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APLU Releases Regional Meetings Report

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In advance of the 123rd annual meeting in Dallas on November 14, The Association of Public and Land-Grant Universities (APLU) has released the final report resulting from five regional meetings to discuss key concerns about the future of public research universities, one of which took place at UW Seattle on April 26, 2010.

The report, Ensuring Public Research Universities Remain Vital, outlines the important contributions that public research institutions like the UW make to knowledge, society and the economy. The report also reaffirms the need for institutions to remain committed to their public mission of providing world class education that is affordable and accessible, and for the states to remain committed to facilitating that mission by restoring and protecting the public investment in higher education.

Additionally, the report addresses ways that the federal government can help keep US public research institutions vital. First, by reforming indirect cost reimbursement rate setting policies and regulations associated with federal research grants. Second, by exploring ways that the federal government can partner with institutions to provide operating support, including endowed faculty chairs, funding for doctoral trainees, and new targeted research funding.

Financial Aid Rises Alongside College Prices

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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

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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.

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.

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.

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.