Broward limits loans to cut defaults

Students at Broward College in Fort Lauderdale, Fla., attend a debt management workshop. Broward is one of 29 colleges that no longer accepts unsubsidized student loans. The effort is part of an experiment to cut down on student loan debt and defaults.
Broward students attend a debt management workshop. John O’Connor/WLRN

“Neither a borrower nor a lender be,” Polonius advised Hamlet. At Florida’s Broward College, financial aid officer Kent Dunston tells would-be borrowers not to borrow more than they need.  The two-hour money-management workshop is required. “You’ll be offered more,” says Dunston. “You don’t need it.”

Starting this year, Broward will not accept unsubsidized federal loans that require students to begin making interest payments immediately, reports NPR. Twenty-eight other community, four-year and online colleges around the country take subsidized loans only to prevent defaults. Broward has gone farther: The college no longer accepts private loans.

About 75 students were in (Dunston’s) class on a recent day, listening as he tells them the story of a young woman concerned about how her $137,000 student debt might affect her chances of getting married.

“That can throw a lot of cold water on a relationship, unless the guy can say, ‘Well, that’s OK baby, I owe $87,000 myself,’ ” Dunston says.

Broward student George Aleman thinks he owes about $60,000 in student loans. The middle-school dropout, who went on to complete his GED, came to Broward already owing that much in debt from a previous attempt at trade school.

The Broward College admissions and financial aid staff “couldn’t believe that I owed so much, and I only have an associate’s degree,” he says.

Aleman is eligible for one more year of loans. After that, he’ll have to pay Broward’s tuition of $2,400 a year and cover his living expenses.

Debbie Cochrane with The Institute for College Access and Success “fears that rejecting unsubsidized loans may force some students to turn to credit cards or other high-interest loans to pay for school and living expenses,” reports NPR.

Broward’s default rate has fallen to 12 percent, lower than the national rate of 13.7 percent.

Nearly 1 million lack access to federal loans

Nearly one million community college students nationwide — about 8.5 percent of the total — can’t take out federal student loans because their college doesn’t participate in the program, according to a report by The Institute For College Access and Success (TICAS).

Denied access to “the safest and most affordable way to borrow for college,” some students turn to “more costly and risky forms of borrowing such as credit cards or private loans,” reports At What Cost?  Others reduce their “chances of graduating by working longer hours or cutting back on classes.”

“Most community college students still don’t use loans to pay for their education, but for those who need to borrow, federal student loans can make the difference between graduating and having to drop out,” said Debbie Cochrane, TICAS’s research director and the report’s lead author. “Only 17% of community college students take out loans, but 37% of community college associate’s degree graduates have federal loans.”

Native-American, African-American, and Latino community college students were the most likely to lack access, reports TICAS.

The report takes a closer look at California, Georgia, and North Carolina.

Community colleges can avoid defaults by helping students borrow wisely, argues TICAS, citing Albany Technical College in Georgia.

“Barring access to federal student loans doesn’t keep students from borrowing—it just keeps them from borrowing federal loans, which are the safest option,” said Cochrane.

Community college students could lose access to Pell Grants if their college has a high default rate, said the American Association of Community Colleges in astatement. “Some community colleges are faced with a loss of eligibility later this year.”

If a college participates in the federal loan program, financial aid officers can’t limit loans to students who are unlikely to be able to make loan payments.

If colleges could control overborrowing and not risk Pell eligibility, they’d be more willing to offer federal loans, AACC’s David Baime told Inside Higher Ed.  “We strongly believe that the penalty of losing the Pell eligibility for nonpayment of loans doesn’t make much sense and we wish that policy would be changed,” he said. “The threat of that loss is tremendous, and it’s a very serious concern for colleges.”

Community colleges, along with other types of institutions of higher education, have been pressing Congress to give them the power to limit the amount their students can borrow in federal loans, as a tool to safeguard against overborrowing.

This year, colleges and universities face sanctions for high default rates. A community college in rural Texas could lose eligibility for federal student aid.

Ed Trust: Cut off aid to low-quality colleges

Every year, $15 billion goes to “college dropout factories” and “diploma mills,” according to Tough Love, a new Education Trust report. These are four-year colleges and universities in the bottom 5 percent nationally in graduation rates and student loan repayment rates. In addition, some institutions — including some state universities — admit few low- and moderate-income students eligible for Pell Grants. Tough Love proposes linking federal aid, tax benefits and charitable deductions to minimum standards for access and success:

Pell, full-time freshman enrollment: 17 percent

Six-year, full-time freshman graduation rate: 15 percent

Student loan repayment rate (three-year cohort default rate: 28 percent)

Colleges would have three to four years to meet the standards, the report proposes.

“The federal government writes a $180 billion check annually to thousands of colleges and universities using taxpayer dollars to fund schools from the highest performing to the lowest, with virtually no consideration of institutional performance on access, success, or student loan repayment measures,” said Michael Dannenberg, director of higher education and education finance policy and a co-author of the report. “Schools falling beneath the bottom fifth percentile on these measures represent the ‘worst of the worst,’” said Mary Nguyen Barry, higher education policy analyst and co-author. “Establishing goals without consequences . . . won’t protect students from a lifetime of mounds of debt, a meaningless degree, or no degree at all.”

Many for-profit colleges enroll a high percentage of low-income, non-white and adult students. They tend to have low graduation rates and high default rates. However, also in the bottom 5 percent are a number of historically black colleges as well as “minority-serving” institutions with heavy Latino and Native American enrollments. Linking aid to student success would be politically difficult.

Elite universities and private colleges that can’t afford much financial aid tend to admit few Pell-eligible students. These “engines of inequality” have a lot of political clout too.

Pell goes up, but so does tuition

The near-doubling of Pell Grant funding hasn’t decreased borrowing by low-income students, writes Ben Miller, a senior policy analyst at the New America Foundation, in the Chronicle of Higher Education. Federal dollars are “gobbled up by insatiable college budgets” and used to offset state cuts in higher education spending.

The increased funding for Pell Grants provided colleges across the country with billions of dollars in additional revenue and resources. And it had arguably the least restrictive requirements of any stimulus dollars. Colleges did not have to ensure that Pell dollars supplemented and did not supplant funds already provided by states and schools. States were not told to avoid cutting their postsecondary budgets, as they were in other programs. This lack of strings left states and colleges free to slash support, increase tuition, and use Pell to make up the difference.

The federal government did not even ask for more transparency about whether colleges successfully graduated students getting this aid—a common last gasp attempt at oversight. Rather, colleges took the dollars and continued the same trend of increasing prices they’ve been following for decades.

The federal government needs to protect the purchasing power of federal student-aid investments and demand “transparency about basic outcomes like completion,” writes Miller.

AACC’s wish list for higher ed act

Community college leaders must speak out on revisions to the Higher Education Act before it’s too late, said Belle S. Wheelan at the annual convention of the American Association of Community Colleges in Washington, D.C.

Wheelan, president of the Southern Association of Colleges and Schools Commission on Colleges, said a reauthorized HEA could hurt open-access colleges, reports Community College Week.

It could include provisions tying the receipt of federal money to minimum completion rates. It might create new penalties for colleges with high student loan default rates. And it’s up to community college leaders to tell Congress how unpalatable measures like that are, before they become law, Wheelan said.

“If you look at the policies coming out of Washington, they are still focused on that 18-21 year old cohort, which is only 13 percent of out students,” she said. “We are trying to get the folks in Washington to understand that. Help us help the powers that be understand that.”

The AACC and the the Association of Community College Trustees have a wish list for the reauthorized Higher Education Act reports Community College Week.

Protecting Pell Grant funding, reinstating the year-round grant and increasing Pell flexibility top the list. Community colleges attract many Pell-eligible students from low- and moderate-income families.

Measuring student success accurately also is a priority. 

Current metrics used by the federal government exclude significant numbers of community college completers, causing distortions in public perceptions of institutional outcomes.

. . . The federal government must ensure that students are tracked throughout their course in postsecondary education. There are different routes to achieving this end, but the lack of national framework for monitoring student progress, such as a federal unit record database, must be addressed.

Community college leaders also want to see a redesigned index to track student loan defaults, simplification of student aid and income-based repayment schemes and the authority to discourage “overborrowing” by part-time students.

AACC guide outlines how to meet lofty goals

Empowering Community Colleges To Build the Nation’s Future is an implementation guide to achieving the ambitious goals set in 2012 by the American Association of Community Colleges. By 2020, AACC wants “to reduce by half the number of students who come to college unprepared, to double the number who finish remedial courses and make it through introductory college-level courses, and to close achievement gaps across diverse populations of students,” reports the Chronicle of Higher Education.

“It is time for community colleges to reimagine and redesign their students’ experiences,” Walter G. Bumphus, the association’s president, said in a written statement. Students need “a clear pathway to college completion and success in the work force.”

Increase completion rates by 50 percent by 2020. Publicly commit to aggressive, explicit goals, the guide advises, with time frames for completion numbers and smaller gaps in the achievement of low-income and minority students relative to the overall enrollment.

Significantly improve college readiness. Establish strong connections with local public-school systems, using clear metrics and assessments to define what it means to be prepared for college. Collect baseline data, and track students’ progress.

Close the American skills gap. Understand labor-market trends and local employers’ needs, and communicate them to students. Establish clear pathways for students to build up industry-recognized credentials in high-demand fields.

Refocus the community-college mission and redefine institutional roles. Become “brokers of educational opportunities,” the guide advises, not just “direct providers of instruction.” By creating a consortium, for instance, colleges could share a curriculum, letting students draw from several campuses and delivery models.

Invest in collaborative support structures. Build alliances with other colleges and community-based or national nonprofit groups to pool resources and streamline operations. Small rural colleges, for instance, could create a purchasing cooperative. A national consortium could provide more-affordable access to tools for tracking students across sectors and states, from kindergarten to their first job.

Pursue public and private investment strategically. Keep seeking creative ways to diversify revenue streams. Meanwhile, join national groups advocating for expanded support for Pell Grants and clearer systems for transfer between two- and four-year colleges.

Introduce policies and practices that promote rigor and accountability. Adopt the Voluntary Framework for Accountability, a national tool developed by and for community colleges to broaden criteria for measuring success.

“We’re not going to achieve our mission unless we all decide we’re ready to lose our jobs over this,” said Eloy Ortiz Oakley, superintendent and president of Long Beach City College, at the AACC convention. 

Obama budget funds Pell graduation bonuses

President Obama’s proposed 2015 budget includes $7 billion over 10 years to reward colleges that do a good job of graduating Pell Grant recipients, reports the Chronicle of Higher Education. The maximum Pell Grant would increase by $100 to $5,830.

The spending plan seeks $4-billion over four years to encourage states to maintain their higher-education spending and adopt performance-based funding models and $6-billion for job-training programs at community colleges. Community colleges would compete for grants to offer training programs and apprenticeships.

The plan partially restores eligibility for Pell Grants to high school dropouts who pass an “ability to benefit” test.

All borrowers would be eligible for Pay as You Earn, which caps monthly payments at 10 percent of discretionary income and forgives borrowers’ remaining debt after 10 to 20 years. Currently, only recent borrowers with no older debt qualify.

Community colleges are concerned about the call to “strengthen academic progress requirements in the Pell Grant program to encourage students to complete their studies on time,” reports Inside Higher Ed. The Education Department can do this at any time without congressional approval.

“This is absolutely something that causes us great concern,” said David Baime, vice president for government relations and policy analysis at the American Association of Community Colleges.

Under the current rules, Baime said, students effectively have to pass two of every three classes they take in order to satisfy the requirement. “Since the standards were tightened a couple of years ago, we’ve heard concerns from our campuses,” he said, “So anything that would go further in the direction of tightening them is something that we would be looking at carefully.”

The budget request also seeks funds to develop a national college ratings system to “encourage colleges to improve and help students compare the value of colleges.”

Clare McCann has more on EdCentral.

Should Pell be linked to performance?

Pell Grants help low- and moderate-income students go to college, but graduation rates are low. In an Education Next forum,  Isabel Sawhill, co-director of the Center on Children and Families and Brookings’ Budgeting for National Priorities Project, and Sara Goldrick-Rab, associate professor of educational policy studies and sociology at the University of Wisconsin, discuss what to do about it.

Target federal aid to low-income, college-ready students, argues Sawhill.  Needy students who are likely to complete a degree could get more money, if well-to-do families gave up their tax subsidies and low performers weren’t eligible for Pell.

According to 2009 National Assessment of Educational Progress (NAEP) data, only a small fraction of high school seniors are at or above proficiency in math and reading: 26 percent and 28 percent, respectively. This lack of preparation makes it difficult for them to do college-level work. For example, of younger students enrolling in college in 2003–04 with a high school grade-point average (GPA) below 2.0, only 16 percent had received a degree six years later, while 84 percent had not. The question we need to ask is whether taxpayers should foot the bill for students whose odds of success are so low.

Currently, Pell Grants are available to anyone with a high school diploma or GED. That doesn’t predict the ability to do college-level work, Sawhill writes.

Linking Pell to academic performance denies help to those who need help most, responds Goldrick-Rab. Instead, she proposes increasing the size of grants so low-income students can work less and study more. 

While 54 percent of wealthy Americans complete college, only 9 percent of low-income Americans earn a degree, Goldrick-Rab writes. The college gap is growing. 

The K–12 system remains overwhelmingly unequal, and chaining Pell eligibility to it even further ensures that both ends of the educational process remain unequally distributed. It transforms the Pell Grant from a policy aimed at transforming lives to one that simply rewards students lucky enough to be born into situations where their families are able to seize good high-school educations for them.

When it was first created, “the Pell Grant covered nearly 90 percent of the costs of attending a public college or university,” writes Goldrick-Rab. Today, the maximum $5,550 grant covers 30 percent of the average costs at state universities.

President Obama has proposed rating colleges and universities by “value.” One measure would be the graduation rate of Pell Grant recipients. Linking Pell to performance would make colleges look a lot better.

After growing very rapidly, the Pell program is running a $1.7 billion budget surplus this year, according to the Congressional Budget Office.

Don’t give up on the longshots, writes Matt Reed. “Open-door public colleges exist to give people options.”

45 million peanut butter sandwiches

President Obama’s higher ed plan is missing something: 45 million peanut-butter sandwiches a week. So argues Wick Sloane, who teaches at Bunker Hill Community College in Boston.

Thanks to donors, including Panera Bread, hungry students at Bunker Hill can make themselves peanut butter and jelly sandwiches to get through the day, Sloane writes. Every Pell-eligible student — some nine million — should get a free PB&J sandwich every day, he argues. That’s 45 million sandwiches a week.

Many of these students . . . received federal free and reduced lunch in high school, didn’t they? Why? Because their families cannot afford enough food for the family. Why have we, the people, snatched lunch from these low-income students going on to college?

On a Friday last summer, Sloane made five sandwiches to go for a student who was phoning homeless shelters in vain.

What the heck? I put the jar of peanut butter and a loaf of bread and a plastic knife into the bag, too.

“All this?” he asked me.

“Sure. Just finish your education, run for president, and make sure no one in the U.S. is ever homeless again,” I said.

“I haven’t seen him again,” writes Sloane.

‘Sooner, simpler, smarter’ college aid


In Sooner, Simpler, Smarter, the National College Access Network calls for simplifying federal financial aid, reports Clare McCann, a New America Foundation policy analyst, on Ed Central. Ideas include notifying families with young children about college aid eligibility and using tax returns, instead of FAFSA, to calculate Pell Grant eligibility.

“There is near unanimity on the fact that the financial aid ‘system’ is layered with inconsistencies, redundancies, and overlapping federal programs,” writes McCann. “Students find it confusing and un-navigable, so despite all the taxpayer investments in student aid, students often don’t know how to access them or which benefits to use.”

A Congressional Budget Office reports analyzes ideas for revamping Pell Grants. Replacing FAFSA with federal tax returns would raise costs by about $10 billion over 10 years, the CBO estimates.

. . . the Department of Education would issue about 2 percent more grants averaging $1,500 – some to newly eligible students who wouldn’t have to report that income now, and some to new would-be students who otherwise wouldn’t have applied because the application was too complex. Additionally, about 20 percent of the grants that are already awarded would be larger under the new formula, by about $350 on average.

Another option is to tie Pell Grant eligibility to the federal poverty level replacing the complicated formula now used. That would make it easy for families to predict college costs and aid. students know early where they stand.

Taxpayers would save $1.4 billion over 10 years if the maximum Pell Grant was reserved for families at or below 150 percent of the federal poverty level (about $35,000 for a family of 4), with smaller grants for families between 150 and 250 percent (almost $59,000 for a family of 4).