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In November, a new study presented at the Association for the Study of Higher Education (ASHE) conference purported that public and private nonprofit colleges respond to increases in state need-based grants by raising tuition and fees and reducing their own institutional grants, ultimately leading to an increase in their net price. That assertion later appeared as a headline in The Chronicle of Higher Education. However, a closer look at the study, conducted by Bradley Curs (University of Missouri, Columbia) and Luciana Dar (University of California, Riverside), casts serious doubt on that conclusion.

Although the study shows a relationship between average state need-based grants1 and colleges’ net price,2 there is little evidence or discussion of causality. In fact, some other variables in the study had stronger relationships with college costs. For example, at private nonprofit colleges, changes in endowment funding predicted net college price more than changes in state need- or merit-based grant aid.

More importantly, the authors’ claim that colleges “may undermine state policies to promote access to higher education for low-income students” simply isn’t supported by the research.3 At the ASHE conference, the paper was criticized for failing to support that claim with evidence of how college decisions are actually made. Additionally, data limitations in the study make it impossible to tell whether increased funding for state need-based grants raised or reduced net college costs for low-income students in particular. This means that even if the average net price for all students increased, lower income students may be paying less than they were before.

Given the difficulty of drawing meaningful conclusions from this study, we should not overlook other evidence that shows how need-based financial aid – most notably the federal Pell Grant – is an effective tool in increasing college access and affordability. Regarding federal grants, Curs and Dar cite the College Board’s most recent set of reports on student aid and college pricing, noting that “the most important indicator of college affordability, average net price paid by students, turned out to be lower in 2009-2010 than five years previous due in part to significant expansions in federal grant aid and tax benefits.”4

1The study defines average state need-based grants as state expenditures on need-based financial aid divided by the entire 18- to 24-year-old population in that state, regardless of whether they are enrolled in college.

2The study defines net price as published tuition and fees minus average institutional grant aid received by full-time freshmen.

3Curs, Bradley and Luciana Dar. 2010. Do Institutions Respond Asymmetrically to Changes in State Need- and Merit-Based Aid? 2010 Association for the Study of Higher Education Annual Meeting. Page 14.

4Curs, Bradley and Luciana Dar. 2010. Do Institutions Respond Asymmetrically to Changes in State Need- and Merit-Based Aid? 2010 Association for the Study of Higher Education Annual Meeting. Page 4.

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CNBC's "Price of Admission: America's College Debt Crisis" The Institute's president Lauren Asher appears in CNBC's original documentary "Price of Admission: America's College Debt Crisis," weighing in on the rising cost of college and student debt in the United States.

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The U.S. Department of Education’s National Center for Education Statistics (NCES) just released new data on six-year college persistence and graduation rates for students who began college in 2003-04. These data provide a rarely seen glimpse of how beginning college students fare within six years of college enrollment, regardless of whether they enroll full- or part-time or whether they change schools. The data present a more complete picture of college outcomes than the annual graduation rates calculated through IPEDS, which look only at first-time, full-time students and only count completions at the first institution attended. For example, these new data show that 39 percent of all beginning college students completed a degree or certificate at their first institution within six years, but another 11 percent obtained a degree or certificate within that time period at a different institution.

Overall, the new data confirm a number of completion trends that researchers have consistently found: full-time students are more likely to persist and/or complete (70 percent) than part-time students (29 percent), as are students who go to college soon after high school (73 percent) compared to those who delay enrollment (51 percent). The data also further document that students who enroll at for-profit colleges have less favorable outcomes than those enrolling at other colleges. Students who started at for-profit colleges in 2003-04 were much less likely to persist and/or complete than those who started at other types of colleges. More than three-quarters of students starting at public and non-profit four-year colleges persist and/or complete (78 percent and 81 percent, respectively), compared to less than half of students who first enrolled at for-profit 4-year colleges (45 percent).

Students starting at public and nonprofit 2-year colleges have roughly comparable persistence and completion rates (54 and 57 percent respectively) as those starting at for-profit 2-year colleges (49 percent), but students from public and nonprofit colleges are more likely to complete credentials with higher value. Twelve percent of students starting at community colleges ended up completing a bachelor’s degree within six years, compared to almost no students (0.5 percent) at for-profit 2-year colleges.1 The majority of college completions at community college are associate’s degrees, while the majority of college completions at for-profit colleges are certificates below the associate’s degree level.2 While this new dataset doesn’t break down certificates by length, other data suggest that about half of the certificates awarded by for-profit colleges are less than one year in length – short-term certificates with questionable value in the workforce.

These low completion and persistence rates, along with completions of little value, are especially significant because almost all students attending for-profit colleges take out student loans – more than students at other types of colleges – and have to repay that debt regardless of whether they complete.3

We will continue to mine these new data over the coming months. The last time this type of data was available was eight years ago, for students who began college in 1995-96.

Note: This blog post was revised on June 15, 2011. The initial December post was based on a published NCES report, and the full survey data on which the NCES report was based has since been released. This allowed for more detailed analysis, which is reflected above.


1 Calculations by The Institute for College Access & Success on data from U.S. Department of Education, National Center for Education Statistics (NCES), 2003-04 Beginning Postsecondary Students Longitudinal Study, Second Follow-up (BPS:04/09).

2 Calculations by The Institute for College Access & Success on data from the U.S. Department of Education, Integrated Postsecondary Education Data System (IPEDS).

3 Calculations by The Institute for College Access & Success on data from the 2008 National Postsecondary Student Aid Study (NPSAS).

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Every year, all recent high school graduates who meet income and GPA criteria, and who apply by the March 2nd deadline, receive an Entitlement Cal Grant to help cover college costs. But those who aren’t recent high school graduates or missed the deadline aren’t so lucky – only a limited number of Competitive Cal Grants is available, no matter how many eligible applicants there are.

The Competitive Cal Grant Program serves an incredibly important role, but unfortunately the number of eligible applicants far exceeds the number of grants available. And the data clearly show that demand for the program is higher than ever. Over the past five years, the number of eligible applicants has nearly doubled – for every new grant available there were 13 qualified applicants in 2010-11, compared to seven qualified applicants per new available grant in 2006-07. Most of the eligible applicants who don’t receive a grant attend community colleges.

Financial aid is critical to college success, and without enough of it students may work too much while trying to achieve their academic goals. Research shows that working more than 15 - 20 hours per week has a detrimental effect on student achievement, yet over half of California’s full-time community college students with financial need work that much or more hurting their chances of success.

After_the_FAFSA

- Laura Szabo-Kubitz Policy Associate The Institute for College Access & Success

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State Mapy College seniors who graduated in 2009 carried an average of $24,000 in student loan debt, up 6% from the previous year. Meanwhile, unemployment for recent college graduates climbed from 5.8% in 2008 to 8.7% in 2009 – the highest annual rate on record for college graduates aged 20 to 24. The Project on Student Debt’s new report, Student Debt and the Class of 2009, and a companion interactive map include average debt levels for the 50 states and District of Columbia and more than 1,000 U.S. colleges and universities.

The report focuses on students who graduate from public and private nonprofit four-year colleges with loans. Students in the District of Columbia and New Hampshire graduated with the highest average debt levels: $30,033 and $29,443, respectively. Those in Utah and Georgia had the lowest average debt: $12,860 and $16,568 respectively. As detailed in the report, actual state averages for student debt are likely higher than these estimates, which are based on data reported voluntarily by public and private nonprofit four-year colleges.

The report also includes lists of high- and low-debt colleges, and new data on how much of the Class of 2009’s debt at graduation is made up of private (nonfederal) loans. Read the report

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The Higher Education Opportunity Act (PL 110-315) requires the Secretary of Education to publish recommendations for improving financial aid award offer forms (or award letters), including a model format for such forms, with the input of a group of stakeholders convened for this purpose. Over the past two years, we have closely reviewed existing proposals for improving award letters and identified several shared principles and goals. We also conducted our own analysis of more than 100 actual award letters from a variety of states and schools. We found considerable variation in both the quantity and quality of information provided to students and their families, and numerous challenges to making easy and meaningful comparisons. Based on this work, we offer the following recommendations.

First and foremost, all award letters should clearly and accurately answer one fundamental question: How much will it really cost me to go to this school? We call this the “bottom-line cost”. It is the amount of money that students and their families are expected to come up with -- both out-of-pocket and through student loans and work-study -- to cover the difference between the school’s full cost of attendance and any grants or scholarships the student receives. This crucial figure allows students and families to compare financial aid offers based on the true cost of attending each college. Specifically, we recommend that all award letters:

  • Prominently display the most important and useful information, including:
    (a) total cost of attendance
    (b) total grant aid
    (c) bottom-line cost: the difference between (a) and (b)
  • Group aid by type:
    (a) grants and other gift aid that does not have to be repaid
    (b) self-help, including loans and work-study
    (c) clearly distinguish federal loans from nonfederal loans
  • Break down the full cost of attendance by category (as applicable to the specific student):
    (a) tuition and fees
    (b) room and board or housing and living expenses
    (c) books and supplies
    (d) transportation and miscellaneous personal expenses
  • Present information in a consumer-friendly way, avoiding jargon and acronyms
  • Explain deadlines and the steps students must take to complete the process

These principles are generally consistent with the legislative requirements for the model award letter format. The legislation requires that certain information be included without restricting the model to only those elements. A model format that focuses on providing key pieces of information in an accessible way has real potential to inform and improve institutional practice. Because our country has many different types of colleges serving many different types of students, an emphasis on the consistency and clarity of core content, rather than a single formal structure or layout, will raise the odds of adoption in the field.

Read the full letter we sent to the U.S. Department of Education earlier this year here.

-Matt Reed Program Director 

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The White House released a Treasury Department report yesterday showing that the American Opportunity Tax Credit (AOTC) helped more than 8 million students and families cover college costs last year, and called on Congress to permanently extend this tax credit, which is currently scheduled to expire at the end of 2010. We agree that the AOTC should be made permanent, but it also needs to be improved. Because of the way the AOTC is currently structured, an estimated one million low- and moderate-income students are not eligible for the AOTC despite having financial need. Most of these students attend community colleges.

Here’s the issue in a nutshell: the AOTC covers up to $2,500 in college tuition, fees, textbooks and supplies, and it is 40% refundable so that students with low incomes can benefit. However, we estimate that one million low- to moderate-income students at low-cost schools are ineligible for the AOTC because their grant aid covers these specific expenses, even though they still have unmet financial need relative to their full cost of college attendance.

By better coordinating the AOTC and Pell Grants, many more students struggling to pay for college would be able to benefit from both the AOTC and Pell. We look forward to working with the Administration and Congress to both extend and integrate the AOTC to help make college more affordable for millions of Americans.

 

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