studentaid

Study: Link Between Loans and Tuition Is Murky

Congressional investigators said in a report Tuesday that they could not determine whether students' increased access to federal loans in recent years has caused college prices to rise.

The Government Accountability Office was tasked with analyzing what, if any, impact higher federal loan limits that took effect in 2008 and 2009 have had on the rising price of college. In its report, the GAO concludes that "it  is difficult to determine if a direct relationship exists between increases in college prices and the [federal] loan limit increases because of the confluence of many other factors that occurred around the time the loan limit increases took effect," such as the economic recession and increases in other types of federal, state and institutional aid available to students.

The report also notes that the increased federal loan limits were correlated with a drastic drop, by more than 50 percent, in private student lending. A variety of factors explain that drop, the report says, including more stringent lending criteria, new consumer protections on private loans, and colleges' efforts to steer students away from private loans.

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California private colleges worry about cuts to state-funded Cal Grant

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As the budget forecast turns sunnier for California's public institutions, the privates worry about cuts to a state scholarship program on which their students rely.

Education Department is urged to tighten rules on campus debit cards

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Congressional investigators urge federal policy makers to tighten the rules on campus debit cards and require disclosure of how colleges may be profiting from the products.

Who Defaults and Why?

A new study (abstract available here) from the National Bureau of Economic Research tracks 10 year student loan default rates for those who earned bachelor's degrees in 1993. The study warns against common assumptions about who may default. "Given the importance of post-school earnings for repayment, it is natural to expect that differences in average earnings levels across demographic groups or college majors would translate into corresponding differences in repayment/nonpayment rates, but this is not always the case," the report says.

"Despite substantial differences in post-school earnings by race, gender, and academic aptitude, differences in student loan repayment/nonpayment across these demographic characteristics are, at best, modest for all except race." And while default rates for black students are higher than those of other groups, the study finds, this could be linked to lower levels of family income, since higher levels of family income have been found to minimize default rates.

Lower debt levels and higher income do predict loan repayment status, the report finds. "As a ballpark figure for all repayment/nonpayment measures, an additional $1,000 in debt can be roughly offset by an additional $10,000 in income," the study says. "For example, an additional $1,000 in student debt increases the share of debt in nonpayment by 0.3 percentage points, while an extra $10,000 in earnings nine years after graduation reduces this share by 0.4 percentage points."

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U.S. Selects Rules Panel for PLUS Loans, Debit Cards

The Education Department on Friday announced the negotiators who will hammer out new rules for PLUS loans, campus debit cards, state authorization for distance programs and other topics on the administration’s sweeping second-term regulatory agenda.

The negotiated-rulemaking panel will convene for the first time on February 19 and meet several times over the next several months to address a range of regulations for institutions that receive federal student aid and the companies the handle the disbursement of that money.

Among the more contentious issues the panel will focus on are the eligibility requirements for obtaining a PLUS loan. Consumer advocates and some think tanks have called for tighter eligibility requirements while some historically black and for-profit colleges, whose students and their families rely heavily on the loans, have said the department’s efforts to tighten the underwriting criteria have already cut off college access for low-income and underserved students.

The panel will also attempt to draft rules for student debit cards and other financial products on campus through which students receive disbursements of their federal loans and grants. Advocacy groups, lawmakers and other federal agencies have questioned the lucrative arrangements that some debit card providers have with colleges to offer such products.

In addition, the negotiated-rulemaking committee will also seek to rewrite the department’s state authorization rule for distance education programs. The rule, which required colleges providing distance education to obtain permission to operate from every state in which they enroll students, was thrown out by a federal appeals court in 2012. The panel will also tackle the conversion of clock hours to credit hours when awarding credit, and rules governing when a student can receive federal aid for repeated coursework.

Following are the list of negotiators:

Carney McCullough, U.S. Department of Education

Pam Moran, U.S. Department of Education

Chris Lindstrom, higher education program director, U.S. Public Interest Research Group

*Maxwell John Love, vice president, United States Student Association

Whitney Barkley, staff attorney, Mississippi Center for Justice

Toby Merrill, director, Project on Predatory Student Lending, The Legal Services Center, Harvard Law School

Suzanne Martindale, staff attorney, Consumers Union

Carolyn Fast, special counsel, Consumer Frauds and Protection Bureau, New York Attorney General’s Office

*Jenny Wojewoda, assistant attorney general, Massachusetts Attorney General’s Office

David Sheridan, director of financial aid, School of International & Public Affairs, Columbia University

*Paula Luff, associate vice president of financial aid DePaul University

Gloria Kobus, director of student accounts & university receivables, Youngstown State University

*Joan Piscitello, treasurer, Iowa State University

David Swinton, president, Benedict College

*George French, president, Miles College

Brad Hardison, financial aid director, Santa Barbara City College

*Melissa Gregory, chief enrollment services and financial aid officer, Montgomery College

Chuck Knepfle, financial aid director, Clemson University

*J. Goodlett McDaniel, associate provost for distance education, George Mason University

Elizabeth Hicks, executive director, student financial services, Massachusetts Institute of Technology

*Joe Weglarz, executive director, student financial services, Marist College

Deborah Bushway, chief academic officer and vice president of academic innovation, Capella University

*Valerie Mendelsohn, vice president, compliance and risk management , American Career College

Casey McGuane, chief operations officer, Higher One

*Bill Norwood, chief architect and director, Heartland Payment Systems

Russ Poulin, deputy director, research and analysis, WICHE Cooperative for Educational Technologies

*Marshall Hill, executive director, National Council for State Authorization Reciprocity Agreements

Dan Toughey, president, TouchNet

*Michael Gradisher, vice president of regulatory and legal affairs, Pearson Embanet

Paul Kundert, president and CEO, University of Wisconsin Credit Union

*Tom Levandowski, senior company counsel, Wells Fargo Bank Law Department, Consumer Lending & Corporate Regulatory Division

Leah Matthews, executive director, Distance Education and Training Council

*Elizabeth Sibolski, president Middle States Commission on Higher Education

(Asterisk denotes alternate.)

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Donation to U.Va. Will Provide More Aid, but Won't Shift Policy

A multimillion-dollar donation by a University of Virginia board member will help low-income students affected by the university's decision to scale back a popular financial aid program. U.Va. Trustee John Griffin gave the university a $4 million challenge grant last week, which he and the university hope will be at least matched by other donors. The money will help provide $500,000 in need-based aid to students over the next four years, as well as help fund an endowment set aside for financial aid.

Last year, the university altered its AccessUVa need-based aid program in an effort to curb costs. Starting this fall for incoming students, U.Va. is going to make some low-income students borrow up to $28,000 instead of guaranteeing them a debt-free graduation as it had in the past. Some said that with the new donation, the university was effectively reversing its decision, which has prompted significant opposition. It's unclear, however, to what extent the philanthropy will be used by the university to cover the bases AccessUVa has. 

A university spokesman, McGregor McCance, said the university does not known how many students will receive assistance from the endowment or the value of those scholarships. Nor is it clear how many students will be helped by the $500,000 per year of grants over the next four years. "For some students, this could partially or fully eliminate loans or work study components of financial aid packages," he said.

The university had said it would turn to donors to try to help low-income students even as it was cutting its no-loan guarantee. The cost curbing to AccessUVa will eventually save about $6 million a year.

A current university board member and the student newspaper have both criticized U.Va. for relying on philanthropy to help its poorest students. 

Still, fans of AccessUVa were pleased. "This announcement is effectively a reversal because before they were cutting grant aid to the poorest students, and now they’re investing a sizable infusion of funds directly back into those students," Mary Nguyen Barry, a graduate who received the no-loan version of AccessUVa, said in an email.

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Comments on College Ratings Plan

National Associations

American Association of Colleges of Osteopathic Medicine

American Association of University Professors

American Council on Education

American Psychological Association

Association of American Medical Colleges (AAMC)

Association of American Universities

Association of Community College Trustees

Association of Public and Land-grant Universities

Association of Specialized and Professional Accreditors

Council for Christian Colleges & Universities

National Association for College Admission Counseling

National Association of Financial Aid Administrators

National Association of Independent Colleges and Universities

State Higher Education Executive Officers Association

Veterans groups

Regional Associations

Association of Independent Colleges & Universities in Massachusetts

Association of Vermont Independent Colleges

Kansas Independent College Association

Minnesota Private College Council

Public and private, nonprofit colleges & universities in Wisconsin

Western Interstate Commission for Higher Education

Advocacy Groups/Think Tanks

American Institutes for Research

Center for Postsecondary and Economic Success

College Educational Quality

Institute for Higher Education Policy

National Center for Learning Disabilities

New America Foundation

OneGoal

Postsecondary Analytics

Student Press Law Center

The Aspen Institute College Excellence Program

The Institute for College Access & Success

Young Invincibles

Businesses

ACT, Inc.

Equifax Workforce Solutions

Higher One, Inc.

The College Board

University Systems

California Community College system

California State University System

State University of New York

Texas Higher Education Coordinating Board

University of California system

University of North Carolina system

Individual Institutions

Adrian College

Arkansas State University-Beebe

Athens State University

Athens State University

Brown University

Chesnut Hill College

Clemson University

Columbia College of Missouri

Cornell University

DeVry Education Group

Duke University

East Arkansas Community College

Empire State College

Fisher College

Forsyth Technical Community College

Furman University

Gordon College

Higher Education Consortia at the University of Delaware

Iowa Vocational Rehabilitation

Kaplan Inc.

Lasell College

Le Moyne College

Lebanon Valley College

LeTourneau University

Metropolitan State University of Denver

Mount Aloysius College

Newman University

Northeastern University

Ohio Wesleyan University

Pace University

Roosevelt University

Saint Leo University

Saint Louis University

Santa Clara University

School of the Art Institute of Chicago

Shaw University

Southern Adventist University

Southern Methodist University

Stanford University

The Cleveland Institute of Art

The Ohio State University

Tri-County Technical College

University of Alaska

University of California, Berkeley

University of Colorado Boulder

University of Pennsylvania

University of Washington

University of Wisconsin-Madison

Washington State University

Webster University

Wheelock College

Widener University

Williams College

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Higher ed needs better data to spur reform (essay)

While there is heated debate over how best to fix America’s higher education system, everyone agrees on the need for meaningful reform. It’s difficult to argue against reform in the face of college attainment rates that are stalled at just under 40 percent and the growing number of graduates left wondering whether they will ever find careers that allow them to pay off their mounting debts.

Any policy debate should start with a clear picture of how the dollars are being spent and whether that money is achieving the desired outcomes. Unfortunately, a lack of accurate data makes it impossible to answer many of the most basic questions for students, families and policy makers who are investing significant time and money in higher education.  

During the recent State of the Union address, President Obama talked about shaking up the system of higher education to give parents more information, and colleges more incentives to offer better value. Though he provided little detail, this most certainly referred to the broad vision for higher education reform he outlined over the summer centered around a new a rating system for colleges and universities that would eventually be used to influence spending decisions on federal student financial aid.

However, the President’s proposal rests on a data system that is imperfect, at best. As former U.S. Secretary of Education Margaret Spellings said of the President’s plan, “we need to start with a rich and credible data system before we leap into some sort of artificial ranking system that, frankly, would have all kinds of unintended consequences.”

The American Council on Education, which represents the presidents of more than 1,800 accredited, degree-granting institutions, including two- and four-year colleges, private and public universities, and nonprofit and for-profit entities, agrees on the need for better data as well.

A senior staff member at ACE has been quoted to say that “if the federal government develops a high-stakes ratings system, they have an obligation to have very accurate data,” and that he was “surprised that anyone would think it controversial that having such data is a prerequisite.”

In order to bridge the data gap, we introduced the Student Right to Know Before You Go Act, which would make the complete range of comparative data on colleges and universities easily accessible to the public online and free of charge by linking student-level academic data with employment and earnings data.

For the first time, students, and policy makers, would be able to accurately compare -- down to the institution and specific program of study -- graduation and transfer rates, frequency with which graduates go on to pursue higher levels of education, student debt and post-graduation earnings and employment outcomes. Such a linkage is the best feasible way to create this data-rich environment.

None of these metrics is currently available to those seeking to evaluate a school or program, though plenty of misleading data are out there.

For example, Marylhurst University, a small liberal arts school in Oregon, was assessed with a 0 percent graduation rate by the U.S. Department of Education. This is because the department's current metrics account only for first-time, full-time students, and Marylhurst serves nontraditional students who are part time or have returned to school later in life. Schools like this that serve nontraditional students -- who now make up the majority of all students -- don’t get credit for their success, at least not according to current federal evaluations.

With so many in the higher education community bemoaning the lack of quality data, and clear solutions forward on how to attain better data, why hasn’t it happened?

A major part of the answer: institutional self-interest. Every school in the country has widely disparate performance outcomes depending on the category, and many college presidents are in no hurry to make their less-than-appealing outcome data available for public scrutiny.

There’s a fear that students and families will vote with their pocketbooks and choose different schools that better meet their needs. The abundance of inaccurate and incomplete data provides institutional leaders with a line of defense: so long as such data are the norm upon which they are ranked and rated, they can defend themselves on the basis of flawed methodology. 

Not all schools fear the implications of better quality data; in fact, many schools crave these data and want them made public. They know they’ll stack up well against their competition.

Moreover, many schools realize that getting better data is critical to helping identify what’s working and what’s not for their students in order to build stronger programs. Nevertheless, some of the “Big Six” higher education associations still cling to the status quo and represent a key challenge to realizing these commonsense reforms.

It is long past time for these important actors to look away from their self-interest and toward what’s in America’s collective interest -- a future where higher education produces better outcomes for students and the economy -- by supporting the Know Before You Go Act.

U.S. Sen. Ron Wyden is an Oregon Democrat, and U.S. Sen. Marco Rubio is a Florida Republican.

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Most Teen Workers Don't Save for College

The percentage of employed teenagers has declined over the last decade, but what working high school seniors spend their earnings on has not changed much, researchers have found. Most of the money earned goes toward temporary wants or needs, meaning shopping trips, lunch and dinner dates, movies, music and more -- not saving for college. The information was gathered through surveys given to high school seniors by the University of Michigan Institute for Social Research.

Authors Jerald Bachman, Jeremy Staff, Patrick O'Malley and Peter Freedman-Doan wanted to learn what teenagers did with their earnings and to see if any patterns affect academic achievement. What they discovered is 17 percent took half or more of their income and put it toward their educations. Those who saved for college were less likely to work more than 15 to 20 hours a week because they wanted to focus on school. They weren’t at high risk of smoking cigarettes. The high school students who juggle school and work to help fund their higher education deserve to be recognized, the researchers say.

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Leading Democrat on House Education Committee to Resign

Representative Rob Andrews of New Jersey, one of the top Democrats on the House education committee, announced Tuesday that he was resigning from Congress later this month.

Andrews told supporters that he was leaving Congress to join a Philadelphia-based law firm. He told The New York Times that his decision had nothing to do with an ethics investigation into his alleged misuse of his campaign funds.

Andrews has been a longtime supporter of for-profit colleges in Washington, especially compared with some of his Democratic colleagues in the Senate who have been critical of the sector. He most recently joined a letter expressing concern over the Obama administration’s efforts to impose “gainful employment” regulations on the industry.  

Andrews's resignation follows the announcement last month by Representative George Miller, the top Democrat on the House education panel, that he will not seek re-election at the end of this year. 

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