Which Colleges Benefit from Counting More Graduates?

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

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

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

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

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

Gain from SAM metric: 9%

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

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


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


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

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

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

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

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

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

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

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

ISA and past efforts

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

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

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

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

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

Purdue plan

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

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

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

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

One size does not fit all

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

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

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

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

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

Not for high-income earners

Who might not be the right fit?

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

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

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

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

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

The Conversation

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

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

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

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

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

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


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

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(Still) Don’t Dismiss Performance Funding Research

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

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

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

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

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

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

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Will Colleges Send Out Financial Aid Packages Earlier Next Year?

I’m looking forward to college students being able to submit the Free Application for Federal Student Aid (FAFSA) three months earlier next year. Instead of being able to submit starting January 1 for the 2017-18 academic year, students will be able to submit beginning October 1—giving students an additional three months to complete the form thanks to using ‘prior prior year’ (PPY) income and asset data. This means that students can get an estimate of their eligibility for federal grants and loans as soon as late fall, which has the potential to help inform the college choice process.

But there is no guarantee that students will get their final financial aid package from the college any earlier as a result of prior prior year. Recognizing this, Undersecretary of Education Ted Mitchell recently sent a letter to college presidents asking colleges to send out their aid packages earlier in order for students to fully benefit from PPY. Will colleges follow suit? I expect that some will, but the colleges with the greatest ability to offer institutional grant aid probably won’t. Below, I explain why.

The types of colleges that can easily respond to PPY by getting aid packages out earlier are those institutions with rolling admissions deadlines. (Essentially, it’s first-come, first-served among students who meet whatever admissions criteria are present—less-selective four-year and virtually all two-year colleges operate in this manner.) Some of these colleges already offer their own grant aid upon admission, but these colleges tend to have less grant aid to offer on account of relatively low sticker prices and fewer institutional resources. Additionally, these colleges often take applications well into the spring and summer—after students can already file the FAFSA under current rules.

It is less likely that the relatively small number of highly-selective colleges that get a disproportionate amount of media coverage will respond to PPY by getting financial aid offers out any earlier. For example, the Ivy League institutions didn’t even release their admissions notifications for students applying through the regular route until the last day of March, which gives students plenty of time to complete the FAFSA under current rules. Moving up the notification date to January is definitely feasible under PPY, but it requires students to apply earlier—and thus take tests like the ACT or SAT earlier. All students are supposed to commit to one college by May 1, giving students one month under current rules to compare aid packages and make a decision. Colleges may oppose extending this decision period as students have more time to compare offers and potentially request more money from colleges.

I suspect the Department of Education sent their letter to colleges in an effort to get the admissions notification dates at selective colleges moved up, but this goes against the incentives in place at some colleges to reduce the comparison shopping period. Prior prior year still allows students to get their federal aid eligibility earlier, which is a good thing. But for quite a few students, they won’t get their complete financial aid package any earlier.

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

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

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

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

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

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

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

Just a popular political strategy?

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

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

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

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

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

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

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

More selective and lower standards

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

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

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

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

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

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

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

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

Implications for policy

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

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

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

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

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

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

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

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Understanding Financial Responsibility Scores for Private Colleges

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

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

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

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

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


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


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

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

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The 2016 Net Price Madness Bracket

Every year, I take the 68 teams in the NCAA Division I men’s basketball tournament and fill out a bracket based on colleges with the lowest net price of attendance (defined as the total cost of attendance less all grant aid received). My 2015, 2014 and 2013 brackets are preserved for posterity—and aren’t terribly successful on the hardwood. My 2015 winner (Wichita State) won two games in the tournament, while prior winners Louisiana-Lafayette and North Carolina A&T emerged victorious for having the lowest net price but failed to win a single game.

I created two brackets this year using 2013-14 data (the most recent available through the U.S. Department of Education): one for the net price of attendance for all students and one focusing on students with family incomes below $30,000 per year. The final four teams in each bracket are the following:

All student receiving aid

East: Wichita State ($9,843)

West: Cal State-Bakersfield ($5,690)

South: West Virginia ($9,380)

Midwest: Fresno State ($5,599)


Low-income students only

East: Vanderbilt ($6,905)

West: Yale ($3,918)

South: North Carolina ($4,431)

Midwest: Fresno State ($3,835)


A big congratulations to Fresno State and the state of California for winning this year’s edition of Net Price Madness across both categories.

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What the Leading Republican Presidential Candidates Are Saying About College Affordability

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

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

Donald Trump

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

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

Sen. Marco Rubio

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

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

Sen. Ted Cruz

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

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

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Comments on New America’s Financial Aid Reform Plan

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

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

Things I like

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

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

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

Things I don’t like

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

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

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


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

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

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

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