Skip to content
Blog

Category: Higher Ed News

Financial Aid Rises Alongside College Prices

Posted on

The College Board released its 2010 Trends in College Pricing report this week. The report made a large public splash amidst heightened concern about college prices during the economic crisis. The report’s data and conclusions were presented and dissected from many different perspectives, including: The Wall Street Journal, The New York Times, The Washington Post, NPR, Inside Higher Ed, and The Chronicle.

The full report is worth reading, but some of the highlights include the following:

  • Over the past decade, tuition sticker prices increased, on average, 5.6% per year at public four year institutions. Note that in the 1990’s when state funding levels were high, tuition increased more slowly, while cuts to state funding in the last decade have led to rapid increases.
  • On average, state appropriations per FTE declined by 9% in 2008-09, and by another 5% in 2009-10.
  • In 2009-10, state appropriations per student were 19% lower than they were a decade earlier.
  • Over 47% of all students enrolled in a four year institution (public or private) face published prices of less than $8,999 per year. Only 13% are enrolled in an institution with a published price of over $30,000 per year.
  • In 2010-11, the average student at a public four year institution received $6,100 in grant aid and tax benefits, and Only 1/3rd of college students pay the published tuition and fee rates.
  • Due to historic increases in Federal Pell Grants and increased institutional aid, the average net price paid by students was actually less than the net price paid in 2005-06. Note that students and families who receive little or  grant or tax aid are paying significantly more than they were in 2005-06.

While college costs continue to rise faster than the rate of inflation, which is especially concerning when family incomes are losing ground, the data show that federal, state and institutional grant and tax aid have had a powerful effect on the net cost of college. In fact, many students with financial need are paying less today than they were 5 years ago.

In addition to illustrating the striking role that financial aid is playing in college affordability, the report also highlights the dramatic decline in state support for public institutions, which are operating with almost 20% less state funding per student than they were a decade ago, despite state approval of larger than normal tuition increases.

Ultimately, the costs of public higher education are being shifted from the states to the students and families who are paying higher tuition, and to the federal government, which is providing increasing levels of financial aid.

Expect further detailed analysis of this report and how the College Board’s findings apply to the UW soon.

New Federal Higher Ed Regulations Published Today

Posted on

Having weighed tens of thousands of public comments, the US Department of Education released today a final set of regulations governing various aspects of higher education. While primarily aimed at what are widely seen as abuses within the for-profit higher education system, the regulations apply to all institutions and are driven by the federal government’s interest in protecting the integrity of the federal government’s $170+ billion annual investment in higher education via student aid programs (governed by Title IV of the US Higher Education Act).

Notably, final regulations regarding the controversial gainful employment rule were not published today. Having received over 90,000 public comments and facing an intense for-profit sector lobbying effort, the Department has indicated a need for more time before it is able to finalize gainful employment regulations. The Department will host public meetings on the rule on November 4th and 5th.

Inside Higher Ed has a good overview of the regulations released today, which will take effect in July 2011, as well as links to the rules and a list of the revisions made since the initial rules were proposed. Major changes include:

  • Eliminates loopholes allowing institutions to provide incentive pay for admissions and financial aid employees. The rules now explicitly state that incentive payments for employees can not “in any part” be based on enrollment or financial aid metrics.
  • Revises the definition of a credit hour for the purpose of awarding federal student aid.
  • Clarifies the timeline for returning federal student aid when a student is no longer enrolled.
  • Requires for-profit institutions to provide easily accessed graduation and job placement statistics, as well has college cost calculators.
  • Requires institutions to notify DOE of new non-degree certificate programs, some of which DOE may determine require a formal application for federal approval (note that this is an area where feedback/lobbying had a significant impact as the original rule required DOE approval for all such programs).

These rules represent a large step for the federal government in regulating higher education in the US.

For more information on the federal government’s intensifying scrutiny of the for-profit higher education sector and why it matters to traditional institutions, see our previous posts: Senator Tom Harkin and the HELP Committee Continue to Investigate For-Profit Colleges, and Under Federal Fire, For-Profit Colleges Point Finger at Publics.

Will Expanded Higher Ed Tax Credit be Made Permanent?

Posted on

The federal Recovery Act of 2009 included a two year expanded higher education tax credit (based on the existing Hope Tax Credit). The new American Opportunity Tax Credit (AOTC) maxes out at $2,500, can be redeemed for up to four years, is partially refundable (up to 40%), and eligibility does not start to phase out until joint household income reaches $160,000 per year. Overall, the AOTC is a much more inclusive and expansive tax credit when compared to the existing and permanent Hope and Lifetime credits.

A new report from the US Department of the Treasury provides details on the AOTC benefits provided to Americans during 2009 and 2010. They find that The AOTC has been a great help to families across the nation facing larger than normal tuition increases as state higher education budgets have been cut deeply.

  • 12.5 million students/families received a higher ed tax incentive in 2009.
  • AOTC increased total tax incentives for higher ed by over 90%, from $9.6b in 2008 to $18.2b in 2009.
  • AOTC recipients got an average tax credit of $1,700, a 75% increase over the average credit received via the Hope or Lifetime credits in 2008.
  • 4.5 million students and families were able to take advantage of the new refundable status of the AOTC, receiving an average of $800 that they would not have previously qualified for.

The AOTC is set to expire next year. The Obama administration has called for Congress to make the expanded credit permanent (at an estimated cost of $58 billion over 10 years). Visit the Federal Relations website, and keep up with their Federal Report for news of any action that Congress may take on this issue in the coming weeks and months, and keep an eye on the OPB website and blog for news about what changes in these tax credits might mean for UW students and their families.

Britain Rethinks Higher Ed Financing

Posted on

While some may be expanding public investment in higher education, the US is not alone in wondering how to maintain globally competitive institutions while significantly increasing student access in the face of diminishing public resources. A British panel headed by Lord John Browne released a long anticipated report, Securing a Sustainable Future for Higher Education, which outlines Britain’s higher education goals, assesses the ability of the existing system to meet them, and proposes a new financing model that shifts the cost away from taxpayers and toward the graduates themselves.

The debate about higher education as primarily a public or private good is a familiar one in the US, where shifting the costs from the state to students has been a decades long trend. British institutions only introduced student fees in the early 90’s, and since 2006, British institutions have been allowed to charge a maximum of  £3,000 ($4,800) per year to supplement government funding. If Britain were to implement the report’s recommendations to slash government funding by 82%  and remove the cap on student fees, British higher education would not only catch up, but surpass the US in terms of the public/private split in higher education funding. However, note that loan repayment terms in Britain are much more flexible than in the US.

Some of the primary components of the proposal include:

  • The institutions shall set fees competitively.
  • The Government will front the cost of attendance via student loans.
  • These loans will be paid back after graduation, but not unless or until the student is making more than £21,000 per year.
  • The interest charged will only be high enough to cover the Government’s cost of making the loans.
  • The student’s monthly loan payment will be based on earnings.
  • All outstanding loan amounts will be forgiven after 30 years of payments.

Because the Government is taking on the risk in this model, they propose that institutions face a government levy of 40-90% on any fees charged above £6,000 to discourage needless fee increases.

Such a dramatic increase in the cost of higher education for British citizens is alarming to many. However, proponents note that as many as 20% of students might never have to repay the loans due to low income, and that many others will pay less than the total amount owed. Concerns remain, however, for those who believe in the concept of ‘sticker shock‘, wherein a lower income student is deterred from attending an institution due to the high sticker price, even if financing options may dramatically reduce the overall cost. Still others, including in the humanities and social sciences, are concerned about the differential treatment of medical and other STEM related education fields, which would continue to receive government investment.

Increasing Support for Higher Ed not a Taxpayer Priority

Posted on

The Pew Center on the States teamed up with the Public Policy Institute of California to assess taxpayer attitudes toward state government, budget cuts, and funding priorities during the Great Recession. The survey was conducted in five states– Arizona, California, Florida, Illinois and New York– , which, together, comprise 1/3rd of the nation’s population, 1/3rd of the nation’s output, and almost 45 percent of the total projected state budget gaps for 2011.

The resulting report, Facing Facts: Public Attitudes and Fiscal Realities in Five Stressed States, highlights surprising similarities across the five states where respondents, in general, agreed on the following points:

  • That state government could deliver the same services with fewer resources (even up to 10-20% less).
  • That state government is untrustworthy and could be more effective.
  • That taxes on the wealthy, corporations and particular goods or behaviors like alcohol, smoking and gambling are favored.
  • That state governments are relying too heavily on borrowing money.
  • That K-12 Education and Health and Human Services are seen as the most essential services worth protecting, even if general tax increases are required.

Notably, survey respondents were significantly less likely (by 20-30 percent) to support tax increases to protect higher education than they were to protect K-12 education. These results seem to confirm that while providing a K-12 education is seen as a public obligation, a college education is seen as less essential and something that the student and family should help pay for.

The mere presence of tuition in the funding model for public higher education might also be affecting how citizens view increasing taxpayer support to institutions. Tuition simultaneously provides a reason to believe that universities can better handle state budget cuts because they can raise money elsewhere, and provides a visible and increasing price tag that frustrates citizens who think that this represents inefficiency.

These survey results are consistent with recent polling in Washington.

CA to Vote on Budget that would Restore Some UC Funding

Posted on

The California State Legislature is set  to vote on the budget for FY10-11 (current fiscal year) today; 99 days after the start of the fiscal year.  Based on negotiations among the gang of five (governor and majority and minority leaders from senate and assembly) the budget should pass.

The starting problem for California was a $17.9 billion shortfall, To ‘solve’ this problem the state did the following:

  • Expenditure Reductions  -$7.5
  • Use of one time Federal Funds  $5.3
  • Additional Revenues $2.5
  • Fund Shifts, Other Revenues  $2.8
  • Alternative Funding $0.5
  • Baseline Workload Adjustments -$0.2
  • Total Solutions $18.3
  • Final Reserve $0.4

The $18 billion deficit represents ~20 percent of the state’s $87.5 billion general fund, compared to an estimated 2011-2013 biennial shortfall in Washington State of $4.5 billion, ~14 percent of a $31 billion biennial budget (pre mid-year cuts in FY 11).

One area California chose not to reduce was its university systems.  The University of California received an increase of $370 million in new state funding – an increase of 14 percent over their FY10 state funding base of $2.6 billion.  The funding is broken out as follows:

  • $199m in permanent dollars as a start of restoring the base
  • $106m in temporary funds (with a stated goal of converting these to permanent funds)
  • $51m in permanent funds for new enrollment
  • $14m in permanent funds for health benefit cost increases

While one could argue that this California budget proposal is based on overly optimistic revenue projections, it is clear that they have made a loud statement on the importance of their public universities.

Under Federal Fire, For-Profit Colleges Point Finger at Publics

Posted on

As a result of recent federal scrutiny, the for-profit higher education industry and its supporters have begun to turn their protests toward the unfairness of singling out the for-profit companies while ignoring traditional higher education’s non-profit institutions, particularly public community colleges and four year institutions.

Congressional scrutiny of for-profit education companies comes at the same time that the Obama administration has been pushing new Department of Education regulations that would use three tests– debt-to-earnings ratio for students, debt-to-discretionary income ratio for students, and the loan repayment rate of students—to determine whether a for-profit program would be eligible for federal financial aid funds under Title IV. A large lobbying effort led to over 90,000 public comments on these “gainful employment” regulations, causing the Department to delay publication of the rule.

Opponents of these rules and hearings include Republicans and Democrats as well as various interest groups, many of whom receive large sums of money from the for-profit education industry. The sector’s industry group, the Association of Private Sector Colleges and Universities (known up until September 22 as the Career College Association), institutions, and other stakeholders have spent millions waging a campaign against further regulation. Notably, these lobbying efforts include Chairman and CEO Donald Graham whose Washington Post Company owns Kaplan as well as an 8% stake in Corinthian Colleges, both giants in the for-profit education sector that currently provide over 60% of the Post’s annual revenue. The Post has been called to task for using its opinion and editorial pages to argue against the regulations.

At a HELP Committee hearing on September 30th, three Republican Senators, Richard Burr (NC), John McCain (AZ) and the committee’s ranking minority member Mike Enzi (WY), emphasized their disappointment that the scope of the hearings did not include non-profit institutions. Additionally, for-profit institutions have funded two reports claiming that for-profit colleges are more efficient at producing graduates, and more responsible with taxpayer dollars than non-profit institutions, including community colleges, public four years and private four years. The increased aggressiveness with which proponents of for-profit education are attacking traditional higher education with misleading information and data is troubling. The market share of for-profit institutions continues to rapidly grow alongside ambitions to compete with traditional institutions.

Ultimately, federal attention paid to this issue is a possible harbinger of increased scrutiny for all of higher education. The federal government spends over $170 billion dollars on student aid (loans and grants) each year, potentially providing powerful grounds for increased federal oversight. Looking forward, some of the same questions being asked of for-profit colleges about debt burden, retention, and completion could be asked of the non-profit sector as well. The combination of rapidly rising tuition in an economic crisis, concerns about US competitiveness in the global economy, and the aggressive goals to nearly double the portion of Americans with some level of higher education may create a compelling case for increased federal attention.

Senator Tom Harkin and the HELP Committee Continue to Investigate For-Profit Colleges

Posted on

The atmosphere was tense on the morning of September 30th as attendees, many of them proponents of the for-profit higher education sector, overflowed into a second room to witness a hearing held by the US Senate Committee on Health, Education, Labor, & Pensions (HELP). The hearing, The Federal Investment in For-Profit Education: Are Students Succeeding, was the third in a series held by the HELP committee under the leadership of its Chairman, Senator Tom Harkin (D-IA).

A GAO report on the results of an undercover operation that investigated 15 for-profit education companies revealed “misleading, deceptive, overly aggressive or fraudulent recruitment” practices at all 15 schools visited. Two reports by Senator Harkin’s staff, Emerging Risk?: An Overview of Growth, Spending, Student Debt and Unanswered Questions in For-Profit Higher Education, and The Return on the Federal Investment in For-Profit Education: Debt Without a Diploma, provided even more detail, drawing on nationally available data as well as data that Senator Harkin requested directly from 30 of the largest privately held and publicly traded education companies.

Some of the facts revealed in these publications:

  • Less than 10% of postsecondary students are enrolled in for-profits, yet they receive 23% of federal aid, and account for 44% of all loan defaults.
  • 95% of all students at for-profits borrow money to attend, compared to less than a quarter of community college students, 64% of students at public four year institutions, and 72% at private four year institutions.
  • Almost 60% of students at for-profits drop out within 2 years of enrolling.
  • Student enrollment has grown exponentially. For example, in 1991, the University of Phoenix had 7,000 students. Today it has 475,000 and is the 2nd largest higher education system in America, enrolling more students than the Big 10.
  • On average, 90% of all revenue comes from federal student aid dollars (a $24b annual taxpayer investment), belying claims of being purely private sector institutions.

As the hearings have uncovered more information about these companies, Chairman Harkin’s resolve to continue the fact finding mission has strengthened, and he has pledged to sponsor legislation aimed at tightening regulations. Harkin called fundamentally flawed and unconscionable a system that funnels taxpayer dollars through poor students to line the pockets of the wealthy, leaving many students with no diploma, all students with heavy debt, and the taxpayers, who have guaranteed that debt, at risk.

The next hearing will be held in early December.

In our next post we will consider the implications that this issue might have for traditional institutions of higher education like the UW.

NRC Releases Long Awaited Doctoral Program Rankings

Posted on

After five years, $4 million and a lot of effort across many institutions, the National Research Council has released an update to their 1995 assessment of doctoral programs. A Data-Based Assessment of Research-Doctorate Program in the United States analyzes 2005-06 academic year data collected from over 5,000 doctoral programs at over 200 universities. The NRC collected data directly from faculty, students, graduate programs, and institutions. The Graduate School coordinated UW participation in the assessment, which you can learn more about on their website.

Programs are ranked on the same 21 key variables by two different methodologies, the results of which are reported separately. These methodologies were very complex, but, essentially, the “S” (Survey-Based) rankings weight the relative value of the 21 key variables by program, based on faculty ratings of the relative value of each variables in a given discipline. For example, in the physical sciences, the number of external grants won is weighted more heavily than it would be for an English program. Alternatively, the “R” (Regression-Based) ratings are more similar to the traditional ‘reputation ranking’ where faculty were asked to rank a set of random programs, and then the key variables most associated with the highest ranked programs were assigned the most weight in the overall analysis of programs. Both sets of rankings are reported as ranges (e.g. a program might be ranked as somewhere between 3rd and 11th, at a 90% level of confidence).

While many UW programs do well in these rankings, criticisms of both the data and methodology are important to consider. Inside Higher Ed weighs in with an assessment of the ambivalence surrounding the veracity of the rankings, and the UW’s own Dean of Engineering, Matt O’Donnell, released a statement about possible shortcomings. UW Computer Science & Engineering also issued a strong critique, on which the Chronicle of Higher Education reported. The Chronicle also compiled these data in an easy to use format and offered its own analysis of the report’s delay and overall worth.

How meaningful these rankings are will be debated in the days ahead, but there is at least one important and indisputable conclusion included in the report, which is that public universities play an outsized role in educating our nation’s graduate students:

“Seventy-one percent of the programs ranked in the NRC study are in public universities. The proportion of programs in the universities with the largest programs is similar (70 percent). Among the 37 universities that produced 50 percent of Ph.D.’s from 2002 to 2006, 70 percent were public. Although public universities rely increasingly on nonpublic sources of funding, cutbacks in public funding for universities has a powerful effect on doctoral education simply because of how many large Ph.D. programs exist in public universities.”

National Academies Continue to Sound Alarm Bell on Competitiveness of Research U’s

Posted on

The National Academy of Sciences, National Academy of Engineering, and Institute of Medicine have sponsored an update to their consequential 2005 report entitled Rising Above the Gathering Storm: Energizing and Employing America for a Brighter Economic Future. The latest version is called Rising Above the Gathering Storm, Revisited: Rapidly Approaching Category 5, and can be read online free of charge.

The new report highlights America’s relative decline in global competitiveness by presenting statistics on patent awards, research publications, employer surveys, and student achievement levels in math and science, among other things. While recognizing current economic constraints, the report calls for major investment in and reform of K-12 education, as well as a doubling of the federal basic-research budget to help restore and maintain US competitiveness in the global economy.

One action Congress can take immediately is to reauthorize the America COMPETES Act, which was passed in 2007 largely as a result of the 2005 Gathering Storm report. This Act received one-time federal stimulus funding in 2009, and is set to expire this year without Congressional action. The UW Office of Federal Relations provides regular updates on their blog regarding the Act’s progress in Congress.

In addition to this report, The National Research Council, at the request of Congress, has created the Committee on Research Universities, a panel of business and higher education leaders, to identify the “top ten actions that Congress, the federal government, state governments, research universities, and others could take to assure the ability of the American research university to maintain the excellence in research and doctoral education needed to help the United States compete, prosper, and achieve national goals for health, energy, the environment, and security in the global community of the 21st century.”

The Committee held its inaugural meeting on September 22nd, and is scheduled to meet again in late November.