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Category: Higher Ed Policy

New Book Places College Cost Debate in Larger Context

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Two economists at the College of William and Mary have published a new book called ‘Why Does College Cost So Much?‘ In a co-authored op-ed published by Inside Higher Ed, Archibald and Feldman explain that their book is an attempt to largely dispel commonly asserted narratives that blame rising college costs on a particular set of actors (the government, the administration, the faculty, or even students and families) who have created institutional dysfunction that must be targeted for reform.

Instead of these often politicized arguments, they attempt to examine the higher education industry in the context of the American economy with the basic assumption that economic forces acting on and reshaping other industries might also be applicable to higher education. The authors focus particularly on the role of technology in reducing the costs of manufactured goods and agricultural products, but not services.

We look forward to reading this new addition to the literature.

Will Expanded Higher Ed Tax Credit be Made Permanent?

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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.

NGA’s Complete to Compete Initiative Gains Traction

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The recently announced National Governor’s Association initiative ‘Complete to Compete’ outlines a promising plan to create a national set of performance metrics to enhance accountability and shape funding strategies. The NGA, under the leadership of incoming Chair West Virginia Gov. Joe Manchin III, convened a Work Group on Common College Completion Metrics to make recommendations on the common higher education measures that states should collect and report publicly. The goal is to improve college completion rates and overall productivity in a new era of fiscal constraints coupled with unprecedented demand for higher education. Reliable, comparable data within the sector will be key to achieving these goals as NGA and others attempt to identify which policies and practices are tied to successful outcomes.

The initiative has gained supporters across the country, including among the Higher Education Funding Task Force created by Governor Gregoire in Washington this past summer. Below is a summary of the proposed Complete to Compete metrics.

They use the following definitions:

Completion rate: The percentage of individuals who complete a certificate or degree (e.g., associate and bachelor’s).
Attainment rate: The percentage of a population that has obtained a certificate or degree.
Productivity: Awarding more higher education certificates and degrees within the same resources, while maintaining quality.

They recommend the following metrics:

OUTCOME METRICS:

  • Degrees awarded: annual number and percentage of certificates, associate degrees, and bachelor’s degrees awarded;
  • Graduation rates: number and percentage of certificate- or degree-seeking students who graduate within normal program time (two years for associate’s degrees; four years for bachelor’s degrees) or extended time (three years for associate’s degrees; six years for bachelor’s degrees);
  • Transfer rates: annual number and percentage of students who transfer from a two-year to four-year institution; and
  • Time and credits to degree: average length of time in years and average number of credits that graduating students took to earn a certificate, an associate degree, or a bachelor’s degree.

PROGRESS METRICS:

  • Enrollment in remedial education: number and percentage of entering first-time undergraduate students who place into and enroll in remedial math, English, or both;
  • Success beyond remedial education: number and percentage of first-time undergraduate students who complete a remedial education course in math, English or both and complete a college-level course in the same subject;
  • Success in first-year college courses: annual number and percentage of entering first-time undergraduate students who complete entry college-level math and English courses within the first two consecutive academic years; and
  • Credit accumulation: number and percentage of first-time undergraduate students completing 24 credit hours (for full-time students) or 12 credit hours (for part-time students) within their first academic year;
  • Retention rates: number and percentage of entering undergraduate students who enroll consecutively from fall-to-spring and fall-to-fall at an institution of higher education;
  • Course completion: percentage of credit hours completed out of those attempted during an academic year.

In order to track whether access to higher education is sacrificed in the name of completion, NGA also recommends the following ‘context’ metrics:

CONTEXT METRICS:

  • Enrollment: total first-time undergraduate students enrolled in an institution of higher education;
  • Completion ratio: annual ratio of certificates and degrees awarded per 100 full-time equivalent (FTE) undergraduate students; and
  • Market penetration: annual ratio of certificates and degrees awarded relative to the state’s population with a high school diploma.

The UW has worked with the State for years in efforts to create a robust performance agreement. As those efforts continue, the influence of a national initiative such as Complete to Compete will be interesting to note.

Increasing Support for Higher Ed not a Taxpayer Priority

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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.

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

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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

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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.

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

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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.

Lumina Foundation Sets ‘Big Goal’ for College Attainment

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The Lumina Foundation has just released a report that presents a case for national and state efforts to increase the percent of Americans with a two or four year degree from 37.9% to 60% by 2025. The report, A Stronger Nation Through Higher Education, makes a case based on future economic growth and international competitiveness, and provides a state level analysis that presents degree attainment levels by ethnicity and by county.

They determine that to reach a degree attainment rate of 60 percent by 2025, Washington State will have to increase degree production by 5,421 (5.9%) each year.

As reported by the New York Times, the Lumina Foundation’s focus on college attainment mirrors similar concerns voiced by President Obama, the College Board, the Gates Foundation, and the National Governor’s Association.

Recent Reports Highlight Value of College Education

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How can we tell if college is worth the cost? The economic crisis has some questioning the cost-benefit ratio for post-secondary education, claiming that higher education may be a bubble on the verge of bursting, and that the payoff might not be worth the cost. However, two in-depth reports released this summer presented ample evidence to counter these doubts.

The College Board’s Education Pays 2010: The Benefits of Higher Education for Individuals and Society highlights the demonstrated direct and indirect benefits of post-secondary education. Their analysis finds that, in 2008, median annual earnings for bachelor’s degree recipients was almost $22,000 per year more than those of high school graduates, that college graduates were more likely to have health and retirement benefits, and that the unemployment rate for college graduates was less than half the rate of high school graduates in 2009. Median earnings for those with professional and doctoral degrees were even higher, with the former earning $58,000 per year more than high school graduates in 2008, and the latter earning $66,000 more.

In addition to monetary benefits, college graduates, even after controlling for personal characteristics, are more satisfied with their jobs, healthier, and more involved citizens and parents.

So, overwhelming evidence proves college worthwhile, but will these wage and lifestyle premiums continue into the future? In June, the Georgetown University Center on Education and the Workforce released a report, Help Wanted: Projections of Jobs and Education Requirements Through 2018, that analyzed Bureau of Labor Statistics (BLS) data to project job growth and educational requirements into the future. These economists determined that, by 2018, 63% of available jobs will require at least some college education, and that, at current production rates, the post-secondary system will have produced 3 million fewer college graduates than demanded by the labor market in 2018.

The Center’s state level analysis predicted that between 2008 and 2018, over 1 million new and replacement jobs will open up in Washington, comprising:

  • 94,000 openings for high school dropouts
  • 257,000 openings for high school graduates
  • 677,000 openings for those with some post-secondary training

Taken together, these data-driven reports clearly demonstrate that the benefits of higher education for both the individual and society are tremendous. However, they also demonstrate that access and affordability remain very real concerns that the citizens, government, and institutions must continue to address.