Ed Money Watch

In the first presidential debate this week, both Governor Romney and President Obama gave education a bigger spotlight than anticipated. Both candidates approached education reform as a way to drive job creation and improve workforce training for American workers. Their comments, however, brought up a few lingering questions. (For more on the debate, check out this post from Maggie Severns at our sister blog, Early Ed Watch.)

Governor Romney’s Record: The Massachusetts Bubble

Governor Romney touted his record in Massachusetts, saying the state’s schools “are ranked number one in the nation.” It is true that Massachusetts schools ranked first during his tenure as governor – but with a few caveats.  Romney’s ranking of choice is based on National Assessment of Educational Progress (NAEP) fourth and eighth grade reading and math scale scores in each state in 2005. While NAEP is considered a reasonably rigorous test, it is important to note that it is administered through a system of statistical sampling. This means it doesn’t include all students, or even all schools, in a state. Further, the distinctions between states at the top are marginal, a difference of as little as one percentage point, calling into question the import of a “number one” ranking.

Regardless of the measure, though, Massachusetts ranked first in NAEP scores in at least reading as early as 2002, before Governor Romney took office. That year, Massachusetts fourth graders scored an average of 234 points on the NAEP reading exam, well above the national average of 217. In 2005, they scored 231 in reading compared to 217 across the country, and fourth graders scored 247 in the math exam compared to the national average of 237. And even as recently as 2011, Massachusetts again ranked first according to NAEP scores in all subjects. This suggests that Romney might have just been riding the wave of high achievement; it is unlikely that his policies specifically caused these patterns.

So Governor Romney is right that Massachusetts was ranked first in the country according to the NAEP scores during his tenure. But it is harder to make a claim that the ranking was a result of his policies, especially given that the state performed well before he even took office, and still ranked first in the nation afterwards.

President Obama’s Plans: But How Would We Pay for Them?

President Obama, for his part, also spoke at length about education, saying “I think we’ve got to invest in education and training. I think it’s important…that we take some of the money that we’re saving as we wind down two wars to rebuild America and that we reduce our deficit in a balanced way that allows us to make these critical investments.”

Among those investments, he plugged his administration’s Race to the Top program (three mentions of the competition from the president in 90 minutes!). Congress and the Administration established the Race to the Top with $4.35 billion in the 2009 America Recovery and Reinvestment Act and subsequent rounds of nearly $700 million and $550 million respectively in 2011 and 2012. The President also repeated a proposal from his Democratic National Convention speech in which he called for 100,000 new science, technology, engineering, and math (STEM) teachers. That goal—a $1 billion, one-year proposal the president included in his 2013 budget request, or 1.5 percent of the Department of Education’s annual appropriation. He also called for an additional 2 million community college slots (likely funded with federal money). But if the president is to make good on his deficit-restraining rhetoric on display during the first debate, he will have a tough time finding the money to make those investments. After all, you can’t raise taxes, spend that new revenue, and then reduce the deficit.

The candidates face two more presidential debates, and a vice-presidential debate will be held next week. But there’s not much time left in the campaign for the president or Governor Romney to fine-tune their positions. And come November 6, they may be facing an entirely new reality.

Yesterday, the Federal Education Budget Project, Ed Money Watch’s parent initiative, published the latest two- and three-year cohort default rates for every institution on its comprehensive higher education database. The percentage of students who enter repayment in a given year and default on their loans within either two or three years—the cohort default rate—is meant to ensure that institutions whose graduates cannot repay their loans are ineligible for federal student aid. What do the latest data tell us about institutions with particularly high default rates?

Currently, schools with two-year cohort default rates of 25 percent or above for each of the past three years, or over 40 percent for a single year, stand to lose eligibility for federal student loan and grant programs. Beginning in 2014, however, schools will be assessed using a three-year default rate. Schools with a three-year default rate of 30 percent or higher for three years in a row, or over 40 percent in a single year, would become ineligible for student loans and grants.

Policymakers adopted the three-year rate as a more accurate measure than the two-year rate, because borrowers can use deferment and forbearance options and thereby postpone default beyond two years even though they have inadequate means with which to repay their loans. In the past, the U.S. Department of Education has published three-year rates only for informational purposes. But the recently-released official rates will eventually be used to measure individual schools once three years of information is available. The three-year rate shows the percentage of students from the 2009 cohort who defaulted on their loans by the end of fiscal year 2011. These rates capture more defaults over a longer period of time, perhaps providing a better picture of defaults for a given institution.

A close examination of the three-year cohort default rates mostly confirms what confirms what many stakeholders already believe – the 302 institutions with high three-year default rates serve more disadvantaged students and these students rely on federal aid more than their counterparts at institutions with lower default rates (see table below).

But the data also reveal one surprising finding in particular. Institutions with three-year default rates at or over 30 percent have slightly higher graduation rates than those with lower default rates – 56.9 percent compared to 53.0 percent. Though graduation rates are usually an indicator of a high-performing institution, this could also mean that institutions with higher default rates have a lower threshold for graduation, their students graduate with credentials that are of insufficient value in the labor market, or both.

The pattern is even more pronounced at the 68 institutions with three-year default rates over 40 percent (which, starting in 2014, would earn them an immediate removal from federal aid eligibility). At these institutions, the average graduation rate is 62.5 percent, compared to 53.1 percent at institutions with lower default rates.

That is a troubling pattern indeed. If low-quality institutions continue to flood the market with graduates at a higher rate than higher-performing institutions, competition for a limited number of jobs will become even steeper among those graduates. This will most directly hurt the students from the low-performing institutions who likely have credentials that are less valuable in the market place, reinforcing the cycle of high default rates.

These findings should be a wake-up call for institutions with high default rates coupled with high graduation rates. They are doing their students a disservice by so readily handing out low-value degrees.

Presidential politics made its way into the final day of NBC News’ third annual Education Nation summit Tuesday, with an appearance by Governor Mitt Romney and a taped interview between Today show co-anchor Savannah Guthrie and President Barack Obama. Finally, both candidates got a little wonky and explained their education policy proposals, along with the underlying philosophy that informed them.

After nearly four years of watching President Obama and Education Secretary Arne Duncan in action, the president’s interview offered few revelations to education stakeholders, beyond an interesting and surprisingly detailed exchange on ESEA waivers (which is worth a read, in full). Guthrie asked whether the president was bothered “on a gut level” that some states with flexibility under No Child Left Behind, like Virginia, had set lower performance targets for racial minorities. After replying “of course it bothers me,” Obama explained that his approach would be to emphasize growth and encourage continual improvement toward high standards, rather than set an absolute standard off the bat that schools could not come close to meeting. That’s true, but his answer felt incomplete. He failed to link the growth approach to a strong accountability and improvement system for schools with large achievement gaps. States are encouraged to develop these systems in their waiver proposals, but many are criticizing states’ plans in this area.

The Education Nation appearance offered Governor Romney a chance to go beyond the talking points in his education platform (Cliff’s Notes version: More choice! More transparency!), fill in some of the details and context behind his proposals, and speak to his own ideas on accountability. Romney continues to cling to the naïve idea that soft accountability – like the school report cards with A-F letter grades that Florida uses – will be sufficient to turn around underperforming schools. According to Governor Romney:

“If we had that, then you'd see parents, if they saw their school get a C or a D or worse, those parents are going to be outraged. And they're going to want to gather together, become part of PTA organizations and talk about taking back the school.”

School report cards? That’s so ten years ago. Where are the hordes of parents taking back their schools (other than at the movies)?  And how are these report cards going to be any different than what parents have been getting? In 2012, parents gave their public schools higher marks than they did twenty years ago, according to Gallup’s annual education survey, despite the fact that increasing numbers of schools are labeled as needing improvement on their accountability report cards each year. Transparency needs to be coupled with real accountability and consequences for persistently low-achieving schools.

Governor Romney also answered questions on topics he’s mostly avoided on campaign stops, like Common Core State Standards and early childhood education. In these areas, the Republican nominee shied away from endorsing any significant federal role. When asked by a teacher how he would support schools implementing the new standards, Romney said he wouldn’t. The states chose to adopt them, and so they are “on their own.” Of course, the Common Core is a state-led initiative, but it’s hard to imagine where the effort would be today had the federal government not supported it financially. Between grants to the two assessment consortia and to states through Race to the Top, federal policy built momentum for the initiative. It’s difficult to see how these efforts will be sustained on state budgets alone once the federal grant funding is spent. Even with existing federal funds dedicated to the Common Core efforts, states may need additional flexibility and resources to support educators in their efforts to transform teaching and to build sophisticated testing and data systems that match the standards’ quality.

In early childhood education, Governor Romney’s favored approach isn’t really a policy initiative at all: get parents involved, especially if children can be in two-parent households  with “one parent that stays closely involved with the education of the child and can be at home in those early years of education.”  In this case, Governor Romney isn’t ten years behind federal policy, he’s sixty.

Instead of lamenting the breakdown of the 50’s-era nuclear family, Governor Romney could have elaborated more on specific federal early childhood programs with a parent involvement component but didn’t. While he mentioned Geoffrey Canada’s work in Harlem three times, Romney didn’t say if he would support expanding funding for Promise Neighborhoods, the federal grant competition to replicate efforts like the Harlem Children’s Zone. With limited funding and disputed results, many are skeptical of the program’s sustainability and long-term impact. Governor Romney also offered few details regarding Head Start. While supporting early learning programs that are evaluated and proven to be effective, he did not specify if this extends to Head Start recompetition and other public early childhood programs. And although Romney repeatedly mentioned his unsuccessful effort to offer parent education classes for low-income parents in Massachusetts, he did not relate this to federal policies to improve parenting skills in the early years, like home visiting programs and the parent involvement requirements within Head Start. 

Even with the domestic policy-focused presidential debate fast approaching on October 3, this may prove to be the most we hear about each candidate’s education plans during the election season. Kudos to Education Nation for raising the issue.

This weekend, the Senate voted 62-30 to approve a continuing resolution (CR) that will fund the government for the first six months of fiscal year 2013, which begins on October 1. The bill, which the House of Representatives passed last week, maintains spending at fiscal year 2012 levels, plus a 0.612 percent increase across the board. This will bring total spending for Department of Education discretionary programs to about $68.5 billion. With that final business accomplished, both chambers of Congress agreed to recess until after the November elections.

The CR maintains overall spending in fiscal year 2013 within the discretionary spending caps laid out over a year ago in the Budget Control Act of 2011. It staves off any potential government shutdown, and leaves the mess of passing a final appropriations bill to a lame duck session of Congress after the elections, or to a newly-elected Congress come January.

But the CR didn’t solve every problem. Halfway through the CR – beginning January 2, 2013 – the budget will be subject to across-the-board cuts called sequestration. The Budget Control Act, in addition to setting discretionary spending limits for fiscal years 2012-2021, included a mechanism to automatically cut federal spending if the appointed congressional supercommittee failed to agree on the necessary spending cuts. In such a case, the White House Office of Management and Budget (OMB) would rescind (“sequester”) fiscal year 2013 funding beginning mid-year in January and lower spending limits for each of the following nine years to find $1.2 trillion in savings over 10 years.

The supercommittee did fail, and federal agencies are now preparing for sequestration. The White House released a report last week revealing that most Department of Education programs will face an 8.2 percent automatic cut. Title I of the Elementary and Secondary Education Act, which includes several programs including grants for disadvantaged students, School Improvement Grants, and McKinney Vento Homeless Student grants, will be cut by $1.3 billion. Individuals with Disabilities Education Act special education grants, including K-12, preschool, and infant and family grants, will be cut by $1.0 billion. However, Pell Grants and student loans are exempt (except for an increased student loan origination fee). The 8.2 percent cut exceeds previous estimates from the Congressional Budget Office of 7.8 percent.

The OMB report also failed to meet the requirements for it laid out by Congress, which stated that OMB was to estimate cuts at the program level. Instead, OMB offered its estimates of the cuts by office and account (for example, for the Supporting Student Success account in general, rather than the Promise Neighborhood program specifically). It is uncertain whether agencies or offices have the discretion to apply the cuts unevenly across programs within an account. But if they can, that means the OMB's report provides little information about how sequestration will actually affect individual programs. [JC1] For a look at how sequestration could affect school districts across the country, check out this Ed Money Watch post.

Still, Congress has a window in which to prevent sequestration from taking effect. Lawmakers could return to a lame duck session of Congress immediately after the November elections to cancel or postpone the sequestration legislatively. No congressman likes to see funding cut directly from his district, so they certainly have the political motivation to cancel the cuts.

Check back with Ed Money Watch for more details as the sequestration deadline approaches.