How Acela Corridor Educational Norms Look to an Outsider

Education policy discussions in the United States tend to be dominated by people living in the Acela Corridor—the densely-populated, highly-educated, and high-income portion of the United States that is served by Amtrak’s fast train from Boston to Washington, DC. Since moving from the Midwest to New Jersey four years ago to start on the tenure track at Seton Hall, I have probably logged 50 trips to Washington via Amtrak’s slower (and less-expensive) Northeast Regional train. (It sure beats driving, and Amtrak’s quiet car is a delight!)

Many of the suburban communities in northern New Jersey have median household incomes of well over $100,000 per year, which is roughly the top 20% of American families. The top 20% is notable because that is the cutoff that the Brookings Institution’s Richard Reeves uses in his new book, Dream Hoarders, to highlight how upper-income individuals have taken steps to make sure their children have every opportunity possible—typically at the expense of other families. The sheer concentration of high-income families within much of the Acela Corridor has created a powerful set of social norms regarding education that can leave outsiders flabbergasted.

Yet in spite of having two parents with bachelor’s degrees, a PhD in education, and being one half of a two-income professional household, I find myself confused by a number of practices that are at least somewhat common in the Acela Corridor but not in other parts of the country. This was highlighted by a piece in Sunday’s New York Times on affirmative action. The reporter spoke with two students at private boarding schools in New Jersey, of which there are apparently a fair number. My first reaction, as a small-town Midwesterner, was a little different than what many of my peers would think.

Here are some other things that have surprised me in my interactions with higher-income families in the Acela Corridor:

  • K-12 school choice debates. Unlike some people in the education world, I don’t have any general philosophical objections to charter schools. But in order for school choice to work (barring online options), there needs to be a certain population density. This is fine in urban and suburban areas, but not so great in rural areas where one high school may draw from an entire county. A number of Republican senators from rural states have raised concerns about school choice as a solution for this reason.
  • SAT/ACT test preparation. I attended a small-town public high school with about 200 students in my graduating class. The focus there was to get students to take the ACT (the dominant test in America as a whole, with the coasts being the exception), while also encouraging students to take the PLAN and PSAT examinations. But I never saw a sign advertising ACT prep services, nor was I even aware that was I thing people do. (I took the practice ACT that came with the exam the night before the test—that was it.) In the Northeast, there seem to be more signs on the side of the road advertising test prep than any other product or service.
  • The college admissions process. Going to a four-year college is the expectation for higher-income families in the Acela Corridor, and families treat the college choice process as being incredibly important. Using private college counselors to help manage the process, which often includes applying to ten or more colleges, is not uncommon. A high percentage of students also leave the state for college, which is quite expensive. (In New Jersey, about 37% of high school graduates head to other states to attend college.) Meanwhile, in much of the country, the goal is to get students to attend college at all rather than to get students to attend a slightly more prestigious institution. I can think of just one of my high school classmates who went out of state, and a large percentage of the class did not attend college immediately after high school.
  • Private tutoring while in college. I supplemented my income in graduate school by tutoring students in economics, typically charging between $25 and $40 per hour to meet with one or two students to help them prepare for exams. (I paid for an engagement ring using tutoring income!) I was never aware of anyone paying for private tutoring when I was an undergraduate at Truman State University, but this was a common practice at the University of Wisconsin-Madison. Nearly all of these students came from the suburbs of New York City or Washington, DC and were used to receiving private tutoring throughout their education. I got very few tutoring requests from in-state students, but they were typically paying for their own college (and thus got a substantial discount from my normal rates).

I worry about education policy discussions being dominated by the Acela Corridor regulars because their experiences are so different than what how most Americans experience both K-12 and higher education. If education committee staffers, academic researchers, and think tankers all share similar backgrounds, the resulting policy decisions may not reflect the needs of rural and urban lower-income individuals. It is important to seek out people from other walks of life to make sure policies are best for all Americans.

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Not-so-Free College and the Disappointment Effect

One of the most appealing aspects of tuition-free higher education proposals is that they convey a simple message about higher education affordability. Although students will need to come up with a substantial amount of money to cover textbooks, fees, and living expenses, one key expense will be covered if students hold up their end of the bargain. That is why the results of existing private-sector college promise programs are generally promising, as shown in this policy brief that I wrote for my friends at the Midwestern Higher Education Compact.

But free college programs in the public sector often come with a key limitation—the amount of money that the state has to fund the program in a given year. Tennessee largely avoided this concern by endowing the Tennessee Promise program through lottery funds, and the program appears to be in good financial shape at this point. However, two other states are finding that available funds are insufficient to meet program demand.

  • Oregon will provide only $40 million of the $48 million needed to fund its nearly tuition-free community college program (which requires a $50 student copay). As a result, the state will eliminate grants to the 15% to 20% of students with the highest expected family contributions (a very rough proxy for ability to pay).
  • New York received 75,000 completed applications for its tuition-free public college program, yet still only expects to give out 23,000 scholarships. Some of this dropoff may be due to students attending other colleges, but other students are probably still counting on the money.

In both states, a number of students who expected to get state grant aid will not receive any money. While rationing of state aid dollars is nothing new (many states’ aid programs are first-come, first-served), advertising tuition-free college and then telling students they won’t receive grant aid close to the beginning of the academic year may have negative effects such as choosing not to attend college at all or diminished academic performance if they do attend. There is a sizable body of literature documenting the “disappointment effect” in other areas, but relatively little in financial aid. There is evidence that losing grant aid can hurt continuing students, yet this does not separate out the potential effect of not having money from the potential disappointment effect.

The Oregon and New York experiences provide for a great opportunity to test the disappointment effect. Both states could compare students who applied for but did not receive the grant in 2017-18 to similar students in years prior to the free college programs. This would allow for a reasonably clean test of whether the disappointment effect had any implications for college choice and eventual persistence.

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Examining Variations in Marriage Rates across Colleges

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

Young adulthood is not only the time when most people attend college, but also a time when many marry. In fact, college attendance and marriage are linked and have social and economic consequences for individuals and their families.

When (and if) people get married is an important topic due to the presence of what is known as assortative mating. This phenomenon, in which a person is likely to marry someone with similar characteristics such as education, is a contributing factor to increasing levels of income inequality. In some circles, there is pressure to marry someone with a similar pedigree, as evidenced by the high-profile Princeton alumna who urged women at the university to find a spouse while in college. For people attending less-selective colleges, having the possibility of a second household income represents a key buffer against economic shocks.

In this blog post, I use a tremendous dataset compiled by The Equality of Opportunity Project that is based on deidentified tax records for 48 million Americans who were born between 1980 and 1991. This dataset has gotten a great deal of attention on account of its social mobility index, which examines the percentage of students who move well up in the income distribution by young adulthood.

I use the publicly available dataset to examine marriage rates of traditional-age college students through age 34 based on their primary institution of attendance. In particular, I am curious about the extent to which institutional marriage rates seem to be affected by the institution itself versus the types of students who happen to enroll there. My analyses are based on 820 public and private nonprofit four-year colleges that had marriage rates and other characteristics available at the institutional level. This excludes a number of public universities that reported tax data as a system (such as all four-year institutions in Arizona and Wisconsin).

The first two figures below show the distribution of marriage rates for the 1980-82 and 1989-91 birth cohorts as of 2014 for students who attended public, private religious, and private nonsectarian institutions. Marriage rates for the younger cohorts (who were between ages 23 and 25) were low, with median rates of 12% at public colleges, 14% at religiously-affiliated colleges, and just 5% at private nonsectarian colleges. For the older cohort (who were between ages 32 and 34), marriage rates were 59% at public colleges, 65% at religiously-affiliated colleges, and 56% at private nonsectarian colleges.

There is an incredible amount of variation in marriage rates within each of these three types of colleges. In the two figures below, I show the colleges with the five lowest and five highest marriage rates for both cohorts. In the younger cohort (Figure 3), the five colleges with the lowest marriage rates (between 0.9% and 1.5%) are all highly selective liberal arts colleges that send large percentages of their students to graduate school—a factor that tends to delay marriage. At the high end, there are two Brigham Young University campuses (which are affiliated with the Church of Jesus Christ of Latter-day Saints, widely known as the Mormon church), two public universities in Utah (where students are also predominately Mormon), and Dordt College in Iowa (affiliated with the Christian Reformed Church). Each of these colleges has at least 43% of students married by the time they reach age 23 to 25.

A similar pattern among the high-marriage-rate colleges emerges in the older cohorts, with four of the five colleges with the highest rates in students’ mid-20s had marriage rates over 80% in students’ early-30s.

A more fascinating story plays out among colleges with the lowest marriage rates. The selective liberal arts colleges with the lowest marriage rates in the early cohort had marriage rates approaching 60% in the later cohort, while the 13 colleges with the lowest marriage rates in the later cohort were all either historically black colleges or institutions with high percentages of African-American students. This aligns with the large gender gap in bachelor’s degree attainment among African-Americans, with women representing nearly 60% of African-American degree completions.

Finally, I examined the extent to which marriage rates were associated with the location of the college and the types of students who attended as well as whether the college was public, private nonsectarian, or religious. I ran regressions controlling for the factors mentioned below as well as the majors of graduates (not shown for brevity). These characteristics explain about 55% of the variation in marriage rates for the younger cohorts and 77% of the variation in older cohorts. Although students at religiously-affiliated institutions had higher marriage rates across both cohorts, this explains less than five percent of the overall variation after controlling for other factors. In other words, most of the marriage outcomes observed across institutions appear to be related mostly to students, and less to institutions.

Colleges in the Northeast had significantly lower marriage rates in both cohorts than the reference group of the Midwest, while colleges in the South had somewhat higher marriage rates. The effects of institutional type and region both got smaller between the two cohorts, which likely reflects cultural differences in when people get married rather than if they ever get married.

Race and ethnicity were significant predictors of marriage. Colleges with higher percentages of black or Hispanic students had much lower marriage rates than colleges with more white or Asian students. The negative relationship between the percentage of black students and marriage rates was much stronger in the older cohort. Colleges with more low-income students had much higher marriage rates in the earlier cohort but much lower marriage rates in the later cohort. Less-selective colleges had higher marriage rates for the younger cohort, while colleges with higher student debt burdens had lower marriage rates; neither was significant for the older cohort.

There has been a lot of discussion in recent years as to whether marriage is being increasingly limited to Americans in the economic elite, both due to the presence of assortative mating and the perception that marriage is something that must wait until the couple is financially secure. The Equality of Opportunity project’s dataset shows large gaps in marriage rates by race/ethnicity and family income by the time former students reach their early 30s, with some colleges serving large percentages of minority and low-income students having fewer than one in three students married by this time.

Yet, this exploratory look suggests that the role of individual colleges in encouraging or discouraging marriage is generally limited, since the location of the institution and the types of students it serves explain most of the difference in marriage rates across colleges.

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My 2017 Higher Education Finance Reading List

The middle of July marks the two-thirds point in my academic summer, so I’m spending time getting ready for the fall semester in addition to packing in as much research and fun into this wonderful time of year. I am teaching a higher education finance class at Seton Hall University for the fourth time this fall semester and just posted my syllabus for my students to look at before the semester begins.

Here is the reading list I am assigning my students for the course, which is my best effort to capture the current state of knowledge in higher education finance. I teach students who are primarily administrators and practitioners, so I especially value articles that are clearly-written and explain research methods in a concise manner. 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.

I hope you enjoy the list!

 

Introduction to higher education finance

Lumina Foundation video on how the federal government distributes financial aid to students: https://www.luminafoundation.org/looking-back-to-move-forward-4

Chetty, R., Friedman, J. N., Saez, E., Turner, N., & Yagan, D. (2017). Mobility report cards: The role of colleges in intergenerational mobility. Working paper. (Also, look at their website for data on how your favorite college fares: http://www.equality-of-opportunity.org/college/.)

Ehrenberg, R. G. (2012). American higher education in transition. Journal of Economic Perspectives, 26(1), 193-216. (link)

Madzelan, D. (2013). The politics of student aid. Washington, DC: American Enterprise Institute. (link)

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

National Center for Education Statistics (2015). IPEDS data center user manual. Washington, DC: Author. (skim as a reference) (link)

 

Institutional budgeting

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

Varlotta, L.E. (2010). Becoming a leader in university budgeting. New Directions for Student Services, 129, 5-20. (link)

Seton Hall’s FY 2016 Forms 990 and 990-T to the Internal Revenue Service: https://www13.shu.edu/offices/finance/index.cfm

The College of New Jersey’s FY 2016 audited financial statements: https://treasurer.tcnj.edu/files/2016/02/FY2016-Audited-Financials-and-Schedules-of-Federal-State-Awards.pdf

Moody’s credit rating report for The College of New Jersey: https://treasurer.tcnj.edu/files/2016/09/Moodys-TCNJ-Final-Report-8.15.2016.pdf

Information on The College of New Jersey’s budgeting cycle: https://treasurer.tcnj.edu/files/2012/06/FY2018-TCNJ-Strategic-Budget-Planning-Cycle.pdf

 

Policy analysis and higher education finance

DesJardins, S.L. (2001). Understanding and using efficiency and equity criteria in the study of higher education policy. In J.C. Smart & W.G. Tierney (Eds.), Higher education: Handbook of theory and research, Vol. 17 (pp. 173-220). Norwell, MA: Kluwer Academic Publishers. (link)

Ness, E. C. (2010). The role of information in the policy process: Implications for the examination of research utilization in higher education policy. In J. C. Smart (Ed.), Higher education: Handbook of theory and research, Vol. 25 (pp. 1-49). Dordrecht, The Netherlands: Springer. (link)

Weimer, D.L., & Vining, A.R. (1999). Thinking strategically about adoption and implementation. In Policy analysis: Concepts and practice (3rd Ed.) (pp. 382-416). Upper Saddle River, NJ: Prentice-Hall. (link)

Winston, G. C. (1999). Subsidies, hierarchy and peers: The awkward economics of higher education. Journal of Economic Perspectives, 13(1), 13-36. (link)

 

Higher education expenditures

Altonji, J. G., & Zimmerman, S. D. (2017). The costs of and net returns to college major. Cambridge, MA: National Bureau of Economic Research Working Paper 23029. (link)

Archibald, R. B., & Feldman, D. H. (2008). Explaining increases in higher education costs. The Journal of Higher Education, 79(3), 268-295.

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)

Hurlburt, S., & McGarrah, M. (2016). Cost savings or cost shifting? The relationship between part-time contingent faculty and institutional spending. New York, NY: TIAA Institute. (link)

Commonfund Institute (2015). 2015 higher education price index. Wilton, CT: Author. (skim) (link)

Desrochers, D. M., & Hurlburt, S. (2016). Trends in college spending: 2003-2013. Washington, DC: American Institutes for Research. (skim) (link)

 

Federal sources of revenue

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)

Kirshstein, R. J., & Hurlburt, S. (2012). Revenues: Where does the money come from? Washington, DC: American Institutes for Research. (link)

Pew Charitable Trusts (2015). Federal and state funding of higher education. Washington, DC: Author. (link)

Pew Charitable Trusts (2017). How governments support higher education through the tax code. Washington, DC: Author. (link)

(Note: I will add a draft paper I’m working on looking at whether law, medical, and business schools responded to a 2006 increase in Grad PLUS loan limits by raising tuition later in the semester. I’ll have a public draft of the paper to share in early November, but I think it’s good that students see a really rough draft to see how the research process works.)

 

State sources of revenue

Chatterji, A. K., Kim, J., & McDevitt, R. C. (2016). School spirit: Legislator school ties and state funding for higher education. Working paper. (link)

Doyle, W., & Zumeta, W. (2014). State-level responses to the access and completion challenge in the new era of austerity. The ANNALS of the American Academy of Political and Social Science, 655, 79-98. (link)

Fitzpatrick, M. D., & Jones, D. (2016). Post-baccalaureate migration and merit-based scholarships. Economics of Education Review, 54, 155-172. (link)

Hillman, N. W. (2016). Why performance-based funding doesn’t work. New York, NY: The Century Foundation. (link)

State Higher Education Executive Officers Association (2017). State higher education finance: FY 2017. Boulder, CO: Author. (skim) (link)

 

College pricing, tuition revenue, and endowments

Goldrick-Rab, S., & Kendall, N. (2016). The real price of college. New York, NY: The Century Foundation. (link)

Jaquette, O., Curs, B. R., & Posselt, J. R. (2016). Tuition rich, mission poor: Nonresident enrollment growth and the socioeconomic and racial composition of public research universities. Journal of Higher Education, 87(5), 635-673. (link)

Kelchen, R. (2016). An analysis of student fees: The roles of states and institutions. The Review of Higher Education, 39(4), 597-619. (link)

Levin, T., Levitt, S. D., & List, J. A. (2016). A glimpse into the world of high capacity givers: Experimental evidence from a university capital campaign. Cambridge, MA: National Bureau of Economic Research Working Paper 22099. (link)

Yau, L., & Rosen, H. S. (2016). Are universities becoming more unequal? The Review of Higher Education, 39(4), 479-514. (link)

Ma, J., Baum, S., Pender, M., & Welch, M. (2016). Trends in college pricing 2016. Washington, DC: The College Board. (skim) (link)

National Association of College and University Budget Offices (2017). 2016 NACUBO-Commonfund study of endowment results. http://www.nacubo.org/Research/NACUBO-Commonfund_Study_of_Endowments/Public_NCSE_Tables.html (skim)

 

Student debt and financing college

Akers, B., & Chingos, M. M. (2016). Game of loans: The rhetoric and reality of student debt (p. 13-37). Princeton, NJ: Princeton University Press. (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)

Chakrabarti, R., Haughwout, A., Lee, D., Scally, J., & van der Klaauw, W. (2017). Press briefing on household debt, with focus on student debt. New York, NY: Federal Reserve Bank of New York. (link)

Houle, J. N., & Warner, C. (2017). Into the red and back to the nest? Student debt, college completion, and returning to the parental home among young adults. Sociology of Education, 90(1), 89-108. (link)

Kelchen, R., & Li. A. Y. (2017). Institutional accountability: A comparison of the predictors of student loan repayment and default rates. The ANNALS of the American Academy of Political and Social Science, 671, 202-223. (link)

 

Financial aid practices, policies, and impacts

Watch the Lumina Foundation’s video on the history of the Pell Grant: https://www.luminafoundation.org/looking-back-to-move-forward-3

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)

Carruthers, C. K., & Ozek, U. (2016). Losing HOPE: Financial aid and the line between college and work. Economics of Education Review, 53, 1-15. (link)

Goldrick-Rab, S., Kelchen, R., Harris, D. N., & Benson, J. (2016). Reducing income inequality in educational attainment: Experimental evidence on the impact of financial aid on college completion. American Journal of Sociology, 121(6), 1762-1817. (link)

Schudde, L., & Scott-Clayton, J. (2016). Pell Grants as performance-based scholarships? An examination of satisfactory academic progress requirements in the nation’s largest need-based aid program. Research in Higher Education, 57(8), 943-967. (link)

Baum, S., Ma, J., Pender, M., & Welch, M. (2016). Trends in student aid 2016. Washington, DC: The College Board. (skim) (link)

 

Free college programs/proposals

Deming, D. J. (2017). Increasing college completion with a federal higher education matching grant. Washington, DC: The Hamilton Project. (link)

Goldrick-Rab, S., & Kelly, A. P. (2016). Should community college be free? Education Next, 16(1), 54-60. (link)

Harnisch, T. L., & Lebioda, K. (2016). The promises and pitfalls of state free community college plans. Washington, DC: American Association of State Colleges and Universities. (link)

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

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

 

Returns to education

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. doi: 10.1080/00221546.2017.1291258. (link)

Giani, M. S. (2016). Are all colleges equally equalizing? How institutional selectivity impacts socioeconomic disparities in graduates’ labor outcomes. Research in Higher Education, 39(3), 431-461. (link)

Ma, J., Pender, M., & Welch, M. (2016). Education pays 2016: The benefits of higher education for individuals and society. Washington, DC: 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)

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Examining Trends in the Pell Grant Program

The U.S. Department of Education recently released its annual report on the federal Pell Grant program, which provides detailed information about the program’s finances and who is receiving grants. The most recent report includes data from the 2015-16 academic year, and I summarize the data and trends over the last two decades in this annual post on the status of the Pell program. (Very preliminary data on Pell receipt for the first two quarters of the 2016-17 academic year can be found in the Title IV program volume reports on the Office of Federal Student Aid’s website.)

The number of Pell recipients fell for the fourth year in a row in 2015-16 to 7.66 million. This represents a 7.9% decline in the last year and an 18.9% drop since the peak in 2011-12. The decline is steepest in the for-profit sector (down 13.9% in one year and 36.7% since 2011-12) and among community colleges (down 13.3% and 28.3%, respectively), while private nonprofit and public four-year colleges stayed relatively constant. For the first time since at least 1993, more students at public four-year colleges received Pell Grants than community college students. While most of this change is likely due to a drop in community college enrollment, some could be due to community colleges offering a small number of bachelor’s degrees being counted as four-year colleges. (Thanks for Ben Miller of the Center for American Progress for pointing that out!)

Pell Grant expenditures fell to $28.6 billion in 2015-16, down from $35.7 billion in 2010-11. After adjusting for inflation, program expenditures are down 26% since the peak. This has allowed the Pell program to develop a surplus of $10.6 billion, $1.3 billion of which was taken to use for other programs in the 2017 budget deal. This surplus also allowed for the Pell Grant to be available for more than two semesters per year as of July 1, which was allowed between 2008 and 2011 before being cut due to budgetary concerns.

Most of the decline in Pell enrollment and expenditures can be attributed to a drop in the number of students who are considered independent for financial aid purposes (typically students who are at least 24 years of age, are married, or have a child). The number of independent Pell recipients fell by 28% in the last four years (to 4.05 million), while the number of dependent Pell recipients fell by just 6.4% (to 3.61 million), as shown in the chart below. However, independent students still make up the majority of Pell recipients, as they have every year since 1993.

There has been an even larger drop in the number of students with an automatic zero expected family contribution, who automatically qualify for the maximum Pell Grant based on family income and receiving means-tested benefits. (For more on these students, check out this article I wrote in the Journal of Student Financial Aid in 2015.) The number of independent students with dependents who received an automatic zero EFC fell by 50% since 2011-12, while the number of dependent students in this category fell by 29%. (Independent students without any dependents are not eligible to receive an automatic zero EFC.) Part of this decline was due to a decrease in the maximum income limit that automatically qualified students for an automatic zero EFC, while the rest can be attributed to an improving economy that has both induced adult students to return to the labor market and raised some incomes beyond the threshold for qualifying for an automatic zero EFC.

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The Tangled Web of Student Debt Consolidation Companies

Like seemingly most American households, the Kelchens get far more junk in the mail than actual mail of value. We get about as many credit card applications as our shredder can handle, as well as folks trying to sell us a broad array of products and services. But letters that mention student loan debt and say “Final Notice” on them always get my attention, both as a researcher of higher education finance and as a proud part-owner of my wife’s law school debt.

The letter below came last week from a company called Direct Document Solutions out of Irvine, California. It says that we may be eligible to consolidate our existing federal student loan into a lower-interest federal loan—and that we may be eligible for loan forgiveness. While the fine print says that the company is fee-based and that they are not a part of the Department of Education, it’s in much smaller font than the rest of the letter.

After looking at this letter for a while, I realized that it looked vaguely like another student loan consolidation letter we had received several months prior. I dug through my Twitter media archives and found a nearly-identical letter (presented below) from last August from a company called Certified Document Center (which operates as Document Preparation Services at the same address as Direct Document Solutions). The Better Business Bureau gave the company a C rating, with 18 complaints in the last 12 months alone.

Just before I got the letter last week, NerdWallet put out a helpful list of about 130 companies that are less-than-ideal actors in the student debt consolidation business. To get on this list, companies needed to have faced significant complaints or have a D or F rating from the Better Business Bureau. So this means that Document Preparation Services sneaks over the bar and doesn’t make the list.

But in my research of this company, I discovered it was a part of the Association for Student Loan Relief—a group of 118 companies that specialize in student loan consolidation. A number of these companies show up on NerdWallet’s watch list. These companies tend to be clustered in certain areas—for example, nine are located in Irvine, California and quite a few are located in South Florida. This, along with the multiple aliases that several companies appear to have used, suggest the possibility that a number of these companies may be run by the same people or group of people.

People who are struggling to repay their federal loans (or are simply seeking a better deal) should probably start by talking with their current servicer or even reaching out to their former college’s financial aid office. If an income-driven repayment plan is the best choice, there is usually little need to involve a paid consolidation company. For students who are seeking a lower interest rate, there are legitimate companies (like Earnest and SoFi) and banks that will refinance student loans. Refinancing can be a great option for people who are certain that they won’t benefit from income-driven repayment plans and have fairly high incomes, but this is a decision that should be researched before making. Read reviews, look at BBB ratings (and the number of complaints), and be very skeptical when changing anything with your student loans.

No matter what you do, don’t put your student loans in the hands of some random company sending you “Final Notice” letters even though you have no relationship with them. That’s a great way to ruin your credit and empty your bank account.

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What New Gainful Employment and Borrower Defense Rules May Look Like

President Trump is fond of negotiating, as can be evidenced through his long business career and many promises to renegotiate a whole host of international agreements. Federal higher education policy is also fond of negotiation, thanks to a process called negotiated rulemaking that brings a range of stakeholders together for an arduous series of negotiations regarding key changes to federal policies. Notably, if stakeholders do not come to an agreement, the Department of Education can write its own rules—something that the Obama administration did on multiple occasions. (For more on the nitty-gritty of negotiated rulemaking, I highly recommend Rebecca Natow’s new book on the topic.)

In a long-expected announcement, the Department of Education announced Wednesday morning that it would be renegotiating two key higher education regulations (gainful employment and borrower defense to repayment) that were initially negotiated during the Obama administration, with the first meetings beginning next month. To get an idea of how expected these announcements were, here are the stock prices for Adtalem (DeVry) and Capella right after the announcement (which began to break around 11:30 AM ET). Note the fairly small movement in share prices, suggesting that changes were baked into stock prices pretty well.

It is extremely likely that the negotiated rulemaking committees won’t be able to come to an agreement (again), so the new rules will reflect the Trump administration’s higher education priorities. Here is my take on what the two rules might look like.

Gainful Employment

The Obama administration first announced its intention to tie federal financial aid eligibility for select vocational programs (disproportionately at for-profit colleges) in 2009 and entered negotiated rulemaking in 2009-10. The first rules, released in 2011, were struck down in 2012 due a lack of a “reasoned basis” for the criteria used. The second attempt entered negotiated rulemaking in 2013, survived legal challenges in 2015, and began to take effect with the first data release in early 2017. Nearly all of the programs that failed in the first year were at for-profit colleges, but this also led to Harvard shutting down a failing graduate theater program. No colleges have lost aid eligibility yet, as two failing years are required before a college is at risk of losing funds.

The Trump administration is likely to take one of three paths in changing gainful employment regulations:

Path 1: Expand the rules to cover everyone. One of the common critiques against the current regulations is that they only cover nondegree programs at nonprofit colleges in addition to nearly all programs at for-profit colleges. For example, doctoral programs in education at Capella University are covered by gainful employment, while my program at Seton Hall University is not. Requiring all programs to be covered by gainful employment would both preserve the goals of the original regulations while silencing some of the concerns. But this would face intense pressure from colleges that are not currently covered (particularly private nonprofits).

Path 2: Restrict the rules to cover only the most at-risk programs. It is possible that gainful employment metrics could be used along other risk factors (such as heightened cash monitoring status or high student loan default rates) to determine federal loan eligibility. If written a certain way, this would free nearly all programs from the rules without completely unwinding the regulations.

Path 3: Make the rates for informational purposes instead of accountability purposes. This is the most likely outcome in my view. The Trump administration can provide useful consumer information without tying federal funds (a difficult thing to actually do, anyway). In this case, I could see all programs being included since the data will be somewhat lower-stakes.

Borrower Defense to Repayment

Unlike gainful employment, borrower defense to repayment regulations were set to affect for-profit and nonprofit colleges relatively equally. Here is what I wrote back in October about the regulations when they were announced.

These wide-ranging regulations, which will take effect on July 1, 2017 (a summary is available here) allow individuals with student loans to get relief if there is a breach of contract or court decision affecting that college or if there is “a substantial misrepresentation by the school about the nature of the educational program, the nature of financial changes, or the employability of graduates.” The language regarding “substantial misrepresentation” could have the largest impact for both for-profit and nonprofit colleges, as students will have six years to bring lawsuits if loans are made after July 1, 2017.

These regulations have been halted and will not take effect until a new round of negotiated rulemaking takes place. They were generally unpopular among colleges, as evidenced by a strong lobbying effort from historically black colleges that were worried about the vague definition of “misrepresentation.” The outcome of this negotiated rulemaking session is likely to be a significant rollback of the scope to cover only the most egregious examples of fraud.

Although these two sets of negotiated rulemaking sessions are likely to mainly be for show due to the Department of Education’s final ability to write rules when the committee deadlocks, they will provide insight into how various portions of the higher education community view the federal role in accountability under the Trump administration. The Department of Education doesn’t livestream these meetings (a real shame), but I’ll be following along on Twitter with great interest. Pass the popcorn, please?

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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!

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Comments on the Trump Higher Education Budget Proposal

The Trump administration released its first full budget proposal for Fiscal Year 2018 today, and it is safe to say that it represents a sharp break from the Obama administration’s budget proposals. The proposed discretionary budget for the Department of Education is about $69 billion, $10 billion less than the Fiscal Year 2017 budget. Below, I offer brief comments on three of the key higher education proposals within the budget, as well as my take on whether the proposals are likely to be enacted in some form by a Republican-controlled Congress that seems fairly skeptical of the Trump administration’s higher education policy ideas.

Public Service Loan Forgiveness would no longer be available for new borrowers. Public Service Loan Forgiveness (PSLF) was first made available in 2007 in an effort to encourage individuals to work in lower-paying nonprofit or government jobs. This plan allows students enrolled in income-driven repayment plans who annually certified their income and employment status to have any remaining balances forgiven after ten years of payments of 10% of discretionary income. However, the plan has been criticized due to its likely high price tag to taxpayers and because it provides far larger subsidies to graduate students than undergraduate students.

The Trump administration’s budget proposal would end PSLF for new borrowers as of July 1, 2018—and require all people currently on PSLF to maintain continuous enrollment in the program to remain eligible. This is likely to be a difficult hurdle for many people to clear, as a large number of students have been tripped up by annual recertification in the past. I’m glad to see that the Trump administration didn’t completely end PSLF for current students (as people reasonably relied on the program to make important life choices), but otherwise saving PSLF in the current form isn’t at the top of my priority list because of how most of the subsidy goes to reasonably well-off people with graduate degrees instead of low-paid individuals with a bachelor’s degree in early childhood education.

Prognosis of happening: Low to medium. This will generate howls of outrage in The New York Times and The Washington Post from groups such as the American Bar Association and the National Education Association, but there is a reasonable argument for at least curtailing the amount of money that can be forgiven under PSLF. A full-fledged ending of the program may not happen, but some changes are quite possible as quite a few members of Congress are upset with rising costs of loan forgiveness programs.

Subsidized loans for undergraduates would be eliminated, and income-driven loan repayment periods would change. Undergraduate students can qualify for between $3,500 and $5,500 per year in subsidized student loans (meaning interest is not charged while they are in school), with the remainder of their federal loans being unsubsidized (with interest accumulating immediately). The Trump administration would end subsidized loans, with the likely rationale that the interest subsidy is not an efficient use of resources (something that is hard to empirically confirm or deny, but is quite plausible).

The federal government currently offers students a menu of income-driven loan repayment options, and the Trump administration proposed to simplify these into one option.  Undergraduates would pay up to 12.5% of the income over 15 years (from 10% over 20 years for the most popular current plan), while grad students would pay up to 12.5% for 30 years. Undergraduate students probably benefit from this change, while graduate students decidedly do not. This plan hits master’s degree programs hard, as any graduate debt would either trigger a 30-year repayment period for a potentially small amount of additional debt or push people back into a standard (non-income-driven) plan.

Prognosis of happening: Medium. There has been a great deal of support for streamlining income-driven repayment plans, but the much less-generous terms for graduate students (along with ending PSLF) would significantly affect graduate student enrollment. This will mobilize the higher education community against the proposal, particularly as many four-year colleges are seeking to grow graduate enrollment as a new revenue source. But potentially moving to a 20-year repayment period for graduate students or tying repayment length to loan debt are more politically feasible. The elimination of subsidized loans for undergraduates hits low-income students, but a more generous income-driven repayment program mainly offsets that and makes that change more realistic.

Federal work-study funds would be cut in half and the Supplemental Educational Opportunity Grant would be eliminated. The federal government provides funds for these two programs to individual colleges instead of directly to students, and colleges are required to provide matching funds. The SEOG is an additional grant available to needy undergraduates at participating colleges, while federal work-study funds can go to undergraduate or graduate students with financial need. Together, these programs provide about $1.7 billion of funding each year, with funds disproportionately going to students at selective and expensive colleges due to an antiquated funding formula. Rather than fixing the formula, the Trump administration proposed to get rid of SEOG (as being duplicative of Pell) and halve work-study funding.

Prognosis of happening: Slim to none. Because funds disproportionately go to wealthier colleges (and go to colleges instead of students), the lobbying backlash against cutting these programs will be intense. (There is also research evidence showing that work-study funds do benefit students, which is important to note as well.) Congressional Republicans are likely to give up on changing these two programs in an effort to focus on higher-stakes changes to student loan programs.

In summary, the Trump administration is proposing some substantial changes to how students and colleges are funded. But don’t necessarily expect these changes to be implemented as proposed, even if there are plenty of concerns among conservatives about the price tag and inefficient targeting of current federal financial aid programs. It will be crucial to see the budget bill that will go up for a vote in the House of Representatives, as that is more likely to be passed into law than the president’s proposed budget.

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What Does a Professor Do During the Summer?

It’s safe to say that full-time faculty members at American colleges and universities have work schedules and expectations that are often not well understood by the general public. I often get two kinds of questions from people who are trying to figure out how I spend my time:

(1) You only teach two evenings per week. What do you do the rest of the time?

(2) You really have a three-month summer vacation? How do you fill up all of that free time?

I just finished my fourth year as an assistant professor at Seton Hall University, so right now I hear that second question quite a bit. In this post, I share some insights into what my summer looks like as a tenure-track faculty member at a university with substantial (but not extreme) research expectations. (And yes, I will take some time off this summer, as well.)

You don’t have a 12-month contract?

Like our colleagues in K-12 education, most faculty members are paid to work 9-10 months per year. This means that at least in theory, two or three months per year are completely ours. But although it’s common to say that the best three things about being a teacher are June, July, and August, faculty still have to do work outside the contract window in order to do their job well. My nine-month contract ended May 15, and there is absolutely no way I would meet the research or teaching expectations for tenure without using the summer as a way to get ahead. (Similarly, it’s hard for K-12 teachers to do course preps just within their contract period.) But service expectations grind to a halt during the summer, which does provide more time to do other work.

So what does your summer look like?

My biggest project this summer is to work on a paper looking at whether law, medical, and business schools responded to substantially increased Grad PLUS loan limits after 2006 by raising tuition or living allowances. (This is a new look at the Bennett Hypothesis—and I’ve summarized the existing research here.) I received a grant from the AccessLex Institute and the Association for Institutional Research to support this work, which provides me with a month and a half of additional salary and a grad student to help me with data work for 20 hours per week this summer as well as funds to buy out a course in the fall semester. This is my first successful external grant application after eight failed attempts, so it’s good to have some additional support for the summer.

My other important project on the research front is to put the finishing touches on my forthcoming book on higher education accountability, which should be out in early 2018 through Johns Hopkins University Press. I will spend several weeks working on copy editing, putting together an index, and checking page proofs. While I will get a portion of the book’s sales when it comes out, I can safely say that writing a book isn’t a great get-rich-quick scheme. (But journal articles rarely pay any money.)

I am in a fortunate position in which I can supplement my income as a faculty member with consulting or contract work. Each year since 2012, I have compiled Washington Monthly magazine’s college rankings, which comes with a small stipend along with the more important benefit of building connections with the higher education policy community. I also have the opportunity to write occasional policy briefs or white papers on a contract basis; different organizations ask me to explore a topic of interest to them while leaving me with complete editorial freedom to approach the topic as desired. Some of these turn into well-cited papers or articles, such as a paper I wrote at the request of the American Enterprise Institute in 2015 on the landscape of competency-based education.

While I will not teach any formal classes this summer, I will work with my group of dissertation students over the summer (as they pay tuition to work with me over the summer and I get a small stipend from the university). Based on some of the experiences I had in graduate school, I am getting my students together as a group six times over the course of the summer to share their progress and workshop draft chapters. The first meeting was yesterday, and it was a lot of fun. I will also work to update my higher education finance class for the fall semester, as quite a bit has changed since the last time I taught the class (the spring 2016 syllabus is here). I have a folder of 63 potential new readings to incorporate into the class, so it’ll take me a while to narrow this down to 20-30 articles to use in place of what was the state of the art in late 2015.

Academic summers are a wonderful thing—and the flexibility these summers offer are one of the reasons why many of us like this job so much. But even though we have a lot of flexibility about when we do the work, it still needs to get done. I hope this post provides some insights into what June, July, and August look like for at least a certain type of faculty member, and I’d love to hear what summers look like for other academics in the comments section below.

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