Financial aid

Colleges shouldn't abandon early-admissions programs (essay)

Every year without fail, a well-respected educator comes out against early-admission programs, calling them “barriers to keep most low-income students out.” This year’s quote is from a recent piece in Inside Higher Ed by Harold O. Levy, a former chancellor of the New York City Public Schools and the executive director of the Jack Kent Cooke Foundation.

I have great respect for Levy and for the significant work done by the Cooke Foundation to advance students of great potential from economically disadvantaged families. But early-admission programs are not discriminatory by definition at the bulk of the nation’s nonprofit, four-year colleges and universities. And in fact, they do not have to act against the inclusion of disadvantaged students at the nation’s most prestigious institutions. Here’s why.

It is true that many low-income students are not aware of early-decision programs because they are the first generation in their family to go to college and attend high schools where counselors are responsible for 1,000 or more students each. But colleges and universities can and do promote early decision and early action in all of their search communications, on their websites and in their brochures. And those of us who are committed to enrolling low-income students go out of our way to connect with them and to make them aware of early programs while saving places for them in the regular pool. Pell-eligible students represent 35 percent of the enrollment at my institution, Drew University, and we have an early-decision program -- so it can be done. Further, those students graduate at the essentially same rate as the other two-thirds of the student body, so they are being served well.

Many highly selective colleges are now test optional in admission, so the fact that low-income students may not have test scores in time for early deadlines is a nonissue at those institutions. And the notion that low-income students can’t commit to enrolling through an early-decision program because they need financial aid is an equally empty hypothesis.

First of all, the early Free Application for Federal Student Aid allows colleges to award actual aid upon early-decision admission. Second, as every early-decision institution will tell you, if the aid is not sufficient in the family’s mind, the student will be released from the early-decision commitment.

I always tell students and their parents that they should apply in a binding early-decision program only if parents know how much they are willing and able to contribute toward college expenses, and if they are not interested in comparing offers from other institutions. If they receive enough to make attendance possible, and the college is the student’s first choice, then the process has successfully concluded. If, however, they want to shop for the best deal, then early decision is not for them. But we can’t just say that early decision is bad for all low-income students.

In many ways, early decision is the best time to apply for financial aid, because colleges do not exhaust their grant resources during the early round. And as I said, if the aid is not sufficient, colleges will release students from the early commitment. This is a no-lose proposition for the student.

Levy presents compelling evidence of the disparity of incomes represented in early-decision programs:

The Cooke Foundation study found that only 16 percent of high-achieving students from families with annual incomes below $50,000 applied for college admission on an early-decision basis in the 2013-14 academic year. But 29 percent of high-achieving students from families with incomes above $250,000 applied on an early-decision basis. Is it any wonder that so many more upper-income students gain admission?

To be fair, that needs to be put into context. According to a 2014 report from the Pew Research Center, 51 percent of all low-income students were enrolled in college compared to 81 percent of all high-income students (defining low income as the bottom 20 percent of all family incomes and high income as the top 20 percent). In other words, many more high-income students enroll in college in the first place, so it is not surprising that many more high-income students also enroll through early decision.

This underscores the real issue for American higher education. We need to spend less time advocating for the elimination of a program, like early admission, that attracts higher-income students (who, by the way, help to bring in the revenue to support lower-income students) and more time -- as the Cooke Foundation and many colleges do so well -- developing better ways to recruit and support low-income students through to graduation. The future competitiveness of our country depends on it.

Robert Massa is senior vice president for enrollment and institutional planning at Drew University. He previously served as vice president for enrollment and college relations at Dickinson College and as dean of enrollment at Johns Hopkins University.

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An assessment of the impact of the early FAFSA on college applications (essay)

A little over a year ago, our enrollment team at Augustana College met in retreat to discuss the anticipated impact of prior-prior year submission of the Free Application for Federal Student Aid, or early FAFSA, as it is called now. We completed a strengths, weaknesses, opportunities and threats analysis of what we perceived as entwined in this big change to the financial aid and recruitment timetable. After considerable discussion, we created new timetables, developed a new communication sequence for our prospective and current students, established new and updated old systems, and took a deep breath as we faced an uncertain future with new time frames and a new process.

As we spoke with visiting families during the spring and summer months, we were pleasantly surprised by how many seemed to be informed and fully aware that the FAFSA would now be available for submission on Oct. 1, rather than Jan. 1 -- and that applicants will be able to use income information from two-year-old completed tax returns rather than sometimes incomplete information from the previous year. The high level of awareness continued into the fall. All visit days and high school visits confirmed that families, school counselors and other influencers were aware, had adjusted timetables and were itching to submit the FAFSA earlier than ever before.

Oct. 1 came quickly, and so did the FAFSA submissions. It seemed as if many families were sitting at the computer ready to submit the infamous form in the same way many of us waited to order tickets for Broadway’s Hamilton, refreshing their browsers until they could get in and get it done.

In fact, the early volume of FAFSAs submitted from prospective and current students stunned Augustana’s office of financial aid. All the table tents in the dining hall, the umpteen emails we sent out, our first-ever FAFSA print mailer and the inclusion of the FAFSA timeline in our application instructions had worked. We are rolling in FAFSAs and have exceeded last year’s total volume from first-year students by 40 percent.

Given the high conversion/yield rate for FAFSA submitters in the past cycle, it’s time to break out the champagne. I mean, we’ve done it. We reconditioned the marketplace, prospective students and their families are following our directions, and now we just need to execute. Right?

I confess that I’ve enthusiastically shared the volume numbers with faculty and staff members, the president, and the chair of the Augustana Board of Trustees, and I even tweeted about it early on. But I also admit that I don’t know whether our numbers are strong or soft indicators. Perhaps, I suspect, they are a little of both.

And as I dig into the data, I am increasingly convinced that these lead indicators require very cautious interpretation and should temper my exuberance. Let me offer a couple of examples.

First, because of the U.S. Department of Education’s caution about establishing early timetables for submission, and the potential impact on underserved populations, I have been watching FAFSA submissions for applicants of color carefully and am cautious about what I see. Currently, we continue to see trailing rates of submission for students of color in the applicant pool, with more than 40 percent of those students who applied for admissions not yet filing the FAFSA. The department’s caution is relevant to all of us, and we must now ask what we can do to increase the filer rate among this important population.

Second, nearly 20 percent of those students who have submitted the FAFSA have not yet applied to my college for admission. Some of these FAFSA submitters are even coded as having asked us to cease communication with them. Now, a universal truth in college admissions is that 100 percent of the students who don’t apply don’t enroll. While there certainly is plenty of time for these hundreds of FAFSA submitters to still apply (and I sure hope they do), it’s also reasonable to conclude that we are not a serious consideration for them, making this usually strong indicator meaningless.

There is more to investigate as we look at these very early indicators, but only time will tell us what all of this means.

Looking at the data, I wonder if the Department of Education and all of those who pushed for early FAFSA may have just created the newest fast-application program. Fast-application programs for college admissions are frequently criticized for inflating applicant pools and making it too simple and too convenient for students to apply. These same programs make it difficult for new users in college admissions to interpret what an increase in volume may really mean to yield and enrollments.

Think about it. We’ve made it easier to submit the FAFSA. We’ve aggressively communicated about submitting the FAFSA. We’ve created a marketed FAFSA with the IRS data-retrieval tool. We have systemwide partners, like the Common Application, more effectively encouraging the submission of the FAFSA. We’ve done our best to better align the cost and admissions decision.

It seems we are doing all of the right things. But are we reaching all the right students and families --those most likely to choose Augustana and thrive here?

I am a believer in making the entire process more transparent and less complicated, and in aligning the cost and search process. But I wonder if early FAFSA will just add a new complication for colleges and families -- and more noise that must be interpreted and filtered. Only time will tell.

W. Kent Barnds is executive vice president at Augustana College.

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The problems with the New York tuition-free public college plan (essay)

As the author of Why Public Higher Education Should Be Free, I should be excited by the new plan to make public higher education tuition-free for certain students in New York State. However, the history of American financial aid for college reveals that we need to be very wary of the details of even well-intended policies. In fact, over the last 40 years, the United States has spent trillions of dollars on financial aid to make college more affordable and accessible, and yet the opposite has happened.

In looking at the New York plan, we can see why it will not accomplish its desired goals. The first problem is that it only deals with tuition and not the total cost of attendance. For instance, at the State University of New York, the tuition for this year is $6,470, but the total cost is $24,630 for New York resident students not living at home. And in the case of the City University of New York, tuition is $6,630, but the total cost of attendance is $26,036.

In other words, tuition accounts for only about a quarter of the real cost of going to a public college or university in New York, and so the biggest cause for student debt or nonattendance is not tuition but related costs -- like housing, textbooks, transportation and food. Moreover, most federal and state aid programs only deal with tuition, and so for many low-income students, the plan will be of little or no help.

Another major problem with this plan so far is that it does not appear to try to contain increases in the cost of tuition or related college expenses. Just as in the case health care, if you subsidize something but do not control its costs, it will not be able to achieve its policy goals. U.S. Senator Bernie Sanders should know this, because he introduced a bill into the Senate last year that would have regulated tuition increases and would have also forced colleges and universities to spend more on instruction instead of administration.

Sanders’s bill also required colleges and universities to increase their use of full-time faculty members in order to enhance the quality of education. But New York’s plan does not delve into these issues.

The plan also does not deal with huge federal and state tax breaks related to higher education that often go to the wealthiest families. In fact, New York State already spends over $240 million a year on tax credits and deductions for tuition, and more money is sheltered from taxes through the use of 529 College Savings Plans.

It is understandable that Governor Andrew Cuomo wants his state to come up with its own plan, because he can’t expect much help from the new U.S. Congress or president-elect. But it is important to realize that since we have federal, state and institutional forms of aid, we need programs that integrate those different funders.

If Governor Cuomo wants to know what a successful funding plan for higher education should look like, he can examine CUNY’s own successful Accelerated Study in Associate Programs, which funded wraparound services for low-income community college students. One of the great benefits of that program was that, with little additional cost, it was able to improve the graduate rates of low-income students. The program also showed that if you are serious about improving the quality, affordability and accessibility of higher education in America, then you cannot simply focus on free tuition. For example, research on the success of ASAP showed that sometimes the key way to help a student to graduate on time is to give that student financial support for transportation.

It is great that the state of New York wants to do something progressive for higher education, but the devil is in the details. And the history of American college financial aid has shown that well-intentioned programs often backfire if they do not examine unintended consequences. We should promote free public higher education, but only if we do it right.

Robert Samuels is president of UC-AFT and teaches writing at the University of California, Santa Barbara.

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Education Department releases gainful employment data for vocational programs

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Graduates who earned certificates at public institutions have larger salaries, but there is wide variation between programs even at the same institutions.

Trump win leaves cloudy financial outlook for colleges

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Federal funding is a top item to watch, along with enrollments and fund-raising.

Brookings study finds growing disparities in student loan debt between black and white graduates

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Consumer advocates say a Brookings study highlights the need for comprehensive federal data on the relationship between college loan debt and race.

A report on the Obama administration's higher ed policies (essay)

The benefits of higher education are well established: a significant boost in average earnings, a higher likelihood of employment, increased productivity, greater tax revenues, lower crime. But much debate continues on how best to encourage more students to make high-quality educational investments and how to ensure that a degree is affordable. As the Obama administration welcomes its final back-to-school season, the opportunity arises to look back and assess the impact of its higher education policies and next steps to build on that progress.

A new Council of Economic Advisers report released yesterday examines the administration’s record, finding that evidence-based policies implemented over the last seven years have already begun to pay off. Investments in greater financial aid, in particular, have had high returns. The Council of Economic Advisers estimates that the administration’s increase in the average Pell Grant award between 2008-09 and 2014-15 will lead to an additional $20 billion in aggregate earnings, a nearly two-to-one return on the investment.

But that is only one example. Without federal support, much of the potential benefit of higher education would go unrealized due to misalignments between individual and societal benefits, credit constraints, information failures, and procedural complexities. Since taking office, the Obama administration has worked to address each of these areas so that more students can attend a quality higher education institution, graduate and repay their loans on manageable terms.

From the very beginning of the college selection process, students can face obstacles; even determining which colleges will provide a good return on investment is a daunting challenge. That is why the administration unveiled a redesigned College Scorecard offering the most reliable and comprehensive data ever published on students’ outcomes at individual institutions, including data on cost, graduation rates, earnings, debt and repayment.

At the same time, even with solid information, procedural complexities may prevent some students from using the resources available to them. To help make it easier for them to apply for student aid, the administration has made the Free Application for Federal Student Aid simpler by reducing the number of questions it presents and making it easier for applicants to directly transfer data from the IRS. In addition, the FAFSA is available earlier this fall, improving the information students have about their financial aid packages when they make decisions about where to apply.

Once accepted, students must also determine how to pay for their education. Research shows that lower college costs can improve college access and success, and the administration has made it a priority since day one to help families finance investments in education. President Obama has worked aggressively to increase the maximum Pell Grant award by $1,000, and, for the first time, tied the maximum amount of the award to inflation. This investment will help an additional 250,000 students access or complete college. On average, Pell Grants reduce the cost of college by $3,700 for eight million students a year. In addition, this administration has also established the American Opportunity Tax Credit, which will cut taxes by over $1,800, on average, for nearly 10 million families in 2016, thus giving students and their families more discretionary income to invest in college.

Despite these successful investments, too many people still feel as if college is out of reach. That’s why President Obama announced his America’s College Promise proposal in January 2015 to create a new partnership with the states that would make two years of community college free for hardworking, responsible students. Since the president’s announcement, over 36 free community college initiatives have been launched in states, cities and communities nationwide. Altogether, these programs raise more than $150 million in new public and private investments, supporting at least 180,000 students.

President Obama has also signed key policies into law to maintain the accessibility and affordability of student loans. Research suggests that without access to federal student loans, financially constrained students would be less likely to attend college, more likely to work while in school, and less likely to complete a degree. In 2010, President Obama signed student loan reform into law, generating over $60 billion in savings and redirecting that money back to students and taxpayers. And in 2013, he signed into law further reforms to lower interest rates for nearly 11 million borrowers.

Additionally, the president’s Pay As You Earn and related income-driven repayment plans have allowed approximately 5.5 million student borrowers to cap their monthly student loan payments at rates as low as 10 percent of discretionary income, to ensure their debt is manageable. These plans better align the timing of loan payments with the timing of earnings benefits by allowing borrowers to make smaller payments when their earnings are low or during transitory periods of financial hardship and to adjust their payments as their earnings grow.

Finally, this administration has worked to protect students from unscrupulous institutions that do not deliver a quality education. The U.S. Department of Education’s gainful employment rules will hold career colleges accountable by removing poorly performing programs’ access to federal financial aid. Such rules build on a record of action by this administration to increase accountability in higher education. The department has also created a Student Aid Enforcement Unit to respond more quickly and efficiently to allegations of illegal actions by higher education institutions.

Though more work remains, these policies taken together represent a significant step forward in building an educational system that encourages all Americans who wish to invest in an affordable, high-quality college education to do so. Colleges and others in the higher education community can build on that progress by encouraging students to fill out the new early FAFSA so that they can learn about and access the student aid dollars that are so critical to their future.

Sandra Black is a member of the Council of Economic Advisers. Jason Furman is chairman of the Council of Economic Advisers.

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Decreasing median incomes linked to rising numbers of Pell Grant recipients

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New federal data show rising number of students receiving Pell Grants while median family incomes of recipients fall.

DeVry University plans to adopt financial reform favored by for-profit critics

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By tackling the controversial 90-10 rule -- and lowering it for its institutions -- DeVry Education Group is looking to assert its place as a leader in the for-profit sector.

Student debt is a problem with a color and class element (essay)

Since student debt, free tuition and debt-free higher education have emerged as presidential campaign-level issues, a narrative has begun to emerge among elite news media that the rising price of college and ever-increasing student debt are phantom problems given the overall lifetime benefits of a college degree. Unfortunately that narrative, which has been highlighted over the past few weeks to varying degrees by major media outlets, including NPR and Vox, rests on a pretty narrow set of assumptions about college and its benefits. And, in fact, it misunderstands the entire point behind the push for debt-free public college.

For instance, a recent editorial in The Washington Post titled “Democrats’ Loose Talk on Student Loans” makes the case that we have more of a nuisance than a crisis on our hands. It argues that bold reforms to address student debt -- including the plan offered up by Hillary Clinton’s campaign -- are overkill and that we should presumably make large investments in other areas (like paying down the national debt). Unfortunately, however, like other news media these days, the Post editorial board appears to have overlooked some crucial facts, many of which have been reported by its own newspaper.

It is absolutely true that some form of postsecondary education and training has become more important, and nearly essential, in today’s workforce. Unemployment rates for college graduates are consistently low, and the average lifetime earnings boost remains high relative to a high school degree. Anyone who argues that college “isn’t worth it” is doing so with anecdotal examples or bad data.

But the reason college is so important is not because earnings for college graduates keep rising. In fact, bachelor’s degree holders earn about the same amount as they did 30 years ago. Earnings for everyone else -- including those with only some college experience -- have gone down rapidly. In effect, a degree has become more a necessary insurance policy than an investment.

This matters because students are now on the hook for financing more and more of their own education than ever before. As a result, graduates are taking on rising levels of debt while contending with stagnant incomes and the rising cost of health care and child care, all while attempting to save for retirement or for their own child’s education.

And they are some of the best-off of the bunch -- they’re able to stretch and make their minimum monthly payments. The true crisis in student loans is among those who take on student debt but do not graduate, many of whom attend high-cost for-profit institutions. Those students are more likely to default or become delinquent on student loans, potentially setting themselves up for a lifetime of economic hardship. But while some argue that what we really have is a “completion crisis,” college completion is no better or worse than it’s been in decades.

The difference now is that, unlike the early 1990s, most students must borrow for a degree. In other words, we have increased the risk of attending college, simultaneously telling students that they must go to college to ensure financial security while dialing up the potential for financial catastrophe if they cannot complete.

Completion and debt are also not mutually exclusive, as some people might have you believe. Students drop out of college for many reasons, but the most common reasons cited are financial -- debt, high cost, the need to attend part-time while juggling a full-time job. That means if we care about increasing college attainment, we must first deal with the financial pressure facing students who either decide not to go or feel they cannot finish. Guaranteeing a debt-free pathway to a degree can lower the risk of not graduating and help more students graduate.

On a macro level, the Post and others have seized on a report from the White House Council of Economic Advisors, the key takeaway of which was that providing students with access to loans allowed many to go to college during the recession, leaving them much better off than had they not attended at all. This report tells us much of what we already know: 1) providing a financing mechanism for students is better than nothing at all, and 2) student loans make up a relatively small share of the overall economy, yet 3) for many students (including the seven million in default), it has become a crisis.

But those arguing that this means student debt is not a major policy problem have the counterfactual all wrong. Essentially, the report is arguing that providing students money to pay tuition bills and thus go to college is a good bet. But this is more true of need-based grant and scholarship aid than it is of loans. Grants have proven time and again to increase access, retention and completion, while research on loans is mixed. Further, grant aid, since it does not need to be paid off, does not carry with it the risk of student loans -- an extremely important difference in an era of stagnant college completion rates and stagnant incomes for graduates.

And unfortunately, the news media often misses that student debt is a problem with a color and class element. We know that black borrowers take on thousands more in debt for the same degree as white students and are more likely to drop out with debt. Four in 10 black borrowers drop out with debt and no degree, including two-thirds of those at four-year for-profit colleges.

Moreover, black and Latino students do not see the same benefits of a degree. Unemployment for black college graduates is the same as white high school graduates, average earnings are lower for black workers than white workers at every level of education, and the average wealth of a black college graduate equals that of a white high school dropout. Read that sentence again.

The fact that half of young black households have student debt, and are more likely to have student debt than young white households, means that even if they are better off going to college than not, white families will continue to have an unearned leg up in the economy. Regardless of the amount they have taken on, borrowers of color are the face of this crisis.

Society benefits from an educated population, which is why we invest in it. It’s why the GI Bill, warts and all, returned $7 for every $1 invested and is considered a massive success. It’s why public investment in a degree reaps tens of thousands of dollars in return.

When we individualize the benefits of college, we miss the forest for the trees. It’s striking that we do this for college and no other forms of education. We do not send 5-year-olds home from kindergarten with $20,000 tuition bills, justifying it by saying that the alternative of not going to school is worse. We do this because it’s in the public interest to send students to school without financial barriers and that the alternative would impose massive barriers based on race and class.

It is, of course, important that we provide relief to those who are most likely to struggle with debt and those who do not see the returns from college. The concept of debt-free college does just that, by asking students to work hard and maybe take on a part-time job, states to chip in like they did for previous generations, and the federal government to treat higher education as a public good again. It is progressive -- asking the wealthy to pay their fair share while eliminating unmet need that cripples the ability of low-income students to pay tuition bills. It reduces risk and expands opportunity.

Those of us concerned with student debt are not saying that students should avoid college, any more than we would complain about high rent and recommend homelessness instead. Instead, we want to remove the financial burden from those most afflicted and ensure that the next generation making college-going decisions doesn’t avoid it because their families can’t afford it.

Mark Huelsman is senior policy analyst at Demos, a nonprofit public policy organization focused on economic equality.

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