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Income Share Agreement Update

Income Share Agreements (ISAs) have grown in popularity in recent years. They have been lauded by some as a solution to the student debt crisis, and criticized by others for further complicating the education finance market. Given the continued interest in ISAs, we have updated our 2016 brief on the topic. Here are some key takeaways:

  • While our 2016 brief compared ISAs to the federal Income Based Repayment (IBR) plan, it is now clear that ISAs typically supplement subsided loans rather than replace them, and are thus better compared to private loans than public loans.
  • More colleges and universities have begun offering ISAs directly, as have more coding academics and other non-traditional institutions.
  • Some members of the Washington state legislature introduced a bill that would create an ISA pilot program and establish ISA regulations for Washington state. There continues to be interest in ISAs on a federal level but also within our state.

For more information and to read the updated brief, please see our OPB Briefs page.

2019 Higher Education Trends

As the higher education landscape continues to change and evolve in the United States, below are some select national and state trends driving higher education policy and innovation in recent years. The Office of Planning & Budgeting (OPB) continues to monitor these, and other, trends. This list was curated using multiple sources, including recent news articles and blogs, recent state-level legislation, and higher education trends analyses from The Brookings Institution and The Chronicle of Higher Education.

1. College Affordability

College affordability continues to dominate the national conversation around higher education. This year, the Washington Legislature took big steps to make college more accessible and affordable for Washington families. Read more about the proposal in OPB’s brief on the legislature’s final compromise 2019-21 state budgets.

Additionally, many of the Democratic candidates for president in 2020 have released higher education policy proposals to address college affordability. These proposals include initiatives to increase funding for Pell Grants, to create “free college” using state-federal partnerships, expand student loan forgiveness, and increase dedicated funding for Historically Black Colleges and Universities (HBCUs) and other Minority-Serving Institutions (MSIs).

2. Changing Student Profiles

According to the Lumina Foundation, 38 percent of all undergraduates are older than 25. Traditional college students – 18- to 21-year-olds who attend school full-time – now only make up about a third of the college population.

Students are also increasingly taking on additional responsibilities while in school. According to HBSC, 85 percent of students are working in paid employment while studying. Lumina also reports that students work, on average, 19 hours per week.

3. Integrating Data

A report from the National Association of Student Personnel Administrators, Association for Institutional Research, and Educause found that “most institutions are investing in data and analytics projects, but few are measuring the resulting costs.”

The report found that colleges are using data in more ways as they modernize and manage programs to show returns on student and state investments. Studies of students’ academic progress and success are the leading types of data projects. Many institutions are conducting several types of student success studies annually. However, nearly one fourth of institutions are not collecting usable business and systems-level data and few institutions are systematically collecting, integrating, and using their data.

4. Changes in Admissions

Last year, the University of Chicago announced that it would no longer require applicants to submit SAT or ACT scores, the most-selective institution ever to adopt a test-optional policy. Today, more than 1000 U.S. colleges and universities have adopted similar policies.

As colleges and universities continue to use data to better understand how their students perform, they become less reliant on test scores. According to the Chronicle of Higher Education, “on many campuses, deep dives into enrollment data have helped admissions offices determine which pieces of information they collect from applicants actually help them predict a variety of student outcomes, such as first-year grades and progress toward a degree.” The University of Chicago “found that ACT and SAT scores didn’t tell it much about who would succeed and who would struggle.”

5. Open-Access Research

Global advocates are calling for publicly funded research to be available through open-access sites, rather than behind paywalls of subscription-based journals. Over the last few years, the movement has gained momentum at increasing cost to publishers. In 2018, Florida State University said it would not subscribe to a publisher’s journals in one bundled deal. This year, the University of California system cancelled its contract with Elsevier, one of the biggest academic publishers in the world. The University of Iowa also announced a new open-source online journal, providing open access to the research and creative scholarship of the university.

This debate has some immediate consequences for academics and researchers, who will lose access to journals unless schools renegotiate with publishers. The University of California attempted to mitigate some of these consequences by publishing alternative methods to access publications.

 6. Transnational Students

According to Studyportals, the number of American students enrolling at foreign colleges is expected to grow from 2.3 million student in 2015 to 6.9 million in 2030. This trend is attributed to multiple causes, including “higher ambitions and investments for world-class universities” and “accelerated growth of global, multi-national networks.”

However, in the United States, the number of new international student enrollments is declining. Inside Higher Ed reports that, “New enrollments fell 6.3 percent at the undergraduate level, 5.5 percent at the graduate level, and 9.7 percent at the non-degree level from 2016-17 to 2017-18.” While overall trends remain at an all-time high, increasing by 1.5 percent in 2018, there is some concern that new U.S. immigration policies might have long-term impacts on international enrollment.

7. Online Enrollment

Online courses continue to become more popular in the United States. In 2016-17, overall postsecondary enrollment dropped by almost half a percent, while the number of students who took at least some of their courses online grew by 5.7 percent. Over the last 15 years, online enrollment has quadrupled.

However, a report from George Mason University claims that the growth in online enrollment has been “disproportionately large in the for-profit sector.” Further, “online coursework has contributed to increasing gaps in educational success across socioeconomic groups while failing to improve affordability.”

8. Online Program Managers

As online enrollments rise, online program managers (OPMs) are working with colleges and universities to provide online options for students. OPM providers contract with institutions of higher education to create, market, and recruit for online degree and non-degree programs. In return, OPMs earn a percentage of the revenue or tuition from the online programs offered at public colleges and universities.

College and universities like Harvard University, the University of Pennsylvania, and the University of North Carolina already provide online programs through OPMs. Purdue University chose to acquire Kaplan University in 2017 to directly expand its online presence.

Conclusion

Higher education continues to adapt to new technologies and a changing global environment. This blog represents just some of the most recent changes, and there are many other challenges and opportunities for American colleges and universities. As institutions seek to balance the status quo with contemporary shifts, their flexibility to adapt to changing circumstances will be a key element in determining their future success.

Legislature Passes 2019-21 Biennial Operating and Capital Budgets

On Sunday, April 28, leadership in the legislature reached a compromise on the state’s 2019-21 biennial operating and capital budgets. The Governor is expected to approve these budgets, but has line-item veto power. As part of the compromise budget package, the legislature passed HB 2158, which creates a dedicated source of funding for higher education through an increase to Business and Occupation (B&O) taxes on professional services.

For a detailed analysis and comparison of the proposals, see OPB’s newest brief on this page.

The outcomes of the state operating budget will be incorporated into the UW’s Fiscal Year 2020 (FY20) operating budget, which will be presented to the Board of Regents as an information item in May and as an action item in June.

Operating Budget

Some noteworthy items in the final operating budget include:

  • Competitive Compensation and Foundational Support: The UW’s highest operating budget priority for the 2019 legislative session was funding to provide competitive compensation to recruit and retain valued faculty and staff. HB 2158 provides $25 million over the biennium in “foundational support” to increase the share of state funding for new compensation and central services in 2019-21. The amounts are also sufficient to make permanent the one-time compensation funding provided last year.
  • STEM Enrollments: HB 2158 also includes funding for STEM investments at the UW, including increasing high-demand enrollments across all three campuses and maintaining the Washington State Academic RedShirt (STARS) program.
  • Financial Aid: The compromise budget package will increase funding for the State Need Grant, which was re-named the “Washington College Grant” under HB 2158. The new funding will reduce the program’s current waitlist by one-third in FY20 and will fully eliminate the waitlist in FY21. Starting in FY21, the program’s income eligibility threshold will be expanded to include students with a household income of up to 100 percent of the state’s median family income.
  • UW Hospitals and the School of Dentistry: The compromise budget includes additional funding to UW Medical Center, Harborview Medical Center, and the School of Dentistry to support their role in providing safety-net care for the state. The budget also provides B&O tax parity for Harborview.

Capital Budget

The compromise capital budget appropriates $167.7 million in new state funding, $94.3 million from the UW Building Account, and $1.8 million from the Model Toxics Control Account. The final capital budget provides significant new state funding for capital projects seeking to advance state and University priorities, including STEM, behavioral and mental health, and health sciences education.

Overall, the final budget fully funds multiple UW requests and provides a substantial amount of new funding for key projects that will benefit both the UW and Washington state as a whole.

Stay tuned to the OPBlog for more updates!

 

House and Senate Proposed 2019-21 Biennial Operating and Capital Budgets

Last week, leadership in the House and Senate released their 2019-21 state biennial operating and capital budget proposals.

The House Appropriations committee released their initial operating and capital budget proposals on March 25. The Senate Ways & Means committee released their capital budget proposal on March 27 and their operating budget proposal on March 29. As a reminder, Governor Jay Inslee released his proposals in December.

For a detailed analysis and comparison of the proposals, see OPB’s newest brief on this page.

Operating Budget

Some noteworthy items in the operating budget proposals include:

  • Competitive Compensation and Foundational Support: The UW’s highest operating budget priority for the 2019 legislative session is funding to provide competitive compensation to recruit and retain valued faculty and staff. Importantly, all budget proposals released thus far include funding to improve the UW’s share of state support for these critical new expenses. The Governor’s proposal and the original proposal from the Senate would provide sufficient funding to make permanent the temporary funding provided in the current biennium to increase the share of state support and, generally, those proposals get the closest to what is needed for this purpose in the upcoming biennium.
  • STEM Enrollments: The House operating budget would make significant investments in STEM enrollments, which would be funded by increasing Business & Occupation (B&O) taxes through House Bill 2158.
  • UW Medicine and the School of Dentistry: The House budget would make targeted investments supporting UW Hospitals and the School of Dentistry.
  • Financial Aid: All three proposals make significant strides towards fulfilling the 2018 legislature’s commitment to fully fund the State Need Grant.

The House and Senate operating budget proposals assume revenue projections provided in the March revenue forecast from the Economic and Revenue Forecast Council. All three operating budget proposals rely on significant new revenue from these forecasts as well as new revenue proposals. This includes increasing B&O taxes on professional services, instituting capital gains taxes, and/or increasing real estate excise taxes.

Capital Budget

The House’s capital budget would appropriate almost $167.7 million in new state funding for capital projects, along with $94.3 million from the UW Building Account and $1 million from the State Toxics Control Account. The Senate’s capital budget would appropriate almost $135 million in new state funding, $92.3 million from the UW Building Account, $1.8 million from the Model Toxics Control Account, and $1 million from the Community Behavioral Health Account. Governor Inslee’s capital budget proposed $72 million, $88.3 million, and $1 million, respectively.

Overall, the House and Senate proposals would fully fund multiple UW requests, but differ in their proposed funding mechanisms, amounts, and priorities. Both budgets would over-utilize the UW Building Account while providing significant new investments through state funds.

Stay tuned to the OPBlog for more updates as the proposed budgets move forward.

 

Note: The information in this post and the brief cover legislative versions as of April 1. For operating budget proposals, this means the House proposal after committee and floor amendments and the Senate proposal as originally proposed by the Senate Ways & Means chair. For capital budget proposals, the brief covers the House proposal with committee amendments and the Senate proposal as originally proposed by the Senate Ways & Means chair. Changes to the brief to reflect committee and floor changes in the Senate will be forthcoming.

OPB Brief on Published Price vs. Net Price – 2019 update

The 2019 update of the Published Price vs. Net Price brief is now available on our briefs page, and reflects the newest available data.  The brief includes sector-wide data on trends in published price and net price for public and private four-year colleges and institutions, a description of how declining state investment in higher education has spurred tuition increases, and a table comparing the UW’s net price for resident undergraduates receiving grant or scholarship aid to its U.S. News & World Report top 25 research university peers.

UW Fast Facts 2019 – Now Available!

The 2019 edition of UW Fast Facts is now available. You can find it on the OPB website under the UW Data tab, and in the Quicklinks bar on the right. You can also access it directly at UW Fast Facts.

A special thank you to OPB’s Institutional Analysis team, the Marketing & Communications team, and to our partners around the UW for their work to gather, verify, and crosscheck data; format the document; and pull it all together!

Governor Inslee’s Proposed 2019-21 Biennial Operating and Capital Budgets

On Thursday, Governor Jay Inslee released his proposed 2019-21 biennial operating and capital budgets. For a detailed analysis and summary of the Governor’s proposals, please see OPB’s brief on this page.

The Governor’s operating budget assumes significant new revenue from the creation of a capital gains tax, increasing the business and occupation tax rate for professional services, and modifying the real estate excise tax.

His proposed biennial operating budget would significantly increase appropriations to higher education institutions and student financial aid. The Governor’s budgets also invest heavily in the state’s behavioral health system—including planning a partnership with UW’s health science schools to expand the workforce and clinical care through telemedicine and new clinical facilities, recovery efforts for Southern Resident Killer Whales, and steps to reduce greenhouse gas emissions.

The release of the Governor’s budget proposals represents the first step in a lengthy budget process. Lawmakers in the Senate and the House will have the opportunity to release their own budget proposals over the course of the 2019 legislative session – set to begin on Monday, January 14, 2019.

For more information regarding the UW’s current requests for state funding, please see OPB’s 2019-21 operating and capital request submissions on the State Budget Information page.

Stay tuned to the OPBlog for updates during the 2019 legislative session!

UW’s Adopted FY19 Operating Budget and Tuition Rates

On June 7, the Board of Regents adopted the UW’s Fiscal Year 2019 (FY19) Operating Budget. The budget includes final 2018-19 tuition rates and expected revenue and proposed expenditures by budget area. Annual and quarterly tuition and fee schedules have been posted. Supplementary documents can be found on OPB’s Annual Budgets page.

In conjunction with the FY19 Operating Budget, OPB has updated the estimated 2018-19 cost of attendance for 1st year UW undergraduates with estimated student expenses across UW’s three campuses for:  tuition, mandatory student fees, room & board, books, personal expenses, and transportation. A PDF version is also available. Please note that students often pay far less than the amounts shown after accounting for grant and scholarship aid. Please visit the Office of Student Financial Aid website for more information regarding student budgets and net price.

OPB Brief on Senate and House Leadership 2018 Supplemental Budget Proposals

On Monday, leadership in the Senate released their 2018 supplemental operating and capital budget proposals. On Tuesday and Wednesday, leadership in the House followed with the release of their 2018 supplemental operating and capital budget proposals. The supplemental proposals include technical corrections and minor appropriation changes to the recently approved 2017-19 biennial capital budget, as well as the 2017-19 biennial operating budget, which was approved last June. They also build off Governor Jay Inslee’s proposals, which he released in December.

Please see this OPB brief for a detailed comparison of the supplemental budget proposals released thus far.

As a reminder, now that the House and the Senate have offered competing proposals, lawmakers will work toward negotiating and passing compromise budgets by the scheduled end of session, on March 8, 2018. Stay tuned to the OPBlog for updates during the remainder of the 2018 legislative session.

 

 

New OPB Briefs: Published Price vs. Net Price, Differential Tuition, and Activity Based Budgeting

OPB has released two new briefs.

The Published Price vs. Net Price brief is an updated version of a brief we posted in June, reflecting the newest available data.  The brief includes sector-wide data on trends in published price and net price for public and private four-year colleges and institutions, a description of how declining state investment in higher education has spurred tuition increases, and a table comparing the UW’s net price for resident undergraduates receiving grant or scholarship aid to its U.S. News & World Report top 25 research university peers.

OPB also has a new brief on policy and programmatic trends for differential tuition in higher education, and a recent brief on the Activity Based Budgeting (ABB) model used at the UW and other institutions.