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President Obama Releases His FY2015 Budget

Yesterday, March 4th, President Obama submitted his fiscal year 2015 budget request to Congress.听 has published theiranalysis听of the budget as has .

TICAS states that the President鈥檚 proposal 鈥渢akes important steps towards making college affordable for Americans by reducing the need to borrow and making federal student loan payments more manageable.鈥 Specifically, his budget:

  • Invests in Pell Grants and prevents them from being taxed. 听The budget provides funds to cover the scheduled $100 increase in the maximum Pell award, raising it from $5,730 in 2014-15 to $5,830 in 2015-16. TICAS notes that although this increase will help nearly 9 million students, 鈥渢he maximum Pell Grant is expected to cover the smallest share of the cost of attending a four-year public college since the program started in the 1970s.鈥
  • Makes the American Opportunity Tax Credit (AOTC) permanent. 听TICAS supports making the AOTC permanent as they note research suggests the AOTC is the most likely of the current tax benefits to increase college access and success.听 New America, however, recommends the administration convert the tax credit to a grant program as they state researchers have found grants to be a more effective way to deliver aid to low-income families.
  • Improves and streamlines income-based repayment (IBR) programs. Under the President鈥檚 budget, more borrowers would be eligible to cap their monthly payments at 10 percent of their discretionary income and have their remaining debt forgiven without taxation after 20 years.听The budget also adjusts the IBR programs to prevent debts forgiveness for high-income borrowers who can afford to pay their loans.
  • Requests funding for the College Opportunity and Graduation Bonuses.听 The budget proposes establishing College Opportunity and Graduation Bonuses, which would reward schools that enroll and graduate low-income students on time. Both TICAS and New America note that, unless this proposal is thoughtfully designed, it could incentivize schools to lower their academic standards in order to make it easier for Pell students to graduate. Further, as this proposal is one of several different efforts to reward colleges that provide affordable, quality educations, it is unclear how its goals and formulas would interact with those of initiatives like the Postsecondary Education Ratings System.

The UW鈥檚 notes that the budget also proposes $56 billion for an 鈥淥pportunity, Growth and Security Initiative,鈥 which 鈥渁ims to effectively replace the remaining FY2015 sequestration cuts for nondefense discretionary programs 鈥 the programs we care about the most.鈥 Please stay tuned to their blog for more information and updates.

“Pay It Forward鈥 Is really 鈥淧ay It Yourself and Pay More Than Ever”

On Thursday, The Equity Line, a blog by , posted a (PIF) that discusses some of PIF鈥檚 major flaws. As a reminder, under PIF, instead of paying tuition and fees upfront, students would pay back a certain percent of their adjusted gross income for 25 years. For more information about PIF and how its supporters have applied PIF to the UW, please see the full .

The Equity Line鈥檚 blog post highlights that although PIF is marketed as a 鈥渄ebt-free鈥 way to pay for college, it is actually just another student loan program:

  • It is estimated (by the author and the UW) that many students would pay more under PIF than they currently do to pay back student loans.
  • Students with significant need 鈥 who currently receive federal, state, and institutional grants to cover tuition and fees 鈥 may have their grants (which do not need to be paid back) replaced with loans (which do).
  • Students would not be able to cover these other education costs with federal or state need-based grants because by removing the cost of tuition and fees from a student鈥檚 budget, that student鈥檚 level of calculated need would fall as would their eligibility for federal and state need programs. Thus, students would have to take out more loans (or find a way to pay upfront) for these expenses.

As the author notes, rather than 鈥淧ay It Forward,鈥 it鈥檚 really 鈥淧ay It Yourself and Pay More Than Ever.

News Roundup on 鈥淚ncreasing College Opportunity” Initiative

As you may have heard, President Obama recently announced his “” initiative, which aims to help more low-income and underrepresented minority students attend and complete college. On January 16th, the White House hosted a summit of the more than 100 colleges, universities, nonprofits, and foundations that made commitments to increase college opportunity. The Chronicle provides a of these commitments.

News coverage of the summit and the initiative includes the following:

  • 91探花Today鈥檚 article gives an overview of the UW鈥檚 commitments and highlights how the 91探花already has many achievements related to the provision of accessible degrees to students of all economic backgrounds.
  • The Seattle Times published 鈥,鈥 which focuses on the efforts and commitments of three Washington colleges who were invited to the summit to share lessons from their campuses鈥擫ake Washington Institute of Technology, University of Puget Sound, and Tacoma Community College. The 91探花is not mentioned.
  • The Chronicle put out an article titled, 鈥.鈥 It comments on the important role community colleges play in improving access and notes the dearth of community college participants at the summit.
  • The Chronicle also published a piece called 鈥溾. The article notes many optimistic comments made by participants. But it also discusses the composition of summit participants and, again, remarks upon the imbalance between elite four-years and community colleges.
  • And lastly, Inside Higher Ed鈥檚 article 鈥溾 gives a thorough description of the summit events and describes, in a relatively balanced way, discusses both the praises and criticisms of participants and observers.

Research Suggests MOOCs Primarily Serve the Well-Educated

Researchers at the University of Pennsylvania recently surveyed students who had taken at least one of Penn鈥檚 twenty-four MOOCs and viewed at least one online video lecture.听Findings from the responses of 34,779 students revealed that 80 percent of the MOOC-takers already had a 2- or 4-year degree and that 44 percent already had some graduate education. This supports the platitude that MOOCs primarily serve the well-educated.

The trend was observed for MOOC students in the U.S., as well as those in developing countries, and even those in countries where MOOCs are popular. Coursera 鈥 the MOOC provider for Penn and several other universities 鈥 has made 鈥渁ccess鈥 central to its mission of bringing world-class education to everyone. However, notes:

鈥淐oursera has taken a hands-off approach to publicity, relying almost entirely on word of mouth (and its university partners) to spread awareness of MOOCs. It stands to reason that much of the hubbub about MOOCs has occurred in well-educated circles. Combine that with spotty Internet availability in underprivileged communities, and it makes sense that only the most privileged populations have had occasion to take a MOOC.鈥

Coursera says they are working on several projects to help reach underserved students, particularly those without internet access. One of these efforts (we assume) are the global 鈥渓earning hubs鈥 discussed in a and in this NY Times .

Although the findings are noteworthy, the authors mention two important caveats:

  1. Their findings don鈥檛 necessarily mean MOOCs will never reach underrepresented populations, just that they haven鈥檛 done so yet; and
  2. The respondents represent only a small percentage of students registered for Penn MOOCs, let alone all MOOCs; thus 鈥渢he survey may not be generalizable.”

College Board Releases 2013 Edition of 鈥淭rends in College Pricing鈥

The College Board released its 2013 edition of 鈥溾 on Tuesday.听 The report provides information on what colleges and universities are charging in 2013-14; how prices vary by state, region, and institution type; pricing trends over time; and net tuition and fees鈥攚hat students and families actually pay after accounting for financial aid.

Here are a few noteworthy points about prices at public four-year institutions:

  • The average published tuition and fees for full-time resident undergraduates at public four-years increased by 2.9 percent between 2012-13 and 2013-14, going from $8,646 to $8,893鈥攖his is the smallest percentage increase in over 30 years.
  • In 2013-14, full-time students at public four-years will receive an estimated average of $5,770 in grant aid and tax benefits.
  • Thus, average net tuition and fees for full-time resident undergrads at public four-years will be about $3,120 in 2013鈥14鈥攗p from a temporary low of $1,940 (inflation-adjusted dollars) in 2009-10.

And a few key points about private nonprofit four-year institutions:

  • The average published tuition and fees for full-time students at private nonprofit four-years increased by 3.8 percent between 2012-13 and 2013-14, going from $28,989 to $30,094.
  • In 2013-14, full-time undergrads at private nonprofit four-years will receive an estimated average of $17,630 in grant aid and tax benefits.
  • Thus, average net tuition and fees for full-time undergrads at private nonprofit four-years will be about $12,460 in 2013-14鈥攗p from a temporary low of $11,550 (inflation-adjusted dollars) in 2011-12, but down from $13,600 a decade earlier.

Average net prices in all sectors took a noteworthy dip around 2010 due, in part, to significant increases in Pell Grants and veterans benefits that occurred in 2009鈥10 as well as the 2009 implementation of the American Opportunity Tax Credit. However, some of those benefits have been scaled back since their initial launch. Moreover, total state appropriations declined by 19 percent between 听2007-08 and 2012-13 and FTE enrollment in public institutions increased by 11 percent over that same time. Consequently, net prices have risen in the last few years for all sectors, but most noticeably in the public sector.听 It is important to remember that there are many variations by institution, region, and state.听 Even within institutions, different students pay different prices based on their financial circumstances, program of study, year in school, academic qualifications, athletic ability, etc.

See 听and 听for additional analysis and discussion of the report.

Supreme Court Hears Michigan Affirmative Action Case

On Tuesday, the U.S. Supreme Court appeared to be in favor of upholding a Michigan referendum, known as Proposition 2, which banned the use of affirmative action in the state鈥檚 public colleges and universities. The case, , is not about whether it is permissible for public colleges to consider race and ethnicity in admissions, but whether it is legal for voters to bar such consideration. For background information about this case, please see our .

Tuesday’s arguments focused primarily on a piece of the Equal Protection Clause, known as the 鈥減olitical process doctrine,鈥 which states that political processes cannot be altered in a way that puts minorities at a disadvantage. Opponents of Proposition 2, contend that, under the measure, minority groups who want to reinstate affirmative action must launch a difficult and expensive campaign to re-amend the state constitution, whereas Michigan citizens seeking changes to other university admissions policies are free to simply lobby university regents. This, they argue, places an unfair and disadvantageous burden on minorities.

Swing vote, Justice Anthony M. Kennedy, expressed doubts about whether Proposition 2 truly violates the political process doctrine and only two liberal members of the court voiced major criticisms of the Michigan measure. Thus, with Justice Elena Kagan recused from the case, the numbers point toward the court upholding Proposition 2. Such a decision would effectively preserve similar bans adopted by voters in Arizona, California, Nebraska, Oklahoma, and Washington; by lawmakers in New Hampshire; and by the public university governing board in Florida. In addition, it could theoretically embolden campaigns for similar ballot measures
elsewhere.

While it seems clear the Justices will rule in favor of Michigan, it is less clear whether the Justices are interested in reversing the political process doctrine, which dates back more than 40 years. In 1982, for example, the justices ruled against a Washington referendum that attempted to prevent Seattle from using a local busing program to desegregate schools. 听that Michigan Solicitor General, John Bursch, 鈥渦rged the Supreme Court to reverse the Seattle decision and others like it, if necessary.鈥

We鈥檒l post updates as more information becomes available.

Education and Justice Departments Clarify Fisher v. UT Ruling

On Friday, the Obama administration gave some clarity to the , as the decision had not provided a direct answer about the constitutionality of race-conscious admissions policies in higher education. Instead, the ruling had underscored the necessity of 鈥渟trict scrutiny鈥濃攁 term that sparked concern and confusion among some college officials. In a , the Education and Justice Departments clarified:

An individual student鈥檚 race can be considered as one of several factors in higher education admissions as long as the admissions program meets the well-established 鈥榮trict scrutiny鈥 standard; specifically, the college or university must demonstrate that considering the race of individual applicants in its admissions program is narrowly tailored to meet the compelling interest in diversity, including that available, workable race-neutral alternatives do not suffice.

In other words, colleges can continue considering race in admissions decisions as long as race-neutral alternatives would not achieve 鈥渟ufficient diversity,鈥 as Justice Kennedy put it in the case鈥檚 . Determining what constitutes 鈥渟ufficient鈥 diversity is where much of the remaining ambiguity lies.听 However, in their letter, the Departments pledged to provide 鈥渢echnical assistance鈥 to institutions as they interpret the ruling and asserted that previously-provided guidance on affirmative action still holds true.

As Inside Higher Ed , legal experts believe the court鈥檚 鈥渟trict scrutiny鈥 requirement will make it difficult for UT and many other institutions to successfully defend their use of race in admissions. However, the Obama administration seemed to encourage colleges to maintain their diversity efforts. 鈥淭he Departments of Education and Justice stand ready to support colleges and universities in pursuing a racially and ethnically diverse student body in a lawful manner,鈥 the letter stated.

For more information, see the Departments鈥 and the by Inside Higher Ed, and stay tuned to our blog for updates.

Oregon Passes Bill to Implement 鈥淧ay Forward, Pay Back鈥 Pilot Program

(This piece was originally posted on 07/11/2013, however听it was lost听due to听technical issues and is therefore re-posted here.)

Last week, the Oregon legislature passed a bill that, if signed by the governor, will implement a pilot program to study the effects and feasibility of substituting upfront tuition payments with income-based, post-graduation payments. For 24 years after graduating, four-year college students would pay back 3 percent of their income and community college students would pay back 1.5 percent. Students who do not graduate would pay back a smaller percent determined by how long they were in school.

If, after several years of study, Oregon decides to adopt a plan (or some form of it), it would signify a major shift in the funding paradigm for public institutions.听But that鈥檚 a big IF. The plan has received considerable criticism due to a multitude of unanswered questions that could pose significant logistical barriers. For example:

  • How would institutions and/or the state pay for the plan鈥檚 implementation (i.e. the several years of foregone tuition revenue between when a student enters school and when they graduate and start earning pay)?
  • How would the state efficiently collect accurate income data on students who move out-of-state?
  • How would the state go about collecting and enforcing payments?
  • How would the plan account for and apply to part-time students, transfer students, mid-career students, and other non-traditional students?
  • How would the plan work with federal and state financial aid programs?听Would low-income students be accommodated so as to avoid creating barriers to entry?
  • How does one pilot a 24-year repayment program in just 2 or 3 years?

Even if Oregon鈥檚 higher education commission, which is tasked with implementing the pilot program, can find viable answers to those questions, the plan still has a number of possible (if not likely) negative consequences. For instance, the plan may:

  • Magnify the public鈥檚 view of higher education as a private good (only benefiting the individual) rather than a public good (benefits for many) which, in turn, could spur the continuing and problematic trend of replacing state dollars with tuition revenue;
  • Make institutions even more vulnerable to economic variations and recessions as their revenue would be tied to graduates鈥 earning and unemployment rates; and
  • Create social and economic imbalance between Oregon and other states since students who expect to earn less鈥攅.g. social science and humanities majors鈥攚ould be incentivized to go to Oregon, and students expecting to earn more鈥攅.g. engineering and medical students鈥攚ould likely go elsewhere.

Granted, the idea of basing college payments on graduates’ income is not a new one. Some federal student loans are eligible for income-based repayment and a program similar to Oregon鈥檚 already exists in Australia. However, Australia鈥檚 version is administered at the federal level, meaning many problems inherent in Oregon鈥檚 plan (tracking students who move around the country, imbalance between states, etc.) are avoided.

The Economic Opportunity Institute, a liberal think tank in Seattle, proposed a version of the plan for Washington in October 2012; but, unlike Oregon鈥檚 version, it has yet to go anywhere.听 We鈥檒l keep you posted.

Critique of 鈥淔or Public College, the Best Tuition Is No Tuition鈥

In 鈥,鈥 a recent opinion piece published by The Chronicle, the author describes the merits of Finland鈥檚 no-tuition education system. In Finland, 鈥渁ll education became public and free鈥 during the 1960s as part of a multipronged strategy to reform and improve education. The other prongs of the strategy involved strengthening the country鈥檚 basic education by providing teachers with better pay and training, ensuring that students have individual attention at a young age, and by making education more interactive and experience-based. Forty years later, the country ranks 1st in Pearson鈥檚 Global Index of Cognitive Skills and Educational Attainment, which is based on results from a variety of international tests of cognitive skills as well as measures of literacy and high school graduation rates. The US ranked 17th. Though the accolades go to Finland鈥檚 basic education system, the author concludes that the US should model its higher education system after Finland鈥檚. However, a higher percentage of the US鈥檚 population has attained tertiary education (42 percent, ranked 5th, versus 39 percent in Finland, ranked 9th) and a higher percentage has entered into higher education (72 percent, ranked 8th, versus 68 percent in Finland, ranked 13th).

Even if the US should model its higher ed system after Finland鈥檚, the no-tuition strategy is not nearly as feasible as the author suggests. To determine whether Finland鈥檚 approach would be 鈥渁ffordable鈥 for the US, the author multiplies the number of US public students in 2008-09 by the average cost of public tuition, room, and board in 2009-10. By his calculations, the program would cost $130 billion annually which, he notes, is more or less equivalent to what the federal government spent on Pell grants and student loans in 2010 ($134 billion). His approach, however, has some serious flaws:

  • First, what he is analyzing here is the cost of all public education becoming free, not all education becoming public and free, which is Finland鈥檚 model. It is unclear whether the author accidentally left out private non-profits and for-profits鈥攚hich would be converted to public institutions and made free under Finland鈥檚 model.听 But if the other sectors are added into the equation, the program costs increase significantly.
  • Second, undergraduate tuition and fees have increased since 2008-09. Between 2009-10 and 2012-13, adjusting for inflation, undergraduate tuition and fees increased by about 5 percent per year at public institutions and by an average of 2 percent per year at private non-profits. During that the same time, federal spending on Pell grants and undergraduate financial aid remained relatively stable after adjusting for inflation, meaning the costs would not be nearly as interchangeable as the author suggests.
  • Lastly, completely eliminating the price of tuition would stimulate demand, which would increase enrollment at public institutions and, thus, the cost to taxpayers. Not only would there be a per-student cost (tuition, room, board, etc.) for each additional student, more students would also require more buildings, classrooms, labs, housing and other capital investments.

Another significant feature inherent in Finland鈥檚 system that isn鈥檛 contemplated by the author is Finland鈥檚 use of a barrier to entry. Finland has limited enrollment spaces and, thus, requires that students pass certain standardized tests at specified levels, depending on the program. This works well in Finland due to their exceptional K-12 system, which ensures that all students are thoroughly prepared for college regardless of personal income or community wealth. The same cannot necessarily be said about our basic education system in the US. Thus, it isn鈥檛 clear whether a standardized test could serve as a barrier to entry without significantly and profoundly harming less prepared students.

We鈥檙e trying to create a system in which students of all backgrounds and privileges have access to higher education, but substituting price for a proxy barrier like college preparedness may not get us very far. College preparedness would be a preferable barrier in that naturally-talented low-income students would have a better chance of attending college than they currently do; but what would happen to the students who don鈥檛 have the resources they need to succeed? Would they be denied access to higher education?

There are costs and tradeoffs associated with every higher education system and reform plan, free tuition is no exception. Free tuition may be a viable option, but it鈥檚 not a silver bullet.

States Shift Financial Aid Money toward Need-Based Aid and Grant Aid

According to an released on Monday by the National Association of State Student Grant and Aid Programs (NASSGAP), the amount of state dollars going toward financial aid remained relatively stable between 2010-11 and 2011-12. In 2011-12, states awarded about $11.1 billion in state-based financial aid, a slight increase (0.7 percent) over the $11.0 billion awarded in 2010-11. That growth has not kept pace with rising enrollments or the overall increase in students鈥 financial need; however, it’s encouraging to see growth of any size given that听general state appropriations for higher education fell by 7 percent during that same time period.

The state-by-state data show that Washington, New Jersey, New York and California gave out the most need-based aid on a per-student basis. Oregon more than doubled the amount it spent on need-based grants, to nearly $44-million, and Washington increased its need-based grants by 26 percent. However, 23 states cut need-based aid from 2010 to 2011 and four states reported no need based aid听programs at all.

What’s most intriguing, in my opinion, is that even though states collectively put only slightly more money toward their financial aid programs, they shifted a larger portion of those aid dollars toward need-based aid and grant aid (see the tables below). This finding suggests that states are attempting to maintain access in the face of rising tuition rates and to reduce the amount of debt their students accumulate.

Of the $11.1 billion in total state-awarded student aid:

  • $9.4 billion (84%) was grant aid鈥攗p 1.7% from 2010-11; and
  • $1.7 billion (16%) was non-grant aid (loans, work-study, tuition waivers, etc.)鈥攄own 4.2% from the previous year.

Of the $9.4 billion in state-awarded grant aid:

  • $7.0 billion (74%) was need-based鈥攗p 6.3% from last year; and
  • $2.4 billion (26%) was non-need-based鈥攄own 9.4%.

Of the $10.1 billion in state-awarded undergraduate aid (both grants and non-grants):

  • $4.7 billion (47%) was exclusively need-based鈥攗p 6.0%;
  • $2.0 billion (20%) was awarded on a mix of need and merit criteria鈥攗p 1.6% and surpassing, for the first time ever, aid awarded solely on merit;
  • $1.9 billion (19%) was exclusively merit-based鈥攄own 1.3%; and
  • $1.4 billion (14%) was special purpose awards and uncategorized aid鈥 a 3.0% drop.

Change in Total State-Awarded Student Aid
Percent change from 2010-11 to 2011-12
Type of Student Aid Dollar amount Portion of total
Grant aid 1.7% 0.8%
Non-grant aid -4.2% -0.8%
Total aid 0.7%
Change in State-Awarded Grant Aid
Percent change from 2010-11 to 2011-12
Type of Grant Aid Dollar amount Portion of total
Need-based 6.3% 3.0%
Non-need-based -9.4% -3.0%
Total grant aid 1.7%
Change in State-Awarded Undergraduate Aid
Percent change from 2010-11 to 2011-12
Type of Undergrad Aid Dollar amount Portion of total
Exclusively need-based 6.0% 2.7%
Mixed need & merit-based 8.5% 1.6%
Exclusively merit-based -6.5% -1.3%
Uncategorized & other -17.4% -3.0%
Total undergraduate aid 0.0%