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College Affordability

Student Stories from Gainful Employment Programs UPDATED

June 17, 2013

Last week, Higher Ed Watch took a look at some of the gainful employment policy questions raised in the over 900 public comments submitted to the Department of Education. While policy discussions will ultimately be the most important considerations as the regulatory process moves forward, it's also important to remember that these issues do affect real people. So today we're looking at what some current and former students at these programs had to say in their comments.

Ambition and hope do not pan out in Wisconsin

For many low-income and non-traditional students, going to college can be a source of hope and a chance for a better life, even in spite of fears about not having succeeded academically in the past. That sense of opportunity is prevalent in a combined set of 13 comments from students who now appear to be enrolled in courses at Milwaukee Area Technical College. These comments almost all start on a hopeful note with a sense of excitement for a better life. Many detail previously unachieved academic successes in these programs--high grade point averages, scholarship-winning essays--the type of accomplishment that shows they are college-caliber material. But then the reversal--a degree with no return, a dispute over further debts, no change in status--that leaves them arguably worse off and in debt. (The original comments have been temporarily taken down from Regulations.gov with a request to remove personally identifiable information, so I created a redacted version here.) 

A story from one woman who enrolled at Sanford Brown to become a probation officer encapsulates this emotional roller coaster:

I was so excited about going to Sanford Brown College. I was sold because I was told I could get small class sizes and get extra help if I needed and graduate faster because the courses were 5 weeks long and you went to school year round until you graduated. 
...
I went ahead and took the admissions test and paid $50.00 for it. I was told by the financial aid personnel that I could also write a 500 word paper on why higher education was important and win a $1,500 scholarship. I won the scholarship because of the paper I wrote. I was so excited and proud of myself. I was looking forward to the wonderful future my 3 kids and I were going to have. I was going to finish college and finally have a career which I loved which was helping people. I was assured by all the admissions people at Sanford Brown College that I had made the right choice to attend that college. They all were so friendly and seemed to want this as much as I did.
 
But it was not to be. After attending from August 2006 to September 2008, the woman believed she had graduated but ended up not being able to do so after a dispute with the institution over whether she still had an outstanding balance on her account. She never ended up finding a job in the criminal justice field and owes $25,000 in student loans and cannot transfer her credits. Now the campus she attended, which had a 27.5 percent student loan default rate in the last year and charged the lowest income students a net price of nearly $18,000, is shutting down. 
 
Those who went from the highs of success to the disappointing workforce reality pulled no punches on their sentiments. For example, one student in the Milwaukee area who graduated from a dental assisting program at Everest College in 2011 wrote: "My intentions were to give my children a better future by bettering myself through education. Everest ripped that dream away from me and is the reason I am struggling today with a $12,000 loan." A student who finished at Everest with a 4.0 grade point average in the same program had the same reaction, calling her experience the "beginning of a long unfinished nightmare."
 
[UPDATE: On Twitter, Robert Kelchen notes that the Milwaukee branch of Everest College closed after placing only 95 out of its 1,585 students in jobs since opening in October 2010. An Inside Higher Ed article from February also notes that Milwaukee is increasing scrutiny of for-profit colleges.]

Confusion rules the day

Given all the work that's been done to raise questions about some gainful employment programs, it's fair to ask why students are still choosing to enroll in certain ones that already have bad outcomes (see 27 percent default rate at Sanford Brown). The answer, at least partially, appears to be confusion. Lack of clarity around costs, expected return, likelihood of finishing, transfer opportunities, and ability to pass licensing tests whether credits would transfer, and whether they will even be able to sit for the necessary licensing tests pop up again and again in a host of comments. (See for example, this comment about trying to get an animation degree or page 4 of the document labeled "student complaints.")

Confusion can be one way to shift personal responsibility away from the individual and to the program, but it also seems to be a symptom of our opaque higher education system and false quality assurance provided by accreditation. In a working transparent market, concerns about cost, transfer, etc. should not be happening. The fact that they are again reiterates the importance of efforts like the College Scorecard and Financial Aid Shopping Sheet, which try to standardize information to help with comparisons may be some assistance, but are struggling to get widespread adoption.

But better information is not enough unless either: 1) consumers change their behavior and take a more skeptical and less trusting approach to choosing colleges or 2) they have a better quality assurance that the institutions where they can take their aid have been sufficiently vetted to merit a more trusting relationship. Right now, students face the worst of both worlds thanks to accreditation. With the imprimatur of accrediting agencies (and thus by implication the Department of Education), accreditation provides a false sense of security for students that breeds an implicit level of trust toward the institution that may not be warranted. Unlike a mechanic you've never used before, a student trusts her accredited college will charge her a reasonable price and give her a service that works. And she does that because some other group of people have reviewed the college to check its quality. Experts in higher education have signed off on it, so why shouldn't she trust that seal? And so students trust that their accredited institution will offer accredited law degrees in their state--but that's not always true, as a student from Iowa found out when he tried to get a law degree from a program whose lack of recognition from the American Bar Association meant California was the only state in which he could become a lawyer. Or they might assume that their credits could be used at colleges beyond the one they are currently attending., which was not the case for many students who tried to take their coursework from proprietary institutions to Milwaukee Area Technical College.

Solving this issue of trust can be done one of two ways. First, Congress could change the requirements around accreditation to compel these agencies to actually set clear standards for outcomes and results--including things like having necessary programmatic accreditation--which would likely result in closing some institutions and accreditors for poor performance. Or, we could go the opposite way and acknowledge that accreditation is not a meaningful indicator of anything and students should not assume that just because a college gets federal student aid that means they should assume it's any good. The former is extremely difficult politically. The latter is not only hard to accomplish but would make the path into college even more confusing for low-income students that currently have to trust and rely on their financial aid office for help navigating Federal grants and loans. Either way this issue indicates more must be done to think about not just what information consumers use for their decisions, but also how they interact with the colleges they are considering attending.

Does this really require a college credential?

Also implicit in the trusting attitude of students is the assurance that program will be what it says it is--training that will provide them access to a job. Now in any system, some programs will be better than others and there will always be a few duds.  And commenters did identify some that appeared to be not very good--students discussed outdated or insufficient equipment (imagine learning how to work with braces on half a mouth) or instructors without sufficient content knowledge. But assumed in all of those comments is the idea that the program would have been better had those deficiencies just been corrected. Never would a student assume that the degree itself is fundamentally not reflective of how the fields they are preparing for actually operate. Yes one student who attended  Sanford Brown in the Milwaukee area found out that misalignment problem was exactly what her program suffered from:
 
The majority of companies hiring for Billing have on the job training for people who have been hired by the company including Aurora Healthcare. ... The HIPPAA, JCAHO and Medical Terminology courses are being given as on the job training as free computer based learning courses. Positions in Coding for hospitals are impossible to get into without years of experience. The Certificate I received has not been useful to me and is not worth the $17,000 I now owe. 
 
The commenter raises a point that goes beyond the idea of whether a program merits the price charged and debt incurred to instead ask is it even aligned with fields or occupations where postsecondary education really provides an advantage for entry and advancement? In the case of the coding program, she suggests that even an extremely good program would not have been worth it because that is not how the coding industry works. This isn't a derivative of the "bachelor's degree holders working in restaurants" argument, but rather the idea  that even someone who gets employment in the relevant field may not actually need that credential. It's a challenge to the idea that if a college or university offers a program it is by definition "postsecondary." 
 

Signs some schools are taking steps to improve--is it enough?

To be sure, there's a lot of comments that do no paint a flattering light of the programs and the institutions that offer them. But there are some rays of light suggested in the comments. Some institutions have shut down poor-performing programs, while others have closed entire branches that did not appear to be succeeding. Outside the comments, the University of Phoenix and Kaplan University have been among the large institutions to get noticed for offering trial periods and experimenting with new curricula to boost quality. In these cases, schools do appear to be responding to market forces in positive ways. The task ahead then is to figure out how to keep driving those kinds of changes so that stories of future students can focus only on the hope and not the disappointment and regret that followed. 

Does Your Favorite Private College Serve Low-Income Students Well? Find Out Here.

May 30, 2013

[The New America Foundation's Education Policy Program recently released "Undermining Pell: How Colleges Compete for Wealthy Students and Leave the Low-Income Behind," a report that presents a new analysis of little-examined U.S. Department of Education data showing the "net price" – the amount students pay after all grant aid has been exhausted – for low-income students at individual colleges. This is the seventh and final post in a series related to the report's findings. Read earlier parts of the series here, here, here, here, here, and here.]

How do individual private colleges stack up in terms of their commitment to serving low-income students? To answer that question, it is important to look at both the proportion of low-income students they serve and how much those students are asked to pay. As this graphic shows, some institutions are authentically committed to enrolling low-income students and charging them affordable prices, while others -- including some that are extremely wealthy (those with the largest circles) -- are stingy with their admissions slots, their aid dollars, or both. Click on the graphic below for an interactive dataset that allows you to compare colleges.

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This graphic has been updated from an earlier version to reflect changes that some private colleges have recently made to their net price data.

“High-Tuition, High Aid” Hurts Low-income Students at Public U’s

May 22, 2013

[The New America Foundation's Education Policy Program recently released "Undermining Pell: How Colleges Compete for Wealthy Students and Leave the Low-Income Behind," a report that presents a new analysis of little-examined U.S. Department of Education data showing the "net price" – the amount students pay after all grant aid has been exhausted – for low-income students at individual colleges. This is the fifth in a series of posts related to the report's findings. Read earlier parts of the series here, here, here, and here,]

For generations, states made college affordable for all of their citizens by keeping the prices of their public higher education institutions low. But with more and more states divesting from their public college systems, those days are increasingly in the past.

There has long been a debate in the higher education policy world about the effectiveness and efficiency of states’ historic low-tuition model. Some student aid experts have advocated against this approach, saying that it doesn’t target subsidies effectively because it lowers the cost of higher education for the rich and the poor alike. They have argued that low-income students would benefit more from a high-tuition, high-aid model, in which states and schools devote their subsidies exclusively to those who couldn’t afford to go to college without the help.

The net price data analyzed in Undermining Pell don’t bear this out. In fact, they clearly show that the lowest-income students fare much better in states that have kept the costs of attending their public institutions relatively low.

Why Act When You Can Ask For A(nother) Study? House Kicks the Can On Better College Data

May 14, 2013
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For more on this issue, check out this post from Clare McCann on our sister blog, Ed Money Watch.

For those who care about increased higher education transparency, the last few days have been a trip through the Congressional looking glass, culminating with yesterday’s introduction of a bill to “study” higher education transparency. On Thursday a bipartisan group of senators and representatives introduced the Student Right to Know Before You Go Act, which would help provide students, families, and taxpayers with answers to critical questions like whether students at particular institutions graduate, whether they get jobs, and whether they can comfortably pay back their loans. A televised discussion among Senators Wyden (D-OR), Rubio (R-FL), and Warner (D-VA), Representatives Hunter (R-CA) and Andrews (D-NJ), students, and guidance counselors underscored the urgent need for better information about higher education outcomes and value.  

It seems pretty straightforward. Students, families, and policymakers have questions. And this legislation would provide answers. But the day after the legislation was introduced, an unnamed senior Congressional education staffer said of the effort, “But a federal unit record system is only designed to answer questions no one is asking, namely: how do we bring No Child Left Behind and its command and control mentality to higher education.”

Let’s ignore the intentionally distracting NCLB reference and instead focus on this doozy: “designed to answer questions no one is asking.” Perhaps the staffer has fallen through the looking glass, because from this side it seems like everyone is asking these questions.

Student Loan Debt May Put Young Adults in Financially Precarious Standing

May 13, 2013
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Student loan debt has been in the news a lot these days. In the last week, a number of news outlets wrote about mounting student loan debt and the delaying of life events by their borrowers (see ABC News, the Chronicle of Higher Education, CNN Money, the NY Times [here and here], and the Wall Street Journal, to name a few). The article in the NY Times provides a great example of this, "Consider Shane Gill, a 33-year-old high-school teacher in New York City. He does not have a car. He does not own a home. He is not married. And he is no anomaly: like hundreds of thousands of others in his generation, he has put off such major purchases or decisions in part because of his debts."

The Higher Ed Arms Race: How the High-Tuition High-Aid Model Shuts Out Low-Income Students

May 9, 2013
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Yesterday, the New America Foundation's Education Policy Program released "Undermining Pell: How Colleges Compete for Wealthy Students and Leave the Low-Income Behind." Author Stephen Burd reveals a full-fledged "financial aid arms-race" between private colleges and universities, and a burgeoning one among publics as well. Schools adopt a "high-tuition, high-aid” model that allows them to attract wealthy and high-achieving students to boost their rankings with significant amounts of merit aid – money that could have instead been directed to need-based aid for low-income students. That means that the neediest students are left with an impossibly high tuition bill.

Burd uses data, many of which are available through our Federal Education Budget Project database, on Pell Grant enrollment and net price for the lowest-income students at thousands of individual colleges. The analysis shows that hundreds of public and private non-profit colleges expect the neediest students to pay an annual amount that is equal to or even more than their families' entire yearly earnings. As a result, these students are left with little choice but to take on heavy debt loads or to behave in ways that are demonstrated to reduce the likelihood of earning their degrees, such as working full-time while enrolled or dropping out until they can afford to return. Only a few dozen exclusive colleges meet the full financial need of the lowest-income students they enroll. Nearly two-thirds of the private institutions analyzed charge students from the lowest-income families, those making $30,000 or less annually, a net price of over $15,000 a year.

Many private colleges have small endowments, making it extremely difficult for them to provide adequate support to those students with the greatest need. According to the report, the poorest schools are often the ones that enroll the largest share of federal Pell Grant recipients, but they charge these students high net prices because of their own limited resources. At the same time, many of these institutions provide deep tuition discounts to wealthier students to attract those high-achieving students to the school.

This is not just a question of institutional wealth, though. Some of the country's most prosperous private colleges are, in fact, the stingiest with need-based aid. These institutions tend to use their institutional financial aid as a competitive tool to reel in the top – and the most affluent – students to help them climb the U.S. News & World Report rankings and maximize their revenue.

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We created an interactive graphic that groups institutions into four categories based on whether they charge low-income students a high or low tuition and whether they enroll a high or low percentage of Pell recipients. We also used data from the Department of Education, FEBP, and The Chronicle of Higher Education to determine the number of endowment dollars available per student.

We can see from this graphic, for instance, that Washington & Lee University enrolls a very low proportion of Pell students (eight percent) and charges the lowest-income students over $14,000 a year in tuition after Pell Grants and financial aid. That’s an average tuition bill of over half of a family’s total income. What's worse is that Washington & Lee has a relatively large endowment of around $450,000 per student. 

While the problem is not as extreme among public universities, it is rapidly getting worse. As more states cut funding for their higher education systems, public colleges are increasingly adopting the enrollment management tactics of their private college counterparts - to the detriment of low-income and working-class students alike.

In many states, public institutions are following the same high-tuition, high-aid model – and in some cases, including in Pennsylvania and South Carolina, the neediest students are facing net prices more than double what they are charged in low-tuition states such as North Carolina. At Penn State University, for example, in-state students attending the university's flagship campus in University Park pay about $16,000 in tuition and fees annually, which is double the average tuition charged at all national public four-year colleges and universities examined in his paper. Despite the fact that Penn State spends nearly $14 million a year on institutional aid, its lowest-income in-state students pay an average net price of nearly $17,000, the fifth-highest of any public institution this report examines. In other words, Penn State's neediest students do not appear to be getting any discount relative to other students at all. At the same time, about 6 percent of the school's first-time freshmen received an average of $3,800 in so-called "merit aid" in 2010-11.

Schools like Penn State seem to be using their pricing autonomy to gain an advantage as they fiercely compete for the students they most desire: the "best and brightest" students - and the wealthiest. These actions fly in the face of national goals to increase access to higher education and help more students earn high-quality degrees.

Over the past several decades, a powerful enrollment management industry has emerged to show colleges how they can use their institutional aid strategically in the pursuit of high-achieving and affluent students. And worse yet, there is compelling evidence to suggest that many schools are engaged in an elaborate shell game: using Pell Grants, the primary source of federal aid for low-income students, to supplant institutional aid they would have provided to financially needy students otherwise, and then shifting these funds to help recruit wealthier students. This is one reason that, even after historic increases in Pell Grant funding, the college-going gap between low-income students and their wealthier counterparts remains as wide as ever.

Paying a High Price for Prestige at Private Colleges

May 14, 2013
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[Last week the New America Foundation's Education Policy Program released "Undermining Pell: How Colleges Compete for Wealthy Students and Leave the Low-Income Behind," a report that presents a new analysis of little-examined U.S. Department of Education data showing the "net price" – the amount students pay after all grant aid has been exhausted – for low-income students at individual colleges. This is the third in a series of posts related to the report's findings. Read earlier parts of the series here and here.]

Some private nonprofit colleges are making extraordinary efforts to recruit, enroll, and financially assist low-income students. Unfortunately, they are few and far between. Only 53 private colleges, or 11 percent of the schools examined in Undermining Pell charged students with family incomes of $30,000 or less an average net price under $10,000 in the 2010-11 school year. In contrast, nearly two thirds of the private institutions analyzed charged the lowest income an average net price of over $15,000 a year.

Certainly, a substantial number of private colleges have small endowments, making it extremely difficult for them to provide adequate support to those students with the greatest need. Indeed, many of these schools provide deep discounts because they believe they must do so as a matter of survival.

However, there are plenty of private colleges that have the means to enroll a substantial share of Pell Grant recipients and charge them a low price but choose not to do so. These include some fairly prosperous colleges that use their institutional aid as a competitive weapon to attract the students they desire, rather than to meet the financial need of their students.

Undermining Pell

May 8, 2013
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Nearly fifty years ago, the federal government committed itself to removing the financial barriers that prevent low-income students from enrolling in and completing college. Colleges for years complemented the government's efforts by using their financial aid resources to open the doors to the neediest students. But those days appear to be in the past. With their relentless pursuit of prestige and revenue, the nation's public and private four-year colleges and universities are now in danger of shutting down what has long been a pathway to the middle class for low-income and working-class students.

Today the New America Foundation is releasing Undermining Pell: How Colleges Compete for Wealthy Students and Leave the Low-Income Behind, a report that presents a new analysis of little-examined U.S. Department of Education data showing the "net price" – the amount students pay after all grant aid has been exhausted – for low-income students at thousands of individual colleges. The analysis shows that hundreds of public and private non-profit colleges expect the neediest students to pay an amount that is equal to or even more than their families' yearly earnings. As a result, these students are left with little choice but to take on heavy debt loads or engage in activities that reduce their likelihood of earning their degrees, such as working full-time while enrolled or dropping out until they can afford to return.

Undermining Pell

  • By
  • Stephen Burd,
  • New America Foundation
May 8, 2013

Nearly fifty years ago, the federal government committed itself to removing the financial barriers that prevent low-income students from enrolling in and completing colleges. For years, colleges complemented the government's efforts by using their financial aid resources to open the doors to the neediest students. But those days appear to be in the past.

Simpson-Bowles: Reform Student Loans, Fund Pell Grants

April 23, 2013

Alan Simpson and Erskine Bowles, of the famed Simpson-Bowles commission (officially the National Commission on Fiscal Responsibility and Reform) that the Obama administration tapped to generate ideas to reduce federal budget deficits, are out with a new wide-ranging proposal. Titled A Bipartisan Path Forward to Securing America’s Future, the report was published by the Moment of Truth Project, which is itself affiliated with the Committee for a Responsible Federal Budget, an organization previously housed at New America.

The report includes higher education reforms that they say will create $35 billion in savings through 2023. These reforms mirror some of the ideas outlined earlier this year in the Education Policy Program’s report, Rebalancing Resources and Incentives in Federal Student Aid. Unlike the latest Moment of Truth Project report, though, the New America Foundation report argues that the savings these proposals generate should be reinvested fully in more effective and higher-quality postsecondary education aid. (The Path Forward proposal reinvests most, but not all of the savings into higher education aid.)

One way that Path Forward finds big savings is through eliminating the in-school interest rate subsidy, which defers accrued interest on the borrowers loans until after graduation. This is basically identical to New America’s proposal to eliminate Subsidized Stafford loans.

According to the Moment of Truth Project report, the subsidy is poorly targeted and that money can be better spent by funding the Pell Grant program. The authors argue that income-based repayment is a far better benefit to struggling borrowers, something we made the case for in Rebalancing Resources and Incentives. The deficit reduction report writes:

Another $15 to $20 billion could be generated through a number of more targeted changes such as adopting the President's proposal to reform Perkins loans, lowering Guaranty Agency Compensation Rehabilitation loans, repealing Grad PLUS loans, equalizing loans for dependent and independent students, creating a two-tiered income-based repayment system, and reducing or discontinuing funding for underperforming for-profit schools.

The authors go on to note that such reforms would fix the Pell Grant funding cliff, something we also accomplished in the Education Policy Program report. The authors further note that "by providing mandatory funding to cover much of the projected shortfall in the Pell Grant program, this option would limit the pressure on the Appropriations Committee" to make deep cuts in discretionary programs or to decrease the benefits Pell provides. In 2014, Congress was pleasantly surprised by a Congressional Budget Office estimate that showed a surplus had accumulated in the program over the past several years, permitting lawmakers to flat-fund the program at 2013 pre-sequester levels. Still, costs of the Pell program are expected to increase rapidly over the next several years, demanding a long-term solution.

The report also endorses a proposal first offered by the Education Policy Program’s Jason Delisle. Recently highlighted both in President Obama's fiscal year 2014 budget proposal and in a bill proposed by Republican Senators Coburn, Burr, and Alexander, the plan would interest rates on federal student loans to the rate of 10-year Treasury notes, plus a mark-up. As the commission notes, this addresses the interest rate problem more gradually than a bump from 3.4 percent to 6.8 percent – and it would permanently resolve the annual debate over setting the rates by creating a long-term policy subject to the market, not lawmakers’ whims and political interests.

In the Education Policy Program paper Rebalancing Resources and Incentives in Federal Student Aid, we recommend nearly all of these fixes as part of a larger reform to make federal student aid more equitable and rational. And we did this in a budget-neutral way – that is, we used savings found in some programs to increase funding for other programs, or to create completely new ones. While the new Simpson-Bowles report would use some of the savings to fund the looming Pell Grant program shortfall, the authors would also redirect a portion of the savings to deficit reduction.

Our proposal included a broad array of reform proposals, covering loans, grants, tax expenditures, transparency, and other federal aid issues, and it is meant to be seen as an entire package, not a menu of options, because each component of aid affects the others. We stand by that belief, but we are pleased to see other groups arrive at the same conclusions that we did in reforming the federal student aid system: Policymakers can better spend the significant resources they have already committed to federal student aid programs to benefit students, taxpayers, and other education stakeholders.

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