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.
Groceries or graduation?
By helping low-income students access public aid — food stamps, health insurance, housing and energy vouchers, child-care subsidies and the like — community colleges hope to improve retention and graduation. Single Stop, a national nonprofit, has partnered with colleges to set up offices on campus. Students also can use legal and financial counseling and free tax-preparation services.
Julio Cohen came with his father to the Single Stop office at Miami Dade College. Laid off as a construction surveyor—the boss kept the guys with degrees—he had decided to study architectural design. But he was thinking of giving up on college to help his father, who was struggling to care for a disabled wife.
Maria Rubios unemployment ran out. The foreclosure papers came in the mail. She couldnt afford medications for bipolar disorder, so she cut each pill in half. She decided to drop out of Miami Dades healthcare administration program. “You’re on the deans list,” a financial aid counselor said. “Wash your face, get some coffee, and be back here in half an hour. You need Single Stop.”
About to “purge” a student from the class roll, a professor first called Single Stop. Could someone call the students cell phone to ask why she had stopped attending?
You can read the full story on U.S. News.
More help for low-income students
By linking low-income community college students to benefits such as food stamps, medical insurance, child-care assistance, legal aid and other public help, the Benefits Access for College Completion hopes to increase retention and graduation rates.
The American Association of Community Colleges has launched the three-year, $4.84 million initiative, which will be piloted at six community colleges. Led by the Center for Law and Social Policy and AACC, with funding from the Ford, Kresge, Lumina, Annie E. Casey and Open Society foundations, BACC hopes to help students complete college faster and become economically self-sufficient.
The participating schools are Cuyahoga Community College in Cleveland, Gateway Community and Technical College and Owensboro Community and Technical College in Kentucky, LaGuardia Community College in New York, Northampton Community College in Pennsylvania, and Skyline College in California. In addition, two schools in Michigan — Macomb Community College and Lake Michigan College — will share perspectives from similar work.
LaGuardia Community College President Gail Mellow said the initiative is a “huge opportunity” to help “financially troubled students get the benefits they are eligible to receive” and to help “shape the policy environment.”
California may require higher grades for grants
California Gov. Jerry Brown wants to raise the minimum grade point average to qualify for state-funded student aid, directing scarce resources to students who are the most likely to graduate. However, the state’s Legislative Analyst believes the change will hurt the neediest students.
The governor would raise the minimum GPA from 3.0 to 3.25 to qualify for Cal Grant A, which covers tuition. Students would need a 2.75 GPA, up from 2.0, to qualify for Cal Grant B, which gives low-income students $1,551 for books, living expenses and tuition assistance. Community college students often use Cal Grant B. In addition, community college transfers would need a 2.75, up from 2.4, to apply for Cal Grants.
More than a third of current Cal Grant recipients would be locked out, predicts The Institute for College Access and Success.
These are students who have worked hard and earned the grades that the state has long promised entitled them to participate in California’s primary student aid program. These are also the students, research shows, for whom financial aid may make the biggest difference in terms of helping them persist and succeed in college. As they finally reach the point where they are ready to go to college, many will find their dreams shattered.
Three out of four applicants cut out would be prospective Cal Grant B students, who on average have family incomes well below the poverty line. And the majority of these students go to community colleges, where students receive too little aid and are already less likely to receive state grants.
The legislative analyst’s report recommended a smaller increase in the GPA requirement. The report also said Gov. Brown is underestimating the cost of Cal Grants in the proposed budget.
Obama shifts higher ed policy
President Obama’s higher education plan represents a policy shift away from low-income students and toward the middle class, writes Inside Higher Ed.
“They’re sending a strong signal about where the second Obama administration, if we have one, is likely to go,” said Kevin Carey, policy director at Education Sector, a think tank. “They’re not going to just keep putting millions of dollars into the Pell Grant Program and letting the chips fall where they may.”
Expanding Pell Grants would do more to make college accessible, said Sara Goldrick-Rab, an associate professor of higher education policy at the University of Wisconsin at Madison.
“I don’t have high hopes for [the new plan] being very effective in helping him achieve what I thought his goal was, which is getting more students from low-income families to be college graduates,” Goldrick-Rab said, describing the plan as “a little all over the place.”
“This is going to cause problems for the institutions that have the least resources to begin with.”
Judging whether a college provides “good value” is complex, writes Robert Sternberg, provost of Oklahoma State, in an open letter to the president.
Open-admissions colleges with many disadvantaged students won’t have the same graduation rates as elite institutions, he writes. “Over-focusing on completion can lead one to disregard the important issue of whether the education being completed is of the best quality our institutions of higher learning can provide.”
In addition, job preparation isn’t the only mission of colleges, Sternberg writes.
Rising tuition isn’t the biggest scandal in higher education, writes Jonathan Zimmerman, an NYU education and history professor, in the Los Angeles Times. It’s college’s failure to figure out whether students are learning. “Millions of American students and their families are mortgaging their futures to pay for a college education. We owe them an honest account of what they’re getting in return: not just what it costs, or where it will take them, but what it means.”
Repayment study left out blacks
A U.S. Education Department analysis on the relationship between race and repayment of student loans left out black students, skewing results used to justify the gainful employment rule, reports Inside Higher Ed.
For-profit colleges, which enroll many minority, low-income and older students, argue the high-risk demographics explain their students’ higher default rates on student loans. Not so, said the department in June, concluding that only 1 percent of the variance in repayment rates could be explained by the racial composition of enrollment. Sorry, never mind.
But by failing to count black students, the study understated the impact of race: the actual variance at for-profits is 20 percent over all, and 31 percent for four-year institutions, the department said in the December filing.
Eduardo Ochoa, the department’s assistant secretary for postsecondary education, said “accurate figures would have had no impact on the final regulations.”
Interesting.
The Association of Private Sector Colleges and Universities, the for-profit trade group challenging the gainful employment rules, charges the new figures show that “schools that enroll a higher percentage of minority students are more likely to fail the department’s repayment test.”
President Obama talked about defunding colleges that raise tuition in his State of the Union speech, writes Andrew Kelly on the Enterprise Blog. That means shifting “some Federal aid away from colleges that don’t keep net tuition down and provide good value,” according to a White House blueprint (pdf). Deciding whether a college is providing value for the money will require collecting gainful employment data on all higher education sectors, writes Kelly.
Pell for the neediest — or Pell for all?
Pell Grants should be targeted at the neediest students, argues Arthur Hauptman, a higher education policy consultant, on Inside Higher Ed. Eligibility rules have been expanded so much that half of undergraduates now receives a Pall Grant, driving up the costs. In addition, it should be easier and simpler to apply.
Instead of FAFSA, parents and students should use their federal income tax form to calculate their eligibility for student aid, Hauptman writes. Students enrolled less than half time would not be eligible.
Students who lost Pell eligibility would be able to use tuition tax credits.
Hauptman also proposes linking aid to colleges to the graduation rate of Pell recipients.
Middle-class families can’t afford college, writes Hamid Shirvani, president of California State University at Stanslaus. He proposes expanding Pell eligibility to families earning up to $100,000 and awarding larger grants.
Tuition tax credits, which help wealthier families the most, should be eliminated, Shirvani writes. That would cover some of the cost of an expanded Pell program.
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.
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.
The Have Nots aim for college
The Haves and the Have Nots, a documentary by Madena Henderson, focuses on the quest for an affordable college education.
Henderson’s work was honored as a top student-produced film in a national contest by the documentary program POV, reports College Bound. She received a $2,000 grant from Project VoiceScape. Her documentary will be featured on POV and considered for broadcast in 2012.
Henderson was raised by her aunt in a depressed neighborhood of Troy, New York. “It’s important that people go after their dreams of going to college, even if they don’t have as much money as they need,” she says. To cut costs, she lives at home and attends Hudson Valley Community College, while working 25 hours a week. She also receives a Pell Grant. Henderson plans to study nursing.
