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Category: Higher Ed Policy

ED Begins Negotiating New Gainful Employment Rule

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On Monday, the U.S. Education Department (ED) began formal negotiations on the draft language of a . The rule, originally published in 2011, was designed to enforce a requirement of the Higher Education Act that states career education programs鈥攏on-degree programs at all colleges and most degree programs at for-profit colleges鈥攎ust 鈥減repare students for gainful employment鈥� in order to participate in federal student aid programs. The rule was meant to discourage these programs from misusing federal aid dollars and leaving students with debt burdens they are unable to repay. However, in 2012 a federal judge rejected major provisions of the rule, requiring that ED rethink its strategy.

Here鈥檚 a summary of the changes:

  • The proposed rule applies to programs with as few as 10 students, whereas the old rule counted only career-focused programs with 30 or more students. Because of this change, ED estimates that the new rule could cover 11,359 programs at for-profit and nonprofit colleges鈥攏early twice as many as the old rule covered鈥攁nd that 974 of those programs (9 percent) could fail to meet the proposed standards.
  • The draft regulation omits loan repayment as a criterion for federal student aid eligibility. The old rule severed federal aid to programs where too few students were repaying their loans or where graduates’ debt-to-earnings and debt-to-discretionary-income ratios were too high. The new rule removes the loan repayment standards, which the courts deemed “arbitrary and capricious,鈥� and relies only on the latter two measures.
  • Debt-to-earnings calculations would be based only on students who receive federal aid, rather than students who complete the program. The old calculations were based on all students who completed the program, whereas the proposed calculations are based on any students who receive federal student loans and Pell Grants, regardless of whether they complete the program. As the rule is designed to ensure that federal aid is used effectively, this seems a more appropriate approach.听
  • Schools would have fewer chances to improve their performance before losing federal aid eligibility. Under the previous rule, programs that failed the measures in 3 out of any 4 years would be ineligible for federal student aid. However, the new rule only lets programs fail in 2 out of any 3 years before they lose eligibility.

For details, see a prepared by the Education Department.听 Please continue to follow our blog as well as the for updates on this topic.

Oregon Passes Bill to Implement 鈥淧ay Forward, Pay Back鈥� Pilot Program

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(This piece was originally posted on 07/11/2013, however听it was lost听due to听technical issues and is therefore re-posted here.)

Last week, the Oregon legislature passed a bill that, if signed by the governor, will implement a pilot program to study the effects and feasibility of substituting upfront tuition payments with income-based, post-graduation payments. For 24 years after graduating, four-year college students would pay back 3 percent of their income and community college students would pay back 1.5 percent. Students who do not graduate would pay back a smaller percent determined by how long they were in school.

If, after several years of study, Oregon decides to adopt a plan (or some form of it), it would signify a major shift in the funding paradigm for public institutions.听But that鈥檚 a big IF. The plan has received considerable criticism due to a multitude of unanswered questions that could pose significant logistical barriers. For example:

  • How would institutions and/or the state pay for the plan鈥檚 implementation (i.e. the several years of foregone tuition revenue between when a student enters school and when they graduate and start earning pay)?
  • How would the state efficiently collect accurate income data on students who move out-of-state?
  • How would the state go about collecting and enforcing payments?
  • How would the plan account for and apply to part-time students, transfer students, mid-career students, and other non-traditional students?
  • How would the plan work with federal and state financial aid programs?听Would low-income students be accommodated so as to avoid creating barriers to entry?
  • How does one pilot a 24-year repayment program in just 2 or 3 years?

Even if Oregon鈥檚 higher education commission, which is tasked with implementing the pilot program, can find viable answers to those questions, the plan still has a number of possible (if not likely) negative consequences. For instance, the plan may:

  • Magnify the public鈥檚 view of higher education as a private good (only benefiting the individual) rather than a public good (benefits for many) which, in turn, could spur the continuing and problematic trend of replacing state dollars with tuition revenue;
  • Make institutions even more vulnerable to economic variations and recessions as their revenue would be tied to graduates鈥� earning and unemployment rates; and
  • Create social and economic imbalance between Oregon and other states since students who expect to earn less鈥攅.g. social science and humanities majors鈥攚ould be incentivized to go to Oregon, and students expecting to earn more鈥攅.g. engineering and medical students鈥攚ould likely go elsewhere.

Granted, the idea of basing college payments on graduates’ income is not a new one. Some federal student loans are eligible for income-based repayment and a program similar to Oregon鈥檚 already exists in Australia. However, Australia鈥檚 version is administered at the federal level, meaning many problems inherent in Oregon鈥檚 plan (tracking students who move around the country, imbalance between states, etc.) are avoided.

The Economic Opportunity Institute, a liberal think tank in Seattle, proposed a version of the plan for Washington in October 2012; but, unlike Oregon鈥檚 version, it has yet to go anywhere.听 We鈥檒l keep you posted.

Obama Releases College Affordability Plan

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Last week, President Obama toured several colleges and universities promoting his 听to make college more accessible and affordable for “middle class” students. As he noted during several stops, achieving a higher education remains one of the most critical means by which citizens achieve job security and financial听 stability.

For more detailed information about the central themes of the President’s plans, as well as information about which components require action from Congress, please review a on the topic, as well as a from Federal Relations. More about the plans and .

 

Critique of 鈥淔or Public College, the Best Tuition Is No Tuition鈥�

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In 鈥�,鈥� a recent opinion piece published by The Chronicle, the author describes the merits of Finland鈥檚 no-tuition education system. In Finland, 鈥渁ll education became public and free鈥� during the 1960s as part of a multipronged strategy to reform and improve education. The other prongs of the strategy involved strengthening the country鈥檚 basic education by providing teachers with better pay and training, ensuring that students have individual attention at a young age, and by making education more interactive and experience-based. Forty years later, the country ranks 1st in Pearson鈥檚 Global Index of Cognitive Skills and Educational Attainment, which is based on results from a variety of international tests of cognitive skills as well as measures of literacy and high school graduation rates. The US ranked 17th. Though the accolades go to Finland鈥檚 basic education system, the author concludes that the US should model its higher education system after Finland鈥檚. However, a higher percentage of the US鈥檚 population has attained tertiary education (42 percent, ranked 5th, versus 39 percent in Finland, ranked 9th) and a higher percentage has entered into higher education (72 percent, ranked 8th, versus 68 percent in Finland, ranked 13th).

Even if the US should model its higher ed system after Finland鈥檚, the no-tuition strategy is not nearly as feasible as the author suggests. To determine whether Finland鈥檚 approach would be 鈥渁ffordable鈥� for the US, the author multiplies the number of US public students in 2008-09 by the average cost of public tuition, room, and board in 2009-10. By his calculations, the program would cost $130 billion annually which, he notes, is more or less equivalent to what the federal government spent on Pell grants and student loans in 2010 ($134 billion). His approach, however, has some serious flaws:

  • First, what he is analyzing here is the cost of all public education becoming free, not all education becoming public and free, which is Finland鈥檚 model. It is unclear whether the author accidentally left out private non-profits and for-profits鈥攚hich would be converted to public institutions and made free under Finland鈥檚 model.听 But if the other sectors are added into the equation, the program costs increase significantly.
  • Second, undergraduate tuition and fees have increased since 2008-09. Between 2009-10 and 2012-13, adjusting for inflation, undergraduate tuition and fees increased by about 5 percent per year at public institutions and by an average of 2 percent per year at private non-profits. During that the same time, federal spending on Pell grants and undergraduate financial aid remained relatively stable after adjusting for inflation, meaning the costs would not be nearly as interchangeable as the author suggests.
  • Lastly, completely eliminating the price of tuition would stimulate demand, which would increase enrollment at public institutions and, thus, the cost to taxpayers. Not only would there be a per-student cost (tuition, room, board, etc.) for each additional student, more students would also require more buildings, classrooms, labs, housing and other capital investments.

Another significant feature inherent in Finland鈥檚 system that isn鈥檛 contemplated by the author is Finland鈥檚 use of a barrier to entry. Finland has limited enrollment spaces and, thus, requires that students pass certain standardized tests at specified levels, depending on the program. This works well in Finland due to their exceptional K-12 system, which ensures that all students are thoroughly prepared for college regardless of personal income or community wealth. The same cannot necessarily be said about our basic education system in the US. Thus, it isn鈥檛 clear whether a standardized test could serve as a barrier to entry without significantly and profoundly harming less prepared students.

We鈥檙e trying to create a system in which students of all backgrounds and privileges have access to higher education, but substituting price for a proxy barrier like college preparedness may not get us very far. College preparedness would be a preferable barrier in that naturally-talented low-income students would have a better chance of attending college than they currently do; but what would happen to the students who don鈥檛 have the resources they need to succeed? Would they be denied access to higher education?

There are costs and tradeoffs associated with every higher education system and reform plan, free tuition is no exception. Free tuition may be a viable option, but it鈥檚 not a silver bullet.

Federally Subsidized Student Loan Interest Rates Set to Double on July 1

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Thursday night, time ran out for Congress to reach a deal to keep federally subsidized student loan interest rates from doubling. The Senate adjourned for its Fourth of July recess without voting on a plan; thus, the interest rates on new federally subsidized loans will double to 6.8 percent on Monday July 1st (the same rate as unsubsidized federal student loans).

It is possible, however, that students won鈥檛 end up paying the increased rates.听 There has been a push from some legislators to enact a one-year fix that would temporarily adjust/lower the interest rates after the fact.听 As the lender of the student loans, it is within the federal government鈥檚 power to apply such a solution retroactively.

The increase was originally scheduled to occur a year ago.听 But, thanks to an election-year alliance of student advocates and the Obama administration, the rate increase was delayed by a year.

For more information, see the article and please stay tuned to the for updates.

Supreme Court Decision on Fisher v. University of Texas

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On Monday, the Supreme Court ruled that (UT), the case on UT Austin鈥檚 race-conscious admissions policy, be sent back to an appeals court for further scrutiny.听The case stemmed from a lawsuit by Abigail Fisher, a white applicant to the university who claimed she was unfairly rejected due to UT Austin鈥檚 affirmative action admissions program. For more background on this case, please see our previous two posts, found and .

The court鈥檚 7-to-1 decision did not provide a direct answer about the constitutionality of UT Austin鈥檚 admissions practices. Instead, it ordered the U.S. Court of Appeals for the Fifth Circuit to reconsider the case on the grounds that the appeals court had failed to apply “strict scrutiny” (a rigorous standard requiring that both an important goal and a close fit between means and ends be identified) in its review of the case and subsequent ruling in favor of UT.听Justice Ruth Bader Ginsburg was the only dissenting voice; she argued that the appeals court was right to support UT鈥檚 policies.

According to the , Justice Kennedy wrote for the majority that courts reviewing affirmative action programs must, 鈥渧erify that it is necessary for a university to use race to achieve the educational benefits of diversity.鈥� This necessitates, he said, 鈥渁 careful judicial inquiry into whether a university could achieve sufficient diversity without using racial classifications.鈥�

The Supreme Court鈥檚 ruling did not displace its 2003 decision in , which found educational diversity to be of sufficient importance to overcome the government鈥檚 standard ban on racial consideration. However, as reports, legal experts believe the court鈥檚 demanding 鈥渟trict scrutiny鈥� requirements will make it difficult for UT and many other institutions to successfully defend their use of race in admissions.

The debates surrounding Fisher v. UT and affirmative action in higher education as a whole are far from over. Many expect the Texas case to return to the Supreme Court after a new review by the appeals court.听 We will keep you posted with any updates.

Senate Releases Revised Budget Proposal

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On Saturday, the Senate released a , which closely resembles the budget they passed in April.听For the UW, the two budgets differ in just a few ways:

  • Unlike the original Senate budget, the revised budget does not include a $12.5M transfer away听from the UW Hospital Account;
  • The revised budget does not cut the UW by $3.2M for 鈥渁dministrative efficiencies鈥� that were assumed in the original budget; but
  • Compared to the original proposal, the revised budget provides the UW with $3.2M less in new funding.

The latter two changes essentially nullify each other.听A few additional changes occurred with regards to state employee health benefits; we are working to interpret the effects and will provide more information as soon as possible.

As mentioned, the revised Senate budget doesn鈥檛 stray far from the original. Just like the Senate鈥檚 original proposal, its revised budget:

  • Provides the UW with $479.6M (General Fund and Education Legacy Trust funds) for听the 2013-15 biennium鈥�$10.2M of which is one-time performance-based funding;
  • Assumes 0% tuition increases for resident undergraduates;
  • Preserves tuition setting authority, but nullifies that authority if either SB 5883 or SB 5941 pass (the bills would require the UW to decrease resident undergraduate tuition rates by 3 percent for the 2013-15 biennium and limit future resident undergrad tuition growth to the rate of inflation); and
  • Generates 鈥渘ew鈥� funding for higher education by imposing a 20 percent tuition surcharge on international students at the state鈥檚 public colleges and universities.

For more information about the original Senate proposal, please see the .

Closed Presidential Searches Meet Opposition from Students, Press

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A student journalist and two newspapers are filing lawsuits challenging Louisiana State University (LSU) for choosing a new president in a closed search process. LSU鈥檚 presidential search committee released just one finalist, F. King Alexander (the current president of California State University at Long Beach) for consideration. The suits claim that the closed search denied the public the right to participate in the search and violated the state鈥檚 public-records laws, which guarantee open access to public documents. The plaintiffs claim the list of candidates for a university president position should be open to the public under Louisiana鈥檚 Public Records Act.

Concern over closed searches has been mounting elsewhere, as well. While many states have laws that guarantee access to public records, others allow universities to withhold information on candidates until a certain point in the process. Universities argue that closed searches are necessary because many prestigious applicants are currently presidents of other institutions and would be uncomfortable with publically acknowledging their candidacy, for fear of retribution or embarrassment if they do not land the job. Advocates of open searches say that students and faculty have a right to be informed about the process and will be more confident in the eventual choice if they see all of the options upfront.

Washington is currently considering amending its own public records law with . The bill would require the 鈥渁pplications of finalists applying for the highest management position in an agency鈥�, such as a university president, to be released to the public. The information would need to be provided before the agency could make its hiring decision. Until now, applications for public employment were exempt from public disclosure under Washington law. The bill passed unanimously out of the House and is currently being considered in the Senate.

To read more about the Louisiana case, check out the Chronicle鈥檚 . To read HB 1298, please follow this .

Washington Roundtable Urges Legislators to Prioritize Higher Education

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A recent update on our state鈥檚 progress toward meeting the Washington Roundtable鈥檚听 emphasizes the need for legislative action on education, including protecting funding for our public universities, as well as transportation and business costs.听 The Roundtable 鈥� a nonprofit, public policy organization comprised of major, local business executives 鈥� created the Benchmarks in 2011 as a means to measure and track Washington鈥檚 economic vitality and quality of life. The organization publishes annual updates that examine state-by-state comparative data (primarily from federal sources like the U.S. Dept. of Education); assess Washington鈥檚 position in key categories; and highlight opportunities for improvement.

The showed that:

  • Washington trails most states in high school graduation rates (ranking 32nd nationally) and bachelor鈥檚 degrees awarded per capita (39th nationally).
  • Washington鈥檚 road condition rankings have dropped from 16th (2012 ranking based on 2008 data) to 29th (2013 ranking based on 2011 data) and our state continues to rank poorly on bridge conditions (41st).
  • Washington ranks in the bottom third of states for business tax burden (36th), unemployment insurance tax rates (40th) and workers鈥� compensation benefits paid (50th).
  • However, Washington has held onto its lead in patent generation (5th) and in low commercial and industrial electricity rates (3rd).

The authors argue that Washington must move quickly to improve its education pipeline and align with workforce needs. As 70 percent of Washington jobs will require postsecondary training by 2020, they assert, 鈥�It is imperative that Washington prioritizes higher education and does a better job of preparing its citizens to succeed.鈥�

In Monday鈥檚 edition of , Roundtable President, Steve Mullin, urged lawmakers to focus on two key topics during the remaining weeks of session:听 education and transportation. He specifically called for legislators to ensure our colleges and universities have the funding they need to develop necessary talent. 鈥淒ecision time is here,鈥� he wrote, 鈥�Education is the driver of prosperity and individual quality of life. Transportation is the backbone of commerce. Both need attention before the 2013 Legislature adjourns.鈥�

Georgia State Launches Pilot Program to Help Retain Students

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Georgia State University (GSU) has launched an innovative pilot program, called the Panther Retention Grant, designed to help retain and graduate GSU students who drop out of school for financial reasons.听 At Georgia State, a diverse public university with over 24,000 undergraduates, administrators have been struggling to raise the undergraduate 6-year graduation rate, which has been below 50 percent for years. This task is complicated by the diversity of the student body鈥搈ore than 50 percent of students qualify for federal Pell grants, 60 percent are non-white, and 26 percent are adult learners.

In an effort to better understand the root of its low graduation rates, GSU administrators decided to study the students who were dropped from classes for non-payment. They found that the majority of students who were dropped had good grades and owed less than $1,000 on their tuition bill. The university therefore created the Panther Retention Grant鈥攕mall grants awarded to students who would otherwise be cut due to nonpayment鈥攖o bridge the gap on their tuition bill and give students the opportunity to return to school. The grant comes with 鈥攕tudents must complete three online financial literacy modules and fill out a study skills questionnaire to receive the funding.

GSU has already seen promising results. A few years ago, the university provided small grants to 200 students who had been cut for nonpayment to allow them to return to school. The program not only helped retain those students, it also generated more than $660,000 in otherwise forgone tuition revenue. Last year, GSU expanded the program, awarding $600,000 to more than 700 students. GSU hopes its program will demonstrate the effectiveness of targeted, need-based aid in improving graduation rates, particularly for low-income and minority students.

听The 天美影视传媒 has long recognized the importance of ensuring affordable education for low-income students with its commitment to Husky Promise. Thirty-three percent of resident undergraduates were eligible for Husky Promise this year, which covers all tuition and fees for resident students who qualify for the Pell Grant or State Need Grant.听 This contributes to the UW鈥檚 remarkable success in retaining and graduating students: 79 percent of entering freshmen graduate from the UW within six years, one of the highest 6-year graduation rates among public universities in the nation.

To read more about Georgia鈥檚 program, check out the Higher Ed Chronicle鈥檚 . For more information about the UW鈥檚 commitment to affordable education, please see the Husky Promise .