accountability – Page 5 – Robert Kelchen

Who Exactly is a “Hard Working” Student?

Most people don’t like giving money to slackers. After all, people who work hard for their money don’t want to hand it over to people who aren’t working so hard—a very reasonable position to take. But the challenge is defining what “hard working” actually means, particularly as individuals’ definitions may differ and it is generally difficult or expensive to observe someone’s effort level. (I’m not the only academic to note this challenge.) A classic example of struggling to define hard work comes from the welfare reform debates of the 1980s and 1990s (which eventually resulted in major welfare reform in 1996) and has clear linkages to higher education debates.

Similar to the famous “welfare queen” example that Ronald Reagan first used in 1976 of a woman who defrauded the federal welfare system, there have been concerns about “Pell runners”—people who go from college to college in an effort to defraud taxpayers instead of get an education—for years. While the U.S. Department of Education estimates that 2.5% of Pell dollars are improperly spent (either due to fraud or errors by the college or the federal government), there are concerns that students are not putting in sufficient effort to get support from the federal government. In 2011, then-Representative Denny Rehberg (R-MT) called the Pell program “the welfare of the 21^st century,” a concern shared by some who point to the billions of dollars each year going to students who do not graduate (although barriers to graduation may include family or financial issues in addition to academic success or work ethic).

Politicians supporting increased funding for financially needy students have taken great care to explain how their plan helps “hard working” students in an effort to gain political support. For example, President Obama and the White House communications team have repeatedly referred to “hard working” students in describing the administration’s plans for tuition-free community college and other proposals for reform. Obama’s tuition-free community college proposal defines “hard working” as having a 2.5 GPA, enrolled half-time, and making satisfactory progress toward a degree. These requirements are tighter than the Pell Grant’s rules, which require a 2.0 GPA and satisfactory academic progress with no enrollment intensity requirement. Last week, two Democrats on the House Education and the Workforce Committee referred to current Pell recipients as “hard working” in their appeal to use a $7.8 billion surplus in the Pell program to increase awards to current students.

As in most cases in life, it’s worth reading the fine print to see exactly who politicians, advocates, or others consider to be “hard working” students. The term sounds really good, but be wary of people defining the term in such a way that it aligns with their political priorities. I don’t have a perfect definition of what it means to be hard working in college, so I would love your suggestions in the comments section below.

Which Colleges Benefit from Counting More Graduates?

The official graduation rate that colleges must report to the U.S. Department of Education has included only first-time, full-time students who graduate from that college within 150% of normal time (three years for a two-year college or six years for a four-year college). Although part-time and non-first-time students were included in the federal government’s Integrated Postsecondary Education Data System (IPEDS) collection for the first time this year, it will still be about another year or so before those data will be available to the public. (Russell Poulin at WICHE has a nice summary of what the new IPEDS outcome measure data will mean.)

In the meantime, the Student Achievement Measure (SAM)—a coalition of organizations primarily representing public colleges and funded by the Gates Foundation and Carnegie Corporation—has developed in response to calls for more complete tracking of student outcomes. SAM has launched a public relations campaign that has been quite visible in the higher education community using the hashtag #CountAllStudents to show the number of students who aren’t captured in the current graduation rate metric. (Barack Obama and Sarah Palin are two well-known examples.)

But what can be learned from a more complete picture of graduation rates? In this blog post, I examined SAM outcome data for 54 participating colleges in four states (California, Maryland, Missouri, and South Carolina) to see the extent to which graduation rates for first-time, full-time students at four-year universities changed by counting students who transferred and graduated elsewhere as a success, as well as looking at the percentage of students still enrolled after six years. I focused on first-time, full-time students here so I could compare the current graduation rate metrics to alternative metrics; completion rates for part-time students can be a topic for another day. The data can be downloaded here, and a summary is below.

Average graduation rate for first-time, full-time students at the same university within six years: 57%

Average graduation rate for first-time, full-time students anywhere within six years (SAM): 66%

Gain from SAM metric: 9%

Still enrolled anywhere, but no bachelor’s degree: 15%

The first figure below shows the distribution of IPEDS and SAM graduation rates, and it shows that they are pretty strongly related. The correlation between the two graduation rates is 0.966, which is a nearly-perfect relationship.

But colleges with lower IPEDS graduation rates did tend to gain more from the SAM graduation rate than those with higher graduation rates, as shown below. Six colleges with IPDS graduation rates between 35% and 70% had at least 15% of students graduate from another college, including five of the six universities participating in SAM from South Carolina. On the other hand, UCLA (with a 90% graduation rate in IPEDS) gained just 2% from the SAM metric. This suggests that a more complete definition of a graduate will help to at least slightly narrow graduation rate gaps.

It is also stunning to see the percentage of students who were still enrolled in college after six years. While the average college in my sample had 15% of its first-time, full-time students still plugging away somewhere, most of the less-selective colleges with higher percentages of lower-income and minority students still had at least 20% of students still enrolled. The new IPEDS metrics will count students through eight years, which should give a better picture of completion rates. I’m excited to see those metrics come out in the future—and hopefully incorporate them in future versions of the Washington Monthly college rankings.

Which Colleges’ Students Use Income-Driven Repayment Plans? We Don’t Know

The Obama Administration has made expanding access to income-driven repayment (IDR) plans for federal student loans a key part of its higher education policy agenda. The U.S. Department of Education now offers four different IDR plans, all of which allow former students to tie their payments to their income instead of the traditional system of fixed monthly payments. The newest plan, Revised Pay as You Earn (REPAYE), allows millions of students with federal loans to pay 10% of their income above 150% of the federal poverty line—which can represent a significant decline in monthly payments for students with modest incomes relative to their debt burdens.

As IDR plans have become more generous, more students have signed up for these plans. In the third quarter of Fiscal Year 2013, only $72.3 billion in Direct Loans was tied to income-based plans while $247.3 billion was tied to a traditional payment plan. By the first quarter of Fiscal Year 2016, the amount of loans in IDR tripled to $232.5 billion, while the amount in traditional payment plans increased to $353.3 billion—meaning that a majority of additional Direct Loan debt was being repaid via income-driven plans. Data released by the White House show that about one-fifth of students are enrolled in IDR as of early 2016, double the rate of just two years ago.

Income-driven repayment plans likely benefit two different types of students. The first group of students includes those for whom college simply didn’t work out in terms of increasing their earnings potential. IDR is an important safety net for these students, as it helps to insure against the risk of high student loan payments relative to one’s income. Given that students with less than $5,000 in debt are nearly twice as likely to default on their loans than those with more than $100,000 in debt, the availability of IDR should help these students the most.

But a second group of students appears to be the more common users of income-driven plans—graduate students in relatively low-wage fields, particularly those who qualify for the Public Service Loan Forgiveness (PSLF) program that limits payments to a 10-year period instead of 20-25 years for those working for a qualifying nonprofit or public-sector organization. Jason Delisle of New America (who is moving to the American Enterprise Institute soon) has repeatedly raised concerns about the fiscal impacts of IDR for graduate students, noting that the typical borrower in PSLF has between $60,000 and $70,000 in debt and graduate programs have incentives to further raise tuition as the typical student won’t pay back the additional dollars borrowed. Georgetown Law School actually did this by creating a Loan Repayment Assistance Program that covered the loan payments of students who worked in public service and made less than $75,000 per year.

Given the rising cost of IDR programs, it would be useful to know which colleges encourage their students to enroll in income-driven plans or provide assistance to help navigate an often-complex process to annually certify their income. And it would be even more helpful to get this information broken down for undergraduate and graduate students, as the types of students enrolled in IDR likely differ across these two groups. Yet, as with many other important issues (such as graduation rates for Pell Grant recipients or the default rates on PLUS loans), this information is not yet available to the taxpaying public. The White House did release the following chart last week of the number of borrowers in IDR by state, but this chart (released as a picture instead of a spreadsheet!) doesn’t get at the behaviors of individual colleges while also excluding Washington, DC:

The Department of Education’s Office of Federal Student Aid has the ability to release data on which colleges’ students use income-based repayment plans and whether those students are undergraduates with low earnings who are hard on their luck or grad students with lots of debt but incomes at or above the national average. Releasing these data would help inform conversations about the value of IDR plans and what colleges and loan servicers can do to help enroll the neediest students in these programs.

(Still) Don’t Dismiss Performance Funding Research

I like the idea of funding public colleges and universities based in part on their former students’ outcomes—and I’m far from the only one. Something in the ballpark of three dozen states have adopted some sort of a performance-based funding (PBF) system, with more states currently discussing the program. Given that many states currently fund colleges based on a combination of enrollment levels and historical allocations that can be woefully out-of-date, tying some funding to outcomes has an intuitive appeal.

However, as a researcher of accountability policies in higher education, I am concerned that some colleges may be responding to PBF in unintended ways. At this point, as I briefly summarized in a recent piece at The Conversation, there is evidence that PBF may adversely affect access to college for moderately prepared students as well as the types of postsecondary credentials awarded. My newest contribution was a recently published article in the Journal of Education Finance that found both two-year and four-year colleges subject to PBF saw less Pell revenue than other colleges not subject to PBF.

Since that article finished the peer review and copy editing processes and was posted online two weeks ago, I’ve been expecting a response from one of the largest organizations advocating for PBF. HCM Strategists, a DC-based advocacy group that is quite effective in lobbying and policy development, has traditionally been a strong supporter of PBF. (Disclaimer: I’ve gotten funding from them for a project on a different topic in the past.) In 2013, an HCM director responded to a high-quality paper by David Tandberg and Nick Hillman (that was later published in JEF) by writing an Inside Higher Ed piece called “Don’t Dismiss Performance Funding.” In this piece, they call the research “flawed” and “simplistic,” neither of which are particularly true. I wrote a blog post called “Don’t Dismiss Performance Funding Research,” in which I wasn’t too pleased with their response.

Today, HCM director Martha Snyder has a much more nuanced IHE essay on my and Luke’s work entitled “Jumping to Conclusions,” saying that our work should not be used “to draw any meaningful conclusions” on PBF. Snyder discusses what she perceives as some of the limitations of our work. The most notable one is that multiple types of PBF policies are lumped together in the analyses. That is necessary due to data limitations—there is no comprehensive archive of the nuances of PBF plans prior to the early 2010s. However, general trends in PBF policies across states are partially captured by the year fixed effects in the regression (standard practice in panel analyses), which also help to account for these factors.

Snyder also suggests that some states have been encouraging students to enroll in community colleges, which is definitely the case (although somewhat less so prior to 2012-13, the last year of our analysis due to the pace at which new data become available). If this were true, it would explain decreases in per-FTE Pell revenue at four-year colleges, but also increase Pell revenues at two-year colleges. Instead, we saw nearly identical negative point estimates, which raise further cause for concern. (Could this affect for-profit enrollment? I can’t really tell with federal data, but a state-level analysis here would be great.)

I appreciate HCM’s work in helping states implement more modern funding programs, but it is imperative that influential policy organizations work with the research community before drawing any meaningful conclusions about the potential unintended consequences of PBF—especially as the stakes become higher for students and colleges alike. The small, but growing, body of literature on colleges’ responses to PBF suggests that collaboration among interested parties would be far more productive than attempting to dismiss findings from peer-reviewed research that suggest caution may be in order. I’m happy to do what I can to summarize the literature on unintended consequences while working to move forward policy discussions on future versions of PBF.

Fewer Poor Students Are Being Enrolled in State Universities–Here’s Why

This post initially appeared at The Conversation, and is co-authored with my Seton Hall colleague Luke Stedrak.

States have traditionally provided funding for public colleges and universities based on a combination of the number of students enrolled and how much money they were allocated previously.

But, in the face of increasingly tight budgets and pressures to demonstrate their effectiveness to legislators, more and more states are tying at least some higher education funding to student outcomes.

As of 2015, 32 states have implemented a funding system that is based in part on students’ performance in at least some of their colleges. In such states, a portion of state funding is based on metrics such as the number of completed courses or the number of graduates.

Research shows that performance-based funding (PBF) has not moved the needle on degree completions in any substantial way. Our research focuses on the unintended consequences of such funding policies – whether colleges have responded to funding incentives in ways that could hurt disadvantaged students.

We find evidence that these systems may be reducing access for low-income students at public colleges.

Just a popular political strategy?

What is performance-based funding (PBF)? And does it improve college completion rates?

Performance funding, the idea of tying funding to outcomes instead of enrollment, was first adopted in Tennessee in 1979. It spread across the country in waves in the 1990s and 2000s, with some states dropping and adding programs as state budget conditions and political winds changed. In this decade, several states have implemented systems tying most or all of state funding to outcomes.

By basing funding on outcomes such as course completions and the number of degrees awarded, PBF has become a politically popular strategy to improve student outcomes. It has received strong support from the Bill and Melinda Gates and Lumina Foundations – two big players in the higher education landscape.

However, the best available evidence suggests that PBF systems generally do not move the needle on degree completions in any substantial way.

For example, a study of Washington state’s PBF program by Nick Hillman of Wisconsin, David Tandberg of Florida State and Alisa Hicklin Fryar of University of Oklahoma showed no effects on associate degree completion at two-year colleges. The study found positive effects on certificates in technical fields that took less time to complete, but those were the ones that were not as valuable in the labor market.

When Tandberg and Hillman conducted a nationwide study, they found no effect overall of PBF programs on degree completions at two-year and four-year colleges.

However, the small number of PBF programs that had been in effect for at least seven years (giving colleges plenty of time to change their practices in response) did appear to increase the number of bachelor’s degrees awarded by a few percentage points.

More selective and lower standards

While there is no significant evidence of impact, there have been many unintended consequences of this policy.

There is a growing body of evidence, for example, that shows that colleges may be trying to change both their student body and their academic standards in order to meet the state’s performance goals as well as their own priorities.

A research team at Teachers College who interviewed administrators in three states with “high-stakes” PBF systems (Indiana, Ohio and Tennessee) found that colleges facing PBF were both becoming more selective in accepting students and lowering academic standards among current students in an effort to have more students graduate.

A new study by Mark Umbricht and Frank Fernandez at Penn State and Justin Ortagus at University of Florida used data on incoming students to show that Indiana colleges increased selectivity in response to PBF.

They estimated that Indiana colleges lowered admissions rates by nearly 10 percent and increased ACT scores by nearly a full point compared to similar colleges in other states.

In our research, published recently in the Journal of Education Finance, we examined whether public two-year and four-year colleges nationwide changed how they either received or spent money in response to performance funding systems.

We found that colleges generally did not change spending on instruction or research, but they did see significantly less revenue from federal Pell Grants that are primarily given to students with family incomes below US$60,000 per year, suggesting fewer low-income students enrolled. We estimated a statistically significant decline in Pell revenue of about 2 percent at both two-year and four-year colleges.

We also found that four-year colleges offered more institutional grant aid, potentially in the form of merit-based scholarships to attract higher-income students with a greater likelihood of success.

Implications for policy

Although research suggests that performance funding systems have not been particularly effective in increasing the number of degrees that public colleges grant, the fact is that PBF is being adopted in more states. For example, five more states have adopted PBF since 2014, with additional states debating whether to adopt plans of their own.

We believe, this is unlikely to go away anytime soon.

And many states’ existing funding systems are highly inequitable. They favor research universities over less-selective colleges, even though less-selective colleges enroll the lion’s share of low-income students.

States should consider placing provisions in both their enrollment-based and performance-based funding systems to encourage colleges to continuing to enroll an economically diverse student body.

Several states, such as Arkansas, Ohio and Florida, provide additional incentives for graduating Pell Grant recipients. But states need to ensure that these additional funds are sufficient to encourage colleges to enroll academically qualified students from low-income families as well.

To do this, states would need to take three concrete steps. First, states should provide incentives for colleges to not raise admissions standards beyond what is needed to succeed in coursework. Second, they could also provide additional funds for graduating students who require a modest amount of remedial coursework (courses to build skills of less-prepared students), before taking college-level classes.

And finally, it is important that state policymakers and college leaders have honest conversations about the goals of PBF systems and what colleges need to improve their performance. This could help reduce the unintended outcomes.

Understanding Financial Responsibility Scores for Private Colleges

This post originally appeared on the Brookings Institution’s Brown Center Chalkboard blog.

The stories of financially struggling private colleges, both nonprofit and for-profit, have been told in many news articles. Small private nonprofit colleges are increasing tuition discount rates in an effort to attract a shrinking pool of traditional-age students in many parts of the country, while credit rating agency Moody’s expects the number of private nonprofit college closings to triple to about 15 per year by next year. Meanwhile, the for-profit sector has seen large enrollment decreases in the last few years amid the collapse of Corinthian Colleges and the University of Phoenix’s 50 percent drop in enrollment since 2010.

In an effort to identify financially struggling colleges and protect federal investments in student financial aid, Congress requires the U.S. Department of Education to calculate financial responsibility composite scores that are designed to measure a college’s overall financial strength based on metrics of liquidity, ability to borrow additional funds if needed, and net income. Private nonprofit and for-profit colleges are required to submit financial data each year, while public colleges are excluded under the assumption that state funding makes them unlikely to become insolvent.

Though not commonly known, these financial responsibility scores have important consequences for private colleges. Scores can range between -1.0 and 3.0, with colleges scoring at or above 1.5 being considered financially responsible and are allowed to access federal funds. Colleges scoring between 1.0 and 1.4 can access financial aid dollars, but are subject to additional Department of Education oversight of their financial aid programs. Finally, colleges scoring 0.9 or below are not considered financially responsible and must submit a letter of credit of at least 10 percent of federal student aid from the previous year and be subject to additional oversight to get access to funds. The Department of Education can also determine that a college does not meet “initial eligibility requirements due to a failing composite score” and assign it a failing grade without releasing a score to the public. In this case, a college will be immediately subject to heightened cash monitoring rules that delay the federal government’s disbursement of financial aid dollars to colleges. However, private nonprofit colleges dispute the validity of the formula, claiming it is inaccurate and does not meet current accounting standards.

I first examined the distribution of financial responsibility scores among the 3,435 institutions (1,683 private nonprofit and 1,752 for-profit) with scores in the 2013-14 academic year, using data released to the public earlier this month. As illustrated in the figure below, only a small percentage of colleges that were assigned a score did not pass the test. In 2013-14, 203 colleges (73 nonprofit and 130 for-profit) received a failing score and an additional 136 (51 nonprofit and 85 for-profit) were in the oversight zone. Most of the colleges with failing scores are obscure institutions, such as the Champion Institute of Cosmetology in California and The Chicago School for Piano Technology. However, a few of these institutions, such as for-profit colleges Charleston School of Law, ITT Technical Institute, and Vatterott Colleges as well as nonprofit colleges Erskine College in South Carolina, Everglades University in Florida (a former for-profit) and Finlandia University in Michigan are at least somewhat better-known.

I then examined trends in financial responsibility scores since when scores were first released to the public in the 2006-07 academic year. The first finding to note in the below table is that the number of nonprofit colleges that did not pass the financial responsibility test nearly doubled between 2007-08 and 2008-09, including more than one in six institutions. Much of this increase appears to be due to the collapse in endowment values, as even a decline in a rather small endowment would affect a college’s score through reducing net income. During the same period, there was only a slight increase in the number of for-profit colleges facing additional oversight.

The second interesting trend is that in spite of concerns about the viability of small colleges with high tuition prices since the Great Recession, the number of colleges that either received a failing score or faced additional oversight has slowly declined since 2010-11. Only 12 percent of for-profits and seven percent of nonprofits failed in 2013-14, reflecting a general stabilizing trend for struggling private institutions. Although there are certainly valid concerns about how these scores are calculated, most colleges with failing scores and some others facing additional oversight are likely on shaky financial footing. Many of these colleges with failing scores—particularly for several years in a row—will be forced to consider merging with another institution or closing their doors entirely in the near future. Other colleges closer to the passing threshold may be facing tight budgets for years to come, but their short-term viability is generally secure.

It is unlikely that a substantial number of students and families know that financial responsibility scores even exist, let alone use them in their college choice decisions. However, these scores do provide some potential insights into the financial stability of a college and could potentially be included in the new College Scorecard tool. Students who are considering attending a college that repeatedly receives a failing score should ask tough questions of college officials about whether they will be financially solvent several years from now. Policymakers should use these scores as a way to identify financially struggling institutions and provide support for ones with solid academic outcomes, while also asking tough questions about the viability of cash-strapped colleges that academically underperform similar colleges.

What the Leading Republican Presidential Candidates Are Saying About College Affordability

With cumulative student loan debt exceeding $1.2 trillion and the average net price of college attendance continuing to rise, college affordability has become an important issue in the 2016 presidential election. Most of the attention on this topic has been in the Democratic primary, in which Vermont Senator Bernie Sanders and former Secretary of State Hillary Clinton both have ambitious plans to make public colleges either tuition-free (Sanders) or debt-free (Clinton) that have played a prominent role in their campaigns.

College affordability has played a much smaller role in the Republican primary to this point, with topics such as foreign policy and immigration getting far more attention from the candidates. Yet the rising price of college is likely to be an important issue in the general election, particularly among younger adults who tend to lean toward supporting Democratic candidates. Here, I examine the leading Republican candidates’ positions on how to make higher education more affordable for students and their families.

Donald Trump

The billionaire businessman and political novice has gained attention recently for his foray into for-profit higher education through the Trump Entrepreneur Initiative, which was previously known as Trump University before New York’s attorney general sued to stop Trump from using the term “university.” Trump is also facing lawsuits from former students who claimed that they got no value from their investment of up to $35,000 in real estate seminars.

In multiple interviews, Trump has stated his intention to either close or substantially downsize the U.S. Department of Education, although much of his rationale appears to be due to opposition to the Common Core standards at the K-12 level. In his only statement regarding higher education affordability, Trump has criticized the Department of Education for making a profit on the federal student loan program. Trump shares this view with many Democratic legislators, even though government agencies have different opinions about the profitability of student loans.

Sen. Marco Rubio

The first-term Florida senator has significant experience with higher education, having been an adjunct professor of political science at Florida International University between 2008 and 2015. In the Senate, Rubio has co-sponsored bipartisan legislation that would make income-based repayment the default option for federal student loans and would require colleges to report additional data on student outcomes. He has also co-sponsored a bipartisan bill that would open the federal financial aid program to alternative education providers that can meet certain outcome standards and gain accreditation, although he has also faced criticism for his defense of for-profit colleges whose access to federal funds has been threatened.

Rubio has also supported ideas that are likely to appeal to Republican primary voters but may not be as popular with independent-minded voters in a general election. Like Trump, Rubio has also called for the elimination of the Department of Education. Rubio has noted that some programs currently administered by the federal government should continue (such as the federal student loan program), but they could be absorbed by the Department of the Treasury or other agencies. He has sponsored legislation in the Senate to allow students to use private income share agreements, which function similarly to private loans with income-based repayment, to finance their education. This idea has been criticized as a form of indentured servitude, even though federal loans function in similar ways.

Sen. Ted Cruz

The first-term Texas senator has said relatively little about college affordability, other than noting that he just recently paid off his $100,000 in student loan debt. Like the other GOP candidates, he has called for the vast majority of the Department of Education to be eliminated. Cruz would appoint an Education Secretary whose sole goal would be to determine which programs should remain and give most funding to the states via block grants. In 2012, Cruz indicated that he would keep federal student aid funds in the federal budget, but transfer funding and authority to the states.

As Democrats will certainly keep at least 40 seats in the U.S. Senate (the minimum needed to sustain a filibuster to block legislation) and may gain a majority in this fall’s election, it doesn’t appear that the Department of Education will go away anytime soon. But if any of these three Republican candidates are elected, their actions on affordability—and the implications for both students and taxpayers—are likely to be quite different than what a Clinton or Sanders administration will be proposing.

Comments on New America’s Financial Aid Reform Plan

In the last few years, there have been a dizzying number of proposals put forth to reform the complex and confusing system of student financial aid in the United States. From a series of 16 proposals released in the 2012-13 academic year through the Gates Foundation’s Reimagining Aid Design and Delivery project to Sara Goldrick-Rab and Nancy Kendall’s proposal for a free two-year public college option to a host of financial aid reforms proposed by the 2016 presidential candidates, there is no shortage of ideas to reform financial aid. (And I’ve got plenty of ideas of my own.)

The newest thoughtful proposal to add to the mix comes from New America’s education team, many of whom have significant experience in state and/or federal higher education policy. In this proposal, “Starting from Scratch: A New Federal and State Partnership in Higher Education,” the New America team proposes completely throwing out the current federal financial aid system and replacing it with a federal/state partnership with maintenance of effort requirements for states and accountability requirements for colleges while requiring colleges and states to cover students’ unmet financial need. Below, I summarize some of the key pieces of the proposal that I like, some that I dislike, and some that require a lot of additional thought.

Things I like

(1) Unlike some of the other financial aid proposals out there, the New America proposal has provisions to go beyond public colleges and universities to cover at least a segment of private nonprofit and for-profit colleges. This is an important recognition, as all colleges that currently receive federal financial aid are public in one sense of the word. A financial aid system that only supports students attending public colleges could result in a stampede to public institutions, which could be a problem in states with historically small public sectors (such as in the Northeast).

(2) Plowing funds currently spent on tax credits and deductions into student financial aid isn’t a new idea (and New America raised it in 2013), but it makes perfect sense. Research has shown that tax credits and deductions have no effect on college enrollment or completion, likely because the money gets to students well after enrollment (assuming they remember to claim the funds on their tax return).

(3) I’m glad to see the New America team questioning the current definitions of both the cost of attendance (COA) and the expected family contribution (EFC). As I’ve shown in research with Sara Goldrick-Rab and Braden Hosch, the non-tuition portions of the COA are determined by colleges and vary drastically within the same geographic area. The EFC has been criticized as being an outdated formula that doesn’t adequately reflect a family’s ability to pay. I’d like to see New America dig in deeper on both of these areas.

Things I don’t like

(1) I’m generally uncomfortable with the idea of ‘maintenance of effort’ proposals that require states to keep a certain level of funding per full-time equivalent (FTE), as the New America plan does. As I’ve written about before, states tend to think about funding in terms of overall funding amounts (not on a per-FTE basis) because they don’t directly control enrollment levels. If this program shifts a larger percentage of enrollment to public colleges, required state funding levels for higher education will rise at the same time states are already legally or constitutionally required to fund other priorities. I also think that maintenance of effort requirements will result in states lobbying Congress to defeat this proposal (and I also think that states would opt out despite the authors’ insistence that it wouldn’t happen).

(2) I don’t like states choosing which colleges could receive financial aid under the partnership model. I would rather see all colleges that meet quality and accountability thresholds receive funding regardless of their state affiliation or tax status. It may very well be the case that fewer for-profits or private nonprofits meet the threshold, but as long as the threshold is justified, I’m fine with that. But excluding all non-public institutions immediately (and at the whim of state policymakers) doesn’t make sense to me.

(3) I’m concerned about getting rid of federal loans to cover the EFC, while simultaneously placing additional regulations on private loans. This could result in students not being able to get access to credit at reasonable interest rates, as private lenders may choose to not offer loans when students can discharge them via bankruptcy. I would much rather see an income share agreement or income-based repayment model encouraged for private loans in this case, as this gives both students and lenders some level of protection.

Unclear

(1) The New America proposal calls for states to have a larger role in holding colleges accountable for their outcomes. This makes sense for colleges that just operate in one state, but is far trickier for colleges that operate in multiple states. If this were to happen, groups like the National Council for State Authorization Reciprocity Agreements (NC-SARA) would become even more important.

(2) I’m concerned that colleges would try to game the funding system on account of the requirement that 25% of students qualify for Pell Grants under the current EFC formula. If a college already has 30% of students receiving Pell Grants and has funding tied to meeting outcomes, it suddenly has an incentive to recruit a few more higher-income students with a higher likelihood of graduation. Research that I’ve done with my Seton Hall colleague Luke Stedrak (look for it soon in the Journal of Education Finance) shows that colleges in states subject to performance-based funding received less Pell funding that colleges not subject to performance funding after controlling for a host of other characteristics. It might be worth tweaking the system to reduce the possibility of gaming.

I’d love to hear your thoughts on New America’s discussion-worthy proposal. Drop me a note or leave a comment below!

How Colleges’ Net Prices Fluctuate Over Time

This piece first appeared at the Brookings Institution’s Brown Center Chalkboard blog.

As student loan debt has exceeded $1.2 trillion and many colleges continue to raise tuition prices faster than inflation, students, their families, and policymakers have further scrutinized how much money students pay to attend college. A key metric of affordability is the net price of attendance, defined as the total cost of attendance (tuition and fees, books and supplies, and a living allowance) less all grants and scholarships received by students with federal financial aid. The net price is a key accountability metric used in tools such as the federal government’s College Scorecard and the annual Washington Monthly college rankings that I compile. In this post, I am focusing on newly released net price data from the U.S. Department of Education through the 2013-14 academic year.

I first examined trends in net prices since the 2009-10 academic year for the 2,621 public two-year, public four-year, and private nonprofit four-year colleges that operate on the traditional academic year calendar. I do this for all students receiving federal financial aid (roughly 70% of all college students nationwide), as well as students with family incomes below $30,000 per year—roughly the lowest income quintile of students. Note that students from different backgrounds qualify for different levels of financial aid from both the federal government and the college they attend (and hence face different net prices). Table 1 shows the annual percentage changes in the median net price by sector over each of the five most recent years, as well as the median net price in 2013-14.

The net price trends in the most recent year of data (2012-13 to 2013-14) look pretty good for students and their families. The median net price for all students with financial aid increased by just 0.1% at two-year public colleges, 1.4% at four-year public colleges, and 1.7% at four-year private nonprofit colleges—roughly in line with inflation. The lowest-income students saw lower net prices in 2013-14 at two-year public colleges (-1.4%) and four-year private nonprofit colleges (-0.5%) and a small 0.4% increase at four-year public colleges.

Even with one year of good news, net prices are up about 15% at four-year colleges and 10% at two-year colleges since the beginning of the Great Recession in 2009, with a slightly larger percentage increase for lower-income students. Much of this increase in net prices, particularly for lowest-income students, occurred during the 2011-12 academic year.

Although some may blame the lingering effects of the recession or reduced state funding for the increase, in my view the likely culprit appears to be changes made to the federal Pell Grant program. In 2011-12, the income cutoff for an automatic zero EFC (Expected Family Contribution, and hence automatically qualifying for the maximum Pell Grant) was cut from $31,000 to $23,000. This resulted in a 25% decline in the number of automatic zero EFC students and contributed to the average Pell award falling by $278—the first decline in average Pell awards since 2005.

I next examined potential reasons for colleges’ changes in net prices. As colleges are facing incentives to lower their net price, they can do so in three main ways. Lowering tuition prices or increasing institutional grant aid would both benefit students, but they are difficult for cash-strapped colleges to achieve.

If colleges want to lower their net price without sacrificing tuition or housing revenue, the easiest way to do so is to reduce living allowances for off-campus students. Colleges have wide latitude in setting these living allowances, and research that I’ve conducted with Sara Goldrick-Rab at Wisconsin and Braden Hosch at Stony Brook shows a wide range in living allowances within the same county. Here, I looked at whether colleges’ patterns of changing tuition and fees or their off-campus living allowance seemed to be related to their change in net price.

Table 2 shows the change between the 2012-13 and 2013-14 academic years in the total cost of attendance (COA), tuition and fees, and off-campus living allowances (for colleges with off-campus students), broken down by changes in the net price. Colleges with the largest increases in net price (greater than $2,000) increased their COA for off-campus students by $1,398, while colleges with smaller increases (between $0 and $1,999) increased their COA by $829. Both groups of colleges typically increased both tuition and fees and living allowances, which together resulted in the increase in COA.

However, colleges with a reported decrease in net price between 2012-13 and 2013-14 had a different pattern of changes. They still increased tuition and fees, but they reduced off-campus living allowances in order to keep the cost of attendance lower. For example, the 131 colleges with a decrease in net price of at least $2,000 had average tuition increases of $310 while living allowances were reduced by $610. Some of these reductions in allowances may be perfectly reasonable (for example, if rent prices around a college fall), but others may deserve additional scrutiny.

The net price data provide useful insights regarding trends in college affordability, but students and their families should not necessarily expect the posted net price to reflect how much money they will need to pay for tuition, fees, and other necessary living expenses during the academic year. These metrics tend to be more accurate for on-campus students (as a college controls room and board prices), but everyone should also look at colleges’ net price calculators for more individualized price estimates as the net price for off-campus students in particular may not reflect their actual expenses.

Will Recent Protests Affect Higher Education Leadership?

Over the last week, much attention in the higher education world has turned to the saga of University of Missouri-Columbia graduate student Jonathan Butler, who engaged in a hunger strike in an effort to get Missouri’s system president Timothy Wolfe to resign due to a perceived lack of attention paid to racism on at the Columbia campus. His effort quickly gained attention via social media, particularly when Mizzou’s football team decided over the weekend not to play any more games until Wolfe was removed. Wolfe resigned today in the face of overwhelming pressure (including from Republican legislators), handing the protesters a huge win.

Wolfe’s speedy resignation clearly shows both the power of social media and the power of big-time college athletics. For example, Wolfe’s $459,000 salary was far less than the $1 million Mizzou would have had to pay Brigham Young University for cancelling the game, not to mention additional revenues Mizzou would have gained from a lucrative neutral-site game in Kansas City. It’s truly remarkable that arguably the two most influential college football programs of the decade are Northwestern (for its players’ attempt to unionize in recent years) and Mizzou—programs that have combined for zero conference championships since 2001.

But the Mizzou protests may have significant implications for higher education leadership going forward. New university or system presidents are being protested in Iowa and North Carolina, and Mizzou doesn’t seem that atypical among large universities in concerns about racism and leadership. Below are three main ways in which the leadership of colleges and systems may change as a result of these recent protests:

(1) Will the voices of students, faculty, staff, and the public in the presidential selection process change? One way to potentially avoid protests like in Missouri, Iowa, and North Carolina would be to give stakeholders a larger voice in the selection process of new leaders. These stakeholders often have a representative on the selection committee, but these committees are increasingly shielded from public view in order to keep candidates’ identities anonymous for as long as possible. Groups who are unhappy with current leadership may seek representation on the selection committees, which could improve the perceived legitimacy of presidential searches but result in a longer timeline for selecting new leaders.

(2) Will this change who is willing to become a college or system president? Much has been made about the protests in Iowa and North Carolina being due to the selection of non-academics as leaders, and Wolfe had no background in higher education prior to his selection. This sounds like an opportunity for academics to regain their traditional position as college presidents, but I have to wonder if your garden-variety distinguished professor is willing to take on such a high-pressure public role in light of additional protests and demands. (In addition, managing an athletic department might have just gotten more challenging.)

(3) Will future presidents demand financial protection against the risk of ouster? The typical tenure of a college president has fallen from 8.5 years in 2006 to 7 years in 2012 amid pressures from trustees, legislators, donors, and internal stakeholders. If the result of Wolfe’s ouster is additional resignation demands at other colleges, I would expect to see larger buyout packages placed into future presidents’ contracts in order to insulate leaders from the threat of losing their jobs. College football provides some good examples here, as a number of head coaches are being paid millions of dollars to simply go away.

Although it is too early to tell whether protests at other colleges will result in leaders resigning or being forced out, the potential seems to be there if stakeholders coordinate their actions around a popular cause. But these conditions have existed at many colleges for decades, so it’s unclear whether Mizzou’s successful protests are a one-time success for protesters or a start of more ousters.