in 2012-2013 went to colleges with six-year graduation rates that were 40 percent or lower. That’s a lot of loans to people whose chances of finishing a degree are worse than flipping a coin.

What we need are policies that push students toward more effective and affordable options on the front end: better consumer information, income-share agreements, and risk-sharing that gives colleges skin in the game.

 The Student Loan Ranger has advice for community college students on how to avoid the debt trap. 

Structure leads to speedy degree

Slow and steady doesn’t win the race to a community college credential, writes Jon Marcus in Time. The longer students take the less likely they are to reach their goals.

Daranie Ounchaidee sees high school friends at Ivy Tech in Indianapolis.

Many work part time, prolonging their time in school. Others have changed majors or dropped courses. Most, whose parents never went to college, struggle with the red tape of registering, paying, and applying for financial aid.

For her friends, “it’s like there’s no ending,” says Ounchaidee.

But the Thai-Laotian student earned a two-year degree in only 11 months thanks to a program that targets first-generation students from low-income families.

Only 4 percent of community college students complete an associate’s degree within two years, and 36 percent of students at public universities earn a bachelor’s degree in four, according to Complete College America. After six years, 60 percent of community college students and more than 40 percent of university students haven’t earned a degree, reports the National Student Clearinghouse.

Ounchaidee and her classmates in the Associate Accelerated Program, or ASAP, at Ivy Tech Community College in Indianapolis, had grade-point averages of at least 2.5 in high school, and had to pledge to stay in college full time and not work, and to continue living with their parents or guardians. Those are among the stipulations of the program, where the time to their degrees was compressed to less than one year.

They also had no choices of what courses to take. Each began within days of finishing high school, and, together as a group, went through 60 hours a week of rigidly proscribed classes and outside assignments.

“We have their curriculum laid out from Day One,” said Jon Arbuckle, one of the instructors. “Without these guidelines, students bounce around. They’ll take a handful of classes, then some life event occurs, they take a semester off, and they’re lost.”

ASAP students have easy access to counseling.

Eighty-six percent of ASAP students earn their degrees on time or remain enrolled, the college reports. That’s five times higher than the graduation rate for non-ASAP students.

Students save money by completing an associate degree in one year. Most of the $7,119 cost is covered by federal Pell grants and state financial aid.

Ounchaidee will study biomedical engineering at Indiana University-Purdue University Indianapolis.

For-profits offer flexibility — at a price

For-profit colleges charge $35,000 for an associate degree, on average, more than four times the cost at the average community college, writes Ashlee Kieler in the Consumerist. Why does anyone go to a for-profit college? Flexibility and convenience draw many students, she writes. And for-profit colleges spend heavily on marketing.

In 2000, for-profit colleges enrolled 3 percent of postsecondary students. By 2009, that had soared to 9 percent, reports College Board. Community colleges’ share dropped from 43 percent to 40 percent.

For-profit college students see a more convenient and flexible learning experience, according to a report from Stanford’s National Center For Postsecondary Improvement. “Freed from the traditional academic schedules and even from many of the fixed costs of infrastructure and expensive facilities, the [school] is able to offer courses at more convenient times and in more convenient locations.”

For-profit colleges were leaders in offering online and evening courses to students with jobs and family responsibilities.

For-profit colleges also tend to have names that sound more like a traditional university — some even have “university” in their names — which has a certain aspirational appeal to it. The phrase, “I went to Heald College” may have a better ring to it than “I went to Bucks County Community College,” even if the student got the same or better education at the school with the clunkier name.

For-profit colleges rarely make students take remedial courses before taking courses than count for a credential. Instead, basic skills instruction is integrated into for-credit courses. That’s a policy some community colleges are trying.

Like community colleges, the for-profit sector enrolls many students who are 25 to 40 years old. However, for-profit college students are much more likely to be living in poverty, reports the  Institute for Higher Education Policy. They use federal grants and loans to pay for college.


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“Only 35 percent of community college students take out loans to pay for school,” says Suzanne Martindale, staff attorney at Consumers Union. By contrast, “86 percent of for-profit college students take out loans.”

However, Kieler doesn’t mention another reason students may choose a for-profit college. On average, two-year for-profit colleges, which focus on job training, have much higher completion rates than community colleges, which have academic and job training missions. For-profit vocational programs are very structured. Some community colleges are adding structured pathways to improve completion rates.

Is college worth it for everyone?

Going to college is “clearly” a smart economic choice because the “college premium” is increasing, wrote David Leonhardt in the New York Times.

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Not so fast, writes Grace at Cost of College. There’s been plenty of pushback to Leonhardt’s thesis.

Compare apples to apples, writes Matthew Yglesias on Vox.

Suppose I got someone to make a chart showing the incomes of prime-age BMW drivers versus average Americans. It would reveal a large BMW earnings premium. I could even produce a chart showing that the children of BMW drivers grow up to earn more than the average American. But that wouldn’t be evidence that BMWs cause high wages, and that the BMW Earnings Premiums extends across multiple generations. It would be evidence that high-income people buy expensive cars and that there’s intergenerational transmission of socioeconomic status.

. . . How do college graduates fare in the labor market compared to people who were otherwise similar at age 18 in terms of SAT scores, non-cognitive skills, parental socioeconomic status, etc?

The college premium varies significantly by field of study, writes Bryan Caplan. Petroleum engineering or theater arts?

“Most of the benefits of college come from graduating, not enrolling,” writes Ben Casselman on the Five-Thirty-Eight blog. The wage premium for people with “some college” has been flat “even as debt levels have been rising.” Dropouts may be worse off than if they’d never enrolled.

Only 60 percent of full-time college students earn a degree in six years and the odds are much lower for racial minorities, low-income students, older students and part-timers, he writes. “The six-year graduation rate is well under 20 percent” for some groups. These are the people struggling with the “Should I or shouldn’t I?” question.

Going to college is risky for marginal students — especially for men — according to the Center for Economic and Policy Research.

People in the top half of the income distribution don’t question the value of college for their own children, notes EduOptimists. The real question is: “who should go to college among those in the bottom 50%?” and “what should we pay for those people to go?”

Pushing minority kids to 4-year colleges

Latino and black students are as likely as whites to start college, but much less likely to earn a degree, writes Janell Ross in The Atlantic. Most Latino and black students start at two-year colleges with open admissions and low graduation rates. In Los Angeles, there’s a move to help disadvantaged students start at state universities.

Students at gang- and poverty-ridden East Los Angeles’s Garfield High School who meet minimum requirements will now enjoy guaranteed admission to California State University (Los Angeles). The same initiative will also guarantee that students at East L.A. College, a nearby community college, can transfer to Cal State L.A., and the community college will expand its course offerings available to Garfield students.

The partnership between the Los Angeles Board of Education, Cal State Los Angeles, and East Los Angeles College includes mentors and internships.

“Even minority students with high GPAs and standardized-test scores are far more likely to attend two-year schools than their white peers and are subsequently far less likely to graduate,” according to Separate and Unequal, a 2013 report by Georgetown’s Center on Education and the Workforce. “More than 30 percent of African-Americans and Hispanics with a high school grade point average (GPA) higher than 3.5 go to community colleges compared with 22 percent of whites with the same GPA.”

“Selective colleges spend anywhere from two to almost five times as much on instruction per student as the open-access colleges” and offer far more counseling, tutoring and other support services to help students earn a degree, the report observed.

Why get an associate degree en route to a bachelor’s?

Community colleges should encourage students to earn an associate degree before transferring, writes Davis Jenkins on Completion By Design’s blog.

More than 80 percent of new community college students intend to complete at least a bachelor’s degree, he writes. However, only a quarter eventually transfer to a four-year college or university and, of those, a third of transfers complete an associate degree first.

A Community College Research Center (CCRC) study compared community college students with similar characteristics who had earned 50 to 90 credits before transferring. Students who’d earned a transfer associate degree were 77 percent more likely to complete a bachelor’s degree within four years, and 52 percent more likely to earn one within six years.

. . . students who transfer in with an associate degree are more likely to have taken a structured set of courses leading to a degree in a program of study, and thus may have had an easier time transferring their credits. The students who transfer with 50-90 community college credits but no degree are more likely to have taken a “hodgepodge” of courses that are difficult to transfer, leading to delays in bachelor’s completion.

The loss of community college credits upon transfer is endemic across the country and, as a recent national study found, is the biggest barrier to bachelor’s completion for community college transfer students.

Community colleges should guide students “systematically and explicitly” into programs of study that lead to an associate degree, Jenkins writes. “Currently, community college students are faced with a bewildering array of courses and programs, and as a result they often make suboptimal choices.”

Completion by Design colleges are creating transfer pathways that will let students transfer with “junior standing in a major (rather than with credits that transfer as electives).”

UC plans to streamline transfers


Santa Monica College is the top transfer college in California.

Streamlining transfers will expand opportunity and improve diversity at the elite University of California system, concludes a new UC report, Preparing California For Its Future.  In addition to improving counseling and the transfer experience, the report calls for creating and aligning  systemwide pre-major pathways with corresponding Associate Degrees for Transfer and adopting common course numbering, “where appropriate.”

Associate Degrees for Transfer create a “single clear degree pathway,” said the Campaign for College Opportunity. The California Community Colleges (CCC) and the second-tier California State University system have laid the groundwork.

(UC) must eliminate the confusion and complication experienced by students hoping to transfer by getting rid of the varying requirements from campus to campus, even for similar majors. Simplifying transfer makes each of the other challenges raised in this report easier to address including outreach, counseling, guidance, and use of technology.

Unfortunately, many of the recommendations to streamline transfer end with “where possible” and “where appropriate.”

The report also calls for seeking transfers from a wider array of community colleges, reports the Los Angeles Times.

Santa Monica College and Los Angeles Southwest College are only 13 miles apart but have an immense gap when it comes to transferring students to a University of California campus, a new report says. Santa Monica sent 783 students last year, by far the most of 112 community colleges in the state, while Southwest sent just four, among the lowest.

. . .  just 19 colleges sent half of all the 13,999 community college transfers to UC campuses last year and 93 other schools made up the other half, the UC study said.

Improving the transfer pipeline is a priority, said UC President Janet Napolitano. Transfer students, she said, “are an important part of UC’s strength as an engine of social mobility for our state,” she said. “Put simply, if we are serving transfers well, then we are serving the state well.”

Tennessee governor signs free tuition bill

Community college will be free to Tennessee’s high school graduates. Gov. Bill Haslam signed the “Tennessee Promise” bill this week.

At Nashville’s Magnet High School, students are planning to take advantange of the opportunity.

“Our family — instead of two steps back, we’re like, getting two steps up,” said Nazje Mansfield, who plans to enroll and become a teacher. Her mother works the night shift at Walmart.

“I thought I was just going to have to take out a million loans and be paying them till I’m dead,” Nazje said.

Around $34 million in lottery funds will fund the program.

Gov. Haslam has launched a “Drive to 55″ campaign to raise the state’s college graduation rate from 32 percent to 55 percent by 2025. He hopes to change “students’ perspective on what’s possible in their life,” he told AP.

“I’m convinced that if more students think …’I can go to school beyond high school,’ then they’re going to take school more seriously throughout every grade,” he said.

Tennessee Board of Regents Chancellor John Morgan agreed.

“I think it changes the conversation for sixth-graders and seventh-graders and eighth-graders because it’s not about ‘will we be able to go to college, it’s we know we can so we better be prepared,’” said Morgan, who oversees six state universities, 13 community colleges and 27 colleges of applied technology.

Florida, Mississippi and Oregon are considering creating similar programs.

Follow through will be critical, said Thomas Bailey, director of the Community College Research Center at Teachers College, Columbia. “The state must put just as much emphasis on the services — counseling and help transferring to a four-year school — for students once they are enrolled.”

CC must cut defaults or lose federal aid

Lane Community College students will lose access to federal loans and grants unless the Oregon college can cut the default rate, reports the Register-Guard.

More than 30 percent of LCC borrowers who began repayment in 2010 were in default within three years, according to the U.S. Department of Education. 

More than two-thirds of LCC students take out student loans — an unusually high percentage for a community college. The average borrower owes $11,789, which suggests they’re borrowing to cover living expenses, not just tuition and books.

Most borrowers leave Lane without a certificate or degree, making it difficult to earn enough to pay back loans.

“If it’s more than 30 percent for three years in a row or 40 percent in a single year, the school will lose eligibility for federal student aid,” stressed Mark Kantrowitz, a national expert on student aid and publisher of Edvisors. “That could be a death sentence for the school.

Lane is one of 18 community colleges on a “red flag” list created by Andrew Gillen, senior researcher for education at the American Institutes for Research.

“A typical student who enrolls and then borrows to attend Lane Community College has a higher chance of defaulting than they do of graduating,” Gillen said. “What I would say to the student who was considering enrolling at Lane is, ‘Make sure you think long and hard about what you’re borrowing and what your chance of success are.’ ”

In a report to the government, LCC officials wrote that Lane students are disproportionately low income and the first in their families to attend college. “They have sometimes not had the opportunity to develop the reading comprehension, math skills and critical thinking skills to help them make well-considered borrowing choices,” the report said.

College administrators are trying to lower the default rate by “tightening up loan procedures, ensuring that students review their levels of borrowing and bringing in a third-party vendor” to help students and former students work out a repayment plan, reports the Register-Guard.

Till this year, all students were offered “unsubsidized loans — loans beyond the federal calculation of what students need — as part of their annual financial aid package.” Many borrowed the maximum, assuming that all loan options would be affordable, the LCC report said. 

Now, students have to request the unsubsidized loan. “The application requires students to look up their current debt, acknowledge the monthly payment it will require and figure out the total the student is likely to borrow before completing their education,” reports the Register-Guard.  The number of students taking out unsubsidized loans has been cut in half.

Making the transfer dream a reality

Eighty percent of community college students say they plan to transfer and earn a four-year degree, but most never make the leap, reports the Christian Science Monitor. Only 15 percent will earn a bachelor’s degree in six years. Now the “push is on to propel students past community college.”

Glenda Sorto knew she wanted to go to college, but as she started her senior year of high school, that’s about all she knew. “I’m the first one in the family to go to college, so pretty much it was all me to figure it out,” says the Salvadoran immigrant, who arrived in Virginia as a fifth-grader.

Four years after finishing high school, she had her bachelor’s degree in hand – largely because counselors from Northern Virginia Community College (NOVA) helped her stay on track to transfer all her credits to a nearby state university after earning her associate degree.

Sorto was an early participants in NOVA’s Pathway to the Baccalaureate, a partnership of local K-12 school districts, NOVA’s six campuses, and George Mason University, a selective campus in Fairfax, Virginia.  The program appears to be helping students — many of them from low-income minority families — stay in school, transfer their credits and complete a degree. 

“It’s a hugely important issue,” says Joshua Wyner, executive director of the College Excellence Program at the Aspen Institute, a policy group in Washington. “We can’t reach either the equity imperatives or the degree-production imperatives if we don’t solve the transfer issue.”

Only 40 percent of would-be four-year graduates will transfer, according to a City University of New York study. Whether they go on to earn a degree depends, in part, on whether they can transfer all their credits and apply them to their majors. 

“The transfer process has a lot of leaks in it,” because decisions about credits are typically made at the department level of each university, says Kay McClenney, director of the Center for Community College Student Engagement at the University of Texas at Austin. This often-inefficient system “is just nuts,” she says.

About two-thirds of states have “articulation” agreements that are supposed to clarify which credits will be honored by state universities. But the agreements aren’t always honored, sats Thomas Bailey, director of the Community College Research Center at Columbia. 

More than 20 states – including Florida, California, and Virginia – guarantee associate-degree graduates a seat in state universities with status as third-year students. 

Some community colleges have partnered with nearby state universities to help students transfer with their credits. For example, DirectConnect to UCF has helped 28,000 students transfer to the University of Central Florida in Orlando. Nearly 17,000 of them have come from Valencia College. Associate-degree graduates are guaranteed admission. UCF set up space on Valencia’s West and Osceola campuses where students can “meet with advisers, fill out transfer paperwork, and in some cases even earn a bachelor’s degree on-site.”

In response to the rise in student mobility, many states are making it easier for students to transfer college credits, reports the Education Commission of the States. Improving transfer policies is especially critical for low-income and non-traditional students, who typically start at a community college.