My 2022 Higher Education Finance Reading List

I am beyond excited to be back in the (virtual) classroom this spring, as I get to teach a course for the first time since spring 2020. I am teaching a remote synchronous PhD class in higher education finance as my first course at the University of Tennessee, Knoxville. Department heads here are expected to teach one course per year, and it was great to be asked to teach this course.

The last two times that I taught the course (spring 2020 and fall 2017), I shared my reading list for the class on this blog. I do not use a textbook for the course because the field is moving so quickly and there are more topics to cover than a textbook could ever include. Instead, I use articles, working papers, and other online resources to provide a current look at the state of higher education finance.

Here is the reading list I am assigning my students for the course. I link to the final versions of the articles whenever possible, but those without access to an academic library should note that earlier versions of many of these articles are available online via a quick Google search.

The higher education finance landscape and data sources

Lumina Foundation video series on federal financial aid: https://www.luminafoundation.org/history-of-federal-student-aid/

Chetty, R., Friedman, J. N., Saez, E., Turner, N., & Yagan, D. (2017). Mobility report cards: The role of colleges in intergenerational mobility. Working paper. (link)

Schanzenbach, D. W., Bauer, L., & Breitwieser, A. (2017). Eight economic facts on higher education. The Hamilton Project. (link)

Webber, D. A. (2021). A growing divide: The promise and pitfalls of higher education for the working class. The ANNALS of the American Academy of Political and Social Science, 695, 94-106. (link)

Recommended data sources:

College Scorecard: https://collegescorecard.ed.gov/ (underlying data at https://collegescorecard.ed.gov/data/)

Equality of Opportunity Project: http://www.equality-of-opportunity.org/college

IPEDS: https://nces.ed.gov/ipeds/use-the-data

NCES Data Lab: https://nces.ed.gov/datalab/index.aspx

Postsecondary Value Commission’s Equitable Value Explorer: https://www.postsecondaryvalue.org/equitable-value-explorer/

ProPublica’s Nonprofit Explorer: https://projects.propublica.org/nonprofits/

Urban Institute’s Data Explorer: https://educationdata.urban.org/data-explorer/colleges/

Institutional budgeting

Barr, M.J., & McClellan, G.S. (2010). Understanding budgets. In Budgets and financial management in higher education (pp. 55-85). Jossey-Bass. (link)

Jaquette, O., Kramer II, D. A., & Curs, B. R. (2018). Growing the pie? The effect of responsibility center management on tuition revenue. The Journal of Higher Education, 89(5), 637-676. (link)

Rutherford, A., & Rabovsky, T. (2018). Does the motivation for market-based reform matter? The case of responsibility-centered management. Public Administration Review, 78(4), 626-639. (link)

University of Tennessee System’s FY2022 budget: https://finance.tennessee.edu/budget/documents/

University of Tennessee System’s FY2020 annual financial report: https://treasurer.tennessee.edu/reports/

The financial viability of higher education

Ducoff, N. (2019, December 9). Students pay the price if a college fails. So why are we protecting failing institutions? The Hechinger Report. (link)

EY-Parthenon (2018). Transitions in higher education: Safeguarding the interests of students. (link)

Kelchen, R. (2020). Examining the feasibility of empirically predicting college closures. Brookings Institution. (link)

Massachusetts Board of Higher Education (2019). Final report & recommendations. Transitions in higher education: Safeguarding the interest of students (THESIS). (link)

Sullivan, G. W., & Stergios, J. (2019). A risky proposal for private colleges: Ten reasons why the Board of Higher Education must rethink its plan. Pioneer Institute. (link)

Tarrant, M., Bray, N., & Katsinas, S. (2018). The invisible colleges revisited: An empirical review. The Journal of Higher Education, 89(3), 341-367. (link)

Higher education expenditures

Archibald, R. B., & Feldman, D. H. (2018). Drivers of the rising price of a college education. Midwestern Higher Education Compact. (link)

Cheslock, J. J., & Knight, D. B. (2015). Diverging revenues, cascading expenditures, and ensuing subsidies: The unbalanced and growing financial strain of intercollegiate athletics on universities and their students. The Journal of Higher Education, 86(3), 417-447. (link)

Commonfund Institute (2021). 2021 higher education price index. (link)

Griffith, A. L., & Rask, K. N. (2016). The effect of institutional expenditures on employment outcomes and earnings. Economic Inquiry, 54(4), 1931-1945. (link)

Hemelt, S. W., Stange, K. M., Furquim, F., Simon, A., & Sawyer, J. E. (2021). Why is math cheaper than English? Understanding cost differences in higher education. Journal of Labor Economics, 39(2), 397-435. (link)

State sources of revenue

Chakrabarti, R., Gorton, N., & Lovenheim, M. F. (2020). State investment in higher education: Effects on human capital formation, student debt, and long-term financial outcomes of students. National Bureau of Economic Research Working Paper 27885. (link)

Gándara, D. (2020). How the sausage is made: An examination of a state funding model design process. The Journal of Higher Education, 91(2), 192-221. (link)

Laderman, S., & Heckert, K. (2021). State higher education finance: FY 2020. State Higher Education Executive Officers Association. (link)

Lingo, M., Kelchen, R., Baker, D., Rosinger, K. O., Ortagus, J. C., & Wu, J. (2021). The landscape of state funding formulas for public colleges and universities. InformEd States. (link)

Odle, T., Lee, J. C., & Gentile, S. P. (2021). Do promise programs reduce student loans? Evidence from Tennessee Promise. The Journal of Higher Education, 92(6), 847-876. (link)

Ortagus, J. C., Kelchen, R., Rosinger, K. O., & Voorhees, N. (2020). Performance-based funding in American higher education: A systematic synthesis of the intended and unintended consequences. Educational Evaluation and Policy Analysis, 42(4), 520-550. (link)

Tennessee’s outcomes-based funding formula: https://www.tn.gov/thec/bureaus/policy–planning–and-research/fiscal-policy/redirect-fiscal-policy/outcomes-based-funding-formula-resources/redirect-outcomes-based-funding-formula-resources/2015-20-outcomes-based-funding-formula.html

Federal sources of revenue

Bergman, P., Denning, J. T., & Manoli, D. (2019). Is information enough? The effect of information about education tax benefits on student outcomes. Journal of Policy Analysis and Management, 38(3), 706-731. (link)

Cellini, S. R. (2010). Financial aid and for-profit colleges: Does aid encourage entry? Journal of Policy Analysis and Management, 29(3), 526-552. (link)

Gibbons, M. T. (2021, January 13). Universities report 5.7% growth in R&D spending in FY 2019, reaching $84 billion. National Science Foundation. (link)

Kelchen, R. (2019). An empirical examination of the Bennett Hypothesis in law school prices. Economics of Education Review, 73, Article 101915. (link)

Mok, S., & Shakin, J. (2018). Distribution of federal support for students pursuing higher education in 2016. Congressional Budget Office. (link)

College pricing, tuition revenue, and endowments

Baker, D. J. (2020). “Name and shame”: An effective strategy for college tuition accountability? Educational Evaluation and Policy Analysis, 42(3), 1-24. (link)

Baum, S., & Lee, V. (2018). Understanding endowments. Urban Institute. (link)

Cheslock, J. J., & Riggs, S. O. (2021). Psychology, market pressures, and pricing decisions in higher education: The case of the US private sector. Higher Education, 81, 757-774. (link)

Kramer II, D. A., Ortagus, J. C., & Lacy, T. A. (2018). Tuition-setting authority and broad-based merit aid: The effect of policy intersection on pricing strategies. Research in Higher Education, 59(4), 489-518. (link)

Ma, J., & Pender, M. (2021). Trends in college pricing and student aid 2021. The College Board. (link)

Webber, D. A. (2017). State divestment and tuition at public institutions. Economics of Education Review, 60, 1-4. (link)

Financial aid policies, practices, and impacts

Anderson, D. M., Broton, K. M., Goldrick-Rab, S., & Kelchen, R. (2020). Experimental evidence on the impacts of need-based financial aid: Longitudinal assessment of the Wisconsin Scholars Grant. Journal of Policy Analysis and Management, 39(3), 720-739. (link)

Bird, K., & Castleman, B. L. (2016). Here today, gone tomorrow? Investigating rates and patterns of financial aid renewal among college freshmen. Research in Higher Education, 57(4), 395-422. (link)

Guzman-Alvarez, A., & Page, L. C. (2021). Disproportionate burden: Estimating the cost of FAFSA verification for public colleges and universities. Educational Evaluation and Policy Analysis, 43(3), 545-551. (link)

Kelchen, R., Goldrick-Rab, S., & Hosch, B. (2017). The costs of college attendance: Examining variation and consistency in institutional living cost allowances. The Journal of Higher Education, 88(6), 947-971. (link)

Nguyen, T. D., Kramer, J. W., & Evans, B. J. (2019). The effects of grant aid on student persistence and degree attainment: A systematic review and meta-analysis of the causal evidence. Review of Educational Research, 89(6), 831-874. (link)

Student debt and financing college

Baker, D. J. (2019). When average is not enough: A case study examining the variation in the influences on undergraduate debt burden. AERA Open, 5(2), 1-26. (link)

Black, S. E., Denning, J. T., Dettling, L. J., Goodman, S., & Turner, L. (2020). Taking it to the limit: Effects of increased student loan availability on attainment, earnings, and financial well-being. National Bureau of Economic Research Working Paper 27658. (link)

Boatman, A., Evans, B. J., & Soliz, A. (2017). Understanding loan aversion in education: Evidence from high school seniors, community college students, and adults. AERA Open, 3(1), 1-16. (link)

Ritter, D., & Webber, D. (2019). Modern income-share agreements in postsecondary education: Features, theory, applications. Federal Reserve Bank of Philadelphia Discussion Paper 19-06. (link)

Scott-Clayton, J. (2018). What accounts for gaps in student loan default, and what happens after. Brookings Institution Evidence Speaks Report #57. (link)

Free college

Carruthers, C., Fox, W. F., & Jepsen, C. (2020). Promise kept? Free community college, attainment, and earnings in Tennessee. Working paper. (link)

*Collier, D. A., & Parnther, C. (2021). Conversing with Kalamazoo Promise scholars: An inquiry into the beliefs, motivations, and experiences of tuition-free college students. Journal of College Student Retention: Research, Theory & Practice, 22(4), 572-596. (link)

*Gándara, D., & Li, A. Y. (2020). Promise for whom? “Free-college” programs and enrollments by race and gender classifications at public, 2-year colleges. Educational Evaluation and Policy Analysis, 42(4), 603-627. (link)

Murphy, R., Scott-Clayton, J., & Wyness, G. (2017). Lessons from the end of free college in England. Washington, DC: The Brookings Institution. (link)

Perna, L. W., Leigh, E. W., & Carroll, S. (2018). “Free college:” A new and improved state approach to increasing educational attainment? American Behavioral Scientist, 61(14), 1740-1756. (link)

Map of college promise/free college programs: https://ahead-penn.org/creating-knowledge/college-promise

Returns to education

Darity, Jr., W. A., & Underwood, M. (2021). Reconsidering the relationship between higher education, earnings, and productivity. Postsecondary Value Commission. (link)

Deterding, N. M., & Pedulla, D. S. (2016). Educational authority in the “open door” marketplace: Labor market consequences of for-profit, nonprofit, and fictional educational credentials. Sociology of Education, 89(3), 155-170. (link)

Doyle, W. R., & Skinner, B. T. (2017). Does postsecondary education result in civic benefits? The Journal of Higher Education, 88(6), 863-893. (link)

Ma, J., Pender, M., & Welch, M. (2019). Education pays 2019: The benefits of higher education for individuals and society. The College Board. (link)

Webber, D. A. (2016). Are college costs worth it? How ability, major, and debt affect the returns to schooling. Economics of Education Review, 53, 296-310. (link)

How Colleges’ Carnegie Classifications Have Changed Over Time

Every three years, Indiana University’s Center on Postsecondary Research gives the higher education community an early Christmas present in its updated Carnegie classifications. For some colleges, their new classification is a shiny new toy. Others get a lump of coal with a classification that they did not want.

The 2021 version includes many different types of classifications based on different institutional characteristics. But the basic classification (based on size, degrees awarded, and research intensity) always garners the most attention from the higher education community. I took a look at the 2018 update three years ago, and this post provides an updated analysis of the 2021 classifications.

The item that always gets the most attention in the Carnegie classifications is Research 1 (research universities: very high activity) status, as this is based on research metrics and is a key indicator of prestige. In the 2021 dataset, nine universities moved from R2 to R1 (Louisiana, Denver, Utah State, Texas-San Antonio, North Dakota State, Memphis, Kent State, Baylor, and Old Dominion). Three went the other direction: Brandeis, New Jersey Institute of Technology, and Rensselaer Polytechnic Institute. The R1 line has continued to grow, moving from 96 universities in 2005 to 137 in 2021.

YearR1R2R3Total
2021137133202472
2018131132161423
2015115107112334
20101089889295
20059610281279

At the two-year level, there are competing trends of institutional consolidations in the for-profit sector and more community colleges offering bachelor’s degree programs. The number of baccalaureate/associate colleges declined slightly in 2021 (going from 269 in 2018 to 250 in 2021), but this is a larger share of two-year institutions.

2021: 250

2018: 269

2015: 248

2010: 182

2005: 144

IPEDS counts these institutions as four-year universities, but the Carnegie classification (basic codes 14 and 23) is a better way to flag them as two-year colleges.

Going forward, Carnegie classifications will continue to be updated every three years in order to keep up with a rapidly-changing higher education environment. Get ready to see a lot of institutional press releases during the next few weeks highlighting desired changes!

Otherwise, I wish everyone a restful holiday season and stay safe out there.


Rising Inflation and the Impending Tuition Squeeze

For the first time in the lifetimes of many Americans, inflation has become a legitimate concern. In the last year, the Consumer Price Index increased at a 6.2 percent clip—a rate not seen this century.

Trends in inflation over the last two decades (BLS graphic)

The higher education industry is far from immune from the effects of an inflationary cycle that was largely unexpected even a few months ago. Colleges have been struggling to address supply chain issues and a shortage of staff members willing to work in person at pre-pandemic wage rates. Colleges have responded by reducing services, increasing wages in some cases, and even trying to get faculty members to work in dining halls. In my position as a faculty member and department head, I am still waiting for my permanent laptop computer setup to arrive and have seen the challenges in trying to hire employees within existing salary bands.

But what really caught my attention was Virginia Tech’s move to increase meal plan charges by about $200 between the fall and spring semesters. Midyear adjustments in student charges are highly unusual and typically only happen if a state withholds previously promised funding during a recession. But the university is required by state law to have auxiliary enterprises operate with balanced budgets, so the sudden increase in costs had to be passed on to students.

At this point, it seems like inflationary pressures are here to stay for at least the next several months. This will put continued pressure on colleges to increase their salaries to keep up with a hot economy and rising consumer prices. While faculty tend to have less power in the labor market due to lots of qualified people looking to teach in many disciplines, many staff members are in a great position to command raises of between five and ten percent as colleges look to retain talent.

This is also the time of year during which many colleges start to develop their proposed rates for tuition, fees, and room and board for the next (2022-23) academic year. With the costs of running a college likely to rise by at least five percent this year, the logical step for colleges would be to raise student charges by the same amount. This would be a rate largely unseen since the Great Recession—when student debt was less of a public policy concern and there was less vocal skepticism of higher education. But if colleges try to keep tuition increases more modest, they are losing money. And that is a challenge after the pandemic severely affected the finances of many institutions.

So expect a fair amount of sticker shock this spring when tuition, housing, and dining charges for next year get posted. There are likely to be three types of exceptions to this trend:

  • Public colleges in states that limit tuition increases by state law or governing board policy. They’re stuck with what they can get.
  • Extremely wealthy colleges that can afford to limit increases if that will help them increase diversity and/or move up in the rankings.
  • Cash-strapped colleges that are desperately seeking to recruit and retain students. They will decide that holding the line on student charges is the best of a lousy set of options.

Options for Replacing Standardized Test Scores for Researchers and Rankers

It’s the second Monday in September, so it’s time for the annual college rankings season to conclude with U.S. News & World Report’s entry. The top institutions in the rankings change little from year to year, but colleges pay lots of attention to statistically insignificant movements. Plenty has been written on those points, and plenty of digital ink has also been spilled on U.S. News’s decision to keep standardized test scores in their rankings this year.

In this blog post, I want to look a few years farther down the line. Colleges were already starting to adopt test-optional policies prior to March 2020, but the pandemic accelerated that trend. Now a sizable share of four-year colleges had taken a hiatus from requiring ACT or SAT scores, and many may not go back. This means that people who have used test scores in their work—whether as academic researchers or college rankings methodologists—will have to think about how to proceed going forward.

The best metrics to replace test scores depend in part on the goals of the work. Most academic researchers use test scores as a control variable in regression models as a proxy for selectivity or as a way to understand the incoming academic performance of students. High school GPA is an appealing measure, but is not available in the Integrated Postsecondary Education Data System and also varies considerably across high schools. Admit rates and yield rates are available in IPEDS and capture some aspects of selectivity and student preferences to attend particular colleges. Admit rates can be gamed by trying to get as many students as possible with no interest in the college to apply and be rejected, and yield rates vary considerably based on the number of colleges students apply to.

Other potential metrics are likely not nuanced enough to capture smaller variations across colleges. Barron’s Profiles of American Colleges has a helpful admission competitiveness rating (and as a plus, that thick book held up my laptop for hundreds of hours of Zoom calls during the pandemic). But there are not that many categories and they change relatively little over time. Carnegie classifications focus more on the research side of things (a key goal for some colleges), but again are not as nuanced and are only updated every few years.

If the goal is to get at institutional prestige, then U.S. News’s reputational survey could be a useful resource. The challenge there is that colleges have a history of either not caring about filling out the survey or trying to strategically game the results by ranking themselves far higher than their competitors. But if a researcher wants to get at prestige and is willing to compile a dataset of peer assessment scores over time, it’s not a bad idea to consider.

Finally, controlling for socioeconomic and racial/ethnic diversity are also options given the correlations between test scores and these factors. I was more skeptical of these correlations until moving to New Jersey and seeing all of the standardized test tutors and independent college counselors that existed in one of the wealthiest parts of the country.

As the longtime data editor for the Washington Monthly rankings, it’s time for me to start thinking about changes to the 2022 rankings. The 2021 rankings continued to use test scores as a control for predicting student outcomes and I already used admit rates and demographic data from IPEDS as controls. Any suggestions that people have for publicly-available data to replace test scores in the regressions would be greatly appreciated.

Examining Trends in Tuition Freezes and Declines

Greetings from beautiful eastern Tennessee! Since my last post, I have accepted a position as professor and head of the Department of Educational Leadership and Policy Studies at the University of Tennessee, Knoxville. It is an incredible professional opportunity for me, and the Knoxville area is a wonderful place to raise a family. I start on August 1, so the last month has been a combination of moving, taking some time off, and getting data in order to keep making progress on research.

Speaking of getting new data in order, the U.S. Department of Education’s newest iteration of Integrated Postsecondary Education Data System (IPEDS) data came out with a fresh year of data on tuition and fee charges, enrollment, and completions. In this post, I am using the new data on tuition and fees in the 2020-21 academic year to look at how colleges changed their listed prices during the pandemic.

I limited my analysis to 3,356 colleges and universities that met three criteria. First, they had IPEDS data on in-district or in-state tuition and fees in both the 2019-20 and 2020-21 academic years. Second, they reported data for the typical program of study (academic year reporters) instead of separately for large programs (program reporters). This excluded most certificate-dominant institutions. Third, I kept colleges with Carnegie classifications in 2018 and excluded tribal colleges due to their unique governance structures. I then classified public institutions into two-year and four-year colleges based on Carnegie classifications to properly classify associate-dominant institutions as two-year colleges.

Now on to the analysis. There was a lot of coverage of colleges cutting tuition and/or fees for 2020-21 on account of the pandemic, but now analysts can see how prevalent this actually was. The majority of public and for-profit colleges either froze or decreased tuition in 2020-21, but two-thirds of private nonprofit colleges increased their list prices. This does not mean that private colleges actually increased tuition revenue due to the possibility of increased financial aid, and this answer will not be known in publicly available data until early 2023. Public colleges and universities were somewhat more likely to reduce fees than tuition, while for-profit colleges were less likely to do so.

The rightmost column of the first table below combines tuition and fees and provides a more comprehensive picture of student charges. Although a majority of public universities froze tuition and fees, combined tuition and fees still increased at 56% of institutions. This suggests that colleges that froze tuition increased fees and colleges that froze fees increased tuition. Colleges found a way to get the money that they needed. Fifty-three percent of community colleges increased tuition and fees, while 71% of private nonprofit colleges did so compared to just 42% of for-profit colleges.

Changes in tuition and fees, 2019-20 to 2020-21.

TuitionFeesTuition and fees
Four-year public   
Increase35.6%35.8%56.1%
No change61.2%55.5%30.7%
Decrease3.2%8.6%13.1%
Two-year public   
Increase41.0%45.1%53.4%
No change55.3%40.0%39.9%
Decrease3.8%14.9%6.6%
Private nonprofit   
Increase66.9%38.6%71.2%
No change28.2%54.0%21.3%
Decrease4.9%7.4%7.5%
For-profit   
Increase34.7%25.3%42.3%
No change49.6%66.8%41.5%
Decrease15.7%7.8%16.2%
Source: Robert Kelchen’s analysis of IPEDS data.

The next obvious question is whether the 2020-21 trends differed from past years. I pulled IPEDS data going back to 2015 to look at trends in tuition and fees over the past five years. The share of tuition freezes increased in every sector of higher education, with the increase being most pronounced among public universities (9.5% in 2019-20 to 30.7% in 2020-21). Other sectors had smaller increases, although around one-third of community colleges and for-profit institutions had no changes in tuition and fees in prior years. The only sector with a large increase in tuition and fee cuts was public universities, with a jump from 5.1% to 13.1% between 2019-20 and 2020-21.

Changes in tuition and fees over time.

4-year public2-year publicPrivate nonprofitFor-profit
2020-21    
No change30.7%39.9%21.3%41.5%
Decrease13.1%6.6%7.5%16.2%
2019-20    
No change9.5%31.7%13.7%34.0%
Decrease5.1%6.9%4.7%12.0%
2018-19    
No change10.5%27.2%14.6%38.0%
Decrease6.0%6.5%5.2%22.4%
2017-18    
No change7.4%27.2%12.4%34.8%
Decrease3.2%5.9%3.6%25.0%
2016-17    
No change13.8%24.5%12.4%28.7%
Decrease4.4%8.0%3.8%16.0%
2015-16    
No change8.7%29.3%10.8%33.5%
Decrease5.2%7.3%4.3%18.2%
Source: Robert Kelchen’s analysis of IPEDS data.

As the pandemic enters a new stage, the higher education community continues to get more information on the broader effects on the 2020-21 academic year. It will take a few years to get a complete picture of what happened in the sector, but each data release provides additional insights for researchers and policymakers.

An Updated Look at Financial Responsibility Scores and College Closures

The topic of college closures has gotten even more attention since the beginning of the coronavirus pandemic last spring. Even though the number of private nonprofit colleges closing remained around recent norms in 2020 (approximately ten degree-granting institutions), many colleges have absorbed sizable losses during the pandemic and will continue to do so in coming years. In a recent working paper that I wrote with Dubravka Ritter of the Federal Reserve Bank of Philadelphia and Doug Webber of Temple University, we estimate that colleges and universities may lose approximately $100 billion in revenue over the next five years. This means that colleges are still going to face financial challenges going forward.

One of the federal government’s main tools to identify colleges at risk of closure is financial responsibility scores. Private nonprofit and for-profit colleges are scored on a scale of -1.0 to 3.0 based on three measures: a primary reserve ratio, a net income ratio, and an equity ratio. Colleges that score at 1.5 or above pass, while colleges that score between 1.0 and 1.4 are in an oversight zone and colleges that score at 0.9 or below fail. Colleges that fail must submit a letter of credit in order to keep receiving federal financial aid, and colleges that are in the oversight zone or fail are subject to additional financial monitoring.

The financial responsibility scores for fiscal years ending in 2018-19 were recently released by Federal Student Aid, and this represents the final pre-pandemic look at colleges’ finances. The distribution of listed scores by sector is below. The vast majority of colleges in both sectors passed, but a larger number of for-profit colleges failed than in the private nonprofit sector.

OutcomeFor-profitNonprofit
Pass1,5171,479
Zone5151
Fail12349
Total1,6911,579

Four years ago, I looked at the financial responsibility scores of private nonprofit colleges that closed in 2016. Of the 12 colleges with available data, four colleges passed, two were in the oversight zone, three failed, and the final three institutions were placed on heightened cash monitoring for financial responsibility score issues without assigning a score.

I repeated this exercise for twelve private nonprofit colleges that closed or merged in 2020 or 2021 and had available data. As shown below, not a single college that closed received a failing financial responsibility score. Three were in the oversight zone, three were instead placed on heightened cash monitoring for financial responsibility concerns, and the other six all passed. Holy Family College in Wisconsin, which closed in 2020, had a perfect score.

NameFinancial responsibility score
Judson College2.1 (pass)
Becker CollegePlaced on HCM1
Concordia College (NY)Placed on HCM1
Marlboro College1.8 (pass)
Wesley College (DE)Placed on HCM1
Pine Manor College1.0 (zone)
Holy Family College (WI)3.0 (pass)
Urbana University2.9 (pass)
MacMurray College2.6 (pass)
Robert Morris University (IL)1.3 (zone)
Concordia University (OR)1.1 (zone)
Watkins College of Art2.2 (pass)

Next year’s release of financial responsibility scores will begin to show the effects of the pandemic at colleges which had their fiscal years end after the pandemic began. The 2020-21 IPEDS data collection cycle also includes for the first time values for each component of the financial responsibility score so analysts have more information about colleges’ financial positions.

Federal Financial Aid Will Be Easier to Apply For–And a Bit More Generous

Note: This post that I wrote was initially published at The Conversation. If you’re the type who enjoys reading 5,000+ pages of legislative text, the law that changed federal financial aid is available here.

How is applying for federal student financial aid about to change?

The good news is the Free Application for Federal Student Aid (FAFSA) will go from having 108 questions to 36 questions, and most students will only have to answer a smaller set of questions about family income and household size. The not-so-good news is that this simplified form will not be available to students until October 2022 to determine aid for the 2023-24 academic year.

Also, students with family incomes below 175% or 225% of the federal poverty line (which one depends on their family circumstances) will automatically qualify for the maximum Pell Grant, which is the main federal grant given to students from low- to middle-income families as of 2023.

For example, a high school senior in a family of three led by a single parent would receive the maximum Pell grant if their parent’s income is below about $50,000 per year. Currently, only about one in five students with family incomes around $50,000 per year gets the maximum Pell grant. Currently, most students have to file the FAFSA to know the size of their Pell grant.

Automatic qualification will make it easier for students to know how much federal financial aid they can count on getting well in advance of going to college.

Are any new people eligible who weren’t before?

The new law also gets rid of a 1994 ban on Pell Grants for incarcerated individuals. This change means that people can get financial help to begin to earn college degrees while they are still behind bars instead of having to wait until their release. This change will benefit everyone, as receiving education while in prison helps reduce the chances that someone will return to prison.

Also, Pell Grant eligibility is being reset for students who went to colleges that closed while they attended. This means these students can finish their studies elsewhere. Without this change, anyone who had exhausted their Pell eligibility after 12 semesters would likely struggle to find the money they need to finish up their degree at another college.

Is the ‘expected family contribution’ a thing of the past?

Yes – sort of. Ever since 1992, the FAFSA has generated an “expected family contribution.” This number determines how much money students and their families can receive in federal financial aid. It is based on how much money the federal government expects students and their families to contribute toward the price of their education.

However, families are often unable or unwilling to pay this amount of money. The formula has also been adjusted over the years to decrease the number of students who receive the maximum Pell Grant, requiring families to pay more for college. In reality, the expected family contribution provides a rough ranking of families’ resources to help the federal government and others give out limited aid dollars.

Beginning in October 2022, the government will ditch the term “expected family contribution.” It will instead rely on a “student aid index,” the same term that had been used before 1992, that more accurately reflects how the FAFSA is used to determine financial aid. The index also does not send the message that students have to contribute a certain amount.

But in reality, the student aid index is still the amount that the federal government will expect students and families to pay for college.

In good news for students and their families, the law allows for the student aid index to be as low as -$1,500 instead of being limited to zero. This is something that I have called for in my research because it allows students to get more financial aid and helps colleges and states identify students with the greatest financial need. The change in the student aid index will not give students more financial aid from the federal government, but it will allow them to obtain up to $1,500 more in grants, loans and other financial aid from other sources.

Is the government increasing federal student financial aid in any way?

The government is also increasing the maximum Pell Grant to $6,495, a $150 increase, in the 2021-22 academic year. This is basically enough to keep up with inflation. A bigger change is that more students will qualify for the maximum Pell Grant because of increases to the income limits for receiving the grant. But while more students will receive federal grants, students with the greatest financial need will not see increases in their Pell grants other than to keep up with inflation.The Conversation

Looking Ahead to 2021 in Higher Education

Since 2013, I have concluded the calendar year by writing annual lists of what I see as the top ten and not top ten events of the year in American higher education. I spend time throughout the year saving and compiling clips for potential inclusion later on, and it is something that I have greatly enjoyed putting together every year.

I started down my normal path again this year, but it was clear by the first week of March that one event would dominate everything else going on in American higher education. While my university (along with most other universities) was still operating in-person classes the week of March 9, I was scrambling to get both myself and my department prepared to finish the semester online. I thought at the time that things would be back to something near normal in the fall—and that was wrong.

I have written plenty, both on my blog and for The Chronicle of Higher Education, about the difficulties that higher education has faced this year. But there have also been some bright spots. In spite of incredibly difficult odds, no private nonprofit college has announced a major closure since early July (although Judson College may close at the end of the year if it cannot raise $500,000). Colleges have operated remarkably well on a remote basis this year, and it is clear that being absent from physical campuses has made the heart grow fonder for the traditional experience for many students.

Let’s finally close the book on a brutal 2020 and look ahead to 2021. There is clearly a light at the end of the tunnel at this point as multiple vaccines will begin to be available to millions of Americans in the next few weeks. I’m incredibly optimistic that society will be back to something near normal by June or July of 2021, with a possibility that normalcy could come sooner if cases do not spike in January and February. Given those bright spots, here are the five questions that I have as I look ahead to 2021:

(1) Can colleges safely welcome students back to campus in January? Hundreds of thousands of coronavirus cases occurred among college students and employees this fall, and research suggests that cases spread from relatively low-risk students to high-risk community members. While some colleges managed to get through the fall semester with cases under control, other colleges were not as lucky. I tracked colleges’ flips to online classes this fall until too many colleges to capture started to send students home in November—in many cases without providing or requiring exit testing.

It seems likely that coronavirus cases in much of the country will be far higher in January than in August or September, making it much more challenging for colleges as they attempt to welcome students back to campus. Colleges feel forced for political and financial reasons to try to have in-person classes, but it will be difficult for many colleges to succeed unless they have strict quarantines and get lucky. I would not be surprised if some colleges postpone in-person classes until March if vaccine distribution is promising, and some may even try to delay the academic calendar into late May or June to take advantage of improving public health conditions.

(2) How will the vaccine affect colleges in 2021? While I hope that the vaccine will return American colleges to normalcy by fall, there are tricky questions regarding the vaccine. The first question is whether certain college employees will be classified as essential workers so they can get the vaccine earlier. Food service employees and student-facing staff members could qualify, but are they more important than K-12 staff? The second is whether colleges will require students and employees to submit proof of vaccination before returning to campus in the fall. Expect a fight over exemptions. Finally, in the shorter term, will employees and their unions require access to the vaccine before agreeing to resume normal campus operations? This fight will certainly play out in K-12 education and may spill over into higher ed.

(3) What will come out of Washington? The Georgia Senate runoff elections in early January will loom large here. If Democrats take control of the Senate and have a (tenuous) grip on both houses of Congress, more money is likely for state and local governments. Democratic control is probably also beneficial for direct funding to colleges, but state and local government funding appears to be a much bigger partisan sticking point. And watch how state support is distributed to higher education. Does it go directly to public colleges in the form of supplemental appropriations, or does it go to student financial aid that can often be used at private colleges?

(4) How deep will program and employee cuts be? The higher education workforce has been decimated since the start of the pandemic, and many colleges have announced program cuts and layoffs. I wrote earlier this fall about how permanent cuts are coming at many colleges that are concerned about the pipeline of future college students. The newest projections going out to the high school graduating class of 2037 are pessimistic, and birth rates are likely to fall over the next few years as a result of the pandemic in spite of my personal effort to counter the trend. Colleges will also be more hesitant to invest in new programs after seeing their liquidity tested this year. Expect more cuts to come, but they may depend on…

(5) What will fall 2021 enrollment look like? Although overall enrollment this summer and fall stayed strong, new student enrollment plummeted this fall at community colleges and private nonprofit universities in particular. Declines were largest among older undergraduate students and men, which suggests that students tried to find employment during the recession instead of going to college like during normal recessions. Childcare issues could also be a concern, but enrollment among women held steady while enrollment among men fell. If students are staying away from college because they wanted an in-person experience, fall 2021 enrollment should be strong. But if students are skeptical about the value of higher education and feel the need to work to support their families, it will be a tough time going forward.

It has been a pleasure and a privilege to interact with so many wonderful people in the higher education field and beyond this year. Please stay safe, be well, and take time off to spend with loved ones to the greatest extent possible. See you in 2021!

Trends in Debt and Earnings for Common Programs of Study

The Department of Education’s updated College Scorecard dataset contains two new features at the program level. (I looked at the new institution-level data in my previous post.) The first feature is information on median Parent PLUS loan debt and the number of students whose parents take on debt. The second is earnings two years after graduation, which added onto last year’s one-year data.

In this post, I constructed a dataset of students who graduated in the 2014-15 and 2015-16 academic years combined with one-year earnings from calendar years 2016 and 2017 and two-year earnings from calendar years 2017 and 2018. (A note to analysts: the most recent data file shows debt for the 2016-17 and 2017-18 graduating cohorts, one-year earnings from the 2015-16 and 2016-17 cohorts, and two-year earnings from the 2014-15 and 2015-16 cohorts. This will result in some funky numbers, so download the big dataset instead and do your own merging.) I then pulled data for fields of study that had data from 50 or more programs at each credential level.

You can download my summary dataset here, and some key findings are below.

Undergraduate certificate

Both earnings and debt burdens are typically fairly low, and two-year earnings were always higher than one-year earnings (which was true across all programs and credential levels). The median cosmetology graduate had (reported) earnings of just $17,821 two years after graduation, but median student debt was $12,851, only about 14% of student borrowers had their parents take on Parent PLUS loans, and median PLUS debt was just $7,397. Vehicle maintenance and repair had the second-highest two-year earnings ($33,632, just behind nursing at $34,108), but about 34% of borrowers had Parent PLUS loans of nearly $15,000.

Associate degree

Parent PLUS loans were relatively uncommon at this level, with the exception of culinary arts (about 20% of students had parents with PLUS debt). Registered nurses earned $57,247 per year, far higher than any other field. Liberal arts/general studies graduates had modest earnings ($26,159), but their student debt burdens of $13,452 were at least $10,000 below all other fields of study.

Bachelor’s degree

Earnings two years after graduation ranged from $25,243 in fine arts to $66,218 in mechanical engineering. A large number of majors clustered between $30,000 and $35,000 in earnings, while student debt was typically between $25,000 and $31,000.  Fields dominated by adults, such as health/medical administration, had much higher student debt burdens due to their ability to access higher independent loan limits. PLUS loan amounts typically ranged between $20,000 and $30,000, but human resources ($13,637), liberal arts (16,450), design ($40,231) and film ($46,006) stood out as outliers. Film was also a concern in that about 41% of student borrowers also had Parent PLUS loans. This compares to fields like business and nursing, where 10%-15% of students had their parents take on loans.

Master’s degree

The variation in debt (from that institution only) and earnings was much larger for master’s degrees. Two-year earnings ranged from $27,941 in music to $102,895 in earnings, and debt ranged from $27,492 in curriculum and instruction to $95,823 in allied health. Only six programs had debt burdens larger than second-year earnings, led by mental health services at 1.43. Surprisingly, theology graduates (at $44,485) earned nearly as much as criminal justice graduates (at $46,269).

Doctoral degrees

Based on these data alone, going to medical school looks like a terrible life choice as two-year earnings were $58,056 compared to debt of $167,169. However, most new medical doctors do a residency of three years or so before launching into a well-paid career. Pharmacy and nursing graduates see six-figure salaries from the start and have less debt. And I have to give a shout-out to educational administration programs. The overall numbers are solid (earnings of $79,713 compared to debt of $68,877). Graduates of the department that I chair at Seton Hall earned $111,435 with debt of $62,841. Time to hit people up for donations???

A First Look at Parent PLUS Loan Burdens of Graduates

Earlier this week, the U.S. Department of Education released its long-awaited updates to the College Scorecard website and dataset. The updated institution-level dataset has two glaring omissions that carried over from last year’s update. The first is that student loan repayment rates are no longer tracked, which is frustrating given the size of the federal government’s student loan portfolio. Taxpayers and students have the right to know whether students can manage their loans without heavy reliance on income-driven repayment. The second is that post-college earnings are excluded once again at the institution level. The program-level dataset (which I will discuss in a future post) has data, but just for graduates. That’s really useful for colleges with low graduation rates!

But in good news, this year’s Scorecard includes data on Parent PLUS loans. There are currently $101 billion in Parent PLUS Loans outstanding, $10 billion more than just two years ago. Parent PLUS loans do not count in the current cohort default rate measure, but the few studies that have gained access to PLUS data suggest that default and repayment are concerns. Because the older parents of students are expected to pay off these loans as they approach retirement, Parent PLUS loans also raise concerns about the intergenerational transmission of wealth and the growing racial wealth gap in America.

In this blog post, I dig into new Scorecard data on median Parent PLUS loan debt among 2017-18 and 2018-19 graduates, focusing on bachelor’s degree recipients attending 1,103 public and private nonprofit colleges (excluding special-focus institutions) that had sufficient data on student debt and other institutional characteristics.

First of all, the median institution had median Parent PLUS debt among borrowers of $24,399 and median student debt among borrowers of $24,250. The first graph below show that median student debt and median parent debt are only weakly correlated. This is not surprising due to the presence of loan limits for undergraduate students (a maximum of $31,000 for dependent students). But it does seem like some students turn to parent loans after hitting the cap on student loans.

The Scorecard also provides an estimate of the percentage of students whose parents took PLUS loans, and the upper bound of the estimate is 15%. The next graph shows the relationship between the percentage of students whose parents take on loans and median parent debt. There is a positive relationship here, although this is driven in part by the small number of colleges with high borrowing rates. Very few colleges have more than 30% of parents taking on PLUS loans.

The next graph examines the relationship between Parent PLUS debt and the percentage of students who received Pell Grants in 2013-14 (the likely entry year for many of these graduates). There is a strong negative relationship, which could be due to expensive private colleges being more likely to have fewer Pell recipients. The parents of Pell recipients may also seek to borrow less money than non-Pell parents, which is strongly hinted at in Scorecard data that separates borrowing by Pell status.

Historically black colleges get a lot of attention for high Parent PLUS loan burdens, but this did not hold in my sample. The 50 HBCUs with complete data had median PLUS debt of $16,531 and median student debt of $29,502. This compared to $24,540 in PLUS debt and $24,000 in student debt for non-HBCUs. HBCU graduates likely have more in student debt because students can borrow more under their own name if their parents do not qualify for PLUS loans. The two graphs below show no consistent relationship between parent debt and the share of Black or White students.

Finally, I peeked at institutional selectivity (proxied here by ACT composite scores). As median ACT scores rose, parent debt also rose. This is likely due to selective colleges being much more expensive and parents being willing to spend lots of money to send their children there.

My next post will dive into the new program-level data, but I’m happy to take requests for additional institution-level factors to consider that could affect parent debt. This could turn into an interesting short journal article!