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Income Share Agreement Update

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Income Share Agreements (ISAs) have grown in popularity in recent years. They have been lauded by some as a solution to the student debt crisis, and criticized by others for further complicating the education finance market. Given the continued interest in ISAs, we have updated our 2016 brief on the topic. Here are some key takeaways:

  • While our 2016 brief compared ISAs to the federal Income Based Repayment (IBR) plan, it is now clear that ISAs听typically supplement subsided loans rather than replace them, and are thus better compared to private loans than public loans.
  • More colleges and universities have begun offering ISAs directly, as have more coding academics and other non-traditional institutions.
  • Some members of the Washington state legislature introduced a bill that would create an ISA pilot program and establish ISA regulations for Washington state. There continues to be interest in ISAs on a federal level but also within our state.

For more information and to read the updated brief, please see our OPB Briefs page.

UW Fast Facts 2019 鈥� Now Available!

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The 2019 edition of UW Fast Facts is now available. You can find it on the听OPB website听under the UW Data tab, and in the Quicklinks bar on the right. You can also access it directly at听.

A special thank you to OPB鈥檚 Institutional Analysis team, the Marketing & Communications team, and to our partners around the UW for their work to gather, verify, and crosscheck data; format the document; and pull it all together!

UW Fast Facts 2018 鈥� Now Available!

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The 2018 edition of UW Fast Facts is now available. You can find it on the OPB website under the UW Data tab, and in the 天美影视传媒 bar on the right.

A special thank you to OPB鈥檚 Institutional Data & Analysis team, the Marketing & Communications team and to our partners around the UW for their work to gather, verify and crosscheck data; format the document; and pull it all together.

New OPB Brief on Income Share Agreements (ISAs)

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Over the past few months, income share agreements (ISAs) have received significant attention from political candidates, higher education advocates, and news sources.听A new OPB brief takes a closer look at ISAs by:

  • Exploring differences between and the history of privately funded ISAs and publicly funded ISAs (such as Pay It Forward).
  • Comparing ISAs to federal income-based repayment (IBR) plans in terms of overall structure, years to repayment, monthly payments, and total cost over time.
  • Identifying remaining issues regarding ISAs and their implementation.
  • Offering alternatives like improving federal loan repayment options.

Please contact Jed Bradley if you have any questions.

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听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听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.

 

 

Higher Ed News Roundup

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A recent report released by the Organization for Economic Cooperation and Development (OECD) reveals that the United States continues to fall behind in educating its populace. The study shows that the US has dropped to fifth in the percentage of young adults, defined as those between age 25 and 34, who have some sort of higher education degree (46 percent). This drop comes despite the Obama administration鈥檚 stated goal of having the highest proportion of young adults with degrees in the world by 2020. The report also noted that the percentage of students who leave their home countries for college in the US has dropped significantly since 2000, from 25 percent to 19 percent, with more students opting for the UK, Japan and Australia than ever before.

Income-based repayment now most popular higher ed federal aid program: The U.S. Department of Education reports that more student debt is now being repaid through the Income-Based Repayment (IBR) Plan and the Pay as You Earn (PAYE) Plan鈥攁nother form of income-based repayment鈥攖han any other type of repayment. The combination of IBR and PAYE accounts for $188 billion out of a total of $586 billion, a dramatic increase from past years; the percentage of loan dollars in these two programs has doubled since 2013. According to Jason Delisle at edcentral.org (article linked to above), this is both good and bad news. On the one hand, it seems that more students are learning of income-driven repayment plans and are attracted to the affordability they offer. On the other hand, it could be that more borrowers are not expecting to get jobs that would allow them to afford more traditional loan repayment programs.

19.3 million students enrolled in higher education institutions in fall 2015, 340,000 fewer than enrolled in fall 2014, according to released by the National Student Clearinghouse. The drop was most pronounced among for-profit institutions, which saw a decline of over 180,000 enrollees from 2014, and among community colleges, at which 145,000 fewer students enrolled. Given the demographics of the students who are choosing not to enroll鈥攑rimarily full-time community college students and students over the age of 24鈥攔esearchers have attributed the drop in enrollment largely to the improving job market. The enrollment levels of public and private 4-year institutions stayed largely the same; for information about enrollment trends at the UW, please visit UW Profiles鈥� enrollment dashboard.

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.听 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听have received听approximately $12 million in Perkins loans.听听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听and .

DOJ reaches largest-ever settlement with for-profit higher education provider

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U.S. Attorney General Loretta Lynch that the Department of Justice (DOJ) has reached a settlement in its false claims case against the Education Management Corporation (EDMC), an operator of for-profit colleges and universities. The $95.5 million settlement is the largest ever in a higher education false claims case. EDMC will also forgive a total of $102.8 million in loans to over 80,000 students who attended its schools, which include Argosy University, the Art Institutes, Brown Mackie College, and South University, between 2006 and 2014.

The lawsuit was originally filed in 2007 by whistle-blowers within EDMC, who alleged that the organization was offering extra incentives to their admissions officers based on the number of students they enroll, a violation of the in the Higher Education Act. Said Attorney General Lynch in her statement, 鈥淓DMC鈥檚 actions were not only a betrayal of their students鈥� trust; they were a violation of federal law.鈥�

Reactions to the settlement have been mixed.听While it is encouraging to see the DOJ take action against illegal and unethical practices at for-profit institutions, many student and consumer advocates have criticized the settlement for providing too little relief for students who accrued thousands of dollars of federal student loan debt at EDMC institutions.

Secretary of Education Arne Duncan has indicated that his Department is willing to listen to claims from students who believe that EDMC mislead them when if offered loans, but critics of the deal say listening is not enough. “I am disappointed that the department鈥檚 only plan for EDMC students is to hear their complaints,” said Robyn Smith, a lawyer at the National Consumer Law Center, who was quoted in .听

Others have criticized the language of the settlement, which did not force EDMC to admit wrongdoing for its actions. Stephen Burd, a senior policy analyst at New America, laments the continued lack of accountability of听for-profit institutions.

“Too many of these cases are settled without finding fault,” he said in the , “and the for-profit industry has been able to say, 鈥極h, nothing is proven.鈥�”

Despite its issues, this settlement is another step in the Federal Government鈥檚 continuing efforts to rein in the questionable behavior of for-profit colleges and universities. Last year, the Department of Education formed an interagency task force to more rigorously oversee for-profit institutions of higher learning. The Department of Defense also听suspended all tuition assistance to听the University of Phoenix, which targets veterans in its recruiting efforts.

Average National Undergraduate Loan Debt Continues To Rise

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Undergraduates who graduated with student loan debt from four-year colleges听in 2014 owed an average of $28,950, according to a by The Institute for College Access and Success (TICAS).[1][2]听69 percent of graduates have loan debt,听the same figure as听last year and slightly higher than it was in 2004 (65 percent). The average amount of debt per borrower is up 56 percent from 2004 – more than double the inflation rate over the same period – but only up 2 percent from 2013.

A number of factors have contributed to the rising student debt load over the past decade. States have decreased their investment in public higher education over the last ten years, causing students at public institutions to bear a higher percentage of the funding burden. Since 2004, the share of public higher education funding provided by states has dropped (from 62 percent to 51 percent) and the share paid by students and their families (in the form of tuition) has increased (from 32 percent to 43 percent).

In addition, the growth of Pell Grants has not kept up with rising costs. The TICAS report shows that between 2004 and 2012鈥攖he last year in which data is available鈥攔ecipients of Pell Grants at public four-year colleges saw average cost of attendance rise by $7,400 and听grant aid rise by just $2,900. At private, non-profit colleges the gap is even wider; costs rose by $14,400 and grants increased by $8,700.

Washington state is performing well with regard to student loans: only 58 percent of Washington bachelor鈥檚 degree recipients who graduated in 2014 had loans, and those who听did had an average of $24,804, more than $4,000 below the national average. The 天美影视传媒 also looks good by these metrics: thanks in large part to the University’s commitment to institutional aid through programs such as Husky Promise, less than half of all UW undergraduates who graduated in 2014 had student debt and the average debt burden was $21,558, well below the state and national averages.

While Washington鈥檚 performance relative to its peers is laudable, student debt is still a major issue for many students. The TICAS report offers a series of proposals to mitigate the student debt load, among them doubling the size of Pell Grants, simplifying income-driven repayment plans, and improving student loan servicing to make it easier for students to pay back their loans. It is important that policymakers remain focused on reducing the student debt burden and continue working with institutions to make higher education accessible and affordable for all students during and after graduation.

 

 

 

[1] It鈥檚 important to note that borrowing rates and debt levels vary widely by state, college and sector.

[2] Because the federal government does not require colleges to report debt levels for their graduates, data in the TICAS report is based on voluntary reporting by institutions. Hardly any for-profit colleges voluntarily report their graduates鈥� average debt, so this year鈥檚 debt figures are for public and nonprofit colleges only.

National 3-Year Cohort Default Rate Drops For Third Consecutive Year: UW Continues to Excel

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The Department of Education recently released their detailing the 3-year cohort default rate (CDR)鈥攁 metric that measures what percentage of postsecondary students default on their loan payments within the first three years of entering repayment鈥攁nd the data are encouraging: the 3-year CDR for FY 2012 is 11.8 percent, almost two percent lower than the previous year and three percent lower than FY 2010.

While reasons for the drop are uncertain, administration officials have credited the increased enrollment in income-based repayment plans as partially responsible. Secretary of Education Arne Duncan has cheered the lower default rate but cautions that there is more work to do. 鈥淭here鈥檚 no real reason why we can鈥檛 significantly reduce default rates even further,鈥� he told reporters in a statement . 鈥淲e鈥檙e going to keep working to hold schools accountable.鈥�

The report also breaks down the CDR by . Below is a breakdown of the most salient statistics.

National statistics:

  • Public four year institutions saw their 3-year CDR drop to 7.6 percent, down from 8.9 percent last year.
  • Private non-profit four year institutions鈥� default rate also dropped, to 6.3 percent from 7 percent.
  • Private for-profit four year institutions鈥� CDR dropped to 14.7 percent, down from 18.6 percent last year.

State statistics:

  • Schools in Washington state have an average 3-year default rate of 10.1 percent, slightly听below the national average.
  • The 天美影视传媒 performed exceptionally well by this measure: the 3-year CDR for UW dropped to 2.7 percent, almost 5 percent lower than the national average for public four year universities and听down from 4.3 percent last year.

As previously stated, the declining CDR average nationwide is a hopeful sign for the future of student loan repayment. Nevertheless, loans remain a massive strain on millions of college students and graduates and more must be done to alleviate the student debt burden. The CDR itself has come under fire as a flawed metric; it only measures those students who default on payments and does not take into account the who make payments but cannot make any progress on paying down their debt or the share of students at a given institution who borrow.听Some in the education policy world have called for using loan repayment rates, rather than default rates, as听the primary metric for gauging an institution鈥檚 ability to prepare its students for repayment.