The cheap and the not so cheap

The federal College Affordability and Transparency Center has updated its information on the most expensive and the most affordable college options.

The highest tuition college in the public, two-year sector is the University of Pittsburgh-Titusville, which charges $11,324 a year. New Hampshire community colleges dominate the high-tuition list.

California and New Mexico community colleges charge the least: College of the Siskiyous in California costs only $573 a year and Southwestern Indian Polytechnic in Albuquerque costs $675.

The tool also estimates “net price,” the cost of attendance minus likely grant and scholarship aid. This includes living costs, which is misleading for students at non-residential colleges. Most community college students live at home and don’t incur additional living costs by enrolling in college.

CCAP: Fed aid drives up college costs

Federal aid has failed to improve educational opportunity for low- and moderate-income students, concludes Dollars, Cents and Nonsense: The Harmful Effects of Federal Student Aid.  Instead, the financial-aid system has enabled colleges to raise tuition, the study by the Center for College Affordability and Productivity finds. The proportion of lower-income college graduates is lower.

By fueling a rise in tuition, federal aid has led to “enormous student loan debts.”

With their indifference and even hostility to academic excellence, these programs have contributed to grade inflation and mediocre learning outcomes. They have . . . promoted the non-academic side of university life, complete with luxury housing, climbing walls, golf courses, and hedonistic living. . . . These programs have led to underemployment of college students, to credential inflation, to rent-seeking amongst members of university communities. In short, they have eroded the quality and integrity of higher education.

Richard Vedder, the Ohio University economist who runs CCAP, discusses how federal student aid led to tuition increases. “What if that rate of tuition increases had continued after 1978 instead of the 3 to 4 percent increases actually observed? What would tuition fees be today? About 59 percent lower. State universities charging $10,000 in-state fees (a common fee today) would instead be charging a bit over $4,000.”

Borrowing trouble

President Obama’s executive order expanding Pay As You Earn (PAYE) will provide some debt relief to some borrowers, writes Diana Carew, director of the Young American Prosperity Project at the Progressive Policy Institute. But it also will boost subsidies for a “broken higher-education financing model” and reinforce the idea that college attendance is the only postsecondary option.

While everyone needs some form of post-secondary education to earn a living, not everyone needs a bachelor’s degree, writes Carew.

The wage premium for college graduates is growing not because the degree is worth so much more, but because high school diplomas as worth so much less. In fact, real earnings for recent college graduates have been falling over the last decade, and underemployment remains at record highs.

. . . Moreover, the new tools of digital learning — such as online courses — should be driving education costs down, yet tuition continues to climb. That suggests the entire financing model for higher education needs reform. And because there are too few viable pathways into the workforce after high school, our $100 billion per year federal student aid system is channeling people into four-year colleges who may be better suited for less expensive options.

Expanding PAYE may help some borrowers now, but it  almost certainly “will exacerbate the burden on the federal student aid system in the long run, argues Carew. “Borrowers have less incentive to make smart borrowing decisions, or complete in a timely manner. And schools have less incentive to control costs.”

Expanding PAYE “won’t do much to make college more affordable,” writes Clare McCann on The Hill.  It will affect only people who’ve left college and already are eligible for income-based repayment. They must be Direct Loan borrowers — but most pre-2007 borrowers used the now-defunct Federal Family Education Loan program instead.

Few borrowers have opted for income-based repayment so far because the plans are so complex, she writes. “Gimmicks like this one don’t help much — in fact, they make the system even more complex.”

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.

Obama extends 10% cap on loan repayment

Another five million people with student loans will be able to limit payments to 10 percent of their discretionary incomes. Loans will be forgiven in 20 years — or 10 years if they take public-service (government) jobs.

President Obama issued an executive order Monday extending generous repayment terms to more debtors. He also urged Congress to approve a bill to let 25 million borrowers refinance student loans at lower rates.

The biggest winners will be people who took on debt to pay for graduate school, notes the Christian Science Monitor.

All student borrowers – including those 5 million likely to be affected by this change – already had access to some form of income-based repayment, notes Jason Delisle, director of the New America Foundation’s Federal Education Budget Project. Under the previous terms, those who didn’t have access to PAYE (Pay As You Earn) could still do income-based repayment where they paid 15 percent of their incomes, after a $17,500 exemption, and had their debt forgiven after 25 years. In many ways, he says, those terms made much more sense, and were more fair, especially for students borrowing large sums of money to go to grad school, who are very unlikely to be able to pay off their loans in 10 or 20 years even with high incomes.

“Income-based repayment is vital, and it’s important we have it, but it’s very important we get the terms right,” says Mr. Delisle. “The payments are too low and the terms are too short for someone who’s borrowed to go to grad school.”

Burdened with student loan debt, young people can’t buy their first home, Obama said.

That’s saying “we need to help [student loan debtors] with debt so they can go into even more debt”  with a mortgage, Delisle said. Student loans already helped these borrowers consume beyond their means, he said.

Encouraging students to borrow more for college also enables colleges to keep raising tuition.  “It’s dealing with the symptoms and not the disease,” says Richard Vedder, director of the Center for College Affordability.

Some low-income, minority and first-generation students think their loans will be forgiven, reports Sophie Quinton on National Journal.

“A lot of students will take out loans because they hear that if you’re in a certain job it gets paid off. That’s not always the case,” says Lauren Ellcessor, 28, a counselor at the Educational Opportunity Center in Norfolk, Va.

. . . “I get the quote: ‘I’m here to get Obama’s plan to get rid of my student loans,’ ” Ellcessor says. It’s not that easy, she tells clients.

Loan forgiveness should be eliminated, argue Brookings’ researchers Beth Akers and Matthew Chingos. It encourages students to borrow more and stick the taxpayers with the bill. Frugality is not rewarded.

Nationwide, student loan debt tops $1 trillion.

States eye free community college tuition

Community college tuition could be free to high school graduates in Tennessee, Mississippi and Oregon.

Tennessee Gov. Bill Haslam proposed making two years of a community or technical college education free in his State of the State address. “Net cost to the state, zero. Net impact on our future, priceless.”

“We just needed to change the culture of expectations in our state,” the governor told the New York Times. “College is not for everybody, but it has to be for a lot more people than it’s been in the past if we’re going to have a competitive work force.”

Community college costs only $3,800 a year in Tennessee, just above the national average. With help from Pell Grants, most students pay little or nothing in tuition and fees. However eliminating tuition would enable lower-income students to use their Pell aid to pay for books, supplies, transportation and living expenses.

The “Tennessee Promise” will have a psychological impact, Haslam predicted. Many people don’t realize community and technical colleges are affordable. “If we can go to people and say, ‘This is totally free,’ that gets their attention.”

The plan would cover Tennessee’s 13 community colleges, which grant academic degrees, and 27 technical colleges, which provide job training. The technical system is nationally known for high success rates.

The net cost to the state isn’t really zero, but Haslam estimated diverting lottery revenue would cover the $34 million a year.

Mr. Haslam also called for Tennessee’s public colleges to make a new effort to recruit the state’s nearly one million adults who have some college credits but ended their educations without earning degrees or professional certificates. And he proposed expanding a program that gives particular help to struggling high school students so they can go to college without needing remedial classes that do not earn college credit; studies have shown that students who take remedial courses are far less likely to graduate.

High school graduates in Mississippi could attend community college for free for two years under a bill being considered in the Legislature, reports the Clarion-Ledger. Scholarships would be available to students younger than 21 who enroll full-time and maintain a 2.5 grade point average.

The idea started at Meridian Community College, which began offering what it calls a “tuition guarantee” in fall 1996, using privately donated money.

Oregon legislators also may study whether it’s feasible to let high school graduates attend community college for free. “If we get this right, I think we can unleash a tremendous amount of motivation within these young people, giving them the motivation to stay in school, to get a certificate, to achieve that additional learning that can make a difference in terms of their economic success,” Gov. John Kitzhaber told the Senate Education and Workforce Development Committee.

 whether free community colleges is feasible.

Feds could make public colleges tuition free

Public colleges and universities could be tuition free for $62.6 billion, writes Jordan Weissmann in The Atlantic. That’s how much tuition state schools collected from undergrads in 2012, according to Department of Education data. That’s less than the $69 billion the feds spent last year “on its hodgepodge of financial aid programs, such as Pell Grants for low-income students, tax breaks and work study funding,” writes Weissmann. “And that doesn’t even include loans.”

Washington could make public college tuition free with the money it sets aside its scattershot attempts to make college affordable today.

. . . rather than simply using our resources to maintain a cheap public system (and remember, public schools educate 75 percent of undergrads), we spill them into a fairly wasteful and expensive private sector. At one point, a Senate investigation found that the for-profit sector alone was chowing down on 25 percent of all federal aid dollars.

Actually, the feds would spend less than $62.6 billion to cover tuition because most of the $21.8 billion in Pell Grants is spent at state colleges and universities, Weissmann writes. However, state and local governments would have to continue their higher education subsidies.

Students at residential colleges would have to pay for room and board. Those choosing the private sector . . . Well, this plan would wipe out all but the elite, well-funded private nonprofit colleges and nearly all the for-profit sector.

St. Louis college cuts tuition for undocumented

St. Louis Community College will cut tuition for undocumented students with a Missouri high school diploma, reports the St. Louis Post-Dispatch. 

Nearby Illinois and at least 17 states offer in-state rates to undocumented state high school graduates but the college’s move is a first for Missouri.

“It’s a huge need. It’s important to give every single kid a chance at education and getting out of that cycle of poverty,” said Virginia Braxs, president of the Hispanic Arts Council. “I think it’s amazing, amazing news. There is a real chance to be part of the American dream.”

“Clearly, there’s a big affordability gap,” said Mark Kantrowitz, senior vice president of Edvisors Network and an expert on college financing.

CC funding improves in most states

Community college funding is recovering, but two-year college systems remain under stress in many states, according a new survey, Halfway Out of Recession But A Long Way to Go. The Education Policy Center of the University of Alabama at Tuscaloosa surveys community college directors annually.

Only directors in five states — Connecticut, Georgia, Hawaii, Louisiana and Wyoming — reported mid-year budget cuts in 2012-13. In 2008-9, two-thirds of states were reporting such cuts.

Looking ahead, most state directors are predicting increases for this year for community colleges, with the average increase projected to be 4 percent. Only five states — Georgia, Louisiana, Missouri, North Carolina and West Virginia — are projecting decreases in 2013-14.

The state directors report considerable worry about the ability of students to pay for college. Most states are projecting tuition increases, and a majority expect state student aid programs to either be cut or to increase at less than the rate of inflation for higher education.

Many directors expect rising enrollments as four-year institutions impose enrollment caps.

 

CC students are ‘second-class citizens in Ohio

Ohio’s community college students are “second-class citizens” when it comes to Ohio College Opportunity Grants, editorializes the Toledo Blade.

Community college tuitions average $3,800 a year — about one-third that of those at four-year schools — in Ohio.

In 2009, the General Assembly cut the OCOG budget from roughly $395 million to $171 million. Making matters worse, it also forced low-income students to use federal Pell grants to cover tuition expenses at community colleges before tapping state grants. Those changes made nearly all community college students ineligible for OCOG.

Unlike Pell grants, state grants cover tuition only. And because tuition is low at community colleges, Pell grants typically cover students’ tuition.

Before the changes, 20,000 community college students in Ohio received state grants.

Ohio needs legislation that would permit community college students to, first, use OCOG to cover tuition costs, thereby enabling them to tap federal Pell grants for other college-related expenses. That change also would call for setting aside another $20 million a year to cover the more than 20,000 newly eligible community college students.

Last year, as Ohio began to refund OCOG, money was set aside to fund for-profit college students but not community college students, reports Inside Higher Ed.