Collegebound students must dream the affordable dream, writes Michael Alcorn in the Arvada (Colorado) News. A music and fitness instructor, he’s the father of three children, including a daughter in 12th grade who wants to study nursing.
Me, the “life coach” parent, wants her to dream as big as the sky and the stars. . . .
Me, the “teacher” parent, really believes in education and higher education and the value of learning for learning’s sake . . .
But me, the “financial advisor” parent, looks at the average of $26,000 student loan debt for graduates, looks at one in three college graduates living in their parents’ basements, looks at 45-percent dropout rates and 40-percent graduate underemployment . . . This part of me loves the idea of two years of community college to get the general ed. out of the way, transferring all those credits to the great, local private university with the great nursing program, and finding a way to get her into life without crippling debt.
Only 20 percent of jobs require bachelor’s degrees, according to the Department of Labor, writes Alcorn. About 30 percent of adults are college graduates. “One hundred percent of high school students in any suburban school are told . . . they’re a failure if they don’t go to college.”
The three parents in his head keep arguing, but the one who says “debt be damned!” probably isn’t going to win, he concludes.
Helping students avoid default is a new job for community and technical colleges, reports Community College Times. Despite relatively low tuition, more two-year college students are borrowing — and having trouble repaying their loans.
Amy Matteo graduated from Clover Park Technical College (CPTC) in Washington in 2012 with a pharmacy degree. She’d borrowed $20,000 to pay for tuition and expenses. It took her eight months to find a job. After six months, she was laid off.
. . . Matteo began to fall behind on her mortgage payments, and let her student loan repayments slide so she could take care of her housing costs first. Soon, she was on the verge of defaulting on her student loan, as email reminders about missing her $245-a-month loan payments piled up.
At that point, officials from CPTC contacted Matteo and urged her to take advantage of SALT, a third-party financial literacy program the college had just joined. Through SALT, Matteo was able to put her loan payments on pause until she can find a job.
The average two-year cohort default rate for community colleges was 15 percent in 2011, according to the National Association of Student Financial Aid Administrators (NASFAA). That compares to 9.6 percent for all colleges and universities.
SALT, developed by a nonprofit called American Student Assistance, is being used by more than 240 higher education institutions, including 94 community and technical colleges.
SALT is very interactive, with online videos, apps and “money 101” courses to help with budgeting, as well as the basics on student loans, “speaking the language our students speak,” said CPTC spokesperson Tawny Dotson. It provides immediate access to information in a variety of formats—such as downloadable PDFs, email or phone calls.
There is no charge to students who take advantage of SALT’s services, such as financial counseling and debt management. SALT can help them combine loan repayments from different services or change the repayment schedule but it can’t renegotiate interest rates.
Many Clover Park Tech students are “first-time college students, and they are not very well educated in money matters,” said Wendy Joseph, financial aid director.
Many community college dropouts don’t understand that they have to repay loans even if they left school without a degree, said NASFAA Policy Director Megan McClean. Many don’t know default could ruin their credit rating or lead to garnishment of wages.
Redesign Pell Grants, stretch out income-based loan repayment and simplify college cost estimates urged outside experts at a Hamilton Project forum today.
Pell Grants should provide guidance and support services tailored to recipients’ needs, write Sandy Baum of George Washington University and Judith Scott-Clayton of the Community College Research Center at Teachers’ College, Columbia.
They also propose dramatically simplifying eligibility and the application process and strengthening incentives for students to move quickly to a degree.
Income-based repayment should extend beyond the first 10 years after college, propose Susan Dynarski and Daniel Kreisman of the University of Michigan. Payments would rise and fall with a borrower’s income.
This model could prove less costly for taxpayers than the current system and it could even be less expensive; the proposal would reduce defaults and cut the cost of loan servicing, as well as eliminate what would become redundant policies, such as the student-loan interest deduction and the in-school interest subsidy. For the very small percentage of borrowers who take on significant student debt, the authors propose improving bankruptcy protection as well as tightening regulation of the private lenders who own most of these very large loans.
A better college cost calculator would help students from lower- and middle-income families to make informed college choices, writes Wellesley’s Phillip Levine. His Quick College Cost Estimator uses six basic financial inputs.
President Obama’s plan to rate colleges is “yet another mistaken attempt . . . to alleviate some of the symptoms of a problem without actually addressing the underlying disease,” writes Erika Johnsen. The other part of the plan – promoting income-based repayment – will make the disease worse.
The “easy, cheap and indiscriminate availability of student loans ” juices demand and helps universities raise their prices, writes Johnsen. The Obama administration keeps sending out “signals about how ‘easy’ it will be to repay these huge loans after you graduate with a little help from Your Friend, The Federal Government.”
Student loan default rates continue to rise, reports the U.S. Department of Education. After two years, 10 percent of former students are in default; that rises to 14.7 percent after three years.
“The growing number of students who have defaulted on their federal student loans is troubling,” U.S. Secretary of Education Arne Duncan said. The department will expand outreach to explain loan repayment options.
Community colleges have the highest two-year default rate — 15 percent — of any higher education sector. After three years, the community college default rate tops 20 percent, nearly as high as the rate for two-year for-profit programs.
The official default rate understates borrowers’ pain, says Rory O’Sullivan,policy and research director at Young Invincibles, a Washington nonprofit group. The rate, which includes graduates and dropouts, shows the share of borrowers who haven’t made required payments for at least 270 days. It doesn’t include borrowers who are putting off payments through “forbearance” and those on federal income-based repayment programs. “It’s financial disaster for borrowers,” said O’Sullivan. “Defaults can dramatically affect their credit rating and make it harder to borrow in the future.”
Nearly a half-million student borrowers are in default within two years and 600,000 within three years, notes the National Association of Student Financial Aid Administrators.
Eight institutions with high default rates could lose eligibility in federal student aid programs.
The $1.2 trillion college debt crisis is crippling students, parents and the economy, writes Christopher Denhart on the College Affordability blog.
Two-thirds of college graduates have some debt, Denhart writes. The average borrower will graduate $26,600 in the red, according to the The Institute for College Access and Success (TICAS) Project on Student Debt. One in 10 graduates owe more than $40,000.
Student debt now totals $1.2 trillion, 6 percent of the overall national debt.
. . . national debt carries many consequences including slowing economic growth (translating into fewer jobs being created) and rising interest rates. Capital will not be as easy to access.
The majority of student loans are backed by the U.S. government through banks like Sallie Mae, or since 2010, by the Department of Education. Translation: the creditor in this scenario is the U.S. tax payer, who if students default on these loans will be subject to carry the burden of these loans.
Community college students are borrowing too, writes Denhart. Thirty-eight percent of community college graduates in 2008 had student loans. The average debt load at a public two-year institution is $7,000.
One community college, Henry Ford Community College in Dearborn, Mich., is offering a one-time student debt amnesty program that will allow students who owed a balance prior to or including the winter 2012 semester to afford to return to the college. The program “offers the opportunity for students to pay 50% of what is owed on their account to settle their debt with the College.” Will this become a norm within the two-year degree space as more and more debt is accumulated?
“With more and more emphasis being placed on college education for all, raising costs of an already expensive degree, and underemployment of college graduates running rampant, student loan debt is a problem that will cripple economic possibilities and success to come,” Denhart concludes.
Gainful employment regulation is back, reports the Washington Post. Once again, the Obama administration has a new proposal to regulate career-training programs — primarily at for-profit colleges — to see whether graduates earn enough to pay off their loans.
From 2009 to 2011, the administration engaged in a sharp debate with the for-profit education sector and its allies over proposals to crack down on programs that leave graduates with heavy debts that they are unable to repay.
The Education Department issued a rule in 2011 that defined standards for loan repayment rates and the ratio of a graduate’s debt to income. Programs that failed the standards were in jeopardy of being disqualified from participation in the federal student aid, which would essentially shut them down.
A federal judge in 2012 blocked major provisions of that rule. The department will begin negotiating the new proposal next with representatives of for-profit colleges and others.
The new version of gainful employment “undoes many of the concessions” made to for-profit colleges in the first round, writes Ben Miller on Higher Ed Watch. The standards are higher and more colleges are likely to fail.
The biggest change in the proposed regulatory language from the 2011 final rule is that it would only rely on two measures: annual and discretionary debt-to-earnings ratios. Missing from this setup is the repayment rate, the metric that proved to be the weak link the last go around, as the judge ruled that the Department had not engaged in reasoned decisionmaking for the 35 percent repayment rate threshold.
Stronger disclosure requirements will break out information for completers and dropouts. “Repayment rates would be based on borrowers, not loan dollars, which makes them much more intuitive for a consumer,” writes Miller, who has much more on the details of the new proposal.
Higher Education Pays: But a Lot More for Some Graduates Than for Others concludes a Lumina-funded report by Dr. Mark Schneider, the president of College Measures. “What you study matters more than where you study,” says Schneider, a vice president at the American Institutes for Research (AIR). Learning technical and occupational skills pays off, even for graduates of low-prestige colleges and universities. A music, photography or creative writing graduate from a prestige university will struggle.
Schneider analyzed first-year earnings of graduates of two-year and four-year colleges in Arkansas, Colorado, Tennessee, Texas and Virginia.
Some short-term credentials, including occupational associate’s degrees and certificates, are worth as much or more than bachelor’s degrees, the study found. For example, Texans with technical associate’s degrees averaged more than $11,000 more than four-year graduates in their first year in the workforce.
Certificates that require one or two years of study may raise earnings as much as an associate degree, especially a transfer-oriented degree.
In Texas, certificate holders earned almost $15,000 more on average than graduates with academic associate’s degrees, but about $15,000 less than graduates with technical associate’s degrees.
Not surprisingly engineering degrees have the biggest payoff, followed by nursing and other health-related fields. What is a surprise is the weak demand for biology and chemistry graduates. ”The S in STEM (Science, Technology, Engineering, and Mathematics) is oversold,” the report found.
Despite the clamoring for more students to focus on STEM, the labor market shows less demand for science skills. Employers are paying more, often far more, for graduates with degrees in technology, engineering and math. There is no evidence that Biology or Chemistry majors earn a premium wage, compared with engineers, computer/information science or math majors. The labor market returns for science are similar to those of the liberal arts, like English Language and Literature.
Women now make up a majority of biology graduates and about half of chemistry majors.
“Prospective students need sound information about where their educational choices are likely to lead” before they go into debt, the report concludes.
President Obama talked about controlling college costs in a speech at the University of Buffalo last week. Buffalo students and parents worry about paying for college and finding a job afterwards, reports the Chronicle of Higher Education.
Over at Kenmore West High School, home of the Blue Devils, David Coates was meeting with students to finalize their class schedules. Since the recession began, the college counselor has heard plenty of doubts. . . . More students choose to attend local universities and live at home. More have enrolled at community colleges, with plans to transfer to a four-year college, an option that once held more of a stigma, he said.
Mr. Coates has seen parents’ expectations for college change, too. “More are viewing it as vocational training rather than subscribing to that old adage about becoming a problem solver and creative thinker,” he said. . . .
Parents are less focused on liberal arts, said Jane S. Mathias, director of guidance at Nardin Academy. “They want to know, What job is there?” This fall, she’ll offer a financial-aid session for students and parents. “She wants the prospective college-goers to think harder about what it would be like to have $40,000 in debt,” reports the Chronicle.
As the president was speaking at University of Buffalo, Mike Kushner, a freshman, was moving into his dorm with help from his mother, Wendy Kushner, and his sister, Amy.
Ms. Kushner, a widow, said she had saved as much as she could for college, hoarding savings bonds and recycling soda cans. “I feel bad,” she said, “that he’s going to have to take out loans.”
“For a piece of paper,” her daughter said.
Amy had enrolled at Buffalo after high school. She worked at restaurants on the campus, preparing food and making change. “For all the talk about how the foundation of our country is education, as a student you feel like you’re being taken advantage of,” she said. “Tuition, books, all these fees. A lot of things just feel like a scam.”
Nearly all parents want their child’s school to provide a strong core curriculum in reading and math and stress science and technology, concludes a new Fordham study. They want their children to learn good study habits, self-discipline, critical thinking skills and speaking and writing skills. But, after that, parents have different priorities, concludes What Parents Want.
Pragmatists (36 percent of K–12 parents) assign high value to schools that, “offer vocational classes or job-related programs.”
Jeffersonians (24 percent) value “instruction in citizenship, democracy, and leadership,” Test-Score Hawks (23 percent) look for a school with “high test scores,” Multiculturalists (22 percent) want their children to learn “to work with people from diverse backgrounds,” Expressionists (15 percent) stress art and music instruction and Strivers (12 percent), who are far more likely to be African American and Hispanic, prioritize getting into a top-tier college.
President Obama’s plan to rate colleges’ “value” is problematic, writes Matt Reed, the “Community College Dean.”
Students who choose higher-rated schools — based on graduation rates, graduates’ earnings and other metrics — would be eligible for larger Pell Grants and subsidized loans.
For community colleges, that falls somewhere between “irrelevant” and “catastrophic.”
Pell Grants go to students, not to colleges, Reed points out. At low-cost community colleges, “Pell money above and beyond tuition and fees goes directly to the student” to help offset the cost of books, transportation and living costs.
. . . for most community colleges, a higher Pell ceiling wouldn’t mean a single dollar more for the colleges themselves. But it might well mean a larger influx of low-income students, who would presumably be rewarded for forsaking more expensive options.
Over time, more expensive colleges would benefit doubly. They’d get higher graduation rates from having a higher-income student body — these things tend to correlate — and as a result, the low-income they do attract would come with larger checks. Meanwhile, the lower-cost colleges would absorb more high-risk students, without additional funding to pay for the supports that increase their chances of success. The only way that community colleges would capture a gain from an increase in Pell grants would be to … wait for it … raise costs dramatically.
Higher education needs to develop a sophisticated data system, like baseball’s sabermetrics, Reed writes.
Start with an “expected” graduation rate, say, based on the demographic profile of the students. Colleges that do better than their demographics would suggest must be doing something right; colleges that underperform their demographics presumably have some work to do. That way, we aren’t just conflating institutional performance with the economic class of the student body.
The federal method of calculating graduation rates, which ignores part-time students and transfers, is notoriously unreliable for community colleges. Analyzing graduates’ earnings also is complex.
Obama’s higher education proposals are drawing “mixed reviews,” reports the Chronicle of Higher Education.
Gloria Nemerowicz is president of the Yes We Must Coalition, which represents 33 small private colleges where at least 50 percent of the students are needy enough to be eligible for Pell Grants. She said she appreciates that the president’s plan would compare like institutions. But she’s uneasy about efforts to rate colleges based on the earnings of their graduates.
Many of Yes We Must’s member colleges are small regional institutions whose graduates serve their communities as social workers, as teachers, and in other careers that don’t pay well. It’s not fair to penalize colleges for that pattern, she said.
The Education Department’s College Scorecard will include earnings information in the fall, but only for student aid recipients, notes the Chronicle. Congress has forbidden a “unit record” system to track all students.