Summer enrollment is down at many community colleges now that low-income students can’t get federal aid. In a bipartisan compromise last year, the “year-round” Pell Grant was cut from the budget to keep the maximum grant at $5,550.
“Pell runners” — scammers who scram once they’ve collected their federal grants — are having a tougher time, but they still manage to steal an estimated $1 billion in aid annually.
When financial aid flows to affluent students, college raise tuition to capture the dollars, writes Andrew Gillen of the Center for College Affordability and Productivity. However, aid to low-income students, such as Pell Grants, is unlikely to push up tuition, he writes in an Inside Higher Ed essay.
Aid restricted to low-income families allows students who were previously priced out of higher education to attend, without giving colleges the ability to raise tuition without again pricing these students out of higher education. That is not the case with aid given to relatively affluent students who will attend college regardless of price.
Not all colleges will raise tuition, when aid rises, he adds. Instead, “many colleges will instead grow their applicant pool, allowing them to become more selective” and move up in college rankings.
“Don’t leave money sitting on the table” was the ethos, when he attended meetings with university administrators to discuss tuition, writes Peter Wood in a Minding the Campus discussion.
The metaphoric table in question was the one on which the government had laid out a sumptuous banquet of increases of financial aid. Our job was to figure out how to consume as much of it as possible in tuition increases. . . . A substantial portion of the money we captured would be reallocated as “tuition discounts” or “institutional aid.”
. . . And we did all this in the pursuit of educational excellence. It was a large private university in the shadow of world-ranked neighbors and it was attempting to pull itself up in the world of prestige and influence by its bootstraps. There were townhouses that needed buying; laboratories that needed building; faculty stars that needed hiring; classrooms and residence halls that needed refurbishing; symphonies that needed performing; grotesque modern sculptures that needed displaying; and administrators that needed chauffeuring.
Herbert London adds a quote from Derek Bok, a former Harvard president: “Universities share one characteristic with compulsive gamblers and exiled royalty: there is never enough money to satisfy their desires.”
The federal government should provide college aid only to low-income students with performance criteria to weed out mediocre students, proposes Richard Vedder, Gillen’s colleague at CCAP.
Make the college absorb some of the risk for loan defaults — a lesson we should have learned from the financial crisis. Give Pell Grants as vouchers directly to students, not schools. Reinstate private lending options. Unveil new human capital contract approaches that reduce debt reliance. Downsize and reinvent federal programs and allow market discipline to operate more.
Federal financial aid is geared to full-time, degree-seeking students, complained Education Secretary Arne Duncan’s audience at Tallahassee Community College. Colleges can’t train 2 million skilled workers without aid for people seeking short-term job training or part-timers who need literacy or English classes to qualify for a job.
College leaders don’t like President Obama’s tuition-control plan, reports AP. In his State of the Union speech, the president threatened to cut some forms of federal aid to students at colleges that raise tuition or fail to provide “good value.”
Fuzzy math, Illinois State University’s president called it.
“Political theater of the worst sort,” said the University of Washington’s head.
States have reduced higher education funding, forcing public colleges and universities to raise tuition, university presidents say.
Under the president’s proposal, colleges would be judged on “responsible tuition policy,” either by “offering relatively lower net tuition prices” or “restraining tuition growth,” reports College Inc. In addition, the Education Department would evaluate how well colleges prepare graduates to get jobs and repay student loans, and their performance in enrolling and graduating low-income students.
The aid that colleges stand to lose under the president’s plan is not the Pell grant, the largest source of federal funds to students, but rather a package of “campus-based” programs that the federal government delivers to colleges. They are Federal Work Study, an initiative that subsidizes the expenses of campus jobs for needy students at 3,400 colleges; Supplemental Educational Opportunity Grants, a supplement to the Pell grant that awards needy students $100 to $4,000 a year; and the Perkins loan program, which delivers low-interest loans to students.
Obama is proposing to expand all three programs to the tune of about $10 billion — enhancing the Perkins program from $1 billion to $8 billion and augmenting Work Study and Opportunity Grants by a combined $2 billion.
While some believe higher education funding should be tied to performance, Obama’s proposal would deny aid to needy students, critics charge. “Ultimately, who you are punishing with this is the students,” said Haley Chitty, spokesman for the National Association of Student Financial Aid Administrators. “They’re the ones who get this aid.”
“For a growing number of students, entering the lucrative college-educated realms of the economy is like being smuggled across the border—you can get to the promised land if you try hard enough, but you arrive in a state of indentured servitude to the shady operators who overcharged you for the trip.” So writes Ed Sector’s Kevin Carey, who offers A Radical Solution For America’s Worsening College Tuition Bubble. The only way to control college costs is to introduce competition, Carey writes.
New providers of higher education could be made “eligible for payment via Pell grants, federal loans, or other current and imagined federal aid systems if they agree to a few baseline conditions,” such as price regulation and transparency. “They would be required to provide public information about how much their students learn, and have their access to federal aid rescinded if students are not learning enough.”
. . . a pair of well-known Stanford professors are currently teaching an Artificial Intelligence course to about 200 Stanford students—and more than twenty thousand students around the world, online. The non-Stanford students won’t receive credits from Stanford, but they will receive official documentation from the professors as to how they scored on course tests and their overall rank. Under this new system, those professors would be free to set up their own business teaching Artificial Intelligence over the Internet, and students would be free to pay them with federal aid. Other providers might take advantage of the fast-growing body of open educational resources—free online courses, videos, lectures, and syllabi—and add value primarily through mentoring, designing course sequences, and assessing learning.
To remain eligible for federal financial aid, old-line colleges would have to accept transfer credits granted by the new providers.
And because they will be inexpensive and attached to verifiable data about how much students are learning, they will make a compelling value proposition when competing with traditional colleges that have no such data, charge more money, and are weighed down by legacy expenses and change-resistant cultures.
Existing colleges and universities will have to adapt or die, Carey writes.
Making sure those new-style credits are transferable will be tricky. Colleges today often reject credits earned at other accredited institutions.
Education Secretary Arne Duncan is dead wrong on how to control college costs, argues Cato‘s Neal McCluskey.
To a system blackout-drunk on taxpayer money, the Obama administration would deliver even more booze while only whispering about tough love.
A libertarian, McCluskey is the author of How Much Ivory Does This Tower Need? I love the title.
Colleges and universities give $5.3 billion a year in financial aid to students from affluent families.
To avoid default, consider technical college, say investors in bonds backed by bundled student loans.
High schools should ensure that all students have access to a quality education that prepares them for college and careers, say counselors in a College Board survey. But most say that’s not the mission of their school system.