neat ideas – Robert Kelchen

It’s Time to Suspend Federal Student Loan Payments

It is hard to believe that higher education was essentially functioning normally just two weeks ago. Then the novel coronavirus started to make itself known, with travel being suspended, in-person classes being suspended and then moved completely online, and now all on-campus operations are quickly grinding to a complete halt. Much of the American economy is also grinding to a halt thanks to social distancing practices and restrictions on certain sectors of the economy.

This sudden recession (depression?) has placed higher education under an incredible amount of strain, although our industry is far better off in the short term than many other service industries. This has also resulted in a number of proposed economic stimulus packages and other ideas to keep the economy moving. President Trump’s current higher education-related proposal is to unilaterally waive interest on student loan payments. But since this does not actually reduce payments (instead just allowing people to pay down more principal), the economic benefits of the proposal are likely to be zero if this plan survives potential legal challenges.

If the federal government wants to provide economic relief for millions of Americans who will likely be struggling with their student loan payments (or getting into income-driven repayment) over the next several months, my recommendation is relatively straightforward. Congress should seriously consider passing legislation to suspend all federal student loan payments for a period of six to twelve months. Just like the coronavirus is freezing the economy, freezing student loan payments would give Americans a chance to recover before either resuming normal payments or going onto income-driven repayment plans. A six-month halt would also give people time to navigate the complicated income-driven repayment system, which is likely to be overwhelmed in the short term.

To explain how this would work, consider a student with $15,000 in debt and six years of payments remaining. In the case of a six-month pause, the student would still have $15,000 in debt and six years of payments six months from now. Since this plan would not directly forgive any student loans, the taxpayer burden would be relatively small in the long term. The only cost would be that more struggling borrowers would enroll in income-driven repayment plans. I also would not count this six-month pause toward the required number of payments for Public Service Loan Forgiveness, as no payments would be made.

Hitting the pause button on student loans could be a good way to get more money in the hands of Americans in the short term while not resulting in a massive forgiveness of student debt. It is an idea worth serious consideration at this point.

The 2018 Net Price Madness Bracket

Every year, I take the 68 teams in the NCAA Division I men’s basketball tournament and fill out a bracket based on colleges with the lowest net price of attendance (defined as the total cost of attendance less all grant aid received). My 2017, 2016, 2015, 2014 and 2013 brackets are preserved for posterity—and often aren’t terribly successful on the hardwood. My 2015 winner (Wichita State) won two games in the tournament, while prior winners New Orleans (2017), Fresno State (2016), Louisiana-Lafayette (2014), and North Carolina A&T (2013) emerged victorious for having the lowest net price but failed to win a single game. But at least West Virginia (a regional champion last year) won two games, so maybe there is some hope for this method.

I created a bracket using 2015-16 data (the most recent available through the U.S. Department of Education for the net price of attendance for all first-time, full-time students receiving grant aid I should note that these net price measures are far from perfect—the data are now three years old and colleges can manipulate these numbers through the living allowance portion of the cost of attendance. Nevertheless, they provide some insights regarding college affordability—and they may not be a bad way to pick that tossup 8/9 game that you’ll probably get wrong anyway.

The final four teams in the bracket are the following, with the full dataset available here:

East: Cal State-Fullerton ($8,170)

West: UNC-Chapel Hill ($10,077)

South: Wright State ($14,464)

Midwest: New Mexico State ($10,213)

Kudos to Cal State-Fullerton for having the lowest net price for all students ($8,170), with an additional shout-out to UNC-Chapel Hill for having the lowest net price among teams that are likely to make it to the final weekend of basketball ($10,077). (Also, kudos to the North Carolina system for having two universities in the last eight.)

Additionally, although I didn’t do a bracket for students in the lowest family income category (below $30,000) this year, the University of Michigan has the lowest net price in that category (at $2,660). Although Michigan doesn’t serve that many low-income students, a new program (designed in part by all-star Michigan economist Susan Dynarski) guarantees four years of free tuition for in-state students with family incomes below $65,000. That’s a good step for a wealthy public university to take.

Downloadable Dataset of Marriage Rates by College

I enjoyed reading this recent piece in the Chronicle of Higher Education that looked at the “ring by spring” pressures that students at some Christian colleges face to be engaged by graduation. I looked into factors affecting marriage rates across colleges in a blog post earlier this year and found a nearly six percentage point increase in marriage rates at religiously-affiliated colleges between ages 23 and 25 relative to public institutions, as shown in the figure below.

As a data person—and someone who married his college sweetheart only three years after graduation—I wanted to share a dataset that I had already compiled for that piece so people can look through to their heart’s content. It contains data on 820 public and private nonprofit four-year colleges from the Equality of Opportunity Project, with marriage rates for cohorts ages 23-25 and 32-34 in 2014. The three colleges featured in the Chronicle piece all have higher-than-average marriage rates by age 25, with Cedarville University having a 41% marriage rate, Houghton College having a 34% marriage rate, and Baylor University having a 18% marriage rate.

You can download the dataset here, and have fun exploring the data!

A special thanks to Carol Meinhart for catching a silly error in an earlier version of the dataset, where the two marriage rate column headings were switched. It has since been fixed.

Which States Search for FAFSA Information the Most?

In advance of this week’s National Spelling Bee finals, Google released data on the word that people located in each state searched “how to spell” on a regular basis. (Kudos to South Dakota for being so interested in how to spell “college!”) I used the Google Trends tool to search for how often people in each state searched for information on the FAFSA over the last five years and one year, as well as how often they searched for the “FASFA”—a pronunciation that is like fingernails on the chalkboard for many folks in higher education.

Between 2012 and 2016, interest in both the FAFSA (in blue) and the FASFA (in red) followed a pretty typical pattern, as shown in the first graph below. Searches picked up in frequency on January 1 (the first day to file for the new application year) before peaking around March 1 (when many state aid deadlines occur) and falling off dramatically in September. But in the 2016-17 application cycle (the second graph), searches spiked near October 1 (the new first date for filing the FAFSA) with a smaller peak around January 1 and an equal peak around March 1. This shows how the early FAFSA changes did reach students and their families.

Note: The “FAFSA” is in blue and the “FASFA” is in red.

I also looked at search intensity by state over the last year, with the most intense state receiving a value of 100. Mississippi had the highest intensity of FAFSA searches, while Oregon’s value of 42 was less than half of Mississippi’s value. Louisiana and Arkansas tied for the highest FASFA value (30), while Minnesota (7) had the lowest value. Looking at FAFSA-to-FASFA search ratios (a proxy for how commonly people searched for the wrong term), Louisiana had the lowest ratio of 3.07—indicating the highest frequency of incorrect searches. Meanwhile, Minnesotans were the least likely to type “FASFA” relative to “FAFSA,” with a ratio of 10.

FAFSA and FASFA search intensity, May 31, 2016 to May 31, 2017.

State	FAFSA	FASFA	Ratio
Mississippi	100	28	3.57
Arkansas	95	30	3.17
Oklahoma	93	25	3.72
Louisiana	92	30	3.07
New Mexico	89	26	3.42
West Virginia	88	23	3.83
Idaho	87	18	4.83
Kentucky	87	23	3.78
Alabama	84	22	3.82
Tennessee	82	20	4.10
Indiana	80	22	3.64
Vermont	79	13	6.08
Maryland	79	18	4.39
Hawaii	78	9	8.67
South Dakota	78	14	5.57
Alaska	77	15	5.13
California	77	14	5.50
Wyoming	77	23	3.35
Utah	77	15	5.13
Montana	77	11	7.00
Arizona	76	18	4.22
Delaware	75	25	3.00
Rhode Island	74	18	4.11
Iowa	74	18	4.11
North Dakota	74	9	8.22
South Carolina	73	19	3.84
North Carolina	72	18	4.00
Virginia	72	15	4.80
Connecticut	72	16	4.50
Florida	72	18	4.00
Nebraska	72	13	5.54
Ohio	71	18	3.94
Missouri	71	20	3.55
Nevada	71	16	4.44
New Jersey	71	15	4.73
Maine	71	17	4.18
Pennsylvania	70	17	4.12
Minnesota	70	7	10.00
New Hampshire	68	15	4.53
Michigan	67	17	3.94
Washington	66	12	5.50
New York	66	15	4.40
Wisconsin	66	10	6.60
Georgia	65	18	3.61
Illinois	63	13	4.85
Massachusetts	60	12	5.00
Colorado	60	15	4.00
Texas	56	14	4.00
Kansas	54	14	3.86
District of Columbia	45	11	4.09
Oregon	42	8	5.25

Source: Google

Google search data can have the potential to provide some interesting insights about public perceptions and awareness of higher education, yet they have been used relatively infrequently. If there are any terms you would like me to dig into, let me know in the comments section!

Should Part-Time Students Have Their Borrowing Limited?

One of the key higher education policy interests of Senate Health, Education, Labor, and Pensions chairman Lamar Alexander (R-TN) has been to limit student borrowing in an effort to help reduce rising student loan debt. I’ve written in the past about how “overborrowing” is not as big of a concern as students not borrowing enough for college, but there is one group of students that may actually benefit from not being able to take out the maximum allowed amount in student loans.

Currently, students who attend college part-time can borrow the same amount as full-time students as long as there is space in their financial aid package. This can be a concern for students, as it means that they can run out of federal loan eligibility before they complete a bachelor’s degree. Current federal loan limits are the following:

Year in college	Dependent student	Independent student
First	$5,500	$9,500
Second	$6,500	$10,500
Third	$7,500	$12,500
Fourth and beyond	$7,500	$12,500
Lifetime	$31,000	$57,500

This equates to about four and a half years of borrowing at the maximum for dependent students and five years for independent students. Given that a sizable percentage of students complete a bachelor’s degree in more than five years, running out of loan eligibility before graduation can be a real concern for students. This is particularly true among students who begin at a community college, where tuition is relatively low compared to at a four-year college. If a student reasonably expects to take six years to complete a bachelor’s degree, then she and her financial aid office should have a conversation about how to best preserve her loan eligibility for when she needs it the most.

A fairly straightforward way to reduce the number of students who exhaust their loan eligibility would be to allow students to get a certain amount of money per credit hour. Students can currently receive a Pell Grant for up to 12 full-time equivalent semesters, with full-time defined as taking at least 12 credits. The current loan limit could be divided by 12 (roughly $2,600 per semester), or this could be done on a per-credit basis (perhaps $200 per credit) to recognize that students who take more classes need to work less.

A completely different proposal would allow students to use their student loan eligibility in any way they see fit. For example, dependent students could use their $31,000 in two years if desired—as long as they had space in their aid package. This idea of an education line of credit was raised by Jeb Bush in his short-lived presidential campaign, but it is unclear what Senator Alexander thinks of this proposal. At this point, it seems like the idea of limiting borrowing for part-time students at an individual college’s discretion is the most likely policy outcome.

Why I Support the File Once FAFSA Act

This year will mark the biggest change to the federal financial aid process in quite a few years, with students being able to file the Free Application for Federal Student Aid (FAFSA) for the 2017-18 academic year on October 1, 2016 instead of January 1, 2017 using 2015 tax data. This change, known as prior prior year (PPY) or early FAFSA, has the potential to give more students information about their federal financial aid eligibility around when they are applying to colleges. My research on the topic (thanks to the generous support and assistance of my friends at the National Association of Student Financial Aid Administrators) found that most students will see similar Pell Grant awards under PPY than under the current system, which helped alleviate concerns about what PPY would mean for both the federal budget and financial aid offices. However, I remain concerned that colleges will not notify students of institutional aid earlier than under current rules due to concerns about their financial aid budgets.

While prior prior year is a step in the right direction for students and their families, there really isn’t a good reason why many students have to fill out the FAFSA every year. While the U.S. Department of Education claims that it takes the average student 21 minutes to file the FAFSA, this number is undoubtedly higher for students with more complex family situations or students whose parents struggle to navigate the form due to limited English proficiency or the FAFSA’s complicated instructions. As a result, an estimated 10% of Pell-eligible students who remained enrolled in college fail to refile the FAFSA.

In 2013, I wrote a piece in The Chronicle of Higher Education with Sara Goldrick-Rab (now at Temple University) titled “Change FAFSA Now.” In that piece, we argued for one-time FAFSA filing to reduce the burden on both students and the U.S. Department of Education. Today, I am happy to see a piece of legislation called the File Once FAFSA Act of 2016, introduced by Rep. Bobby Scott (D-VA), that would allow dependent Pell Grant-eligible students to file the FAFSA just once as long as they remain dependents. (Students with large changes in family income could get their expected family contribution (EFC) changed by talking with their financial aid office.)

While I am pleased to support the legislation, I would like to see two additional groups of students become eligible for a one-time FAFSA. The first group is those students who file the FAFSA just to receive a federal unsubsidized loan. All students attending participating colleges can receive these loans regardless of financial need, so making students repeatedly file the FAFSA just to get these loans makes little sense. This would be particularly beneficial for graduate students, who can no longer receive any federal subsidized loans.

The second group of students who should become eligible is independent students with dependents of their own. In the 2011-12 academic year, 61% of students in this category had an EFC of zero—reflecting a large amount of financial need. This compares to just 24% of dependent students having a zero EFC. Moreover, in a 2015 article, I showed that over 98% of independent students without dependents who had a zero EFC one year and refiled the FAFSA two years later received a Pell Grant that year. Therefore, extending the one-time FAFSA to this category of students make sense.

The idea of a one-time FAFSA should garner bipartisan support, as evidenced by a similar idea being a part of former Republican presidential candidate Jeb Bush’s higher education proposal. I welcome and support Rep. Scott’s proposal as a first step to helping more students whose family circumstances don’t change much while they are in college spend time doing something more productive than completing the FAFSA.

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.

Are Income Share Agreements a Good Way to Pay for College?

This article was originally published on The Conversation. Read the original article.

Millions of Americans are struggling to pay for college. Nearly 10 million students and their families took out almost $100 billion in student loans from the federal government in the 2014-15 academic year, pushing outstanding student loan debt to more than $1.2 trillion by the end of 2015.

The traditional way to repay student loans is to make the same monthly payment each month for 10-20 years, similar to how mortgages work. But this isn’t always the best setup for students, particularly as college doesn’t always pay off immediately in terms of increased earnings.

Newly released government data show that many students are having difficulty repaying their loans after leaving college. About 40 percent of students had not been able to pay any part of the principal within three years of entering repayment.

A new idea in paying for college in the United States is Income Share Agreements (ISAs), in which students agree to pay a percentage of their future income to a private company or lender in exchange for additional money to cover college expenses.

What is an income share agreement and is it a viable option for students?

ISA and past efforts

ISAs function similarly to certain types of federal loans, which allow students to tie their student loan payments to their income.

However, the amount that undergraduates can borrow under income-based repayment plans isn’t always enough to pay for college. The typical college student straight out of high school can borrow only $31,000 from the federal government for college with a current interest rate of 4.29 percent. This means many students may need to turn to expensive private loans as an alternative.

And here is where an ISA can help. Technically, ISAs are not loans since students don’t have to pay any money back if their earnings are not adequate. This means that if students don’t make money, they could pay back less than what they took out in loans. Instead of interest rates, lenders offer students contracts with the percentage of future earnings paid to the ISA provider and the time period based on a student’s major, year in school and amount borrowed.

ISAs have been in use in Latin America for more than a decade with providers such as Lumni financing the college educations of thousands of students. In the United States, there have been a few small efforts to introduce ISAs, but they have largely been unsuccessful.

In 2014, Senator Marco Rubio (R-Florida) and Congressman Tom Petri (R-Wisconsin) introduced legislation for an income share repayment option, with a similar bill introduced in 2015 by Representatives Todd Young (R-Indiana) and Jared Polis (D-Colorado). Lawmakers in Oregon too have been pushing a similar program called Pay it Forward. However, none of these attempts worked.

Purdue plan

More recently, in a first-of-its-kind development, Purdue University launched an Income Share Agreement plan “Back a Boiler” (originally “Bet on a Boiler”) program to help juniors and seniors pay for college. This name plays on Purdue’s mascot of the Boilermaker, a vehicle outfitted to look like the 19th-century steam engines that boilermakers built throughout the country, which fits the STEM-heavy university well.

Under the Purdue plan, students would be offered a contract that would specify, based on their major, what percentage of their earnings would be paid and for how many years. Students can receive money to cover any remaining financial need after grants and scholarships, with payment terms based on the total amount of money needed.

For example, a student majoring in biological engineering and expecting to graduate in 2018 would pay 3.32 percent of her income to Purdue for 96 months after graduation in exchange for $10,000 today, while an elementary education major would pay 4.97 percent of his income back for 116 months after graduation.

Students who make less than $20,000 per year will not need to pay anything back. Their maximum lifetime payment is capped at 2.5 times the initial amount of money provided.

One size does not fit all

Although some students could benefit from ISAs, they certainly aren’t for everyone.
So, who should consider income share agreements?

In my view, income share agreements make the most sense for three groups of students.

First, students in need of additional funds beyond federal loans should consider ISAs as a potential option. Second, since ISAs are technically not loans, they may appeal to students who are particularly averse to taking on debt to pay for college. Loan aversion is particularly common among minority and first-generation students. So a product that doesn’t come with fixed payments might benefit these students.

Finally, not all students can access federal loans. About one million students attend community colleges that do not participate in the federal student loan program. Federal loans also aren’t available for educational opportunities such as bar exam prep for law students or “boot camp” courses designed to teach students particular skills outside the traditional college setting.

ISAs might be particularly well-suited to these types of programs that are closely tied to employment.

Not for high-income earners

Who might not be the right fit?

Students who don’t need to borrow beyond the $31,000 in federal loans for a bachelor’s degree are better off with federal loans.

This is particularly true for students who plan to work in public service fields and could benefit from the federal government’s Public Service Loan Forgiveness program, that can forgive debt not repaid after 10 years. The terms for ISAs likely aren’t as favorable, as private lenders may offer students contracts of longer than 10 years in order to at least break even. The 40 percent of students unable to pay down the principal on their loans are unlikely to get terms as good as with federal loans.

Students who think they’ll make a lot of money after college may not want to consider the ISAs either. ISAs require students to pay a fixed percentage of their income. So, they can be an expensive proposition for students who do really well even if the terms are better than for other majors.

These students would be better off taking on federal and private loans and then consider joining the growing number of students who are getting their loans refinanced by a new generation of private lenders, who are willing to give borrowers with successful careers loans on lower interest.

In theory, ISAs have a market, but whether students take up this new product will determine its success.

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!

Should Students Get Admission Preferences for Community Service?

A January report called “Making Caring Common” sponsored by the Harvard Graduate School of Education and endorsed by dozens of researchers and enrollment management professionals made headlines for calling on students seeking to attend elite colleges to focus less on college preparatory tests and more on community service while in high school. (The report also called on expanding the definition of what a “good” college is, but that’s a topic for another day.)

Last weekend’s New York Times included an interesting proposal from attorney Steve Cohen in response to this report. He wrote the following:

“The best way for colleges to tell kids they truly value a concern about others and a real commitment to community service is to announce that they’ll give an admissions bump of one standard deviation to anyone who spends two years after high school doing full-time AmeriCorps-type community or military service.”

Essentially, Cohen is calling for an expansion of the ‘gap year’ between high school and college. While this sort of plan has some benefits (such as giving students a chance to mature before beginning their studies and providing potential opportunities to learn more about the world), I am skeptical that a two-year community service program would actually benefit students from lower-income families:

(1) Voluntary gap years are basically just for students from wealthy families. Although research from Sara Goldrick-Rab and Seong Wan Han shows that gap years are far more common for financially-needy students, these gap years are typically so students can transition to adulthood and pay for their education. Community service jobs are unlikely to pay the bills; AmeriCorps, for example, pays their full-time employees about $1,070 per month—far less than a full-time job flipping burgers or making biscuits. Students from wealthier families can rely on their parents to subsidize them while waiting to get into an elite college, while lower-income families may expect their college-age students to help pay the bills.

(2) Delaying enrollment for two years can hurt students when they get to college. A majority of first-time students who enroll in community college already take at least one remedial course while they are in college (remediation data at four-year colleges are tricky because some states and colleges technically do not offer remedial courses). Even among students who took college preparatory coursework, delaying enrollment by two years provides ample opportunity for many of the key math and writing skills to become rusty. This can result either in higher rates of remediation (and delaying the path to a degree) or struggling in the first year of courses (which can result in the loss of financial aid). For example, research by Robert Bozick and Stefanie DeLuca finds that delayed enrollees are less likely to earn a college degree than on-time enrollees, even after controlling for academic preparation and family income.

For these reasons, I highly doubt that giving admissions preferences to students who delay college to do community service will help non-wealthy students. However, I am intrigued by the preference for students with military experience, particularly as most elite colleges enroll few veterans. Research by Amy Lutz shows that young adults from the wealthiest family income quartile are less likely to serve in the military than those from lower-income or middle-income families. Military service also offers a better compensation package than community service, although at greater risk to the individual. These people who are willing to put their lives on the line certainly deserve special consideration in admissions, while young adults who can afford to do community service for two years likely do not.