2017

Unlike its House counterpart, the Senate’s 2018 budget resolution expected to pass tonight or tomorrow does not detail cuts to student loans and Pell Grants. However, it proposes overall spending levels that would require similar if not exactly the same cuts to student aid proposed in the House’s budget resolution that passed in early October.  We’ve previously called attention to these proposals, including the elimination of all mandatory funding for Pell Grants. Today we focus on another of these unnecessary and harmful proposals—an arbitrary maximum income cap that would eliminate Pell Grants for students with household incomes above a fixed threshold, regardless of family size or other financial circumstances that affect their ability to pay for college. Attempting to limit Pell Grant eligibility in this way is not new, but the current political climate in which the proposal is being advanced, combined with recent external encouragement, makes resisting such efforts more urgently critical.  

Arguments for a maximum income cap rely on the unsupported assertion that an increasing share of Pell Grants are going to “middle income” students who don’t have nearly as much financial need as the lowest income students. However, data clearly show that the vast majority of all Pell Grant recipients continue to have family incomes of $40,000 or less, and furthermore that the median family income of Pell Grant recipients (in 2011-12, $26,100 for dependents and $12,700 for independents) has been declining over time.

Additionally, the federal aid eligibility formula rightly recognizes that while income is a central component of a family’s ability to contribute toward the cost of college, income alone is an insufficient determinant of financial need. In addition to income information, the federal financial aid formula also takes into account factors including assets, taxes paid, household size, and the number of family members in college at the same time—factors that directly affect a family’s ability to afford college for each student. For example, of the Pell Grant recipients with family incomes above $40,000, more than two-thirds have families of four or larger, and almost two in five have families of five or larger.* Of the just 10% of Pell Grant recipients with family incomes over $50,000, almost four in five (79%) come from families of four or more, and many have more than one family member in college. While an income of $50,000 may be near the median US income, larger families must use that “middle” income to cover basic needs for more family members, and potentially to cover college costs for more than one family member at the same time.

Establishing an arbitrary maximum income cap would undermine college access and completion goals by forcing students with very high financial need to make up for lost grant aid by working longer hours, taking out more loans, or forgoing college altogether. Pell Grant recipients already face disproportionate debt burdens in attending and completing college: Nearly nine in 10 Pell Grant recipients who graduate from four-year colleges have student loans, and their average debt is $4,750 more than students who did not receive a Pell Grant.

Now is the time to protect and strengthen the Pell Grant for all students with significant financial need, not arbitrarily restrict access to those grants.


* See the Department of Education’s Federal Pell Grant Program 2015-16 End of Year Report, Table 71: Distribution of Federal Pell Grant Recipients by Family Income and Family Size, available for download here: https://www2.ed.gov/finaid/prof/resources/data/pell-data.html

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California Governor Jerry Brown signed legislation today (AB 19 from Assemblymember Santiago) that is widely reported to make community college tuition free for Californians. If fully funded by the legislature, the bill would provide dollars sufficient to cover tuition for first-time, full-time students who do not qualify for the California College Promise Grant (known until last month as the Board of Governors Fee Waiver), which has long fully covered community college tuition for students with demonstrated financial need.

But the bill actually provides much broader and more meaningful flexibility to colleges than is widely understood. The bill does not require colleges to eliminate tuition for these additional students, but instead allocates money to colleges to spend in ways that will increase college access and success and decrease inequities in which students get to and through college. Community colleges “may” use funds to cover tuition for those students who don’t already benefit from the fee waiver, but they don’t have to, and that is a good thing.

To qualify for the new funds, colleges must agree to implement certain student-oriented reforms, such as partnering with local school districts to foster college awareness among students before they leave high school, using evidence-based practices to assess students’ academic readiness, creating guided pathways to help students complete programs and degrees without getting lost, and ensuring students’ access to all the need-based financial resources available to them. 

These details are important, because a meaningful promise to increase college access, affordability, and success for California’s students has to address more than just tuition. College enrollment means little if students don’t know which courses to take or can’t get into them, if they’re stuck in unnecessary developmental coursework, or if they can’t afford their textbooks or transportation to campus. These are very real obstacles that hold students back from succeeding in college even when tuition is free. And the structure of AB 19 allows future funding to be used to help students overcome these hurdles. Here are just some of the important ways that colleges could choose to spend funds appropriated for the bill:

  • For low-income students with children, the lack of affordable childcare can be a tremendous obstacle to persisting in college. Money provided under AB 19 could be used to support childcare centers on campuses, or direct aid to low-income parents to help them cover childcare costs.

  • The new funds could be used to provide transportation passes or textbook vouchers for low-income students, better positioning them to get to campus and pass their courses.

  • More than 20 community colleges in California do not offer federal student loans, in part because they don’t feel they have the resources they need to administer the loan program responsibly. Offering federal loans is a requirement for receiving AB 19 funds; these colleges could use these funds to support loan counseling and other efforts that would enable them to reenter the loan program.

With the lowest community college tuition in the country, and an existing financial aid program that covers tuition for low- and middle-income students, challenges outside of tuition are almost certainly bigger determinants of student success at most community colleges in California. Thankfully, the bill Governor Brown signed today allows colleges the choice for how best to support the enrollment and completion of their students.

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The Free Application for Federal Student Aid (FAFSA) for the 2018-19 school year became available on October 1st, and millions of students can once again use the IRS Data Retrieval Tool (DRT) to electronically transfer their tax information directly into the form. (As we wrote about here, the DRT was taken down due to security concerns in March.) Unfortunately, the DRT will remain unavailable for students applying for aid for the 2017-18 school year, which runs through June 2018.

Due to the security enhancements made to the tool, there are a few important changes that students and families should be aware of while they fill out the FAFSA for the 2018-19 school year:

  • To protect personal data from potential identity theft, the information transferred via the DRT will no longer be visible to the applicant on the online FAFSA or the Student Aid Report (SAR). Instead, those fields will display “Transferred from the IRS”. For 2018-19 applicants, the data will come directly from their 2016 tax return.
  • An applicant will not be able to change the IRS data that is transferred via the DRT, but can contact colleges directly if their financial situation has changed or they or their parents file an amended tax return.
  • The applicant may receive a letter in the mail from the IRS each time the DRT is accessed. They should not be alarmed by the official-looking IRS mail — it is an extra layer of protection!

The DRT is a crucial tool for students and families. It makes the FAFSA process much faster and easier, and reduces the burden of “verification” – a process that requires selected students to submit additional documentation before receiving the financial aid they qualify for. For more about the importance of this tool and why any applicant who can use the DRT should do so, see the National College Access Network’s recent blog post: “The IRS is Ready for FAFSA Season – Are You?

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 authentication requirements that would have made it difficult for low-income students to use it.

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

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Last month, the House Budget Committee released their fiscal year 2018 budget resolution, which sets Congressional funding priorities for the coming fiscal year starting October 1, 2017, and provides a fiscal blueprint for the next decade. This resolution lays out a plan even more extreme than the education cuts proposed by the Trump Administration’s FY18 budget. In addition to including well over $200 billion in cuts to education funding over the next ten years, the resolution also initiates the fast-track reconciliation process that would require at least $20 billion of these education cuts be made this coming year.  

Recent threats to college affordability and access are persistently coming from multiple directions: the FY17 spending agreement already raided $1.3b from Pell Grants, the President’s budget proposed deep cuts to federal education spending, and the House Appropriations Committee separately agreed to raid $3.3 billion from Pell Grants in FY18 at the same time this budget resolution was introduced. However, the House Budget plan is a uniquely devastating attack on federal support for higher education.

The budget resolution’s massive cuts to both the Pell Grant and student loans would magnify the already heavy burden of debt on students, families, and the economy. We’ve summarized the cuts to student loans, and their impact, on Twitter:

The proposed cuts to Pell Grants are likewise both numerous and extreme. This thread lays out each one, and what they mean for students and equity in higher education more generally:

It’s helpful to remember that the House Budget Committee’s framing of the link between federal financial aid and tuition costs — which we can only assume is an attempt to help justify all these deep cuts — is both deceptively narrow and unsupported by research.

The House Budget report furthermore claims that cuts are needed because the Pell Grant’s current funding is unsustainable, but evidence shows that is simply not true.

In reality, steady program costs and existing reserve funds signal an opportunity to make an increased investment in Pell Grants to better support the nation’s students and their career goals. As the FY18 budget process moves forward, we urge Congress to reject these needless cuts to federal financial aid that would take our country down a path of deeper inequity and a weaker economy, and instead heed the call of over 300 colleges and student advocates to strengthen Pell Grants.

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Next month, we’ll be releasing our twelfth annual report on state-by-state and school-by-school levels of student debt among recent college graduates, Student Debt and the Class of 2016.  A lot has changed since we started these analyses.  Initially, our aim was to call attention to rising levels of indebtedness, as the issue of student debt was not yet commanding the attention of the public or policymakers.  Now, student debt is widely recognized as a significant national issue affecting millions of Americans, and our report isn’t simply about raising awareness of rising debt and where debt levels are highest. It’s also about fostering support for policies to help reduce debt and debt burdens for those who need to borrow to pay for college.

Along with new state- and institution-level debt figures, our forthcoming report will include analysis of where private loan borrowing, which is riskier than federal loan borrowing, is most pronounced. We’ll also be taking a close look at colleges where graduates leave with high levels of debt and whether those colleges have chosen to spend substantial financial aid resources on students without financial need. And we’ll be updating our data website www.College-InSight.org so that students, parents, colleges, journalists, and policymakers can see colleges’ debt levels alongside myriad other information about those colleges, such as low-income enrollment, enrollment by race, or graduation rates, and even compare averages across states.

One thing our report will not include this year is a national average for bachelor’s degree completers.  While we receive new school-by-school debt figures annually, and use them to calculate state-level averages, the best available national average comes from a nationally representative federal study that is released every four years by the U.S. Department of Education (the National Postsecondary Student Aid Study, or NPSAS). The next set of NPSAS data will cover students who graduated in the Class of 2016 – the same group of students that will be covered in our report – but the federal data aren’t expected to be available for several more months. 

Why are we planning to wait for NPSAS to publish a national average rather than estimating it based on data that schools voluntarily report to college guide publishers? Because we have consistently found that college-reported figures understate student debt levels. NPSAS provides the most comprehensive and reliable national estimate because it is based on a large, nationally representative sample of students, rather than on voluntarily reported data by colleges that participate in a private survey.  In years when we can make a direct comparison to NPSAS data, the college-reported figures understate average student debt at the national level by as much as eight percent compared to NPSAS, and the share of students borrowing by as much as 13 percent.  For example, the most recent NPSAS showed average debt for the Class of 2012 that was about $2,000 higher than the average based on college-reported data. This could be due to a number of factors, including missing data from many schools and the exclusion of private loans that colleges don’t know about. The same data flaws likely affect the state-level and school-level averages we calculate and publish as well, but we don’t have a better source for state-by-state and institutional figures. For a national average, though, we do, which is why we’re choosing to wait to publish a national average until we have more comprehensive and reliable data. Additionally, using the NPSAS data will allow us to include borrowing and debt levels for for-profit college graduates, which is not possible with available college-level data because almost no for-profit colleges voluntarily report their data to other surveys.

To find out when we release Student Debt and the Class of 2016 and update www.College-InSight.org, sign up for our mailing list

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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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