College Affordability

March Madness: Do Colleges Cut Down the Net on Net Price?

March 27, 2013

This post originally appeared on the New America Foundation's In the Tank blog.

College basketball fans across the country bemoaned ruined brackets as they watched Harvard unseat the University of New Mexico in the first round of the NCAA March Madness tournament.  Of all the teams in this year’s bracket, Harvard graduates the highest percentage of its student body, and we've been thinking about how the other tournament schools stack up on this front, as well as on how they treat their lower-income students. Some of the traditional basketball powerhouses aren’t too shabby. Duke University, for instance, graduates 94 percent of its student body, and also does well by its low-income students, charging them relatively little to enroll.

Only 15 percent of Harvard’s 2010 enrolled students were from families with sufficiently low incomes to receive federal Pell Grants. And while Harvard charged the lowest-income students (those from families earning less than $30,000 a year) only a nominal amount of $423, few other schools matched up. Bucknell University, already knocked out of the tournament, charged more than $16,000 to those students – at least half the family income.

Meanwhile, a quarter of students enrolled at the University of Arizona – triumphant victors over Harvard – receive Pell Grants. And a third of La Salle University students are Pell Grant recipients. Michigan, which plays Kansas this week, enrolled fewer Pell students (15 percent), but charges a net price of only about $5,000.

Our NCAA brackets would certainly look different if we judged schools by the way they help low-income students afford their tuitions, rather than by athletic prowess. Check out the data on this page – and many more data points from the New America Foundation’s Federal Education Budget Project — to see a new side of your Final Four.

Take a look at how NCAA March Madness schools compare below. Click the table headers to sort ascending or descending on that particular column.

Department of Education Letter Could Put Cracks in the Credit Hour

March 19, 2013
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The U.S. Department of Education took a critical step forward today in moving towards a more flexible and innovative financial aid system—one that privileges (and pays for) learning, rather than time. In a letter released this morning, the Education Department let the world know not only that schools can award federal financial aid based on competency rather than seat time, but that the Department wants them to do so.

Up until now, the entire multi-billion dollar federal aid system has run on the credit hour. And while credit hours are useful for administrative functions like scheduling classes and determining faculty workloads, they are not so useful for measuring learning. (See our report Cracking the Credit Hour for more on the curious birth and harmful legacy of this time-based unit).

This shift in the Department’s stance has been seven years in the making. In 2005, Congress created an alternative path allowing federal financial aid to be awarded to a program that “in lieu of credit hours or clock hours as the measure of student learning, utilizes direct assessment of student learning (emphasis added).” While Congress didn’t give much detail about what direct assessment would look like, the general idea was that federal financial aid could be awarded based on the amount of learning a student had achieved, rather than the amount of time she had spent in class. Congress created this provision in large part to help an innovative, growing, and politically-connected institution, Western Governor’s University (WGU), receive federal financial aid.

California's Groundbreaking State Online Higher Education Plan

March 12, 2013

California is currently home to two of the most important things happening in higher education, one good, one bad. The good thing is the rapid advancement of cheap and free online courses offered by companies like Udacity and Coursera. The bad thing is the catastrophic failure of California lawmakers to provide enough money to support basic access to foundational courses at community colleges. Tomorrow, California Senate President pro Tem Darrell Steinberg will announce a plan that essentially tries to use the one to fix the other. This groundbreaking initiative has broad implications for the nature, financing, and regulation of higher learning.

As of today nearly half a million students are on waiting lists for basic courses in California’s public higher education system, increasing the cost and duration of college and reducing the number of students who ultimately earn degrees. This is a human tragedy and a policy failure on a massive scale. Under the plan, waitlisted students would be able to take online classes that have been approved by California’s Open Education Resources Council, a faculty-led body that was created by recent Steinberg-sponsored legislation creating free open textbooks. ACE certification would be a point in course's favor. Students would have to take in-person proctored exams to pass the courses. Public colleges and universities in California would be required to accept those courses for credit.

Double Whammy to College Affordability: New Reports Show College Costs Up but College Savings Down

March 8, 2013
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Fresh off the presses are two reports highlighting the dismal state of college affordability: the first was released Wednesday by the State Higher Education Executive Officer's Association showing that college costs rose 8.3 percent last year and the second from Sallie Mae released last Tuesday (slightly less fresh) showing that less families are savings for college and thos

Preserving Need-Blind Admissions Comes at a Price at Grinnell

February 28, 2013

When it comes to private colleges enrolling and supporting low-income students, Grinnell College has been one of the best. Nearly a quarter of its students receive Pell Grants, and the lowest-income students have to take on only a relatively small amount of debt to receive a top-notch liberal arts education.

That’s why it is so disheartening to hear that Grinnell plans to become more aggressive in using so-called “merit” aid for the explicit purpose of recruiting wealthy students. According to college’s president Raynard Kington, this is the price Grinnell will have to pay for maintaining its need-blind admissions policy for the next two years.

Last year, Grinnell’s board raised alarms on campus when it announced that it was considering abandoning its costly policy of admitting students regardless of their financial need. But after months of heated discussions among students, faculty, administrators, and alumni, the board relented and agreed to allow the practice to continue for another couple of years. In return, however, the school must “find a way to curb growth in its discount rate (the percentage of sticker price provided by the college in aid, on average) and to reduce the share of its operating budget paid by the endowment,” according to Inside Higher Ed. They need to, in other words, bring in more students who can pay full freight.

The Impact of the New Pell Grant Restrictions on Community Colleges: A Three State Study of Alabama, Arkansas and Mississippi

February 27, 2013

A new study by the Education Policy Center at the University of Alabama finds that enrollment at community colleges in Alabama, Arkansas, and Mississippi declined significantly in the fall of 2012 due to recent changes made to Pell eligibility. The report’s authors argue the eligibility changes caused thousands of students to lose Pell grants and they predict many more thousands will lose their Pell grant funding in the coming year. Using data from the U.S. Department of Education and survey results from financial aid administers at all 63 of Alabama’s, Arkansas’ and Mississippi’s community colleges, the report argues that students in these three states are particularly sensitive to changes in  Pell eligibility criteria and that reductions in Pell aid as a result of such eligibility changes adversely affect students’ academic futures.

Among the report’s findings:

  • It is estimated that two out of every three full-time students receive Pell grants in Alabama, Arkansas, and Mississippi, indicating their importance to higher education access for students in the Deep South.
  • Declining community college enrollment, the authors argue, is a direct effect of the 2012 changes to Pell eligibility which included (1) reducing the maximum time a student is Pell-eligible from 18 total semesters of full-time enrollment to 12 total semesters; (2) lowering the income threshold for receiving an automatic zero expected family contribution from $32,000 to $23,000; and (3) restricting students without a high school diploma or GED from receiving a Pell grant.
    • These changes were enacted to address rapidly rising costs associated with the Pell program resulting from more generous eligibility criteria in prior federal higher education legislation and a substantial increase in the number of Pell applicants and recipients during the recession.
  • Enrollment declined at more than 75% of two-year colleges in Alabama, Arkansas, and Mississippi in the fall of 2012.
  • Over 5,000 students in these three states lost their Pell grants in the fall of 2012 and nearly 17,000 are estimated to lose their Pell grant in 2013.
  • Before these changes in Pell eligibility, community colleges in the Deep South saw an across-the-board 6% rise in enrollment from 2008-2011 due an increase in the number of students who qualified for a Pell grant.
  • Survey results from financial aid administrators at all 63 community colleges in the Deep South indicate:
    • Most administrators favor lowering the maximum Pell award if it would mean fewer student eligibility restrictions and regulations on how it can be used.
    • A large majority view the now-defunct year-round Pell grant program as an effective tool to increase student completion at their institutions.
    • Overall, administrators of financial aid would like to see a phased-in implementation of the new time limits for Pell eligibility to mitigate the negative impact on students. 

Too Much 'Merit Aid' Requires No Merit

  • By
  • Kevin Carey,
  • New America Foundation

On June 9, 1904, Harvard's president, Charles W. Eliot, wrote a letter to Charles Francis Adams Jr. A former railroad executive, Adams was a member of the college's Board of Overseers and, as a grandson of John Quincy Adams, a multigenerational Harvard legacy. The two men were quarreling over the question of raising tuition to ease a financial crisis. Wrote Eliot:

One Thing Obama and Rubio Agree on: Higher Education Innovation

February 13, 2013

This post ran first on the Future Tense blog.

The opposition response to the State of the Union is normally a time to denounce the president and all his works. For the most part, Sen. Marco Rubio, R-Fla., kept to form last night, repeatedly slamming Barack Obama for his big government, job-killing agenda. But there was one area in which, perhaps without realizing it, Rubio and Obama agree: They both want to unleash a wave of innovation that could transform American higher education and finally bring the eternal problem of rising college prices to heel.

In his speech, Obama put colleges on notice about “skyrocketing costs [that] price way too many young people out of a higher education, or saddle them with unsustainable debt.” The blame, the president said, lies on campus. “Taxpayers cannot continue to subsidize the soaring cost of higher education. Colleges must do their part to keep costs down.”

But Obama’s truly revolutionary proposal was kept inside the more detailed policy agenda released by the White House directly after the speech. The administration proposed “establishing a new, alternative system of accreditation that would provide pathways for higher education models and colleges to receive federal student aid based on performance and results.” The existing accreditation system is a cabal of incumbent colleges and universities that controls access to the $140 billion that the federal government disburses to college students every year in grants and loans. Breaking up this monopoly would have far-reaching effects on the higher education market. Most importantly, it would create a level financial playing field for firms that provider higher education services but aren’t “colleges” in the traditional sense of the word.

Rubio’s response? He wants to do exactly the same thing. “We need student aid that does not discriminate against programs that non-traditional students rely on,” said Rubio, “like online courses, or degree programs that give you credit for work experience.”

New College Scorecard: Will Students Use It?

February 13, 2013
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In last night’s State of the Union, President Obama announced the release of the College Scorecard, a consumer information resource that helps students and families compare colleges and universities on important measures such as costs and graduation rates. “Colleges must do their part to keep costs down…” said President Obama, “Parents and students can use [the Scorecard] to compare schools based on simple criteria: Where you can get the most bang for your educational buck.” While better information is not the cure to solving all problems with student access and success in higher education, it can lead to more informed decision-making and, in turn, improved outcomes. But information only helps students and families if it gets into their hands and they know how to use it.

The College Scorecard is not a new initiative. In last year’s State of the Union, President Obama put higher education “on notice” saying that, “If you can’t stop tuition from going up, the funding you get from taxpayers will go down.” In the days that followed he announced a new higher education reform package that included two new consumer information tools: the Scorecard and the Financial Aid Shopping Sheet. After thousands of public comments on both, the finalized Shopping Sheet was released in July and now the new Scorecard is out today. I’ve already written extensively about the Shopping Sheet, but what will the new Scorecard mean for students and families?

President Obama’s Bold Plan To Reshape American Higher Education

February 13, 2013

As a rule, speechwriters put the most dramatic parts of a president’s agenda front and center in televised speeches, leaving the boring policy details to the supplemental notes. Last night, the Obama administration did the opposite: the higher education section of the State of the Union address was much the same as last year’s, focusing intensely on college affordability and putting institutions on notice that the gravy train of public support for rising prices would have to end. But the truly earth-shaking policy initiatives were left for the supplemental policy document  released directly after the speech, in which the Obama administration proposed the biggest change to federal higher education policy since at least the Higher Education Amendments of 1972.

Those laws created what would become the Pell Grant program for low-income students, which has grown to a $40 billion pillar of government support for higher learning. The Pell grant is a voucher system--any eligible student can use their grant to pay tuition at any accredited college of their choice.

The key words in that sentence are “accredited” and “college.” There are lots of ways to learn, but Pell grants can only be used to purchase learning from organizations that fit the model of colleges as we know them today. And who decides, legally, what a “college” is? Accreditors, a group of independent non-profit organizations run by...colleges as we know them today. By controlling access to Pell grants, student loans, and other forms of financial aid, existing colleges determine the price, structure, and character of higher learning. This regulatory monopoly has had severe and sadly predictable negative effects on price and innovation in higher learning. To compete on a level financial playing field, you have to teach, spend, and ultimately charge like established institutions.

The Obama administration wants to change all of that:

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