How Colleges’ Net Prices Fluctuate Over Time

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

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

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

netprice_jan16_table1

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

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

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

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

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

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

netprice_jan16_table2

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

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

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Comments on the Bush Higher Education Proposal

The three Democratic candidates for president all released their plans for higher education fairly early in the campaign cycle, with Sen. Clinton, Gov. O’Malley, and Sen. Sanders’s plans all including some variation of tuition-free or debt-free public college. These plans are all likely dead on arrival in Congress due to their price tags ($350 billion for the Clinton plan) and the high probability that Republicans hold the House of Representatives through 2020, but the candidates deserve credit for making higher education a key part of their domestic policy platforms.

On the Republican side, higher education has been much less important during the campaign, with only Sen. Rubio having a framework (with a good number of components that may enjoy bipartisan support) in place for higher education before now. But Gov. Bush’s newly released proposal for education reform (as summarized in this piece written by Jason Delisle and Andrew Kelly, two informal advisors to the Bush campaign and people I greatly respect) reflects the most detailed proposal from any of the Republican candidates. (Gov. Bush’s summary on Medium is available here.) And like Rubio’s plan, there are components that will likely get bipartisan support in Congress—while other parts are likely to face opposition from within his own party. Below are the key planks of Bush’s higher education platform, along with my comments on whether they are likely to be effective and feasible.

Proposal 1: Replace the current financial aid system with education savings accounts and a line of credit. If one thing unites all presidential candidates, it’s that the Free Application for Federal Student Aid needs to be either incredibly simple or eliminated. The Bush proposal would replace the FAFSA for most students with an education savings account based on the tax code. All students would get a $50,000 line of credit (roughly the same as what independent students can borrow for a bachelor’s degree today), and low-income students would get an additional account with need-based aid based on their family’s income in high school. Adults would also qualify for grant aid, likely by filling out some new version of the FAFSA. Tax credits would also disappear in the Bush proposal, which will probably upset some people although they have not been proven to induce students to enroll in or graduate from college.

This proposal represents a modest—but likely helpful—improvement over the current system for undergraduate students. This would give students at least some additional flexibility in using their financial aid, with the potential for students to accelerate their progress by taking summer courses that would not be aid-eligible under current rules. Getting students information about their likely aid eligibility in eighth grade is a plus, as shown in my research. But I’d like to see students get money deposited in their account at a slightly earlier age to make the commitment seem more tangible.

It appears that the $50,000 line of credit will be the new lifetime limit for federal student loans. For undergraduate students, this makes a lot of sense. The typical student with debt has between $30,000 and $35,000 in debt for a bachelor’s degree, so $50,000 seems like a reasonable upper bound for most students. However, it doesn’t look like graduate students would qualify for additional credit—which could curtail enrollment in master’s degree programs or doctoral programs in less-lucrative fields. This could create an opportunity for the expanded use of income share agreements with the private sector.

Proposal 2: Impose “risk sharing” on federal student loan dollars by holding colleges responsible for a portion of loans that are not repaid. The general principal of risk sharing makes sense—if a college’s former students can’t pay the bills, then the college should be responsible for partially reimbursing taxpayers. And the idea has at least some bipartisan support, as evidenced by 2015 legislation introduced by Senators Hatch (R) and Shaheen (D). But putting together a risk sharing proposal that doesn’t punish colleges for serving at-risk students while protecting taxpayer funds is far more difficult than it would first appear. I’ve tangled with some of these issues in my prior work (see my proposed framework for a risk sharing system), and the Bush team will have to do the same if their candidate pulls off an improbable comeback.

Proposal 3: Allow new providers to receive federal financial aid dollars. Right now, students can take their federal financial aid dollars to any of the approximately 7,500 colleges and universities nationwide that are eligible for and participate in programs under Title IV of the Higher Education Act. Conservatives have frequently called for other non-college providers (such as boot camps, apprenticeship programs, and single-course providers) to be eligible for federal financial aid to promote competition and potentially place downward pressure on the price tag of traditional programs. However, making this sort of change would likely require a significant overhaul of the current accreditation system, which has been deemed a cartel by some Republicans.

Bush’s proposal echoes these calls, but also proposes that prior learning assessments qualify for federal financial aid. This would allow students to use Pell Grant or student loan dollars to pay for taking tests such as the College Level Examination Program (CLEP) that can result in college credit if a student can demonstrate subject mastery. It could also potentially be used to help pay for portfolio assessments of previous academic or work experience, which can cost hundreds of dollars at some colleges. Even if the entire accreditation system isn’t blown to smithereens, a relatively modest change of allowing vetted prior learning assessment providers to accept federal aid would benefit students.

Proposal 4: Get outcome data into the hands of students and families. Florida has one of the most comprehensive education data systems in the country, allowing students and their families to access detailed data on earnings by field of study. The Bush proposal calls for each state to develop a similar system in order to provide outcome data to the public. However, given the way the pendulum has swung regarding student privacy (a substantial part of both the GOP and Democratic primary bases), it will be difficult to include incentives or sanctions that would encourage states to develop these databases. But even if such a proposal were to be adopted, it’s far from clear whether 50 separate databases would make more sense from a logistical or privacy perspective than a federal College Scorecard with program-level data.

Proposal 5: Reform the student loan repayment system. Both Republicans and Democrats seem to be moving toward a consensus that income-based repayment models (where loan payments are tied to a former student’s income and debt burden) are superior to the traditional 10-year fixed payment plan. Bush’s plan would make income-based repayment the only option for new borrowers, with payments equal to 1% of income per each $10,000 borrowed for up to 25 years, with the maximum lifetime payment being $17,500 per $10,000 borrowed. His proposal would also encourage current borrowers to shift into income-based repayment, which is currently a headache for many students. Although people will likely disagree with the exact terms Bush’s proposal sets forth, the general principles match up with conservative proposals as well as President Obama’s REPAYE program.

Although Gov. Bush is badly lagging in the polls, his campaign’s higher education proposals are serious, generally well-considered (although lacking for most details), and represent an important starting point for federal higher education policy discussions. Given that large infusions of federal funds into higher education are unlikely regardless of who becomes the next President, some pieces in the Bush plan (such as increased flexibility in how students use Pell Grants) are worth considering as low-cost plans that have the potential to positively impact students. Other ideas (such as risk sharing) sound promising in principle, but have the potential to do harm if they are improperly implemented. But even if the Bush campaign doesn’t make it past the first few primary states, many of the ideas included in the plan should be strongly considered by other candidates.

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Should States Offer Student Loan Refinancing Programs?

As outstanding student loan debt has roughly tripled in the past decade to reach $1.2 trillion, many people have pushed for measures that would reduce the repayment burden on former students. In the last few years, there were efforts to stop subsidized student loan interest rates from doubling (which were largely successful) and more generous income-based repayment programs on federal loans, as well as efforts for tuition-free and/or debt-free public college that have taken center stage in the Democratic presidential primary.

The latest effort to reduce debt burdens has been allowing students to refinance their student loan debt at a lower rate. Private companies such as SoFi and Earnest are expected to refinance between $10 billion and $20 billion in loans in the next few years, primarily of well-paid professionals who are extremely unlikely to default on their obligations. (By doing this, loans become private—so this isn’t a great idea for people who would qualify for Public Service Loan Forgiveness.) But for people who have lots of debt and a steady job, refinancing can save tens of thousands of dollars.

Spurred by the #InTheRed hashtag on Twitter and support from some leading Democrats, the next move is to consider allowing all students to refinance their loans through the government. Any legislation in Congress to do so is unlikely to go anywhere with Republican control and concerns about increasing the deficit. As a result, efforts have moved to the state level, with at least seven states having adopted refinancing plans for some loans and others considering plans. But is this a good policy to explore?

While states are free to do whatever they want—particularly if they issued the loans instead of the federal government—I view state refinancing efforts as an inefficient way to help struggling borrowers. Sue Dynarski at the University of Michigan sums up my concerns nicely in 140 characters:

Essentially, further subsidizing interest rates rewards borrowers with larger debt burdens (particularly those with graduate degrees who rarely default on loans) at the expense of students with debt but no degree represents a transfer of resources from lower-income to higher-income families. For a group that draws most of its support from the Left, supporting regressive taxation like this is rather surprising. Additionally, to keep the price tag down, some states are heavily restricting who can refinance and acting more like private companies. Minnesota, for example, will only allow graduates to refinance—and only in that case if they have a good credit score or a co-signer. This could potentially help keep some talented graduates in state, but the magnitude of the benefit is often outweighed by differences in income taxes, property taxes, or job offers across states.

I would encourage states to take whatever money they plan to use on refinancing loans and directing it toward grant aid for students from lower-income families who have stopped out of college and wish to return. Scarce resources should be directed toward getting students through college at a reasonable price instead of trying to make graduates’ payments slightly lower later on.

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The 2015 “Not Top Ten” List in Higher Education

Earlier this week, I unveiled my third annual list of the year’s top higher education policy issues and events (part 1 and part 2). Now it’s time to turn to the “not top ten” list, with Kean University getting a pass this year for topping the 2014 list with its $219,000 conference table.

10. Paul Krugman writes that “debt is good” for the United States while making a sizable contribution to student loan debt. In an August New York Times piece, the Nobel prize-winning economist and CUNY professor made a case that the federal government taking on debt can be a good idea under many circumstances. While I am an economist by training, my focus here isn’t on macroeconomic policy. Rather, it’s on Krugman’s ubiquitous economics textbook that is used by thousands of students nationwide. His book costs $284 on the publisher’s website, which would soak up 20% of an average student’s book allowance if they didn’t shop around. Krugman knows the marginal cost of book production is low, so he ought to try to reduce student loan debt even a little bit by lowering his book’s price. (But, in his defense, his book is somehow cheaper than Greg Mankiw’s $388 book that has netted the former George W. Bush administration economist an estimated $42 million in royalties.)

9. The New York Times gave op-ed space to a man with three Ivy League degrees who chose to default on his student loans. Lee Siegel, who was previously known for being a cultural critic at The New Republic before being suspended for anonymously criticizing readers on his blog’s comments section, got the attention of the higher ed world and the general public for his first-person account of why he defaulted on his student loans. Apparently, he wanted to become a writer and not worry about loan payments (this was in a world before income-based repayment). Yet Siegel, who has written five books, has three Ivy League degrees and lives in tony Montclair, New Jersey (where the median selling price of a home is $615,000). Of all the takes on Siegel’s selfish move, I like Sue Dynarski’s data-driven look noting that most defaulters didn’t finish college and Jordan Weissmann’s indignation.

8. The paper FAFSA takes another beating. Although just 80,922 students of the nearly 21 million FAFSA filers filled out the paper version in 2014-15, the paper FAFSA has been a favorite prop of members of Congress who want to simplify the form. For example, a bipartisan bill to simplify the FAFSA sponsored by Senators Lamar Alexander (R-TN) and Michael Bennet (D-CO) resulted in quite a bit of paper FAFSA abuse—as evidenced in the picture below. Additionally, the Department of Education will no longer print the paper FAFSA in 2016, meaning that Congressional staffers will have to fire up the laser printer to produce their favorite prop.

bennet

7. Governor Scott Walker blames a “drafting error” for an attempt to remove the Wisconsin Idea from the University of Wisconsin. The Wisconsin Idea is the simple, yet transformative, idea that the boundaries of the university are the boundaries of the state. And those of us with Wisconsin ties hold this idea quite dear, regardless of political affiliation. This is why Governor Walker, who was one of the favorites for the GOP presidential nomination at the time, faced such outrage (including from me) for eliminating the public service mission of the university while adding language on workforce development (which I’m okay with). Although Walker blamed a “drafting error” for the changes, a Milwaukee Journal Sentinel investigation suggested otherwise.

6. Some colleges still won’t release graduation rate data on Pell Grant recipients. Under the 2008 amendments to the Higher Education Act, colleges are required to disclose the graduation rates of first-time, full-time students receiving federal Pell Grants to current or prospective students upon request. Yet many colleges still refuse to release their Pell graduation rates to the general public in what can be interpreted as either a stunning attempt to obfuscate outcomes or a shortcoming of institutional data systems. My hat is off to Andrew Nichols of the Education Trust, who worked long hours to compile a dataset of Pell graduation rates. But even he was only able to get data from 90% of public four-year colleges and 68% of private nonprofit colleges within a reasonable time frame, meaning that 351 colleges (including mine) didn’t respond. Colleges can—and should—do better.

5. Data misinterpretations abound. I could do a post of the top 10 ways in which analysts and/or journalists misinterpreted data in 2015, but I’ll focus on three examples here. First, when the College Scorecard earnings data came out, some media and President Obama (!) thought the data were on graduates 10 years after leaving college, not for all students 10 years after entry. Second, two prominent reports claimed that college enrollment or completion rates were far lower for lower-income than higher-income families. But as Matt Chingos and Sue Dynarski correctly note, their data source (the Current Population Survey) is inappropriate for those types of analyses. Finally, a 10-point decline in average SAT scores over the last five years brought about howls of concern about the K-12 education system from the media. A more level-headed look, from myself and others, shows that universal SAT-taking policies and demographic changes are more likely factors. I highly recommend reading the 1953 classic How to Lie with Statistics and reading the data documentation one more time.

4. Big-time athletics programs suffered from multiple scandals. Three scandals stick out from the pack here. First, the University of North Carolina at Chapel Hill was put on probation by its accreditor for allowing many student-athletes to take phony classes. The 214,000 pages of documentation from the university contain some rather ironic (and incriminating) e-mails from a former ethics professor. The University of Louisville is facing accusations that a former graduate assistant coach paid for strippers in an effort to recruit men’s basketball players. (Louisville football coach Bobby Petrino also got a $500,000 bonus this year basically for his players persisting at the minimum rate needed to be eligible for a bowl game.) Finally, Rutgers football coach Kyle Flood (who was fired at the end of a 4-8 season) was suspended for three games for talking with an adjunct professor about trying to get a player’s grade changed. College athletics can do good things for many institutions, but these three cases sure don’t help the cause.

3. The University of Florida’s online degree effort hasn’t gone as planned. State legislators are often interested in creating online degree options within their public colleges, both as an opportunity to potentially serve more students and increase revenue from lucrative out-of-state students. Arizona State University Online has done quite well, nearing 20,000 students and doing a good job attracting students from other states—most notably capacity-constrained California. But the University of Florida’s effort has been much rockier. UF entered into a massive contract with Pearson in 2013 that paid the technology giant $135 per in-state student and $765 per out-of-state student who enrolled while paying faculty $60 per student. However, efforts to increase enrollment largely failed and UF fired Pearson this fall for failing to recruit enough out-of-state students. States will keep pushing for online endeavors (which I think have promise), but getting them to scale up will be difficult.

2. Nevada higher education officials buried a report critical of how they managed community colleges. The Las Vegas Review-Journal did a great job this summer using open records laws to show how the Nevada System of Higher Education attempted to stop an independent report that made them look bad from being released. Not only did system officials try to get criticisms levied by the sharp folks at the National Center for Higher Education Management Systems to be lightened, they eventually made sure the report never went to lawmakers. Additionally, the system tried to stop UNLV to halt research that made them look bad. For trying to bury independent research, the state of Nevada gets a plum position on my list.

1. The University of Akron spent $556.40 on an olive jar for its president’s bedroom. I can’t say that I care that much for olives, but I know I’m in the minority here. But it’s really hard for a public university to justify spending $556.40 for a decorative olive jar or $838.83 for a make-up chair—even if it’s paid for by private funds. Given that Akron was already in the news for eliminating student advising jobs, cutting the baseball team, threating a $50 per-credit fee for juniors and seniors, and eliminating the university press before it was restored, spending funds on an olive jar that could be even possibly used for other purposes looks really bad. (But the jar is pretty good on Twitter.) I’ll stick to a $5 glass jar full of jellybeans, thank you very much.

 

Also considered: Overreactions by college protesters and legislators in response, federal data dumps on Friday and/or Saturday, accreditors on the defensive, Trump University, HRC University, outdated campus-based aid allocation formulas.

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The 2015 Higher Education Top Ten List (Part 2)

Yesterday, I revealed the first half of my list of top ten higher education events of 2015. Today, I reveal the top five events from the past year, with a list of ‘not top ten’ events (events that either didn’t go as planned or don’t benefit students or the general public) to come tomorrow.

  1. Federal college ratings are dead, but the College Scorecard data represent a big step forward.

The U.S. Department of Education (ED) closed out 2014 by releasing a set of potential metrics for their much-anticipated (and much-reviled in many parts of higher education) Postsecondary Institution Ratings System. The framework at that point was so rough that I told Politico that “I’d be surprised” if any ratings were released by the Obama Administration’s goal of fall 2015. The ratings plan was pretty much dead by March, when an ED official announced that two rating systems would be created—one focused on consumer information and one focused on accountability. Given the difficulty of doing two big projects at once, it was no shock to see accountability-focused ratings dropped in June (see my full postmortem here).

Although ED had promised that additional information would be released in the College Scorecard tool, I didn’t expect the sheer magnitude of what was released on an otherwise-tranquil Saturday morning in September. The new public-facing College Scorecard site has information about typical student loan debt, the percentage of students paying down principal on their loans, and the median earnings of former students 10 years after starting college—important data points for students and the public to consider. Even more importantly, ED made up to 18 years of more detailed outcomes data downloadable online (caution: large file sizes!) for everyone to use as they see fit. These data will be used to inform policy discussions going forward, as well as to help students make better college choices (or at least avoid awful choices).

  1. The federal government erases student loan debts of some students who attended the now-closed Corinthian Colleges.

The rapid collapse of the for-profit Corinthian Colleges chain was the top higher education event on my 2014 list, but its repercussions will continue to be felt for years to come. In June, the Obama Administration announced that at least 40,000 students at Corinthian-owned Heald College could have their loans erased due to the college’s fraudulent practices. That could cost over $500 million (so far, $28 million has been forgiven), but total costs for debt forgiveness across all Corinthian campuses could reach $3.2 billion.

The big policy question going forward is whether more students who attended for-profit—or even nonprofit—colleges with dubious recruiting practices or phony job placement data will be able to have their loans forgiven by the federal government. Some Democratic senators, including liberal icon Elizabeth Warren of Massachusetts, have called for forgiveness to be extended to other large for-profit chains with practices that were allegedly similar to Heald. This would benefit tens of thousands of students, but come at a cost of billions of dollars to taxpayers as these colleges typically don’t have enough money to reimburse the federal government. This issue will continue to be important for years to come.

  1. Led by Tennessee, ‘tuition-free’ and ‘debt-free’ higher education becomes a hot political discussion.

The Tennessee Promise program, which offers tuition-free community college as well as some mentoring services to qualified recent high school graduates, has been widely hailed as a bipartisan policy success. Enrollment in Tennessee public higher education increased by 10.1% in fall 2015, with large increases at community colleges far outpacing declines at some four-year public and private colleges. This increase in enrollment is taking place even though many students receiving federal Pell Grants do not get a dime from the Tennessee Promise program, as Tennessee’s ‘last-dollar’ design means that the state picks up the tab after all other grant aid has been applied. Clearly, program messaging matters—and a clear message of affordability goes a long way.

In addition to a number of states considering tuition-free community college, the Obama Administration proposed its own version at the national level in January. This plan is quite different from the Tennessee Promise, with notable differences being that Obama’s plan is ‘first-dollar’ (supplementing instead of supplanting the Pell Grant) and includes several additional requirements on states and students. All three major Democratic candidates (Clinton, O’Malley, and Sanders) have released plans for at least some tuition-free or debt-free public higher education this year. While it’s unlikely that any of these happen at a national level due to Republican opposition and cost concerns, states may move forward with their own plans.

  1. The Department of Education adopts ‘prior prior year’ (PPY), allowing students to file for federal financial aid earlier starting next October.

Currently, students cannot file the Free Application for Federal Student Aid (FAFSA) until January 1 for attending college the following fall. This means that students often do not get any information about their Pell Grant or student loan eligibility until February or March as they wait for their final tax documentation from the prior year. This is too late to influence the college choice processes of many students attending four-year colleges, as application deadlines at somewhat selective institutions are often well before this date. Moving up the FAFSA timeline by up to one year (by using tax data from the year prior to what is currently being used) would help students get earlier information about college prices.

I’ve done a fair amount of research the past few years (thanks to generous support from the National Association of Student Financial Aid Administrators and the Gates Foundation) on the financial implications of PPY. I co-authored a report that found that PPY wouldn’t affect the Pell Grant awards of the vast majority of students, alleviating one of the key concerns against switching to PPY (the journal article version with cost estimates is available here). I’m quite happy that President Obama ordered a switch to PPY starting in fall 2016, meaning that students can file the FAFSA on October 1 instead of the following January 1. The transition in 2016 could be difficult from a technical perspective, but it’s a win for students going forward.

  1. Student protests shake up higher education in a way not seen in decades.

Any good analysis of the history of American higher education has a substantial section of the protest and free speech movements on college campuses in the 1960s. Yet, for those of us who went to college in the last 40 years, protests have been relatively few and far between (with most of these protests being focused on foreign policy endeavors). Having been in graduate school at the University of Wisconsin-Madison during the massive protests against Governor Scott Walker’s changes to collective bargaining rules, I didn’t expect to see anything of that magnitude again for years to come.

But this fall’s protests at Yale, the University of Missouri, and many other colleges around the country over concerns of racism and a lack of diversity on and near college campuses have the potential to represent a new wave of student activism. The most successful protests to this point have been at the University of Missouri, where the chancellor of the flagship Columbia campus and the president of the four-campus system both resigned under pressure from a student on a hunger strike, Mizzou’s football team, and a number of deans who wanted change. The rationales for these protests aren’t likely to go away in 2016, and there are a number of unanswered questions. Will higher education change as a result of protests? Will leaders at other campuses be forced to resign? What are the unintended consequences of the protest movement? Are there potential concerns about free speech on campuses?

 

Also considered: Colleges competing for athletes based in part on the cost of attendance, more colleges adopting test-optional policies for admission, ED’s release of colleges facing heightened cash monitoring, risk sharing for federal student loans, continued growth of state performance-based funding policies, new admissions coalition breaks away from the Common Application.

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The 2015 Higher Education Top Ten List (Part 1)

Although higher education has a partially deserved reputation for being extremely slow to change, quite a bit happened in the higher education world in 2015. Below is the first half of my top ten list of most important or influential higher education events that took place in the last year, with the second half coming out tomorrow. Look for my annual list of “not top ten” events to come out later this week. As always, I’d love to hear your thoughts about the list and what I missed!

  1. Faculty teaching loads come under fire from state policymakers.

A common perception among the general public is that college faculty don’t work that much, even though small-scale surveys routinely indicate that full-time faculty often work 50+ hours per week. (I would say I fall in the 50-60 hours per week range.) However, faculty members only spend a portion of this time in the classroom—teaching three classes per semester equates to nine hours per week teaching. What takes up the rest of the time? In addition to preparing for classes and meeting with students, research and service obligations can be substantial at many colleges, particularly as research expectations are increasing at many four-year colleges. Some faculty are making rational decisions to prioritize research over teaching, as that is easier to measure and can heavily contribute to tenure decisions.

Although it’s difficult to conclude whether teaching loads have actually decreased over time (one study that said so—and still makes the rounds on the Internetwas retracted over a data error), the public perception is that faculty don’t teach enough and that they should more often focus on teaching over research. Two examples of this stand out. In Wisconsin, Governor Scott Walker recommended that the University of Wisconsin System have faculty teach one more class per semester (in addition to revising tenure rules). In Missouri, a state legislator noted that half of tenured and tenure-track faculty generated fewer than 180 credit hours per year (or roughly 30 students per semester). Should some faculty teach more? Quite possibly—but it requires a commitment to rewarding quality teaching.

  1. Income share agreements (ISAs) provide a possible new way to finance higher education, but many questions remain.

Under ISAs, students would pay a percentage of their post-college earnings to a private company in exchange for the company covering upfront educational expenses. The idea is actually pretty similar to federal income-based repayment plans for student loans (although ISA proponents insist these agreements are not loans), with the big difference being that terms of the loan will likely vary based on a student’s college of attendance, field of study, and possibly even pre-college achievements.

Although ISAs have existed in Latin America for a while now, they are still quite new in the United States. Purdue University is working to bring ISAs to their campus through a partnership with Vemo that definitely bears watching. I’ve written this year about how I think the market for ISAs will be fairly limited due to the terms on federal loans being hard to beat. However, I think Purdue’s focus on replacing PLUS and private loans with ISAs makes sense, and ISAs also have potential to help students pay for programs (such as coding boot camps) that don’t currently qualify for federal financial aid. This is a topic to watch for 2016 and beyond.

  1. Calls for accreditation reform grow louder.

Colleges currently have to have accreditation from a recognized body in order for their students to access federal financial aid dollars. However, there are concerns that accreditation is doing little to maintain academic quality. A Government Accountability Office report released in late December 2014 highlighted that colleges are more likely to lose accreditation for poor financial health than poor academic outcomes, and a high-profile Wall Street Journal piece showed that many colleges with poor graduation or default rates maintain their accreditation. Additionally, Senator Elizabeth Warren (D-MA) had a heated exchange this summer with one of the main accrediting bodies of for-profit colleges over how it could allow Corinthian Colleges to keep its accreditation in spite of many known issues.

Accreditation reform could take several paths in the next few years. One path would involve accrediting bodies heightening their standards (either voluntarily or via legislative or executive action) in order to keep the worst colleges out of the federal financial aid program. A second path would be for the federal government to take a larger role in accreditation. Instead of a rather circuitous path through the National Advisory Committee on Institutional Quality and Integrity, the federal government could directly accredit colleges. A third, and more politically feasible, path would revise the accreditation process to allow colleges to qualify based on demonstrated student learning outcomes. This has the support of Senator (and presidential candidate) Marco Rubio (R-FL) and Senator Michael Bennet (D-CO), and might be more palatable to many colleges.

  1. While Sweet Briar was saved, other private colleges are struggling.

Sweet Briar College, a women’s liberal arts college in rural Virginia, only had about 500 students last spring when its board announced the college would close. Yet the saga of its alumnae and friends to save the college (which was financially solvent at the time, but faced a bleak financial picture going forward) caught the attention of the national media. Alumnae were eventually able to keep the college open after a successful lawsuit and promises to raise millions of dollars. Enrollment was about 330 students this fall, making future recruitment efforts key to the college’s future success.

Although Sweet Briar averted closure, six private nonprofit colleges closed in 2015 according to Ray Brown’s excellent list at College History Garden. Credit rating agency Moody’s expects the rate of closure to triple by 2017, which would mean roughly 15 closures per year out of over 1,000 private institutions. Moody’s also expects about half of private colleges to see steady or declining tuition revenue after taking inflation into account. Small, less-selective colleges in areas with little population growth among traditional-age college students will continue to face pressures, but don’t count colleges out. As Sweet Briar shows, it’s very hard to kill a college.

  1. Presidential searches at the University of Iowa and the University of North Carolina system draw criticism.

Traditionally, the vast majority of college or system presidents have been academics with decades of teaching and administrative experience within higher education. But as the expectations of college presidents have morphed from being a more inward-focused leader to a champion fundraiser who can effectively lobby legislators and donors, relatively few provosts want to become presidents. This, combined with a perception that even some traditionally-qualified academics are no longer suited to run complex universities, has opened the door to more college presidents with nontraditional backgrounds.

The University of Iowa (with new president Bruce Harreld) and University of North Carolina system (with new president Margaret Spellings) both picked leaders without traditional backgrounds. Iowa’s faculty senate quickly censured Harreld, who ran Boston Market before becoming a senior executive at IBM, for making multiple errors on his resume that can either be interpreted as minor errors or a pattern of embellishing credentials. Spellings was the Secretary of Education in the George W. Bush administration, but she has not had experience as a faculty member and does not have a doctorate. The big question is whether presidents need doctorates or teaching experience to effectively lead, or whether business leaders with sharp teams around them can do a better job than traditional academics.

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Nominees Wanted for the 2015 Top Ten and Not Top Ten Lists

As 2015 rapidly draws to a close, I’m looking to continue an annual tradition on this blog—two lists of the top ten and ‘not top ten’ events in the higher education world during the past year. The top ten list includes the most newsworthy events of the year, regardless of whether they are good or not for higher education or the public as a whole. 2014’s winner was the rapid downfall of Corinthian Colleges, while 2013’s winner was President Obama’s announcement of a federal college ratings system (which ended up being scuttled earlier this year).

The not top ten list also includes some events that are important and newsworthy, but the primary focus is on decisions that look pretty silly in hindsight or show the underbelly of greed and jockeying for power that is often present in higher education. Last year’s ‘winner’ was Kean University’s $219,000 conference table, while Georgetown Law ‘won’ in 2013 for its plan to vacuum up federal loan dollars and stick taxpayers with the entire bill.

I’m looking for nominees for this year’s lists, which will be posted on December 15 (top ten) and 16 (not top ten). Some items (such as the campus protests at the University of Missouri and the University of Akron’s infamous olive jar) will definitely be on one of the lists, but I’m looking for your thoughts about some of the other happenings (both serious and humorous) that happened this year. Please leave any suggestions in the comments area below or send them to me via Twitter (@rkelchen). I look forward to sharing the results!

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Why is College So Expensive? (Nearly) Everyone is to Blame

“Why is college so expensive?” “Why does college cost so much?” If I had a dollar for every time I’ve been asked that type of question, I could probably pay the roughly $15,000 it takes to provide a year of college for the typical student at a four-year regional public university. This is the true cost of college—how much the college spends on a given student each year. The public is often more concerned with the price (what students and their families pay), but barring additional massive public spending on higher education, the cost of providing a college education must be brought under control in order for students to see lower price tags.

Any piece written by a member of the higher education community for the general public about college costs is likely to reach a large audience due to deep public concerns about college affordability. A recent piece in the Washington Post by Steven Pearlstein, former journalist and current professor at George Mason University, offers four potential solutions to bending the college cost curve. Below, I discuss each of his four ideas and whether they are feasible. (Note that because the focus is on reducing the cost of educating a student, state funding and additional financial aid aren’t relevant here—although they would reduce the price faced by students.)

Proposal #1: Cap administrative costs. This one seems like a no-brainer; if the goal is to educate students, more money should be spent on instruction compared to various “deanlets” and other administrators. But there are legitimate reasons for additional administrators. First, as Pearlstein notes, increasingly complex government regulations, such as for how financial aid is disbursed, do need specialized individuals. As the college-going population has become more diverse, at least some additional student services are required to serve a student body with different academic and social needs than decades ago.

However, the blame for rising administrative costs can also be shared among students and faculty in addition to administrators and regulators. Some students’ preferences for intercollegiate athletics and recreation facilities (such the infamous climbing walls and lazy rivers) also require a number of additional staff members and administrators to run these endeavors. Additionally, as Andrew Kelly of the American Enterprise Institute noted last week, even student protesters’ demands for additional services at places such as the University of Missouri and Yale could increase total costs. Faculty are also to blame—each time we give up a former part of our jobs (such as advising students, making admissions decisions, or even making copies), someone else does it.

Proposal #2: Use a year-round teaching schedule, five days per week. It’s really hard to argue that college facilities are being used in an efficient manner. Fridays tend to be ghost towns at many colleges, although many less-selective colleges do hold quite a few evening and weekend classes. But residential students tend not to like Friday classes, and faculty with demanding travel schedules also prefer to keep Fridays free for travel. I teach Monday and Wednesday evenings, and I’ll use about half of the Fridays in a given semester to go to meetings and conferences. Technology has the ability to help solve this problem through the use of hybrid classes. Faculty can teach online a few weeks each semester while they are traveling, something which I do on occasion as well as when the weather is bad.

Moving to a year-round teaching schedule, however, is likely to have significant budgetary implications. Most faculty with teaching obligations are on a 9-month or 10-month contract, meaning that they are not expected to work with students during the summer period—let alone teach. Asking faculty to teach in the summer would likely result in contracts needing to be 11 or 12 months per year, which would probably mean increased salaries. After all, if teaching is added to a professor’s schedule in the summer, she probably won’t work for free.

Proposal #3: Teach more and research less. Pearlstein notes that much research is never cited by any other academics, as well as noting that the incentive structure often favors research (which is far easier to quantify than teaching). The blame for the focus on research can be placed on both administrators and faculty, as both groups often prefer research over teaching and may both have input into the tenure and promotion process.

However, Pearlstein’s mention of research showing that “teaching loads at research universities have declined almost 50 percent in the past 30 years” is incorrect. That study, which used the National Study of Postsecondary Faculty, was rescinded in 2013 due to concerns about the wording of faculty workload questions changing during the length of the study. While it’s probably the case that faculty teaching loads at more selective institutions have declined somewhat, Pearlstein shouldn’t have used a study that was rescinded a month after it was released.

Proposal #4: Cheaper, better general education. In this section, Pearlstein pushes for more online and hybrid courses to better engage students in the material. This sounds good, but it is far from a certainty that online courses are actually less expensive than in-person courses. (Research on this is nascent and inconclusive.) Additionally, Pearlstein cites government data stating that “more than three-quarters of students at four-year colleges and universities have never taken an online or hybrid course.” As Russ Poulin at WCET notes, 27% of students took a distance education course in 2013 alone, meaning that the percentage of students with some online experience at some point in college is likely far larger than 25%. I’ll be the first to admit that general education is not my strong point as a member of the graduate faculty, but there are lots of good people working on issues of general education.

As the discussion above suggests, nearly everyone (except woefully underpaid adjuncts) is to blame for the rising costs—and prices—of a college education. The challenge is that any solution is likely to be fairly complex and involve negotiations among faculty, administrators, students, and taxpayers. This is why college costs tend to get lip service from the higher education community until revenue sources dry up. But the financial struggles of many small private colleges (let alone many cash-strapped public colleges) make cost-cutting measures necessary, and hopefully the rest of the higher education community can learn from their experiences.

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Will Recent Protests Affect Higher Education Leadership?

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

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

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

 

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

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

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

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

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Should Students in “Boot Camps” Get Federal Financial Aid?

In the last several years, a number of companies have started short-term, intensive training programs in fields such as computer programming, Web design, and business designed to give fresh college graduates the skills they need to land lucrative jobs in growing fields. These “boot camps” include offerings by start-up companies such as Dev Bootcamp, General Assembly, and Koru as well as some entries from branches of traditional colleges (such as Rutgers). This sector is rapidly growing, with one organization estimating that about 16,000 students will complete coding boot camps in 2015.

Boot camps may tout their high job placement rates, but they are not cheap for students. The typical program costs about $11,000 for an 11-week program, although shorter options are often available in some fields. Unlike for most undergraduate and graduate programs through traditional colleges, these programs are currently not eligible for federal financial aid dollars. This means that students have two options to pay for these programs: paying out of pocket or taking out a private loan. However, the U.S. Department of Education is beginning an “experimental sites” program that will allow a small number of colleges to partner with unaccredited providers like boot camps to offer courses and receive federal financial aid.

Should students in boot camp programs be able to receive federal grants and loans? The best argument toward allowing students to receive federal funds for these programs (after a careful vetting process) is that it would allow students with modest financial means and little creditworthiness of their own to easily pay for some or all of these programs. These programs tend to recruit heavily from selective colleges with fewer low-income students (see the list of Koru’s partners), where ability to pay hasn’t been such a concern to this point. But as the sector expands to include colleges with more economic diversity, financing these programs could become a problem.

On the other hand, the highly vocational nature of these programs allows for different financing structures to make sense. This can happen through private loans focused on high-quality programs, which is the goal of the partnership between private lenders Skills Fund and six boot camps. Income share agreements are also a potential fit in this area, although I do have concerns about whether successful graduates would want to give up equity in themselves rather than just make loan payments. Finally, it remains to be seen whether boot camps themselves would actually be interested in going through certification and quality assurance processes that are likely to accompany federal student aid. For example, General Assembly’s co-founder told Inside Higher Ed that he didn’t want to receive federal student aid due to concerns about federal aid leading to higher prices in the future (the so-called “Bennett Hypothesis”). Others, such as Alex Holt at New America, have concerns about additional federal oversight leading to reduced program quality and less innovation.

I’ve thought about the dueling concerns of access and flexibility regarding boot camps, and I still don’t know exactly where I stand. The good thing here is that we’re likely to have a small number of programs get access to federal financial aid, so the effects of federal funding (and rules) can be examined before opening the spigot for more interested programs. I’d love to hear your thoughts on this question below, as this is a developing issue on which research badly needs to be conducted.

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