Posts published in March, 2011

State College Savings Plans A Big Gamble For Parents

Washington, D.C. — As college costs have continued to rise, states have offered families a way to save for their child’s education. Private savings accounts, known as 529 savings plans, allow a family’s investment to grow tax-free until a child is ready for college.

Yet according to Education Sector Policy Analyst Chad Aldeman in Why 529 College Savings Plans Favor the Fortunate, a new Chart You Can Trust, parents might as well gamble with their college savings. Most state college savings plans are little more than a roll of the dice, Aldeman argues.

Among the key findings:

  • College costs have skyrocketed over 80 percent in the last decade. As states decrease their contributions to public universities and colleges, increasingly, families are turning to 529 college savings plans to pay for higher education.
  • Today, every state sponsors at least one 529 plan, and families have more than 10 million accounts, assets of which have increased from $14 billion to $135 billion in the last decade.
  • Timing is critical for 529 investors. These plans rely on the power of compounding stock market returns to finance higher education. But market rises and falls create huge winners and losers, based solely on luck and timing. (See Chart 1, below).
  • Assuming they saved the same amount each year, a student entering public college in 1997 could have paid for as much as 4.27 years of college, while a student entering in 2008 could only afford less than a year.
  • Although 529 plans are intended to help all students afford higher education, in reality, wealthy taxpayers are much more likely to benefit. For wealthy families, the tax advantages of financing college expenses through a 529 plan can amount to as much as a 39 percent advantage over a traditional taxable account. For middle income families, that advantage is 35 percent, but for lower-income families it is just 22 percent.

As states decrease their investment in higher education, more of the burden of paying for college will shift to individuals and families. And helping families afford higher education is a worthy public policy goal. But based on the data assembled in this Chart You Can Trust, Aldeman asks whether 529 plans remain the best way to meet that goal.

Read Why 529 College Savings Plans Favor the Fortunate.

Georgia Hope Scholarships Cut Except For Top Students

Georgia’s Hope scholarship was the flagship merit student aid program, but lottery funding has not kept pace with growth of demand and costs.

Senate Passes HOPE Bill with Some Changes
The HOPE scholarship would cover all tuition for Georgia’s high school valedictorians and salutatorians through an amendment the Senate approved to the overhaul of the lottery-funded program. House Bill 326 would cut the amount of the scholarship for all but the very brightest students and make other changes to keep the program from going broke. (Atlanta Journal-Constitution, 03/08/11)

College Coaching Is Effective For Student Retention

STANFORD –Student coaching significantly increases the likelihood that college students will stay in school and graduate, according to a new study released today by researchers at Stanford University School of Education.

The study, conducted by Stanford University Associate Professor Eric Bettinger and doctoral student Rachel Baker, reviewed the academic records of more than 13,500 students from eight colleges and universities across the 2003-4 and 2007-8 academic years. The researchers compared randomly selected, demographically balanced groups of coached vs. non-coached students, and found a 10 -to 15-percent increase in retention and graduation rates among those in the coached group. Bettinger and Baker measured student outcomes using data provided by InsideTrack, a national student coaching company.

“The results are clear:  coaching had a clear impact on retention and completion rates,” Bettinger said.  “And not only does coaching improve the likelihood students will remain in college, but expenditures on coaching are much smaller than the costs of other methods to encourage persistence in college.”

Bettinger and Baker announced their findings Thursday through the National Bureau of Economic Research’s website.  Following a randomization process, 8,000 of the students received one-on-one coaching and 5,500 did not. The universities participating in the study provided data on student persistence after six, 12, 18 and 24 months.  Degree completion data was also provided for a subsample of students in the earlier sample year.

Other research results included:

  • Increased retention rates in the coached groups across all of the time frames following the students’ enrollment:

    After six months, the coached student group led the non-coached group in retention by about 10 percent. After 12 months, the coached group led by nearly 12 percent.  The coached group also led at 18 months and 24 months, by 15 and 14 percent, respectively. The results were consistent when the researchers controlled for age, gender, SAT or ACT scores, high-school GPA, and scholarships and grants.

  • Graduation rates were 13 percent higher for coached students in the subsample where completion rate information was available.

“The research about the effects of coaching has implications for institutions of higher learning and for the policymakers at the state and national level who are grappling with improving retention and graduation rates,” Bettinger said.

Bettinger, who has studied the effects of financial aid on college retention, also found that student coaching appears to be cost effective.  For instance, Bettinger said, a $1,000 increase in financial aid typically increases persistence by three percentage points, while a two-semester investment in one-on-one coaching costs about the same and increases persistence by five percentage points.

“Coaching not only works, but it appears to be one of the more cost effective ways to produce better retention and graduation rates,” Bettinger said.

For more information about the research results, please see “The Effects of Student Coaching: An Evaluation of a Randomized Experiment in Student Advising,” National Bureau of Economic Research Working Paper at The paper is also available to NBER subscribers at

K-12 Education Expanding Virtual Education

  Postsecondary virtual education may get a boost from the expansion in k-12

A combination of higher proficiency standards and tighter budgets are prompting school and state officials to look more closely at online education. All but two states now offer online courses to at least some students. In most cases, online courses are blended with in-school courses. But 27 states allow students to attend virtual schools full-time. The information is from Stateline.

California Community Colleges Need Higher Priority For Career Education

In view of the urgent need to improve the economy and increase educational attainment in the state,

the potential of the Career Technical Education function of the California Community Colleges is not

receiving sufficient attention, says a new report released today by the Institute for Higher Education

Leadership & Policy at Sacramento State University.

The report, The Road Less Traveled: Realizing the Potential of Career Technical Education in

the California Community Colleges, found that CTE can be an important vehicle for helping to

meet the state’s completion, workforce, and equity goals. But a lack of priority on awarding

technical certificates and degrees and the absence of clear pathways for students to follow in

pursuing those credentials have held the programs back.

“The mission and importance of CTE are not well understood by policymakers and other

stakeholders, and as a result we don’t have the structures and policies to take full advantage of

these programs,” said Nancy Shulock, director of IHELP. “We think there are some important

steps to be taken that would allow the colleges to help more students complete the occupational

programs they are pursuing, and that would better meet the needs of the state as well.”

Recent studies show that a large share of California’s future jobs are “middle skills” jobs

requiring an occupational certificate or vocational associate degree and that many of these jobs

have the prospect of more substantial earnings than those of traditional academic degrees. Yet,

in spite of large enrollments of CCC students in vocational courses, few students earn

vocational credentials.

Of the 255,000 degree/certificate-seeking students (defined as taking more than six units in the

first year) entering the CCC in the 2003-04 academic year, only 5% earned certificates and 3%

earned vocational associate degrees within six years. Many more students than that made

considerable progress and earned 30 or more college-level credits, but the progress did not

translate into certificates or degrees.

Researchers studied patterns of student enrollment and progress in four high-wage, high-need

fields (information technology, engineering technology, engineering and nursing) as a basis for

drawing some conclusions about the CTE mission area as a whole and to explore reasons for

the low award of technical credentials. They found that even in these technical fields most of the

associate degrees earned were in interdisciplinary studies rather than in a technical field.

“There appears to be a perceived lack of value to technical associate degrees and certificates

which may account for students not pursuing these credentials,” said Shulock. “Unfortunately

the general degrees students are receiving do not signal to employers that a student has

expertise in a field and therefore do not serve students well who want to enter the workforce.”

Researchers also documented a huge variety of choices of certificates and degrees in the same

or similar fields even in a single college and widely differing program requirements across

colleges. This raises the possibility that fewer choices and more consistency might make it

easier for students to enter and complete occupational programs.

“This report rightly points out that we have an opportunity to do a much better job of using the

resources in our community colleges to help create a stronger workforce in California,” said

David Rattray, vice president, education and workforce development, Los Angeles Chamber of

Commerce. “The employers I work with would definitely benefit from more structure to certificate

and associate degree programs. We would attract more students into these programs and help

them be better prepared for high-paying jobs when they finish.”

The report offers specific recommendations to strengthen the CTE mission including

reexamining the structure and function of occupationally-oriented associate degrees now that a

new set of associate degrees for transfer is being developed under last year’s SB 1440. Also

recommended is that the system consider offering fewer, more consistent CTE programs that

clearly meet regional needs and that students formally declare a program of study and colleges

ensure that students have access to the classes they need for those programs.


Columbia University Research Summaries Provide Basis For New Policy Thinking

The Community College Research Center (CCRC) at Teachers College, Columbia University, has released a series of exciting papers that all developmental education leaders should review. The papers cover a wide range of topics, to include developmental math pedagogy, assessing assessment systems and acceleration in developmental education. For a full list of the new publications, visit the CCRC Web page.

States Cut Student Aid And Students Suffer

Aid cuts may close door to college // Colleges grant programs face unprecedented cuts in aid for low-income students. And schools say they can’t fill the gap.
STAR TRIBUNE (Mpls.-St. Paul)

Marquita Walker is smart enough to win scholarships, poor enough to get grants, disciplined enough to work three on-campus jobs.

But the Concordia University junior worries that next year, she won’t have enough money to pay tuition.

Federal and state grant programs for low-income college students face unprecedented cuts. Last weekend, the U.S. House of Representatives passed a measure that would shrink next year’s maximum per-student Pell Grant by $845.

Even without further cuts, Minnesota’s already-strained State Grant program will shrink student grants to grapple with a projected shortfall. Last year it awarded $168 million to 103,400 low- and middle-income students.

Facing tough times themselves, many public and private colleges and universities don’t expect to make up the difference.

“The fact is that we can’t,” said Kris Wright, director of the Office of Student Finance at the University of Minnesota. “We can’t afford to do that in a time when our own budgets are getting cut.”

Officials fear the bottom line will mean fewer students going to college.

Add in another tuition increase, and “we may have a lot of folks heading off to some other institutions or just plain dropping out,” said Rep. Joe Atkins, DFL-Inver Grove Heights.

Federal and state grants, which students never have to pay back, help Minnesota students attend for-profit, nonprofit and public schools with tuition and fees ranging from an average of $4,984 for a public, two-year college to $41,304 at Carleton College in Northfield.

Demand is up

The cuts come at a time when there are more students — with more need.

In the Minnesota State Colleges and Universities system, financial aid applications have increased at double the rate of enrollment growth, Chris Halling, system director for financial aid, told legislators last week.

Last year, demand for the Minnesota State Grant program exceeded its funding by $24.4 million for two reasons: “an increase in financial aid applications and enrollment and a decline in income for students and families,” according to a new report from the Minnesota Office of Higher Education.

In order to fix the gap, the office began “rationing” the awards. So already, students have seen cuts.

At Bethel University in Arden Hills, for example, 175 of 1,095 students lost eligibility for the state grants this school year. Of those who received the grant, the average amount dropped 14.5 percent — from $3,235 in 2009-10 to $2,767 this year.

State grants are tied to federal ones, so any cuts there will hit Minnesota’s State Grant program.

The budget proposal by the House of Representatives would cut Pell awards by 15 percent. President Barack Obama’s budget would cut Pell, too, by shaving summer grants and money for graduate students. He maintains the maximum per-student award.

Most Pell Grants go to low-income students. In 2008, about 62 percent of recipients dependent on their parents had a total family income at or below $30,000, according to a January congressional report.