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President Obama Releases His FY2015 Budget

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Yesterday, March 4th, President Obama submitted his fiscal year 2015 budget request to Congress.听 has published their听analysis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.

News Roundup on 鈥淚ncreasing College Opportunity” Initiative

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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.

Higher Ed Roundup–Happy New Year!

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Now that news sources are back from their holiday hiatus, we have a couple of noteworthy stories to bring you.听 Both articles highlight the continuing trend toward greater accountability.

:听 Last week in Florida, a judge upheld new rules by the State Department of Education that require tenure decisions鈥攌nown in Florida as 鈥渃ontinuing contracts鈥濃�攖o be contingent upon professors鈥� performance on certain student success criteria. The judge also upheld a new requirement that faculty must work for five years, rather than three, before being eligible for the contracts. The United Faculty of Florida had contested that the new rules were beyond the scope of the department’s powers, but the judge rejected that claim.

:听 On Thursday, three Democratic senators introduced a bill dubbed 鈥渢he Protect Student Borrowers Act of 2013,鈥� which would impose a fine on colleges with high student-loan default rates and federal student-aid enrollment rates of at least 25 percent. Penalties would be on a sliding scale. On the low end, colleges with default rates of 15 to 20 percent would incur a fee equal to 5 percent of the total value of loans issued to their students in default. On the high end, schools with default rates of 30 percent or more would incur a 20 percent penalty.听 The Education Department currently cuts off federal funds for institutions with high default rates, but the senators argue it punishes only “the most extravagant, outrageous schools.” The Chronicle writes, 鈥淭he proposed legislation would hit for-profit institutions the hardest, as their graduates have the highest default rates, on average.鈥�

Supreme Court Hears Michigan Affirmative Action Case

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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.

91探花Federal Student Loan Default Rates Remain Very Low Relative to National Rates

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On Monday, the U.S. Department of Education (ED) released its annual update on federal student loan cohort default rates (CDRs), which measure the frequency with which student borrowers at all levels (undergraduate, graduate, etc.) default on their federal loans. Although both national and 91探花CDRs rose, the UW鈥檚 rates remain well below those of the nation.

As ED is in its second year of switching to the 听more accurate three-year CDR measure, this year鈥檚 report includes both the FY 2011 two-year and the FY 2010 three-year CDRs. These rates represent the percentage of student borrowers who failed to make loan payments for 270 days within two or three years, respectively, of leaving school.

The Department provides breakdowns of its data by , and . Here are some key findings:

:

  • The national three-year CDR increased from 13.4 to 14.7 percent overall鈥攑ublic institutions increased from 11.0 to 13.0 percent, private nonprofits increased from 7.5 to 8.2 percent, but for-profits鈥� whopping 22.7 percent rate decreased slightly to 21.8 percent.
  • The UW鈥檚 three-year CDR increased slightly from 3.1 to 3.9 percent, but this is still nearly 11 percentage points below the national average.听

:

  • The national two-year CDR increased from 9.1 to 10.0 percent overall鈥攑ublic institutions increased from 8.3 to 9.6 percent, for-profits increased from 12.9 to 13.6 percent, but private nonprofits held steady at 5.2 percent.
  • The UW鈥檚 two-year CDR increased from 2.1 to 3.2 percent, but this is still nearly 7 percentage points below the national average.听

While this is good news, many students still struggle to afford ever-increasing tuition fees and/or to repay their student loans. The 91探花reaches out to our former students at risk of default on their Stafford Loans and helps identify federal repayment options that could benefit them.听Former 91探花students who are in default or experiencing difficulties repaying their loans can contact the Office of Student Financial Aid for assistance (osfa@uw.edu, 206-543-6101). Students can also visit to explore their repayment options.

Education and Justice Departments Clarify Fisher v. UT Ruling

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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.

ED Begins Negotiating New Gainful Employment Rule

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On Monday, the U.S. Education Department (ED) began formal negotiations on the draft language of a . The rule, originally published in 2011, was designed to enforce a requirement of the Higher Education Act that states career education programs鈥攏on-degree programs at all colleges and most degree programs at for-profit colleges鈥攎ust 鈥減repare students for gainful employment鈥� in order to participate in federal student aid programs. The rule was meant to discourage these programs from misusing federal aid dollars and leaving students with debt burdens they are unable to repay. However, in 2012 a federal judge rejected major provisions of the rule, requiring that ED rethink its strategy.

Here鈥檚 a summary of the changes:

  • The proposed rule applies to programs with as few as 10 students, whereas the old rule counted only career-focused programs with 30 or more students. Because of this change, ED estimates that the new rule could cover 11,359 programs at for-profit and nonprofit colleges鈥攏early twice as many as the old rule covered鈥攁nd that 974 of those programs (9 percent) could fail to meet the proposed standards.
  • The draft regulation omits loan repayment as a criterion for federal student aid eligibility. The old rule severed federal aid to programs where too few students were repaying their loans or where graduates’ debt-to-earnings and debt-to-discretionary-income ratios were too high. The new rule removes the loan repayment standards, which the courts deemed “arbitrary and capricious,鈥� and relies only on the latter two measures.
  • Debt-to-earnings calculations would be based only on students who receive federal aid, rather than students who complete the program. The old calculations were based on all students who completed the program, whereas the proposed calculations are based on any students who receive federal student loans and Pell Grants, regardless of whether they complete the program. As the rule is designed to ensure that federal aid is used effectively, this seems a more appropriate approach.听
  • Schools would have fewer chances to improve their performance before losing federal aid eligibility. Under the previous rule, programs that failed the measures in 3 out of any 4 years would be ineligible for federal student aid. However, the new rule only lets programs fail in 2 out of any 3 years before they lose eligibility.

For details, see a prepared by the Education Department.听 Please continue to follow our blog as well as the for updates on this topic.

Obama Releases College Affordability Plan

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Last week, President Obama toured several colleges and universities promoting his 听to make college more accessible and affordable for “middle class” students. As he noted during several stops, achieving a higher education remains one of the most critical means by which citizens achieve job security and financial听 stability.

For more detailed information about the central themes of the President’s plans, as well as information about which components require action from Congress, please review a on the topic, as well as a from Federal Relations. More about the plans and .

 

Federally Subsidized Student Loan Interest Rates Set to Double on July 1

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Thursday night, time ran out for Congress to reach a deal to keep federally subsidized student loan interest rates from doubling. The Senate adjourned for its Fourth of July recess without voting on a plan; thus, the interest rates on new federally subsidized loans will double to 6.8 percent on Monday July 1st (the same rate as unsubsidized federal student loans).

It is possible, however, that students won鈥檛 end up paying the increased rates.听 There has been a push from some legislators to enact a one-year fix that would temporarily adjust/lower the interest rates after the fact.听 As the lender of the student loans, it is within the federal government鈥檚 power to apply such a solution retroactively.

The increase was originally scheduled to occur a year ago.听 But, thanks to an election-year alliance of student advocates and the Obama administration, the rate increase was delayed by a year.

For more information, see the article and please stay tuned to the for updates.

Supreme Court Decision on Fisher v. University of Texas

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On Monday, the Supreme Court ruled that (UT), the case on UT Austin鈥檚 race-conscious admissions policy, be sent back to an appeals court for further scrutiny.听The case stemmed from a lawsuit by Abigail Fisher, a white applicant to the university who claimed she was unfairly rejected due to UT Austin鈥檚 affirmative action admissions program. For more background on this case, please see our previous two posts, found and .

The court鈥檚 7-to-1 decision did not provide a direct answer about the constitutionality of UT Austin鈥檚 admissions practices. Instead, it ordered the U.S. Court of Appeals for the Fifth Circuit to reconsider the case on the grounds that the appeals court had failed to apply “strict scrutiny” (a rigorous standard requiring that both an important goal and a close fit between means and ends be identified) in its review of the case and subsequent ruling in favor of UT.听Justice Ruth Bader Ginsburg was the only dissenting voice; she argued that the appeals court was right to support UT鈥檚 policies.

According to the , Justice Kennedy wrote for the majority that courts reviewing affirmative action programs must, 鈥渧erify that it is necessary for a university to use race to achieve the educational benefits of diversity.鈥� This necessitates, he said, 鈥渁 careful judicial inquiry into whether a university could achieve sufficient diversity without using racial classifications.鈥�

The Supreme Court鈥檚 ruling did not displace its 2003 decision in , which found educational diversity to be of sufficient importance to overcome the government鈥檚 standard ban on racial consideration. However, as reports, legal experts believe the court鈥檚 demanding 鈥渟trict scrutiny鈥� requirements will make it difficult for UT and many other institutions to successfully defend their use of race in admissions.

The debates surrounding Fisher v. UT and affirmative action in higher education as a whole are far from over. Many expect the Texas case to return to the Supreme Court after a new review by the appeals court.听 We will keep you posted with any updates.