studentaid

Study Links Student Loan Debt and Postcollege Wealth

Those with student debt -- whether they graduated from or dropped out of college -- are less likely than their counterparts without debt to accumulate assets in the years after leaving college, according to a new study. The research linked debt with borrowers, compared to others, having lower net worth, fewer financial and nonfinancial assets, and homes with lower market values. The study, accepted for publication in Children and Youth Services Review, was written by Min Zhan, a professor of social work at the University of Illinois at Urbana-Champaign.

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Amherst president discusses college's welcoming environment for low-income students

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Amherst College's president talks about adding more community college transfers after receiving an award for supporting low-income students.

Interest Rates on Federal Loans Will Hit Record Low

The interest rates on federal student loans will fall by about half a percentage point in the 2016-17 academic year, to the lowest point in history, based on the results of the Treasury Department's auction on 10-year notes. The rate on federal undergraduate loans will drop to 3.76 percent from the current 4.29 percent, and the rate for graduate Stafford loans will fall to 5.31 percent and for Grad PLUS and Parent PLUS loans to 6.31 percent.

The interest rates on student loans used to be set by congressional action, but 2013 legislation linked the rates to market fluctuations.

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Study: Student Debt Doesn't Limit Home Ownership

Many worry that rising levels of student debt limit home ownership. But a new study from the Brookings Institution says that data cited as proof of those fears don't actually demonstrate their accuracy. What the statistics show, the Brookings analysis says, is that the dividing line between those who own homes and those who don't is actually between those with a college education and those who lack one. The study was done by Susan Dynarski, a professor of public policy, education and economics at the University of Michigan.

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Federal Default Rate Adjustment List Published

The Wall Street Journal on Friday published an article revealing the 21 colleges that benefited from an adjustment the U.S. Department of Education made to the institutions' student loan default rates. The department had not disclosed which colleges received the controversial default-rate tweaks, even when members of the U.S. Congress asked.

The newspaper filed a Freedom of Information Act request to get the list, as did Inside Higher Ed, unsuccessfully. But the department mistakenly released the information to the Journal. The colleges included 10 for-profits, many of them small, six historically black colleges or universities, and five community colleges.

Education Dept. Grants Researchers More Data Access

The U.S. Department of Education will offer researchers new access to federal data for studies that "can inform and advance policies and practices that support students’ postsecondary success and strengthen repayment outcomes for borrowers," the White House announced last week. The pilot program will allow experts -- starting with Federal Reserve Board researchers this fall -- to apply to access and match student-aid data files with other surveys and administrative data, the Obama administration said, while keeping data safeguards in place.

The new Advancing Insights Through Data program "builds on the administration’s recent efforts to leverage government data in ways that can improve service delivery, promote transparency and strengthen accountability, particularly through the College Scorecard, which includes the most comprehensive, reliable data ever published on students’ postcollege earnings and repayment outcomes," the White House said.

College has become less affordable in most states, threatening to worsen economic stratification

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College affordability has declined in 45 states since 2008, with low- and middle-income students in particular feeling the pinch, new study finds.

New Employee Degree Program From JetBlue

JetBlue on Monday announced a new employer-sponsored college degree program with some unusual features. The airline is offering its employees with at least 15 previous college credits the chance to earn a bachelor's degree for $3,500 or less.

So far 400 JetBlue employees have signed up for the program. Each is assigned one of six success coaches JetBlue has trained and employs. The airline and its coaches then help employee students map a path to a degree from Thomas Edison State University, an online, public university based in New Jersey.

Students will receive prior learning credits for skills and knowledge they've picked up on the job. They also will be directed to online courses from Sophia, StraighterLine.com and Study.com, which in turn can earn students credit recommendations from the American Council on Education, which Thomas Edison accepts.

"We give them one class at a time," said Bonny Simi, president of JetBlue Technology Ventures, who helped create the program. She said the airline sought to eliminate some of the complexity in earning a degree and to use coaches to review students' transcripts and to help them fill in the gaps.

The company is planning for 1,000 of its 18,000 employees to be enrolled in the degree program on an annual basis, Simi said.

Essay challenging academic studies on states' performance funding formulas

A recent Inside Higher Ed article about the analysis of state performance funding formulas by Seton Hall University researchers Robert Kelchen and Luke Stedrak might unfairly lead readers to believe that such formulas are driving public colleges and universities to intentionally enroll more students from high-income families, displacing much less well-off students. It would be cause for concern if institutions were intentionally responding to performance-based funding policies by shifting their admissions policies in ways that make it harder for students who are eligible to receive Pell Grants to go to college.

Kelchen and Stedrak’s study raises this possibility, but even they acknowledge the data fall woefully short of supporting such a conclusion. These actions would, in fact, be contrary to the policy intent of more recent and thoughtfully designed outcomes-based funding models pursued in states such as Ohio and Tennessee. These formulas were adopted to signal to colleges and universities that increases in attainment that lead to a better-educated society necessarily come from doing a much better job of serving and graduating all students, especially students of color and students from low-income families.

Unfortunately, Kelchen’s study has significant limitations, as has been the case with previous studies of performance-based funding. Most notably, as acknowledged by Kelchen and Stedrak, these studies lump together a wide variety of approaches to performance-based funding, some adopted decades ago, which address a number of challenges not limited to the country’s dire need to increase educational attainment. Such a one-size-fits-all approach fails to give adequate attention to the fact that how funding policies are designed and implemented actually matters.

For example, the researchers’ assertion that institutions could possibly be changing admissions policies to enroll better-prepared, higher-income students does not account for differential effects among states that provide additional financial incentives in their formulas to ensure low-income and minority students’ needs are addressed vs. those states that do nothing in this area. All states are simply lumped together for purposes of the analysis.

In addition, the claim that a decrease in Pell dollars per full-time-equivalent student could possibly be caused by performance-based funding fails to account for changes over time in federal policy related to Pell Grants, different state (and institutional) tuition policies, other state policies adopted or enacted over time, changes in the economy and national and state economic well-being, and changes in student behavior and preferences. For example, Indiana public research and comprehensive universities have become more selective over time because of a policy change requiring four-year institutions to stop offering remedial and developmental education and associate degrees, instead sending these students to community colleges.

If any of these factors have affected states with newer, well-designed outcomes-based funding systems and other states with rudimentary performance-based funding or no such systems at all, as I believe they have, then there is strong potential for a research bias introduced by failing to account for key variables. For example, in states that are offering incentives for students to enroll in community colleges, such as Tennessee, the average value of Pell Grants at public bachelor’s-granting institutions would drop if more low-income, Pell-eligible students were to choose to go to lower-cost, or free, community colleges.

I agree with Kelchen and Stedrak that more evaluation and discussion are needed on all forms of higher education finance formulas to better understand their effects on institutional behavior and student outcomes. Clearly, there are states that had, and in some cases continue to have, funding models designed in a way that could create perverse incentives for institutions to raise admissions standards or to respond in other ways that run contrary to raising attainment for all students, and for students of color in particular. As the Seton Hall researchers point out, priority should be given to understanding the differential effects of various elements that go into the design and implementation of state funding models.

The HCM Strategists’ report referenced in the study was an attempt by us to inform state funding model design and implementation efforts. There needs to be a better understanding of which design elements matter for which students in which contexts -- as well as the implications of these evidence-based findings for policy design and what finance policy approaches result in the best institutional responses for students. There is clear evidence that performance funding can and does prompt institutions to improve student supports and incentives in ways that benefit students.

Analysis under way by Research for Action, an independent, Philadelphia-based research shop, will attempt to account for several of the existing methodological limitations correctly noted by Kelchen and Stedrak. This quantitative and qualitative analysis focuses on the three most robust and longest-tenured outcomes-based funding systems, in Indiana, Ohio and Tennessee.

Factors examined by Research for Action will include the type of outcomes-based funding being implemented, specifics of each state’s formula as applied to both the two- and four-year sectors, the timing of full implementation, changes in state policies over time, differences in the percentages of funding allocated based on outcomes such as program and degree completion, and differences in overall state allocations to public higher education. And, for the first time, Research for Action will move beyond the limitations of analyses based primarily on federal IPEDS data by incorporating state longitudinal data, which give a more complete picture.

As states continue to implement various approaches to funding higher education, it is essential to understand the effects on institutional behavior and student outcomes. Doing so will require more careful analyses than those seen to date and a more detailed understanding of policy design and implementation factors that are likely to affect institutional responses. Broad-brush analyses such as Kelchen and Stedrak’s can help to inform the questions that need to be asked but should not be used to draw any meaningful conclusions about the most effective ways to ensure colleges and universities develop and maintain a laser focus on graduating more students with meaningful credentials that offer real hope for the future.

Martha Snyder is a director at HCM Strategists, a public policy advocacy and consulting firm.

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Veterans Rally on Hill as Congress Mulls GI Bill Trim

Iraq and Afghanistan Veterans of America and several other veterans' groups held a rally on Capitol Hill Thursday to protest a proposed cut to a benefit included in the Post-9/11 GI Bill.

The veterans, who were joined by several Democratic members of Congress, were pushing back against a provision in a bill the U.S. House of Representatives passed last month. The bill included a 50 percent cut in the housing stipend for dependents of a military or veteran parent who had transferred the benefit to them. The U.S. Senate is considering a similar version of the bill.

"It is embarrassing that we have to come here and beg our elected officials not to steal from the pockets of our military, veterans and their families," said IAVA founder and CEO Paul Rieckhoff in a written statement. "As we stand in front of the U.S. Capitol, men and women are fighting in a prolonged war in Afghanistan and ongoing conflicts in the Middle East, earning this very benefit. We are once again seeing the impact of a growing civilian-military divide in this country. It is national disgrace that some members of Congress are willing to use veterans' benefits as a piggy bank to pay for other programs."

Iraq and Afghanistan Veterans of America founder and CEO Paul Rieckhoff speaks at a rally on Capitol Hill Thursday, April 14, protesting a cut to GI Bill benefits.

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