Admissions

It's that time of the year again: high-school seniors around the country are anxiously awaiting the news that will change their lives -- early admission to the university of their choice. But while junior checks his email and the school's website 15 times an hour, parents are checking their savings account statements. As the recession bites into American families' incomes and makes the job search for recent graduates that much trickier, an increasing number of people are beginning to question the cost of attending colleges and universities in the United States.

According a recent U.S. Department of Education report, higher education has reached a troubling milestone: the country’s public and private four-year colleges are now spending a greater share of their institutional aid dollars on trying to attract the students they desire than on meeting the financial need of the low- and moderate-income students they enroll.

The report from the Education Department’s National Center for Education Statistics provides the clearest picture to date of how colleges, under the sway of enrollment management consultants, have fundamentally changed the way they spend their institutional aid dollars, to the detriment of low-income students.

[For the last two weeks at Higher Ed Watch, we have run posts from student aid expert Mark Kantrowitz (see here and here) in which he argued that the financial aid award letters that colleges send out each spring need to be standardized both to protect the best interests of students and their families and to make them easier to understand and compare. Because this is an important public policy issue, we invited Justin Draeger, the president of the National Association of Student Financial Aid Administrators, to provide an opposing view. He took us up on the offer. Read on to find out why Draeger believes that "a federally mandated, standardized form" would do more harm than good.]

By Justin Draeger

Financial aid award letters can and should be improved to better help students understand the costs of higher education and the aid available to them. But a federally mandated, standardized form would fail to meet the needs of students, create more confusion, and stifle institutional innovation. Instead, we should focus on standardizing terms and definitions and promoting key elements to be included in each award letter.

One Size Does Not Fit All

If all colleges and student populations were the same (or even similar), then a standard award letter could be useful. Because there is so much variety, institutions need the flexibility to design unique award letters that highlight information that is most relevant to their student demographic. A cooperatively designed, optional form that models at least one good approach would be a useful catalyst for institutions to review their practices in light of their students’ needs.

Are colleges trying to kill the Pell Grant program? It sounds like an absurd question. But after reading the results of a recent survey that Inside Higher Ed conducted of nearly 500 college admissions directors, we think it's a fair one to ask.

As readers of Higher Ed Watch well know, the Pell Grant program is in the midst of a major budget crisis. The White House and Congress have struggled mightily over the last two years to try to keep the current $5,550 maximum Pell Grant in place. And the program’s funding problems are only going to get  more severe at the end of the 2013 fiscal year, when the supplemental Pell Grant funds that Congress provided in this summer’s budget ceiling legislation run out.

Obama administration officials and the program’s supporters in Congress have been willing to sacrifice many student benefits they have previously supported (with the latest victim expected to be the interest subsidy payments that the government makes on federally subsidized loans during the six-month period after students leave college) because they remain committed to the program’s core mission: eliminating the cost barriers that all too often keep low-income students from attending college.

But do the nation’s public and private four-year college leaders share this commitment? They certainly say they do. The results of the IHE survey, however, suggest that many of them are just paying it lip service.

[Last week at Higher Ed Watch, student aid expert Mark Kantrowitz explained why he believes the government needs to set mandatory standards for the financial aid award letters colleges send out each spring. Today, he offers his recommendations for what those standards should look like.]

By Mark Kantrowitz

Financial aid award letters need to be standardized both to protect the best interests of students and their families and to make them easier to understand and compare. Existing voluntary standards have proven to be inadequate to the task.

But what would these mandatory standards look like? To make these award letters more useful to students and their parents, colleges should be required to:

• Include Clear and Correct Information about College Costs

Every award letter should disclose the total cost of attendance, the total amount of gift aid (money that doesn’t need to be repaid, such as grants and scholarships), and the out-of-pocket cost (the difference between the cost of attendance and gift aid) for which students and their families are responsible. This information should appear prominently on the first page of the financial aid award letter in a standard location and format to allow families to comparison shop.

[The U.S. Department of Education is holding a public meeting today to discuss ways to improve financial aid award letters. Among those testifying is student aid expert Mark Kantrowitz, who has written extensively on this subject. Today at Higher Ed Watch, Kantrowitz explains why he believes the federal government needs to set mandatory standards for these letters. In a future post, he will offer his recommendations for what those standards should look like.]

By Mark Kantrowitz

The letters that colleges send students to alert them of their financial aid awards should be focused primarily on the needs of students and their families. Students and their families need and want clear, correct, complete, and comparable college cost and financial aid disclosures when they are deciding which school is the best fit. Unfortunately, most colleges’ award letters do not currently satisfy these needs.

All too often, in fact, colleges send award letters to prospective students that understate costs they’ll incur at the institution; overstate the generosity of the financial aid packages they offer; and obscure or misrepresent the true bottom-line price they will have to pay.

But why would colleges send award letters that are so misleading? The reason is that many institutions treat the financial aid award letter as a marketing and recruiting document, not a counseling tool. The goal from the college’s perspective is to make the college seem more affordable than it is. Colleges often accomplish this by obscuring the difference between loans and grants, which can lead to over-borrowing. In such cases, the design of the financial aid award letter is driven by the college’s pecuniary interests and not the student’s best interests.

Financial aid award letters need to be standardized both to protect the best interests of students and their families and to make them easier to understand and compare.

According to a recent article in The Chronicle of Higher Education, the U.S. Department of Education is planning to crack down on “Pell runners.” A Pell runner is “a scam artist who bounces from college to college, staying just long enough to receive a Pell Grant refund,” the newspaper reports.

The Education Department is absolutely correct to go after these individuals. Their actions not only hurt the federal fisc, but, if left unchecked, could undermine public and political support for this vital program over the long run.

There is, however, another group of “Pell runners” who may be even doing greater damage to the program’s long-term viability, but are coming under far less scrutiny. We are talking about public and private four year colleges that receive large amounts of  Pell Grant funds but use their institutional aid dollars to attract the students they desire, rather than to meet the financial need of the low-income students they enroll.

As we’ve said before, colleges that engage in financial aid leveraging to buy the best and/or wealthiest students are undercutting the Pell Grant program’s mission of making college accessible and affordable for low-income students. These institutions are, in fact, adding extra hurdles for Pell recipients to succeed, by loading them up with heavy loads of debt, including high-cost private student loans.

Judging by several reports that have been released over the last month, this problem is only getting worse and worse.

What just may have been the for-profit colleges’ last chance to save the 12 “safe harbors” that the Bush administration created in 2002 to help schools skirt a federal law banning schools from providing incentive payments to their admissions employees was dealt a fatal blow on Tuesday. The U.S. District Court for the District of Columbia upheld the Department of Education’s new regulation that puts an end to these loopholes.

The ruling by Judge Rosemary Collyer came in a lawsuit that the Association of Private Sector Colleges and Universities (APSCU)  filed in January seeking to block the Education Department from putting into effect several regulations it finalized in November that aim to prevent unscrupulous schools from taking advantage of financially needy students. In addition to the rule enforcing the federal incentive compensation ban, APSCU (which was formerly and more appropriately known as the Career College Association) also challenged rules that were designed to strengthen the role that states play in preventing fraud, waste, and abuse in the federal student aid programs and to prohibit colleges from providing misleading information to prospective students and others about their programs.

Judge Collyer awarded the career college group a partial victory. While the judge upheld the regulations dealing with incentive compensation and misrepresentation, she stuck down a key part of the new state authorization rules on technical grounds (which you can read more about here and here).

If you’ve followed the Senate Health, Education, Labor and Pensions (HELP) Committee investigation into the for-profit higher education industry closely, you have probably heard of Yasmine Issa, the single mother of twins who completed a training program in ultrasound technology at Career Education Corporation’s Sanford Brown University in 2008 only to find out later that the program was not accredited. Recruiters, who had stressed the school’s accreditation to Issa, apparently neglected to mention that the ultrasound program lacked the necessary specialized accreditation. As a result, Issa, who paid $32,000 for the program (including $15,000 in federal loans), wasn’t eligible to sit for the licensing exam or to find work as a sonographer.

Issa is not alone. The Senate investigation, the news media, and lawsuits against for-profit college companies suggest that her situation is more common than you would think. Recognizing the seriousness of the problem, the Department of Education took an important step last fall when it finalized regulations that aim to crack down on such abuses. Under the rules, which go into effect on Friday, schools that mislead students into signing up for programs that lack the specialized accreditation needed to get jobs could face severe penalties, including being barred from participating in the federal student aid programs.

This is a major change that, if well enforced, should go a long way in safeguarding students in the future. But this regulation is of little solace to those who have already fallen victim to such deception. These students have been left worse off than before they enrolled -- graduating with significant debt but without the credentials they need to become gainfully employed in the field for which they sought training.

Is there anything that the U.S. Department of Education can do to help these students? The answer is yes, but unfortunately the Education Department continues to act as if it was powerless to provide relief to those who have been harmed.

The majority of non-profit four-year colleges do not use third-party agencies to recruit international students, primarily because they are against the practice “on principle,” the National Association for College Admissions Counseling (NACAC) found in a survey it conducted of its membership last fall. The results of the survey show that many college admissions officers harbor deep concerns about a strategy that is becoming more common as public universities, facing declining state revenues, are increasingly seeking to attract foreign students who are able to pay full freight.

Because some colleges are reluctant to go to the expense of sending their own admissions officers overseas for long stretches, they often rely on international recruitment agents to find the students for them. Most of these schools pay the agents a commission for each of their students that enroll. While there are undoubtedly many reputable agents, there are also plenty of unscrupulous ones who, according to a recent Bloomberg News investigation, “often misrepresent and conceal their U.S. affiliations,” and offer false promises to lure in students.