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Student loan defaults hit highest level since 1995

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The latest snapshot of defaults on federal student loans shows that one in ten borrowers are defaulting within two years and nearly 15 percent are defaulting within three years. 

U.S. Panel Warns of Dangers in Using Financial Aid to Push College Completion

Proposals to alter federal financial aid programs to try to promote college completion could end up damaging postsecondary access, the U.S. Advisory Committee on Student Financial Assistance argues in a new report. The report, "Do No Harm," warns that several of the policies being discussed in think tank circles and among some members of Congress could diminish the representation in higher education of students from low-income families.

Essay suggests that scoring in diving suggests path for rating colleges

About one month ago, President Obama announced plans for sweeping changes in higher education. In short, he wants the system to be much more efficient, affordable, and timely. Numerous reports have indicated the cost of higher education has increased at rapid rates. Bloomberg indicated that since I started college in 1985, the cost has risen by 500 percent.

This is a complex problem. Our health care provider told us to expect a 19 percent increase this year. Technology upgrades mean additional costs. The reality is while we are a nonprofit, nothing is slowing the for-profits interested in greater profit margins. But I understand the president’s concerns.

Yet as I heard President Obama share ideas about measuring the effectiveness of institutions as a solution, I was concerned. I agree that assessment is essential. We need to make sure we are delivering on what we promise. But my concern is how will these metrics be developed, and will they really be able to consider all of the factors that impact student success and institutional performance?

As Secretary of Education Arne Duncan and his team begin their work, I would like to propose a competitive diving approach to college assessment. In diving, you receive a raw score from 1 to 10 based on dive execution. That score is averaged by the judges, then multiplied by the degree of difficulty for the overall score.

Most of the rankings that exist, particularly those of U.S. News & World Report, measure inputs dependent upon wealth so that quality is determined by whom you serve rather than what you do with them. Essentially, the fewer Pell Grant, part-time, nontraditional and students of color you serve, the better your outcomes.

Elite colleges, which educate those who received the best high school educations and who frequently have plenty of money, serve students who have the right inputs ,which almost guarantee high retention and graduation rates, low debt, and high employment.

But, in order to be fair, any new rating system must calculate the degree of difficulty when examining the metrics. For example, reviewing data for the last three years available, the smaller a share of the student body made of Pell Grant eligible students a college has, the better the graduation rate.

In fact, decades of research prove this point. The difference is significant as well. For 2011, as an example, the graduation rate for baccalaureate nonprofit colleges was 52 percent. For colleges with fewer than 20 percent Pell grant recipients (generally households earning less than $40,000 a year), the graduation rate was 79 percent. It dropped to 56 percent for colleges with 21-40 percent Pell students, and then to 42 percent for institutions with 41-60 percent Pell students. For those where more than 60 percent were Pell grant recipients, the graduation rate was 31 percent.

Colleges with less than 20 percent Pell students had few part-time, nontraditional and underrepresented students of color. Colleges with more than 60 percent Pell students had twice as many part-timers, five times as many nontraditionals, and almost six times as many underrepresented students of color.

And yet most rankings have lauded the first group for providing a great education. They essentially have done simple dives -- forward in a tuck position off a 1-meter springboard which has a degree of difficulty of 1.2 (based on USA diving). Meanwhile, many colleges attempt a back 4 1/2 somersaults in a tuck position off a 3-meter springboard, degree of difficulty 4.6. The problem is, we don’t get the degree of difficulty factored in. Only the raw score is calculated and we’re determined to be lesser institutions.

If President Obama’s plan to overhaul higher education is to have any credibility, there must be a degree of difficulty factor. In fact, there should be some other factors as well if there is to be any equity in this process. If colleges will be evaluated on the earnings of graduates, will the methodology take into account that women earn 77 percent of what men do, and this would disproportionately penalize women’s colleges and those with high proportions of women? Will the rankings factor in students who had to leave college because the government changed Parent PLUS loan eligibility?

The skepticism is widespread because we’ve watched numbers being used without proper context. For example, the highly touted White House College Scorecard was launched in February as a great step in accountability. For my institution, the graduation rate was listed as 24 percent. That looks atrocious. And yet, nothing on that webpage indicated that rate was based on freshmen who started in August of 2005, a few weeks before Hurricane Katrina made the campus unusable for almost one year. Eight years later we are finally opening all previously closed buildings.

We lost half that freshman class after one year, and large numbers of sophomores and juniors. The simple analysis presented on the scorecard paints a damaging picture. If consequences are then attached without all factors being weighed, this becomes an attack on a college.

The point is there has to be serious analysis with the broadest range of institutions at the table as this rating is developed. If all the factors are not considered, we end up with a simplistic one-size-fits-all that harms many institutions and their students. I know President Obama does not want that to be part of his legacy.

We are diving into a new territory to rate colleges. I just hope we’ll use diving's scoring as well.

Walter M. Kimbrough is president of Dillard University.

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$50 Million Gift for Scholarships at North Carolina State

North Carolina State University on Friday announced a $50 million gift from the Park Foundation. The funds will support a scholarship program through which students receive a four-year scholarship, a computer stipend, specialized faculty mentoring and various special learning opportunities.

 

Speaking to black college leaders, Arne Duncan apologizes for PLUS loan denials

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Education secretary tells black college leaders he's sorry for how his agency tightened underwriting standards for federal parent loans, which resulted in wave of loan denials. 

Is panic over college costs the product of generalizations?

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Perhaps college costs are not too high, panelist tells crowd at conference of admissions counselors.

U. of California Uses Celebrities and Crowdfunding

The University of California System is turning to celebrities for a new crowdfounding approach to raise money for financial aid, The Los Angeles Times reported. Celebrities are pledging access and performances if their supporters can raise set amounts of money. Jamie Foxx, the actor, will for example "rap a song like Bill Clinton, President Obama  and Monique from the movie 'Precious'" if his fans raise $20,000. The idea is to attract young alumni and others who are not interested in traditional fund-raising appeals, officials said.

Adrian Will Repay Loans of Those Lacking Good Jobs

Adrian College has announced that it will repay all or part of the student loans of new graduates who fail to get jobs that pay at least $37,000. Under the plan, the college will make all of loan repayments due for of those who don't have a job that pays at least $20,000, and then a portion of the repayments for those with salaries of $20,000 to $37,000. The idea behind the program, called Adrian Plus, is to reassure students and families that they can attend a private liberal arts college without fear of debt they can't manage upon graduation. Adrian officials stressed that, based on past patterns, the vast majority of students won't need to partipate in the program.

 

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Feds Float Idea of Program-Level Loan Default Rate

An official with the U.S. Department of Education on Tuesday suggested that a panel of negotiators consider including a program-level cohort default rate as part of proposed gainful employment regulations, which would would measure the employment outcomes of vocational programs at for-profit institutions and community colleges. That metric would be a new addition to an annual debt-to-income ratio and a discretionary income ratio.

John Kolotos, the official, who is a negotiator for the rule-making session that began this week, said the department had not vetted the details on how a loan default rate would work. But the department already has an institution-level rate in place, and he said the feds consider a three-year program-level rate of 30 percent (and one year at 40 percent) to be a "viable addition" to gainful employment. It would be a stand-alone measure, he said, meaning academic programs would lose eligibility for federal aid programs if they crossed the threshold, regardless of how they perform on other measures. 

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Investment in 529 College Savings Plans Grows

Investment in 529 college savings and prepaid tuition plans reached a record level in the first six months of 2013, according to a midyear report released Tuesday by the College Savings Plan Network.

Total investment in 529 plans reached $205 billion and the number of open 529 accounts increased to 11.43 million as of June 30, 2013, up from 10.74 million in December 2011.

“As families reach a crossroad about the value of higher education, our mid-year report finds that they have continued their commitment to save for and invest in college education,” Hon. Michael L. Fitzgerald, Chair of the College Savings Plans Network and State Treasurer of Iowa, said in the report. “The steady increase of total assets, account size and contributions in 529 plans are positive signs that Americans recognize saving for college as a long-term commitment and investment. Fostering this mid-year success, if the government undertakes the new initiative to slow tuition increases, then families’ hard earned 529 savings will go further to cover more college costs.”

 529 plans are offered in 49 states and the District of Columbia. 

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