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Category: Higher Ed Policy

Obama administration announces plan to expand Pell Grant program

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The Obama administration has introduced a plan to bring back year-round Pell Grants and to create a $300 bonus for Pell recipients taking at least 15 credits a semester. Both elements of the plan are designed to incentivize students to graduate faster and accrue less debt in school. The plan would cost $2 billion over the next year,

The year-round Pell Grant program was initially put in place by President Bush in 2008 but was cut in 2011 as a budget-saving measure. While the effort to reinstate the program will likely face significant Congressional opposition, there is some bipartisan support. Senator Lamar Alexander (R-LA), Chair of the Senate education committee, and Democratic Senator Michael Bennet of Colorado are cosponsoring legislation to reintroduce year-round Pell Grants. “We have long supported providing students a more flexible Pell Grant program and hope this is one of many areas Congress and the administration can work together to strengthen higher education,” a Republican education committee spokesman Even with this bipartisan support, however, the administration faces a difficult task in getting the legislation through a very budget-conscious Congress.

The $300 bonus, dubbed 鈥�15 to finish鈥� by education non-profits, is also somewhat controversial, though the division is between a different set of stakeholders than the Pell Grant expansion. Many college completion non-profits support 15 to finish, saying that encouraging 15 credit semesters is an important tool in incentivizing Pell recipients to graduate on time. The plan has drawn criticism, however, from community college leaders and adult student advocates, who contend that 15 credits is too many for students who are busy working or who have come into higher education unprepared for college-level work.

See the for further information on the Pell Grant proposal.

New York expands student loan forgiveness program to include lower earners

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New York state has recently instituted the 鈥淕et on Your Feet鈥� loan forgiveness program in an effort to keep young college graduates living and working in the state. The program, originally introduced as a part of Governor Cuomo鈥檚 2015 Opportunity Agenda, is designed to help struggling recent graduates in the state pay back their student loan debt. Get on Your Feet is the most recent extension of NY state鈥檚 financial aid to its college graduates, which includes loan forgiveness for several public service professions and need-based with awards of up to $5,165.

There are a number of eligibility stipulations for the program, including that the graduate be enrolled in the federal Income-Based Repayment plan or the Pay As You Earn plan, that they are making less than $50,000 per year, that they work and have graduated in-state, and that they have received their degree during or after the 2014-15 academic year. Get on Your Feet also only applies to federal loans; private loans are ineligible for relief through the program.

The plan, which has been covered by , , , and the , is not without controversy 鈥� recent graduates who do not qualify for Get on Your Feet are upset because they feel they are paying for others鈥� college costs while reaping none of the benefits of the loan forgiveness. The program is financed through the state鈥檚 General Fund, for which the primary sources of revenue are in-state taxes.

The Washington Post lists some of the other states that have forms of student loan forgiveness. Forty-five states and the District of Columbia offer some form of loan forgiveness for its residents, according to the article, but New York is the only state that specifically targets lower-income graduates. Most programs in other states are concentrated in public-service industries; health, social work, teaching, and public law.

Washington state provides聽health-care professionals with loan forgiveness of up to $70,000 over two years (details ) and also gives financial assistance in the form of the (SNG), which聽distributes financial aid awards up to the price of in-state undergraduate tuition鈥�$10,344 at UW鈥攆or Washington residents whose families meet the minimum income requirements.

Unfortunately, , 3,500 of whom attend the UW, are eligible to benefit from the SNG but do not because the program has not received sufficient funding from the state.

 

 

Perkins Loan Program Temporarily Revived

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Last week, Congress passed a bipartisan bill to extend the , which had expired in September.

The bill authorizes new undergraduate applicants to join the program through September 2017, but only if they have exhausted all other federal borrowing options first.聽 New graduate students will not be able to join the program, but those who already have Perkins loans can continue to receive them through September 2016.

In the current academic year, over 3,200 天美影视传媒 students聽have received聽approximately $12 million in Perkins loans.聽聽These low-income, high-need students, rely on Perkins loans to cover any financial gap that remains after grants and scholarships have been applied to their tuition.

More information on the Perkins extension is available at聽and .

New OPB Brief on Graduates’ Earnings Report

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Washington State’s Education Research & Data Center (ERDC) recently published the , which provides earnings information for graduates from the state’s public institutions. OPB’s latest describes where the data for the report came from, discusses some of its limitations, and warns against relying on the report in choosing a program of study.

Final Gainful Employment Rule Removes Default Rate Metric

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The Education Department鈥檚 (ED) final 鈥済ainful employment rule,鈥� which was released yesterday, will hold vocational programs accountable to just one of the two outcome metrics that were proposed in the .聽 Cohort default rates (CDRs) were eliminated from the legislation, meaning that debt-to-earnings ratios will be the only聽criteria upon which individual career education programs are evaluated to determine聽federal aid eligibility.

Community colleges had for the change on the grounds that a relatively small number of their students take out federal loans and, thus, cohort default rates are 鈥渕aterially and statistically unrepresentative of all the students in a program.鈥�

Student and consumer advocates, however, have contended that the change weakens the rule and doesn’t do enough to protect students and taxpayers. Pauline Abernathy 鈥� Vice President for The Institute for College Access & Success (TICAS), a consumer advocacy group 鈥� issued a yesterday saying:

鈥淲e and more than 50 student, civil rights, veterans, consumer, and education organizations urged the Obama Administration to strengthen its draft gainful employment regulation, but instead this final regulation is even weaker. The final rule also does not provide any financial relief to students who enroll in programs that lose eligibility; lets poorly performing programs enroll increasing numbers of students, right up to the day the programs lose eligibility; and even passes programs in which every student drops out with heavy debts they cannot pay down.鈥�

For-profit colleges with the outcome either, arguing that the legislation does nothing to fix a proposal they see as being “fundamentally flawed.”

Arne Duncan, the education secretary, estimates that 1,400 programs鈥�99 percent of which are at for-profit colleges鈥攚ill fail the rule in the first year. However, that number is 500 less than it would have been under the March version of the rule. Unfortunately, of those 500 programs, 15 are ones where students are more likely to default than they are to graduate. 聽See the for more information.

Since programs will only become ineligible for federal aid after they fail the debt-to-earnings tests twice in a three-year period or are 鈥渋n the zone鈥� for four consecutive years, institutions will not face penalties for at least three more years. Therefore, it is possible that the gainful employment rule will be revised yet again before its effects are truly felt.

ED Releases New PLUS Loan Rules

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It will soon be easier for students and parents with adverse credit histories to qualify for federal PLUS loans. 聽Under new the Education Department鈥檚 (ED鈥檚) 鈥� which were released on Wednesday and are expected to take effect in March 鈥� ED will review only two years (rather than five) of a prospective borrower鈥檚 credit history to determine loan eligibility, and will excuse up to $2,085 in certain types of delinquent debt聽when running initial credit checks.

ED agreed to revisit the rules following pressure from many colleges and families who were angered after ED tightened the PLUS loan standards in 2011. The 2011 changes resulted in thousands of sudden loan denials and, consequently, enrollment declines and revenue losses at some institutions. According to , department officials expect that the new standards will allow an additional 370,000 applicants to pass the initial credit check for PLUS loans.

Representative Chaka Fattah 鈥� Pennsylvania Democrat and co-chair of the Congressional Black Caucus Education Task Force 鈥� ; however others connected with historically black colleges have for not moving quickly enough.聽 Meanwhile, some policy analysts and consumer advocates to prevent borrowers from being saddled with unmanageable debt, and that the new rules don鈥檛 do enough to safeguard against default.

If defaulting becomes an issue as a result of the new standards, the silver lining is policymakers will at least know about it and, hopefully, be able to do something. As part of ED鈥檚 changes to the PLUS program, the department will begin calculating and publishing annual cohort default rates for institutions receiving PLUS loans.[1] That information should help illuminate whether borrowers are getting in over their heads.

Ultimately though, as points out:

鈥淭he Department must do a better job reaching out to parents and helping them understand the terms and conditions of their loans, including the ability to repay their loan as a percent of their income if they consolidate into a Federal Direct Consolidation Loan. Better counseling won鈥檛 solve all the issues with the PLUS loan program. But it鈥檚 a start until we can ensure PLUS loans are a safe product for families and we can improve access to better aid options like grants for low-income families.鈥�

[1] ED currently only calculates cohort default rates for colleges that receive Stafford loans.

AASCU States 鈥淧ay It Forward Is Not the Solution to Addressing College Affordability鈥�

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On Thursday, the American Association of State Colleges and Universities (AASCU) released examining the potential consequences of Pay It Forward (PIF) (please see our for background information). 聽The AASCU brief summarizes other, similar approaches to paying for college and analyses PIF as a potential state approach to financing public higher education. 聽

The report describes the following 鈥�13 Realities of PIF College Financing Proposals鈥�:

  1. Most students could pay more, not less, for college.
  2. Considerable uncertainty would be introduced into campus budgeting and planning efforts.
  3. The majority of college costs are not covered.
  4. Students from sectors with the heaviest student debt burdens would be ineligible to participate.
  5. The class divides in public higher education, and more broadly, in American society, could intensify.
  6. Costs borne by students pursuing privately financed degrees and higher-paying careers would increase dramatically.
  7. PIF is duplicative鈥攖here are existing public and private programs that calibrate student debt to earnings.
  8. PIF鈥檚 start-up costs would be enormous.
  9. Payment collection would be costly and challenging.
  10. Campus and state leaders would have strong incentives to promote programs leading to high-paying occupations, to the possible detriment of the liberal and applied arts, humanities, and public service careers.
  11. Underlying college cost drivers would not be addressed.
  12. Support for state and institutional student financial aid could dissipate.
  13. Support for maintaining existing state investment in public higher education would erode, creating a pathway to privatization.

In addition, the authors discuss 鈥淭he Unknowns of 鈥楶ay It Forward鈥欌��:

  1. How will institutional financing gaps be addressed?
  2. How would payments be collected?
  3. Who would control PIF funds?
  4. How would PIF鈥檚 structure and revenue generation differ from campus to campus?
  5. How would PIF complement or conflict with federal higher education programs?
  6. How would transfer students be integrated into PIF?
  7. What would be the consequences for noncompleters?
  8. How would college savings change under PIF?
  9. How would PIF affect campus philanthropic campaigns?

The report鈥檚 conclusion reads, 鈥淐reating a lifelong tax and privatizing public higher education through pay it forward is not the solution to addressing college affordability.鈥� 聽

I recommend that readers review .

AASCU Releases Latest State Outlook

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On Thursday, the American Association of State Colleges and Universities (AASCU) released its most .聽 According to the report, state operating support for public 聽four-year colleges and universities is 3.6 percent higher for FY 2015 than it was for FY 2014. Of the 49 states that have passed a budget thus far, support for higher education increased in 43 states and decreased in only 6 states. Of those 6 states that reduced funding, all were under 3 percent: Alaska, Delaware, Kentucky, Missouri, Washington (0.8 percent decrease) and West Virginia.

There was a relatively small amount of variation between states in terms of their year-to-year funding changes. For FY 2015, the spread between the state with the largest gain and that with the largest cut was only a 24 percent鈥攖his is compared to 57 percent, 25 percent and 46 percent, respectively, in FYs 2012, 2013 and 2014. The report notes that this decreased volatility likely indicates 鈥渁 continued post-recession stabilization of states鈥� budgets.鈥�

Charitable contributions to U.S. colleges and universities increased 9 percent in 2013, to $33.8 billion鈥攖he highest recorded in the history of the Council for Aid to Education (CAE) Voluntary Support of Education (VSE) survey. In addition, college and university endowments grew by an average of 11.7 percent in FY 2013, according to a January 2014 study released by the National Association of College and University Business Officers and the Commonfund Institute.聽 This represents a significant improvement over the -0.3 percent return in FY 2012.

The report also describes ten highlights/trends from states鈥� 2014 legislative sessions, those being:

  1. State initiatives linking student access to economic and workforce development goals.
  2. Tuition freezes or increase caps in exchange for state reinvestment鈥攖his occurred in Washington and another example is discussed in .
  3. Performance-based funding systems that attempt to align institutional outcomes with state needs and priorities.
  4. Governor emphasis on efforts to advance state educational attainment goals.
  5. Interest in policies related to vocational and technical education, including allowing community colleges to grant certain four-year degrees (as described in ).
  6. Efforts to develop a common set of expectations for what K-12 students should know in mathematics and language arts.
  7. STEM-related initiatives, including additional funding for STEM scholarships in Washington.
  8. Financial support for the renovating and/or constructing of new campus facilities鈥攗nfortunately, Washington鈥檚 legislature did not pass a capital budget.
  9. Bills allowing individuals to carry guns on public college and university campuses鈥攁s of March 2014, seven states had passed such legislation.
  10. Legislation that extends in-state tuition or, as occurred in Washington, state financial aid to undocumented students.

Other noteworthy policy topics described in the report include:

  • Student financial aid programs鈥攕ome states broadened their programs while others limited them;
  • Online and competency-based education reciprocity agreements;
  • 鈥淧ay It Forward鈥� Funding Schemes; and
  • Consumer protection as it pertains to student recruitment, advertising and financial aid at for-profit colleges.

Congress Introduces Bills to Reauthorize Higher Education Act

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As the UW’s Office of Federal Relations reported on their , yesterday Senate Democrats released to reauthorize the Higher Education Act (HEA). Their proposal focuses on four main goals:

  • Increasing affordability and reducing college costs for students,
  • Tackling the student loan crisis by helping borrowers better manage debt,
  • Holding schools accountable to students and taxpayers, and
  • Helping students and families make informed choices.

In addition, today the House Committee on Education and the Workforce introduced reauthorization-related bills of their own, including:

For more information, check out the and a recent . 聽We’ll post more information on OPBlog over the coming weeks.

Divergent Views on International Student Retention Among Administrators, Students

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In an effort to boost international student retention, a new survey by the : Association of International Educators seeks to understand why international students drop out or transfer before earning a degree. The survey asked 517 international undergraduate students, of which 110 had either transferred or were planning to transfer, about their college experience and their reasons for changing schools.聽 In a parallel survey, about 500 international education professionals were asked why they thought international students transferred.

The students who participated in the study cited financial factors as the top reasons for their dissatisfaction:

  • Limited access to jobs and internships (37 percent)
  • Affordability (36 percent)
  • Dearth of scholarship opportunities (34 percent)
  • Meal plans (26 percent)
  • Quality of housing (17 percent)

Interestingly, the factors that educators believe are hurting international student retention are quite different. Although nearly two-thirds of international education professionals named 鈥渇inancial problems鈥� as a primary cause of attrition, the other top reasons they listed focused more on academic preparedness and fit:

  • Finding a 鈥渂etter fit鈥� institution (67 percent)
  • Financial problems (64 percent)
  • Academic difficulties (62 percent)
  • Inadequate English language skills (40 percent)
  • Dissatisfaction with location (34 percent)

The findings suggest that there is a disconnect between the expectations of international undergraduates and those of college administrators. quotes Rahul Choudaha, the report鈥檚 principal investigator, as saying, 鈥淪tudents may be underestimating the academic preparation expected to be on a campus and they are overestimating the availability of jobs, availability of scholarships, availability of financial aid and so on.鈥� College recruiters, thus, should help manage international students鈥� expectations by recognizing and being upfront about the availability of job and scholarship opportunities on their campus. In addition, as international students may be underestimating the level of academic and language preparedness necessary to succeed at American universities, special tutoring and academic advising services may be required to help them succeed and stay. Together, these approaches could help boost retention and clarify expectations, so both administrators and students have a better experience.

To read the NAFSA findings, click . Or, check out the or articles on the issue.