Uncategorized

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.

Posted in

| Tagged

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

Posted in

| Tagged

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 

Posted in

| Tagged

Trophy U.S. News & World Report has chosen two of the Institute for College Access & Success' projects College InSight and the Project on Student Debt for their top ten list of the best college websites!

See the entire list here

Posted in

| Tagged

Posted in

| Tagged

CIS Screenshot For the third year in a row, Governor Schwarzenegger has proposed cutting a key component of the Cal Grant program. This is a cut that students and our state cannot afford. Just two days ago the governor said in his ‘State of the State’ speech, ‘We can no longer afford to cut higher education.’ Yet he now proposes to cut a critical source of higher education funding for high achieving, low-income students already struggling to keep college within reach.

The Governor would suspend all new competitive Cal Grants, which go to students who apply after the March 2 deadline, and/or graduated from high school more than a year before applying for a grant. There are already a limited number of these grants available, and demand for them jumped 42 percent in 2009-10, when 245,400 qualified applicants vied for just 22,500 competitive Cal Grants.

The San Jose Mercury News covered this issue in their weekend edition.

Read the article here.

Read the Institute's statement here.

Posted in

| Tagged

As July 1 (the first day the Income-Based Repayment option becomes available for borrowers) draws closer, coverage of IBR and Public Service Loan Forgiveness is ramping up.

The Institute's acting president Lauren Asher was featured in a recent USA Today article focused on IBR. An excerpt:

Starting July 1, borrowers will have a new option: a repayment program that caps monthly payments based on income. It targets borrowers who would have a hard time paying basic living expenses if they had to make standard monthly payments on their loans, says Lauren Asher, acting president for the Project on Student Debt. Under the income-based repayment program, such borrowers will never have to spend more than 15% of their discretionary income — an amount based on federal poverty guidelines — on student loan payments. Most who qualify for the program won't spend more than 10% of their income on student loans. Those whose income falls below 150% of the poverty level (see box) won't be required to make any payments, Asher says.

Read the entire article here

Additional Coverage

For more information about Income-Based Repayment visit IBRinfo.org

Posted in

| Tagged

Statement of Deborah Frankle Cochrane Program Director, The Institute for College Access & Success

After months of arduous budget negotiations, the California legislature today passed an 18-month budget that maintains the state’s investment in student aid. This budget protects Cal Grants from attempts to cut both eligibility and grant levels, which would have had a devastating impact on California students. Cal Grants are the state’s primary source of financial aid and helped 300,000 students pay for college last year. This move comes just days after President Obama signed the federal economic stimulus package into law, which includes the largest Pell Grant increase in the program’s history. Together, these commitments to college affordability will help Californians get the education and skills they need to help our state stay economically competitive in these difficult times.

Posted in

| Tagged

The Rethinking Student Aid study group released "Fulfilling the Commitment: Recommendations for Reforming Federal Student Aid," a report that evaluates the current federal student aid system, and develops a new strategy for financial aid programs. Members of the media have asked the Institute for College Access & Success' President Robert Shireman for his thoughts on the recommendations, and here's what he has to say:

There are enough specifics that the proposals could have legs. Too often these types of commissions produce unrealistic wish lists and vague exhortations. In contrast, this group took a more hard-headed analytical approach. They came up with some creative ideas and made some tough choices. The proposals are clear enough that policymakers could actually follow up. Of course, being specific and not asking for the moon also means that there will be dissent. The proposals will prompt the type of discussion that can yield actual improvements in college access and success. The savings proposal is the newest and most interesting. Telling a low-income family that some money has been put aside in an account sends a much stronger signal than telling them 'there's a program you can apply to.' Money in the bank, when the child is in middle school and still has high aspirations, will help parents and students to plan and prepare both financially and academically. In principle it makes a lot of sense to have just one loan program. But that subsidy shouldn't just be taken away. It should benefit students with improved help in repayment and more grant aid. The idea of increased loan limits needs to be approached carefully. We need to pay attention to how colleges may respond, and also how parents respond. It would be best to encourage parents to take on some of the burden before students take on more. An incentive fund for states makes a lot of sense, but it's been difficult for the idea to get traction. It's not very sexy. But given the huge state role in funding higher education, it's probably one of the most important things the federal government could do, if done creatively.

Posted in

| Tagged

Robert Shireman, the founder and president of The Institute, has been guest-blogging for Higher Ed Watch, a higher education news and policy initiative from the New America Foundation. Here's an excerpt from "A Questionable Arrangement":

An internal strategy document from Sallie Mae says a whole lot about how the company makes its money from taxpayers, from students, and then again from taxpayers. On Tuesday, Higher Ed Watch described the subsidies on federal loans that remain Sallie Mae’s priority #1 to keep, while yesterday’s item explained why the company is intent on maintaining the special status that private student loans have in bankruptcy (priority #2).

Next on Sallie Mae’s list is to protect its debt management operations, "especially Guarantor Services." In two recent articles (here and here), Paul Basken of The Chronicle of Higher Education revealed how Sallie Mae employees in one division of the company effectively run a student-loan guarantee agency that is in charge of monitoring the activities of other divisions of the company, while both sides aim to maximize profits.

That questionable arrangement came into existence in 2000 when federal and state regulators turned a blind eye to Sallie Mae’s purchase of virtually all the assets of a non-profit guarantor known as USA Funds. The deal left in place a non-profit shell that contracts with Sallie Mae, whose employees now do the federal oversight work for which USA Funds is responsible. Last year, federal money passing through USA Funds accounted for 32 percent of the revenue in Sallie Mae’s debt management operations division.

Posted in

| Tagged

Pages

Subscribe to RSS - Uncategorized