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Higher Ed Watch’s Top Ten Posts of 2012

December 19, 2012

Before we take our two-week winter publishing break, we thought we’d revive an old tradition and highlight our most popular posts from the past year.

Nearly half of our best read posts from 2012 deal with students’ lack of understanding of their financial aid options and policymakers’ efforts to try to make the system more transparent for students. Others focus on issues that HEW has long covered: student loan default rates, for profit colleges, Sallie Mae, the horrors of our student loan collection system, and President Obama’s higher education record. And of course, topping the list is a perennial reader favorite, our annual Academic Bowl Championship Series rankings, which we published just last week.

So without further ado, here are our 10 most-read posts of 2012:

Friday Night Lights, College, and the American Dream

December 17, 2012
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I was one of the many people who failed to watch Friday Night Lights when it was first broadcast on NBC in 2006, despite increasingly desperate pleas from critics who believed it to be a kind of masterpiece. Mea culpa. Thanks to the miracle of DVD binge-watching, I’ve now watched all five seasons and can attest to its greatness. Moreover, FNL offers an important lens on the way Americans understand higher education.

America is, of course, a nation of immigrants. Much our collective narrative follows the arc of departure and assimilation. FNL dramatizes a specific, modern version of that story: the vast, ongoing, internal migration from small towns and cities to the urban centers of cultural and economic vitality. Football is just the vehicle; the subject of FNL is how people are driven from places like Dillon, Texas even as such places become, unalterably, a part of their soul.

But because the FNL story engine was built around high school football players and their peers, higher education plays a critical role in that drama. College is the first port city on the other side of the cultural and economic ocean between Dillon and the new world. The vision of higher education portrayed in FNL is, I think, a very accurate representation of how most people understand college today. Parts of that vision are very accurate. Others are, in fact, quite wrong. So it’s worth considering what Friday Night Lights tells us about higher education in America, and what that means.

Guest Post: GAO Shows How 529 Plans are Subsidizing the Wealthy

December 17, 2012

By Chad Aldeman

If President Obama and House Speaker John Boehner need to find additional savings from the federal budget, a new Government Accountability Office report suggests one place they could look to find a couple billion dollars a year: the tax expenditure program known as 529 plans. In a damning report, the GAO found that the federal government spends $1.6 billion every year subsidizing college savings plans for wealthy families. To give some perspective, that money could pay for an additional 288,000 Pell Grants for low-income students.

The report chronicles the rise of 529 plans (and a similar savings vehicle called Coverdell Education Savings Accounts) from their start in 1986 as a small state program in Michigan. By 2001, these programs had become so popular that Congress made distributions for qualified higher education expenses tax-exempt. Today, every state offers accounts and a suite of contribution incentives and tax benefits. There are now 10 million accounts with $167 billion in assets (individuals can have more than one account). GAO researchers document a number of problems with 529 plans—including the fact that some plans are charging annual fees nearing 3 percent—but the most interesting finding is just how few American families are benefitting from these plans, and just how wealthy those who do are.

The 2012 Academic Bowl Championship Series

December 10, 2012
2012 Academic BCS

The results from our sixth annual Academic BCS are in, and we have a Cinderella story that rivals any BCS bowl game. If Academic BCS had a title game, Northwestern University would match up against… Northern Illinois University. Talk about an upset.

The Bowl Championship Series games, which pit the top-ranked football schools against one another, are great to watch. But it’s worth taking a step back to examine the darker side of NCAA football: too many elite football schools are doing a dismal job of graduating their players. Most of these players won’t make it to the NFL, which means that while the school has profited from them, all they can walk away with is a college degree. The trouble is that the graduation rate for football players is often much lower than it is for the rest of the school.

To focus on the student side of collegiate sports, the Education Policy team at the New America Foundation developed the Academic Bowl Championship Series rankings for Higher Ed Watch. Here’s how our formula works:  We calculate the difference between the entire football team’s graduation rate versus that of the male students at the university; the graduation gap between black and white students on the team versus the same gap among the overall school’s male population; and the gap between the graduation rate of black football players versus the black males at the school.* We also factor in the NCAA’s Academic Progress Rate (APR).**

We only rank the top 25 BCS teams, thus the winners of our Academic BCS have displayed prominence both on and off the field. For a full explanation of the formula, click here. For the full breakdown of scoring for this year and past years, click here.

How Much Student Loan Forgiveness Would Senator Rubio Qualify for Under New IBR Repayment Plan?

December 6, 2012

Senator Marco Rubio (R-FL) just announced that he paid off his student loans early with the proceeds from a book deal. Paying down debt ahead of schedule is generally a prudent financial move. But if the Obama administration’s new Income-Based Repayment (IBR) plan had been in place when Senator Rubio graduated from law school, his decision to pay down debt early would have been a sucker bet. Why pay early when your unpaid loans will be forgiven?

Read the full post on Ed Money Watch.

A Holiday Gift from Eric Cantor: Better College Data

December 5, 2012
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On November 7th, the day after the Presidential election, House Majority Leader Eric Cantor (R-VA) sent a letter to his Republican colleagues expressing disappointment with the outcome, but also the belief that there was room for Republicans and Democrats to “act to bridge our differences and deliver results.” Among the short list that Cantor laid out was the following: “Making it easier for parents and students to make informed decisions about what type of post-high school education is right for them.”

That’s right. The day after the most expensive Presidential campaign in American’s history, amidst deep divisions about the fiscal cliff, taxes, spending, and social issues, education data made the legislative “to do” list.

Both political parties spent much of the past year talking about the need for better information in the face of skyrocketing college costs. President Obama proposed a college scorecard with comparable, easy-to-understand indicators of college value. The GOP platform called for greater transparency around “completion rates, repayment rates, future earnings, and other factors that may affect their (college) decisions.” The message was clear and consistent—students and families need better information.

The Net Price Myth

November 26, 2012

[This blog post ran first at The Chronicle of Higher Education]

The concept of “net price”—what students actually pay for college after financial aid is subtracted from published tuition rates—has become increasingly important  in discussions of college affordability. It was prominently featured in last month’s annual College Board pricing report and accompanying news-media coverage, and has been promoted through tools like the U.S. Department of Education’s net-price calculator.

The fact that many students pay substantially less than sticker price is significant, and deserves to be part of the conversation. But it shouldn’t give anyone false comfort about the magnitude of the long-term college-affordability problem.

Most colleges are nonprofit and spend all the money they get, so there are three big numbers to watch here: (1) how much colleges spend per student; (2) how much money comes into the system from sources other than students; and (3) how much students and their families pay out of pocket. Colleges prefer to ignore (1) as a contributing factor to unaffordability and focus on the broadly correct argument that (2) and (3) vary inversely: If state subsidies decline or endowments take a hit, then student charges must rise in order to maintain spending. Similarly, if Pell Grants go up, then students pay less out of pocket.

That’s all generally true. But ignore (1) at your peril because college spending is the driving force behind affordability or lack thereof in the long run. External subsidies and student charges are both limited in how much they can increase over time by a combination of overall growth in economic output (particularly as it’s distributed among families of college-age students) and the political economy of government fiscal policy.

Happy Thanksgiving

November 19, 2012

At Higher Ed Watch, we are off this week to celebrate Thanksgiving. There's plenty to be thankful for this year, but mostly we're grateful for our loyal and spirited readership. Have a great holiday! 

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