Financial aid

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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U.S. receives thousands of comments on proposed student debt forgiveness rules

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Department of Education receives thousands of comments on proposed regulations for discharge of federal loans when colleges have defrauded students.

The problem with Trump's proposal on student loans and the liberal arts (essay)

The most significant challenge facing higher education today is our growing economic segregation. College completion rates for those at the lowest socioeconomic rungs continue to lag far behind those of their wealthier peers, not only due to diminished financial resources but also because of a lack of social and cultural capital. Redressing this phenomenon will require offering an education that prepares each and every student for success in work and life, while inspiring them to take seriously their social responsibilities in a society plagued by persistent inequities.

In fact, the board of directors of the Association of American Colleges and Universities, where I serve as president, expanded the organization’s mission in 2012 to embrace both inclusive excellence and liberal education as the foundation for institutional purpose and educational practice. The addition of inclusive excellence as one of AAC&U’s foundational principles reflects the ideal that access to educational excellence for all students -- not just the privileged -- is essential not only for our nation’s economy but, more important, for our democracy. Democracy cannot flourish in a nation divided into haves and have nots.

The equity imperative as an essential component of educating for democracy has been at the forefront of my mind during the past few weeks of nonstop coverage of the Republican and Democratic National Conventions. I have been particularly focused on the potential impact of various higher education policy proposals on AAC&U’s objective of advancing a public-spirited vision of inclusive excellence as inextricably linked to liberal education.

While higher education issues were pretty much absent from the Republican convention speeches, an earlier proposal by Donald Trump, developed by Sam Clovis, his educational policy adviser, to restrict eligibility for student loans in order to make it more difficult for those at “nonelite colleges” to major in the liberal arts previously caught my attention. Indeed, I am convinced that, if enacted, it would risk exacerbating what Thomas Jefferson termed an “unnatural aristocracy,” where only the wealthy gain the benefits of the kind of broad and engaged liberal education that Clovis himself insists is the absolute foundation for success in life.

Trump’s proposal makes at least two serious errors about the value of a college degree in today’s world. It assumes, first, that one’s undergraduate major is all that matters and, second, that only some majors will prepare students for success in the workplace. The evidence from AAC&U’s own surveys of employers, and from many economists, suggests that this is simply not the case. As noted in the title of our 2013 report of employers’ views, “It Takes More Than a Major,” more than 90 percent of employers agree that “a graduate’s ability to think critically, communicate clearly and solve complex problems is more important than their undergraduate major.” Students can develop such cross-cutting skills in a wide variety of chosen disciplines, if the courses are well designed and integrated within robust, problem-based general education programs.

A student’s undergraduate experience, and how well the experience advances critical learning outcomes, is what matters most, with 80 percent of employers agreeing that all students need a strong foundation in the liberal arts and sciences. A liberal education fosters the capacity to write, speak and think with precision, coherence and clarity; to propose, construct and evaluate arguments; and to anticipate and respond to objections. And it offers what employers value the most: the ability to apply knowledge in real-world settings, to engage in ethical decision making and to work in teams on solving unscripted problems with people whose views differ from one’s own. In a globally interdependent yet multicultural world, it is precisely because employers place a particular premium on innovation in response to rapid change that they emphasize students’ experiences with diverse populations, rather than narrow technical training.

The data confirm what we already know: students in all undergraduate majors can and should gain the outcomes of a broad liberal education. Therefore, we need to be vigilant in rebutting accusations of irrelevance and illegitimacy leveled specifically at the liberal arts and sciences and to recognize those charges for what they are: collusion in the growth of an intellectual oligarchy in which only the very richest and most prestigious institutions preserve access to the liberal arts traditions. Trump’s ostensible presumption that college is only about workforce training is dangerous to our democratic future.

Of course, it is unclear whether a proposal to use student loans to steer students away from certain majors could be implemented, given the challenges of predicting career trajectories based on majors and types of institutions. (After all, I was a philosophy major who began at a community college under funds from the Comprehensive Employment Training Act, Pell Grants and Perkins Loans.)

Still, in order to restore public trust in higher education and destabilize the cultural attitudes at the basis of Trump’s policy proposal, we need to demonstrate in a more compelling way to those outside of the academy, Democrats and Republicans alike, the extent to which we actually are teaching students 21st-century skills, preparing them to solve our most pressing global, national and local problems within the context of the workforce, not apart from it. To do so, our institutions of higher education must come together to engage in an honest assessment of our effectiveness and undertake a collaborative exchange of best practices. Our shared commitments to equity, democratic and economic vitality, and inclusive excellence demand nothing less.

Lynn Pasquerella is president of the Association of American Colleges and Universities.

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Amazon-Wells Fargo partnership on private student loans troubles consumer advocates

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The online retail giant's promise to provide "discounted" student loans through a new partnership with Wells Fargo elicits concerns from consumer advocates about possible duping of students.

Education Dept. spells out new student borrower protections

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Education Department's 56-page memo details new guidelines for student loan servicers.

How college is helping to create a class divide in America (essay)

We usually think of college as providing a boost up the class ladder. That is what it did for a generation or more of Americans, particularly from the 1950s through the 1970s. But since around 1980, college has actually calcified class in America.

That’s one upshot of Tamara Draut’s new book, Sleeping Giant: How the New Working Class Will Transform America (Doubleday, 2016). She explains how the central divide between the working class and the middle class now is college. Not that things are entirely rosy for those with bachelor’s degrees, but those without degrees have experienced a more severe pinch, with proportionately shrinking wages, degraded conditions, few job protections and general insecurity.

Moreover, contrary to college standing as an open thoroughfare for Americans wanting to rise, it has become a gated toll road primarily available to those from middle-class and upper-class families. Those who have gone to college beget those who go to college: if your parents didn’t go to college, you are much more likely to work at or near minimum wage. Only about 9 percent of those from the lowest quartile of wealth complete college degrees, whereas about three-quarters from the top quartile do.

A key impediment has been the exponential rise of tuition prices since the 1970s, at several times the rate of inflation, correlated with the reduction of public support, which in turn has brought the steep increase in student debt and student work hours.

This has produced what Draut called in an earlier essay “The Growing College Gap,” in Inequality Matters: The Growing Economic Divide in America and Its Poisonous Consequences. We usually think that we have seen great progress if not solved the problem of racial inequality, but the enrollment gap between white students and black students was about 5 percent in 1970, whereas it had more than doubled, to 11 percent, in 2000. Similarly, Hispanic students have seen the gap widen from 5 to 13 percent. Affirmative action gets headlines, but we have actually gone backward in attaining racial equality in higher education.

One of Draut’s key insights is that the class divide is not just a matter of money but also one of culture. As she remarks, “When once a steelworker and an accountant could live on the same block, drive the same car, vacation at the same place and eat at the same restaurants, over the course of the 1980s, 1990s and the first decade of the 2000s” those from higher classes have little substantive contact with those from the working class except when they ring up their groceries or take care of their elderly relatives.

That has precipitated a public and political blindness to the new working class, even though it constitutes 60 percent of Americans. Rather than a silent majority, it is an invisible majority.

The cultural divide has two daunting consequences. Because those who work in journalism and other news media come from the upper, college-degreed cohort -- as Draut adduces, in 1971 only about half of journalists had B.A.s, whereas 92 percent do now -- they have little direct sense of the working class. Nor is there a strong interest to represent it in the main news organs, like The New York Times or The Washington Post, whose audiences are largely college educated.

In Draut’s analysis, after the 2008 crash, about half of the news focused on the banks, a third on the federal response, a fifth on businesses and only a smattering on working-class people who might have lost jobs or their houses. Rather, the Post ran a feature on a banker getting by on a reduction of her salary -- to $300,000 a year. Hard times indeed.

Similarly, those who work as congressional staffers come almost entirely from college backgrounds. Of high-level staffers, about half “attended private colleges for their undergraduate degree, including 10 percent who went to an Ivy League school.” They are typically the ones who get the internships inside the D.C. beltway, as well as can afford to carry the expenses of internships.

That has effectively shut the working class out of public representation or political power, even though it constitutes a majority. For Draut, the key is to change the narrative, popping what she calls the “class bubble.” One corrective is simply that we are not all middle class: most Americans are working class.

In addition, Sleeping Giant shows that the present working class no longer fits the iconic image of the construction worker in hard hat who had a union to speak for him. Instead, it is largely female, about half Latino and African-American, usually nonunionized, and struggling to make ends meet at or near minimum wage while laboring in home health care, fast food and retail, which have gained the bulk of new jobs.

Since college is a key class marker, it’s easy to blame higher education itself as the problem. But for Draut the problem lies in the policies that have drained equal opportunity from it and segregated it, and in turn she advocates policies to enhance public higher education, notably reducing tuition fees and eliminating student debt. In this, she differs from the diagnosis of John Marsh, who argues in Class Dismissed: Why We Cannot Teach or Learn Our Way Out of Inequality (Monthly Review, 2011), that college has been overemphasized and offers a false solution, so we should pare back college attendance.

Draut herself was a working-class beneficiary of higher education: the daughter of a steelworker, she went to a public university near home in Ohio, which sent her on her way to a job in advertising, then with Planned Parenthood, and since 2001 with Demos, a progressive think tank, where she started as a researcher and is currently a vice president.

Demos was founded in the 1990s as a counterweight to the many conservative think tanks, and it has produced reports such as “The Great Cost Shift,” about the draining of public support for higher education, and “The College Compact,” about enhancing public support. Draut first worked on studies of credit-card and student loan debt, which spurred her earlier exposé, Strapped: Why America’s 20- and 30-Somethings Can’t Get Ahead (Doubleday, 2006).

She learned a lesson from the battle over credit cards. In seeking reform, as she recalled in an interview with me, “there’s a beltway mentality, ‘Well, that’s never going to happen; we’re never going to regulate the credit-card companies.’” But she proudly attended the 2009 signing of the Credit Card Act, which regulates rates and fees and has helped those in debt. As she quipped, “I got the last laugh on that one,” and she sees the same possibility for higher education: “Debt-free college is now a real idea and part of the political debate.”

That’s one salutary reminder we can take from Draut: it might be a long road, but good ideas that seem unrealistic at one moment can win their day. In academic scholarship, we typically focus on conceptual problems, commenting on one and moving onto the next, and in fact we are continually looking for what’s new or next. But in politics, change sometimes seems glacial, and one has to be dogged. It’s useful to keep in mind that massive student debt is only a recent development, arising since the 1980s, and 10 years ago, the idea of abolishing it or enacting free public higher education were considered pie-in-the-sky proposals. But they’re on the agenda now, and we have to keep working to accrue the data, build the narratives and devise policies that aim toward more equality.

Jeffrey J. Williams is a professor of English and of literary and cultural studies at Carnegie Mellon University. His most recent book is How to Be an Intellectual: Essays on Criticism, Culture, and the University (Fordham University Press, 2014).

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Provost change provokes debate at Temple U

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Temple makes a sudden change after $22 million in overspending on financial aid. But faculty members object to what they see as a lack of information and disrespect for an academic leader many respect.


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