Posts published in October, 2011
Bruce Vandal’s commentary, published in Good Magazine, describes
the shortcomings of college placement testing policies and practices that
direct thousands of students into remedial education. Vandal suggests options
for improving assessments and low-cost, reasonable fixes to help avoid faulty
placement in remedial courses that can deter students’ success in earning a
certificate or degree.
Erin Dillon, Education Sector, Washington, D.C.
Last year, the U.S. reached a troubling new milestone in higher education: for the first time, total
student loan debt in the country exceeded total credit card debt. Today, 56
percent of students have to borrow money to attend college, and the average
graduate leaves school $22,000 in debt.
That increasing debt load has placed major burdens on recent graduates and their
families. A growing number of students are unable to repay their loans. Last
year, the number of students who defaulted on their loans (and thus faced
consequences ranging from ruined credit ratings to revocation of professional
licenses) increased by 22 percent.
It doesn’t have to be this way. In a new Education Sector report, Affordable
At Last: A New Student Loan System, author Erin Dillon proposes a new system (income-contingent loans)
which would allow students to pay back loans on terms they can actually afford.
Economist Milton Friedman proposed the system as far back as 1955. Congressman Tom Petri (R-Wisc.)
continues to support income-contingent loans as the best way to simplify the student loan repayment
system, while also virtually eliminating defaults. Today, a number of countries
have adopted the income-contingent loan plan. Their experience is that
repayment rates go up and default rates are virtually eliminated—in the United
Kingdom, for example, more than 98 percent of loans are repaid.
The Obama Administration clearly recognizes the need to address the problem of student loans.
These changes include a plan to reduce borrowers’ monthly payments to 10 percent of their discretionary
income, with debt forgiveness after 20 years of repayment. A less generous
version of this proposal, known as Income Based Repayment or IBR, is already
available to those with federal student loan debt. But the program is currently
used by only 450,000 borrowers—out of a potential total of more than 36 million.
“Income-based repayment is a great option for struggling borrowers under the
existing loan system,” Dillon says. “But the existing system needs to change—borrowers need more than another
As Dillon suggests, an income-contingent loan repayment program could be put
in place using the IRS. Students would all be offered loans at a single interest rate.
After graduation, the government would
collect payments on their loans through their employer, with adjustments made
automatically depending on the borrower’s income.
The exploding growth in student loan debt, along
with what Dillon calls a “relentless shifting of college expenses from the
public to students and parents,” demands a rethinking of how we finance higher
education. Affordable At Last offers one effective way to
increase the numbers of students who repay their student loans—while virtually
eliminating the prospect of student loan default.
Read Affordable At Last here.
Watson Scott Swail,
President & CEO, Educational Policy Institute/EPI International
This week, President Obama unveiled new programs to alleviate
the debt burden on college and university students. The first program allows
students to consolidate all their college loans into one, US Department of
Education Direct Loan. Although the Department is the only originator of
student loans in the US since 2010, there are still millions of loans that are
owned and serviced by private banks from the FFEL (pre-July 1 2010) days. Obama
is offering students a chance to bring them all together under the federal
government, saving taxpayers money and also reducing the complexity of student
loans for students. As an incentive, the loan interest rate will be reduced by
up to half a percent.
Second, Obama is proposing lowering the percentage of
discretionary income required of borrowers from 15 percent to 10 percent for
graduates enrolled in an income-contingent repayment program. Thus, graduates
with student loans only would have to pay up to 10 percent of their
discretionary earnings toward their loans. After 25 years, if the student still
has loan debt, it will be forgiven by the federal government.
Both of these are positive policy moves. The first allows for
greater savings in the student loan industry, and the second provides a better
option for students with high debt in low-earning jobs.
Common Core Found to Rank with Respected Standards
A new report by the Educational Policy Improvement Center pits the common-core standards against those of California, Massachusetts, Texas, the International Baccalaureate and a college-based set. The common core standards are generally aligned to the other standards, but are more rigorous in some content areas. (Education Week, premium article access compliments of edweek.org, 10/26/11)
State schools gain popularity in a climate of mounting student debt
According to a report from Sallie Mae on college spending in 2011, almost 40 percent of high-income families considered other colleges after looking at the financial aid package offered by private institutions. Dan Hurley, director of state relations and policy analysis for the American Association of State Colleges and Universities says that the increasing popularity of public universities is “putting a lot of strain on the system, with severe capacity issues and funding declines in many states. In California, for instance, they’re capping freshman enrollments, and turning hundreds of thousands of students away from community colleges.”
Paul Wrubel : Guest Blogger: firstname.lastname@example.org
We all know that college costs are rising dramatically. According to the College Board, the typical college price tag has increased by over 30% in the last five years. But that tells only part of the real story.
A college degree should be attainable in four years or less but across the board it is taking longer. Depending upon where you enroll, recent figures from the College Board suggest that it will take an average of 6.2 years at a public college and 5.3 years at private colleges. Too often as we assess the increased cost that accompanies extended college, we simply tack on the out-of-pocket costs to the extra years needed to obtain a degree but there is more, much more to consider.
In another recent survey, colleges were asked about the percentage of students who graduated within six years…six years! Averages in the high eighty percent bracket or above were considered to be solid colleges but few in number. But wait! What is so laudable about taking six years to complete a four-year program? Whatever happened to the four-year standard?
Tolerance for a six-year college experience is in part the result of a faulty and incomplete accounting of costs. When projecting the costs of college, add to the cost mix not just the cash outlay of another year or two but include “opportunity costs” as well. Opportunity costs refer to the income the student could have been earning as a college graduate if he or she were not languishing an extra year or two at college. Using this math, the cost of year five or six dramatically escalates. Thus, as you look into various colleges, it makes sense to ask each college, “What percentage of the students graduate in FOUR years?” If they respond by saying they don’t know, they do know but they just prefer not to tell you.
So when you are planning to deal with college costs, you would be well-advised to always consider opportunity costs. That may make some low-cost, “knee-jerk” choices like community college or a local public, four-year college within commuting distance, actually more expensive in the long haul than colleges that may have higher sticker prices but a more predictable, four-year path to a degree. Remember too, things are not always what they seem. For instance, in California, with one of the nation’s largest community college systems (110 institutions serving over 2.5 million students), a report published widely in early November 2006, revealed that among those who entered community college with the intent of transferring to a 4-year college, only 1 in 4 actually did that and for those who made the transfer, the total time spent on the road to a college degree was in excess of six years or, put a different way, another $70-100 thousand dollars lost in opportunity costs alone. This does not include the substantial out-of-pocket cost of college in years five and six. Even more sadly, fewer than 1 in 10 who went to community college in search of a two-year (AA) degree ever got one. In fact, the report noted that about 25% of the new students entering community colleges each year drop out before the second year. Where’s the bargain in all of that? (Despite the generally gloomy picture, there may be some downstream benefit. Several studies have shown that a little college, even if it does not include a degree, seems to have some lasting social and personal benefits.)
The relatively painless remedy for such woes is to understand how you will pay for college before you even look at colleges. With that knowledge, college selection is more likely to be based upon fit and not cost and those of us with long experience will bear witness to the fact that students who are happy and well-adjusted in a public or private college setting typically get a degree in four years.
In an age where college costs are spiraling upward and where the raging bulls in the china shop are increasing student debt and the very real threat to parental retirement security, timing becomes more important. College should take four years. Students and parents electing to enroll in colleges that take longer should do so with their eyes and pocket books wide open. Before you sign on any college’s enrollment dotted line, be certain that you are prepared to pay a premium for any extra semesters needed to attain your degree. According to the Project on Student Debt, nationally, student indebtedness is averaging about $25,000 with an alarming number of students carrying much higher debt in the range of up to $100,000 or more and because that high-end debt undoubtedly includes private student loans, some are paying interest rates “as high as 19%”. The National Association of Student Financial Aid Administrators (NASFAA) reported in its daily bulletin of October 26, 2010, that the current total amount of college loans taken out in the academic year 2009-10 was $97 billion! And that includes only public loans. Escalating student and/or parent college debt and opportunity costs share the same parentage, time.
Paul Wrubel is a college adviser and expert on college tuition and costs.
Low Completion Rates Generate Growing Costs to States
Washington, D.C. – Nearly $4 billion was spent by federal, state, and local governments over five years on full-time community college students who dropped out after their first year without completing their certificate or degree programs, according to a new analysis released today by the American Institutes for Research (AIR). About a fifth of full-time students who enroll at a community college do not return for a second year.
For the 2008/2009 academic year, the most recent year for which data are available, nearly $1 billion of taxpayer money was spent on first-year, full-time students who dropped out, about 35 percent more than five years earlier.
A copy of the full report – The Hidden Costs of Community Colleges – including state-by-state figures, is available on the AIR website, www.air.org, and on the CollegeMeasures.org website. The report was funded by the Bill & Melinda Gates Foundation. An interactive map of the state results and a breakdown of the financial implications of dropouts at each community college campus are also available at CollegeMeasures.org, a joint endeavor by AIR and Matrix Knowledge Group to help improve outcomes and performance among higher education institutions.
Community college enrollment is growing rapidly, and policymakers are calling on these institutions to play an even greater role in the nation’s higher education system. More than six million students attended community colleges last year, 25 percent more than a decade ago, and President Obama has called for five million more community college graduates by 2020. As community colleges are increasingly relied upon to play a key role in increasing the number of Americans who have a postsecondary education, and retraining jobless workers, more federal and foundation dollars are flowing to these institutions and their students.
Analyzing the five academic years from 2004/2005-2008/2009, the AIR study found that the amounts spent on first-time, full-time students who didn’t return for a second year included:
• Almost $3 billion appropriated by state and local governments.
• More than $240 million on state grants to students.
• About $660 million in federal student grants.
• A total of $3.85 billion in federal, state, and local appropriations and grants.
“Taxpayers are investing billions of dollars to support students who never complete their first year,” said Mark Schneider, a vice president at AIR who authored the report. “And these students are paying tuition, borrowing money, and taking time away from work to pursue certificates or degrees they aren’t getting.”
“We must pay far more attention to the high costs of low retention rates,” Schneider said. “The hidden cost of community colleges is rising,” he said, noting that community college enrollments have grown, while completion rates have fallen.
Using U.S. Department of Education data, AIR analyzed full-time students who didn’t return for a second year, while adjusting figures to account for students who transferred to four-year institutions. The cost of dropouts would be higher if part-time students and other government funding, such as direct federal support and capital expenditures, were included in the analysis.
With states and localities spending far more than the federal government on community colleges, and nearly every state facing serious budget shortfalls, the cost of community college dropouts to state taxpayers is especially troubling.
The annual amount state and local governments appropriated for full-time college students who dropped out before the second year grew by almost a third during the five-year period analyzed by AIR, rising from more than $500 million in 2004/05 to more than $650 million in 2008/09. Eight states spent more than $25 million in 2008/09 in grants and appropriations on the dropouts. California spent the most, more than $100 million, while Texas and New York each spent more than $40 million that year alone.
Federal grants that go directly to needy students have risen in recent years. Over five years, more than $650 million of this federal student aid, primarily Pell Grants, went to first-year community college dropouts, $64 million to California students alone.
“Given the central role community colleges play in the nation’s plans to regain its position as the number one country in the world when it comes to college-educated adults, and given the increasing fiscal difficulties facing individual states and the nation as a whole, it is clear that ‘business as usual’ is far too expensive,” the AIR report said. “We need to find better ways of ensuring that students who enter a community college expecting to earn a degree or a certificate finish the first lap and ultimately get across the finish line.”
The postsecondary dropout problem isn’t confined to community colleges. In August, AIR released another report showing how one year of bachelor-degree seeking students who didn’t graduate within six years cost $4.5 billion in lost income and federal and state income taxes.
The American Association of State Colleges and Universities (AASCU) published:
A Guide to Major U.S. College Completion Initiatives
While the United States has focused on improving access to higher education, many other nations have made steady progress over recent decades in increasing educational attainment. As a result, the U.S. has slipped to 15th place in the proportion of younger workers (ages 25-34) who hold a postsecondary degree or certificate; this is a threat to the nation’s global competitiveness.
Spurred by President Obama’s goal to have the highest proportion of college graduates in the world by 2020, a large number of organizations (funded by major foundations) have recently adopted a “college completion agenda” and have undertaken a wide variety of initiatives to boost college completion. This paper provides background information on the topic and summarizes 13 major college completion projects. The origins for each completion initiative are briefly discussed, as are the associated funding partners, key goals and objectives, accomplishments achieved and time frame for future plans.
Authored by Alene Russell, Senior State Policy Consultant
State urged to form strategy to produce needed college degrees
By Erica Perez
Experts warn that California needs to significantly boost the number of undergraduate degrees granted each year in order to turn around the state’s economy and help the country remain competitive.
But a new report [PDF] from Sacramento State University’s Institute for Higher Education Leadership & Policy says the state’s public higher education segments are not on track to meet that goal.
Also, the report finds the UC, CSU and community colleges have no guidance on how to divide increasingly precious state resources among themselves to produce the necessary degrees.
The report insists California needs a more deliberate strategy, rather than the current approach to education finance policy, which involves keeping costs in line with what they’ve always been, cutting spending around the edges and raising revenue from other sources – mostly tuition.
The Institute for Higher Education Policy held a meeting focused on how “near-completers” – people who have earned most but not all of the credits they need for a college degree. The organization also discussed their Project Win-Win, which has helped nine institutions award nearly 600 associate degrees and identify almost 1,600 students who are candidates for earning degrees. (Inside Higher Ed, 09/14/11)