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In March, we showed what it would mean for students if the House Republicans acted on their proposal to eliminate all mandatory Pell Grant funding. Republicans on the House Budget Committee are expected to include this extreme cut in their FY18 Budget this week. In response, we’ve updated our analyses with the latest data from the Department of Education and Congressional Budget Office (CBO). New data show the same grim story: eliminating mandatory funding threatens the existence of the Pell Grant as we know it, putting higher education out of reach for millions of Americans who rely on the grant to attend and complete college.

It’s worth repeating that mandatory funding currently pays for $1,060 of the current maximum Pell Grant (almost one fifth of the $5,920 grant in school year 2017-18), which already covers the lowest share of the cost of attending college in over 40 years.  

Eliminating mandatory funding would cut $78.5 billion from Pell Grants over ten years. For FY18 alone, mandatory funding provides $7.5 billion for Pell Grants, which is equivalent to the average Pell Grant award for two million students—over one in four students projected to receive Pell Grants in 2018. This is the same number of Pell Grant recipients attending college in Texas, Florida, Illinois, Pennsylvania, Wisconsin and Ohio combined.

The May FY17 spending agreement already cut $1.3 billion from Pell Grants, and the House FY18 Labor, Health and Human Services, and Education appropriations bill now under consideration includes an additional $3.3 billion cut (a move echoing the President’s own request in the Administration’s FY18 Budget Proposal). Eliminating mandatory funding on top of cutting $4.6 billion from Pell Grants would undermine the program’s current solid fiscal footing, abruptly creating a funding gap that would increase each year and require cuts to grant amounts, recipients or both.

If Congress cuts $3.3 billion from Pell Grants and eliminates the $7.5 billion in mandatory funding for FY18, simultaneous cuts to grant amounts and/or eligibility would be necessary to avoid a $2.9 billion funding gap that would immediately appear. Even if Congress rejects the $3.3 billion cut, eliminating mandatory funds in FY18 would lead to a $7 billion Pell Grant funding gap the next year (FY19). To close that gap, Congress would have to eliminate grants entirely for 1.9 million students or cut all students’ grants by an average of over $900, or both eliminate and cut grant amounts.

This brazen plan to create a funding crisis that could only be resolved by making severe cuts to Pell Grants is a clear assault on low-income students’ access to higher education. Rather than put college and a career further out of reach for millions of Americans, Congress should be safeguarding and investing in Pell Grants.


Graphics provided by Young Invincibles

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The House FY2018 budget resolution is expected to advance the President’s proposal to eliminate subsidized Stafford loans that go to students with financial need. With subsidized loans, interest does not accrue while students are in school, for six months after they leave school, during active-duty military service, and for up to three years of unemployment or other economic hardship. The billions of dollars in savings from ending subsidized loans for new students would not be used to make college more affordable. Instead, this proposed rollback would be exacerbated by other dramatic cuts to programs that help students afford college and repay their loans.

Eliminating subsidized loans would increase the cost of college by thousands of dollars for many of the six million undergraduates who receive those loans each year. The Congressional Budget Office (CBO) recently estimated that eliminating subsidized loans would add $23.4 billion in costs to students over 10 years.

The charts below illustrate how much more a student would have to pay if subsidized loans are eliminated and the student borrows the same amount in unsubsidized loans instead. The calculations assume the student starts school in 2018-19, borrows the maximum subsidized student loan amount ($23,000), and graduates in five years.

Using the most recent CBO interest rate projections (from June 2017), eliminating subsidized loans would cause this student to enter repayment with $3,650 in additional debt due to accrued interest charges. As a result, she would end up paying $4,700 (16%) more over 10 years and $6,600 (16%) more if she repaid over 25 years.

The added costs to students would be even higher if interest rates increase faster than current projections. If the undergraduate Stafford loan interest rate hits the statutory cap of 8.25%, eliminating subsidized loans would cause this student to enter repayment with $5,700 in additional debt due to accrued interest charges. As a result, she would end up paying $8,350 (25%) more over 10 years and $13,450 (25%) more if she repaid over 25 years.

At a time where there is growing public concern about rising student debt and broad consensus on the importance of higher education and postsecondary training to the US economy, we need to be doing more, not less, to keep college within reach for all Americans.  For more information on TICAS’ proposals to streamline and improve federal student loans, see our summary of recommendations and our recent report, Make it Simple, Keep it Fair: A Proposal to Streamline and Improve Income-Driven Repayment of Federal Student Loans.

Note: This borrower would only be eligible for a 25-year repayment plan if she borrowed unsubsidized Stafford loans in addition to subsidized Stafford loans and entered repayment with more than $30,000 in debt. The most recent data show that almost four in five (79%) undergraduates with subsidized loans also have unsubsidized loans.

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The Institute for College Access & Success and ACCT, in collaboration with the California Community Colleges Chancellor's Office examine the effect financial aid and assessment policy have on graduation and transfer rates.

This post originally appeared on the Association of Community College Trustees (ACCT) blog

By Debbie Cochrane, The Institute for College Access & Success (TICAS)

Earlier this year, The Institute for College Access & Success (TICAS) and ACCT, in collaboration with the California Community Colleges Chancellor’s Office (CCCCO), set out to explore community college students’ rates of transfer and graduation, and how those rates differed by students’ financial status (both their own ability to pay for college and the amount of financial aid they receive).  This effort was an attempt to expand upon the CCCCO’s Student Success Scorecard efforts, which track first-time students’ success at reaching particular academic milestones but have not included factors related to students’ financial status.  In line with other work on student success and financial status, we found that students with less ability to pay graduated and transferred at lower rates than those with more financial cushion, but that financial aid helped to close the gap.

Our findings also shed interesting light on the importance of college assessment policy, and its particular significance to financial aid recipients. Three out of four California community college students in our sample attempted math or English coursework below transfer level at a CCC, signaling that they had been assessed as being unprepared for college-level coursework. The same is true for 81 percent of students who received a financial aid package that included a institutional fee waiver, Pell Grant, and state Cal Grant, which is particularly surprising given the academic merit standards students must meet to be eligible for a Cal Grant. Eligibility for Cal Grants, the primary state grant aid program in California, requires having a minimum high school grade point average (GPA) of 2.0. Most students’ grades far exceed this threshold: data from the California Student Aid Commission show that the average Cal Grant recipient at a community college has a GPA of 3.0.

The fact that developmental coursework was so prevalent among a group of students who have demonstrated academic merit raises questions. Is the alignment between high school and college curricula so disjointed that students who leave high school with a B average are truly not capable of succeeding in college-level work? Or is it the colleges’ assessment of students’ capabilities that is the issue, such that college-ready students are being placed into developmental coursework unnecessarily?

Indeed, research suggests that many students placed into developmental coursework could succeed in college-level courses, rendering the developmental coursework unnecessary. Importantly, students who take developmental coursework have lower odds of success, and those who do succeed take more time to graduate. In other words, overly aggressive placement of students into developmental coursework isn’t simply duplicative; it has the potential to derail students from reaching their academic goals.

These are particularly problematic issues for financial aid recipients, given strict limits on the number of years students can receive federal Pell Grants (six years) or state Cal Grants (four years).  And it isn’t just grant aid: in our study, 91 percent of students receiving an aid package including a federal student loan had taken developmental coursework. Given these students’ need to repay loans after they leave college, it is particularly important that unnecessary barriers, such as overly aggressive placement into developmental coursework, are removed to increase students’ odds of graduating or transferring.

Within California, developmental placement policies have undergone reforms in recent years, but more remains to be done. A bill currently working its way through the Legislature, AB 705 (Irwin), would require that colleges consider high school performance when determining whether students need remediation. However, whether driven by state policy or not, college leaders must ensure that their own institutional policies do not place students into developmental coursework unnecessarily, causing undue hardship for their most vulnerable students. TICAS and ACCT strongly encourage colleges to use multiple measures – including high school transcripts and test scores – to assess students in order to reduce the likelihood of placing students into developmental coursework unnecessarily. Colleges can also ensure that students receive the targeted support and counseling they need after being placed into developmental coursework, so they understand their progression out of remediation and into – and through – a program of study. These steps will help all students to succeed, and particularly the financial aid recipients for whom the stakes are particularly high.

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After a budget season with unprecedented focus on financial aid, the 2017-18 California State budget agreement now on Governor Brown’s desk includes several important policy gains.

Most critically, the budget includes welcome and long-overdue increases to financial aid for full-time community college students to help cover total college costs that can exceed $20,000 a year.  Due to an increase to the Full-Time Student Success Grant (FTSSG), a program championed by the Assembly two years ago, Cal Grant recipients taking 12 or more credits per term will see an increase of up to $400 per year (for a maximum award size of $1,000). Since its creation, the FTSSG program has received broad support with even the Brown Administration proposing to increase student eligibility and the maximum award size.  And the creation of a new financial aid program, the Community College Completion Grant championed by Senate President pro Tem Kevin de León, will provide eligible students who take additional credits (at least 30 in total per year) during the fall, spring, and/or summer terms with up to $2,000 more per year. While both of these programs are only available to students who receive Cal Grant awards, and hundreds of thousands of community college students who are eligible for Cal Grants are turned away each year due to insufficient funding, these increases add up to substantial new aid availability for those who can access it.  The additional aid will enable students to spend more time in class and studying, rather than working to cover total college costs, increasing their odds of graduating and graduating faster. (Critically, the budget also includes $150 million to support community colleges’ development of ‘guided pathways,’ so that students who want to take 15 or more credits per term can be assured that the specific credits they need for their program are available to them.) 

The budget also includes other key financial aid improvements: 

  • As proposed by the Brown Administration, the California Student Aid Commission will get greater authority to make competitive Cal Grant award offers to students at the time students are making decisions about whether and where to enroll in college. There are only 25,750 competitive Cal Grants (i.e., grants for students who are not recent high school graduates) available each year for more than 300,000 eligible applicants, and the need to stay under that strict cap leads to long delays before many of the awards are received by students. The budget agreement will allow CSAC to make more offers early on, without risking exceeding their authority.
  • Community college students who receive Cal Grant C awards (designated for students in certain career technical programs) will see their grant double, from $547 to $1,094.
  • The maximum Cal Grant B access award, which helps low-income students cover non-tuition college costs, will see a small increase (thanks to 2014 legislation, SB 174 and SB 798, from Senator De León), from $1,670 to $1,672.

In addition to these changes, the budget once again postpones the scheduled reduction to the Cal Grant received by students at private WASC-accredited colleges, and maintains the Middle Class Scholarship program that Governor Brown had proposed phasing out.

We are grateful for the Legislature’s actions to strengthen financial aid and enable more California community college students – whose out-of-pocket costs, despite low tuition and fees, can exceed those of their peers at public four-year schools – to attend full time.  Yet even while recognizing the importance of these budget gains, in a recent op-ed Assembly Speaker Anthony Rendon acknowledged “we haven’t done everything we can for students in need.” We concur, and look forward to continuing to work together with the Legislature and Administration to bring college costs within reach for low-income Californians. 

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The gainful employment rule data the Education Department released in January make clear that some federally funded career education programs are consistently leaving students worse off – drowning in debt they cannot repay – while many other programs are not. We’ve previously blogged about how bad some of these programs are.

We just put together examples of schools located near each other offering the same program with very different results. The examples illustrate that location and type of program don’t explain abysmal outcomes. They also underscore the continued need for the gainful employment regulation to provide key cost and outcome information to students, warn students about failing programs that may lose eligibility for federal funding, and ensure that failing and zone programs improve.    

Amazingly, the for-profit college industry continues to defend programs that failed the gainful employment rule’s modest standards. The cosmetology trade association, for example, recently argued in federal court that a cosmetology program with a 14% job placement rate and a 100% borrowing rate should continue to receive unlimited federal funding. Why should taxpayers keep subsidizing such a program?

The gainful employment rule is based on the premise that students deserve basic information when deciding where to enroll, and that taxpayers should not subsidize programs that consistently underperform and leave students worse off than when they enrolled. This is just common sense, which is why so many student, veterans, consumer, civil rights, and other organizations, as well as state attorneys general, support the rule and oppose any effort to delay, repeal, or weaken it.

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State-by-state analysis looks at the share of family income needed to cover net price of public two- and four-year colleges, as well as number of work hours needed for the lowest income students.

This post originally appeared on the Association of Community College Trustees (ACCT) blog

By Lindsay Ahlman and Debbie Cochrane, The Institute for College Access & Success (TICAS)

Students, schools, and policymakers are increasingly concerned about college affordability, and with good reason. Yet many conversations about college affordability focus on dollar figures of the price of college, as opposed to putting that cost into context to determine whether that price is affordable. Lower income students generally face lower net prices, but even a very low cost might be unrealistic for a family with extremely limited resources. Looking at both the cost and available family resources provides a useful picture of how manageable different prices are for families with different resources.

In a new research brief, College Costs in Context: A State-by-State Look at College (Un)Affordability, we looked at the share of family income that is needed to cover that net price to explore the degree to which net prices[1] reported by colleges are manageable for families. Using a state-by-state analysis of public four- and two-year colleges, we find striking inequities in both two- and four-year public college affordability both within and across states, with the lowest income students facing the most extreme and unrealistic financial expectations.

With lower tuition costs than four-year public colleges, community colleges are frequently assumed to be the most affordable college option for students. Yet our analysis shows that community colleges are far from affordable for many students: students from families earning $30,000 or less must spend 50 percent of their total income to cover the net price of public two-year colleges. As shown below, this is a far greater burden than is placed on any other group.

The share of income required to pay for college costs varies by state. At community colleges, the lowest income students in New Hampshire would need to spend 120 percent of their income to cover net costs, while those in Michigan would need to spend 35 percent. In 31 states, the net price of community colleges is more than half of the total family income for the lowest income students.

The data presented here underscore the difficult choices many students must make to attend and complete college, including potentially working long hours while enrolled full time and compromising their odds of graduating as a result. When we looked at the number of hours the lowest income students would need to work to cover the net price of community colleges, we find that students in 28 states would need to work more than 20 hours per week at their state’s minimum wage to earn enough to cover their net price. In New Hampshire, community college students from low income families would need to work more than 50 hours per week.

The inequitable burden of college costs on the lowest income students not only contributes to wide college enrollment and completion gaps by income, but also disproportionately affects underrepresented minority students. Among undergraduates, more than half of Latino students (52%), about three in five Native-American students (59%), and almost two-thirds of African-American students (64%) have family incomes under $30,000.

These are sobering findings, documenting an affordability problem that demands attention and underscoring the need to focus resources where the problems are most severe. TICAS recommends strengthening Pell Grants, which currently cover the smallest share of college cost in more than 40 years, improving and increasing state grant aid, and promoting state investment in higher education through a new federal/state partnership aimed at maintaining or lowering the net price of public college for low- and moderate-income students.

Read the full brief, and also download a sortable spreadsheet with state and sector level data: http://ticas.org/content/pub/college-costs-context


[1] Net price is the total cost of college – including not only tuition but also textbooks, transportation, and living expenses – minus any state, federal, and institutional grants or scholarships the student receives.

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For the first time since it was taken down due to security concerns in March, millions of student loan borrowers can once again use the IRS Data Retrieval Tool (DRT) to electronically transfer their tax information into the online application for income-driven repayment (IDR) plans. Using the DRT, borrowers will be able to apply for IDR and update their income online at StudentLoans.gov, without needing to separately provide their tax returns.

We thank the Department of Education and IRS for working together to restore secure access to this critical tool, and for doing so without creating burdensome new requirements that would make it difficult for low-income students to use the DRT. We look forward to a full restoration of the DRT by October 1st, when it will become available for students completing the FAFSA to qualify for financial aid in the 2018-19 year.

For more information about the DRT outage, see our previous blog posts:

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The Washington Post reports that the Trump Administration’s FY2018 budget proposal would eliminate subsidized Stafford loans that go to students with financial need. With subsidized loans, interest does not accrue while students are in school, for six months after they leave school, during active-duty military service, and for up to three years of unemployment or other economic hardship. The billions of dollars in savings from ending subsidized loans for new students would not be used to make college more affordable. Instead, this proposed rollback would be exacerbated by other dramatic cuts to programs that help students afford college and repay their loans.

Eliminating subsidized loans would increase the cost of college by thousands of dollars for many of the six million undergraduates who receive those loans each year. The Congressional Budget Office recently estimated that eliminating subsidized loans would add $26.8 billion in costs to students over 10 years.

The charts below illustrate how much more a student would have to pay if subsidized loans are eliminated and the student borrows the same amount in unsubsidized loans instead. The calculations assume the student starts school in 2018-19, borrows the maximum subsidized student loan amount ($23,000), and graduates in five years.

Using current CBO interest rate projections, eliminating subsidized loans would cause this student to enter repayment with $3,400 in additional debt due to accrued interest charges. As a result, she would end up paying $4,350 (15%) more over 10 years and $5,950 (15%) more if she repaid over 25 years.

The added costs to students would be even higher if interest rates increase faster than current projections. If the undergraduate Stafford loan interest rate hits the statutory cap of 8.25%, eliminating subsidized loans would cause this student to enter repayment with $5,700 in additional debt due to accrued interest charges. As a result, she would end up paying $8,350 (25%) more over 10 years and $13,450 (25%) more if she repaid over 25 years.

At a time where there is growing public concern about rising student debt and broad consensus on the importance of higher education and postsecondary training to the US economy, we need to be doing more, not less, to keep college within reach for all Americans.  For more information on TICAS’ proposals to streamline and improve federal student loans, see our summary of recommendations and our new report, Make it Simple, Keep it Fair: A Proposal to Streamline and Improve Income-Driven Repayment of Federal Student Loans.


Note: This borrower would only be eligible for a 25-year repayment plan if she borrowed unsubsidized Stafford loans in addition to subsidized Stafford loans and entered repayment with more than $30,000 in debt. The most recent data show that almost four in five (79%) undergraduates with subsidized loans also have unsubsidized loans. 

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Statement of Jessica Thompson, policy and research director, TICAS:

"Today, Representatives Susan Davis (D-CA) and Bobby C. Scott (D-VA), and Senators Mazie Hirono (D-HI) and Patty Murray (D-WA), introduced the Pell Grant Preservation and Expansion Act. The bill would increase college affordability and access by securing, improving and expanding the Pell Grant, which is the federal government’s most effective investment in higher education. Congress just cut $1.3B from Pell Grants for FY2017, and the President and House Republicans are proposing to cut billions more in FY2018. In stark contrast, these legislators are providing the leadership we need for students and families struggling to pay for college. 

"Each year, more than 7.5 million students rely on Pell Grants to afford college. Yet, the current maximum grant covers the lowest share of public college costs in over 40 years, and will lose its annual inflation adjustment after this year. Boosting the purchasing power of the grant and permanently indexing it to inflation to prevent additional erosion of its value are investments we know are critical to increasing college access and success. The bill includes these and other important improvements that TICAS has called for, including extending the lifetime eligibility limit for Pell Grants, resetting eligibility for students defrauded by their schools, and making Pell Grants a mandatory program to guarantee sufficient annual funding and eliminate any uncertainty for students.

"We thank Representatives Davis and Scott, and Senators Hirono and Murray for their longstanding and continued leadership on college affordability, and Pell Grants specifically. Pell Grant recipients are already more than twice as likely to borrow to attend and complete college, and leave school with significantly more debt than their higher income peers. As college costs and student debt continue to rise, we urge Congress and the Administration to work together on making the Pell Grant program, the cornerstone of federal financial aid, work even better for America’s students and the American economy rather than debating how to cut it." 

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This week, the Department of Education shared new information about its plans to restore access to the IRS Data Retrieval Tool (DRT), a tool that helps millions of students and borrowers easily transfer their tax information into the online FAFSA and the online application for income-driven repayment (IDR) plans for federal student loans. The tool has been unavailable for more than two months after being taken offline due to security concerns. Facing pressure from governors, legislators, colleges, financial aid professionals, and student advocates, the Department has committed to getting the tool secured and back online by the end of this month for the over four million borrowers who use it for IDR. However, the Department and IRS will not have the DRT back up for FAFSA use until the next application year starting in October, an extended outage that will continue to affect millions of students.

The DRT will be restored for student loan borrowers by the end of May. We thank the Department for committing to this timeline, since new data show that about 4.5 million borrowers use the DRT to apply for IDR plans or annually update their income information in those plans. As detailed in our earlier blog post and a recent MarketWatch piece, the DRT outage is more than just an inconvenience for borrowers. While the DRT is down, borrowers with taxable income cannot complete the process of applying for IDR or updating their income online at StudentLoans.gov. Borrowers who miss annual deadlines to update their income information can face unaffordable spikes in monthly payment amounts that increase their risk of delinquency and default, as well as interest capitalization that can add substantial costs.

Students still applying for financial aid for the upcoming 2017-18 year will not have access to the DRT at all. This extended outage will impact millions of students, as more than half of all aid applicants (more than 11 million students) applied for aid on or after April 1 in recent years. Many of these applicants used the DRT, and a greater share were expected to use it in 2017-18 due to recent improvements to the FAFSA timeline.  

For students applying for federal financial aid for the 2018-19 year, the Department and IRS are on track to restore access to the DRT by the time the FAFSA opens on October 1, and to do so in a way that protects access for low-income students. This is encouraging news, particularly since new data show that roughly half of all FAFSA filers use the DRT to transfer tax information from the IRS. As discussed in our earlier blog post, the DRT outage is causing millions of students to face a more complicated, daunting, and time-consuming process to apply for aid. Delays in that process can prevent students from getting their financial aid in time to enroll in college.

Given the importance of the DRT in helping students access financial aid and manage their loan payments, we echo the National College Access Network’s statement that the DRT outage “is an emergency, not a mere inconvenience.” It is essential to quickly restore the DRT in a way that balances student access and data security.

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