Endowments

Higher Ed Roundup: Week of September 29 - October 3

Ed Policy — Fri, 03 Oct 2008 17:00:00 -0400

Direct Loan Volume Soars in Response to Credit Crunch

Spellings Presents Plan to Shrink the FAFSA

Ed Dept. Underestimates Improper Payments to Lenders, IG Reports

New IRS Form Questions Colleges on Spending, Endowments

Direct Loan Volume Soars in Response to Credit Crunch

The Direct Loan program's volume has increased by nearly 50 percent this year, according to the U.S. Department of Education. In the wake of the credit crunch, roughly 400 schools have switched to Direct Lending from the competing Federal Family Education Loan program, bringing the total number of schools offering Direct Loans to 1,369. Overall, students at these schools have taken out $16.4 billion in loans this year, which is about 35 percent of the total federal student loan program volume. At its most popular in the mid-1990's, Direct Lending controlled nearly 40 percent of the total loan volume.

The Department also revealed his week that 10 FFEL lenders have taken advantage of the agency's loan purchase program first authorized in the Ensuring Continued Access to Student Loans Act (ECASLA). Lenders sold about 40 percent of this year's $30.6 billion FFEL volume this year back to the Department, and are working on selling most of the remainder, according to The Chronicle of Higher Education. In a letter to shareholders, Sallie Mae reported that it intends to use the program to finance all of its expected $20 billion in loans this year. The buyback program is designed to help loan companies secure financing by giving them the option of selling all or portions of new student loans back to the Department. By contrast, no schools has had to turn to FFEL's original backup plan, the overly complex and confusing "lender-of-last-resort system," which requires guaranty agencies to provide loans to students that have been turned down by conventional lenders .

Spellings Presents Plan to Shrink the FAFSA

U.S. Education Secretary Margaret Spellings unveiled a proposal on Wednesday to significantly simplify the process of applying for federal financial aid. Under the plan, which Spellings announced in a speech at Harvard University, the Department of Education would slash the number of questions asked on the Free Application for Federal Student Aid (FAFSA) from 120 questions to 27. In addition, the proposal calls for the agency to use year-old tax data so that the agency would be able to inform students about their aid eligibility at the beginning of their senior year in high school rather than at the end. These changes, Spellings said, should encourage low-income students to pursue a higher education rather than discourage them, as the current aid application process does. "We should be knocking down barriers, not putting up hurdles," she stated. "It starts with a new form." In an interview with Inside Higher Ed, Spellings said she said she hoped that Congress would give "careful consideration" to her plan.

Ed Dept. Underestimates Improper Payments to Lenders, IG Reports

The U.S. Education Department has dramatically understated the amount of improper payments it has made to lenders participating in the Federal Family Education Loan program, according to a recent report by the agency’s Inspector General (IG). Federal law requires government agencies to annually report on incorrect payments they have made to outside entities. According to the IG, the Federal Student Aid office’s Financial Partners Services’ division keeps changing the methodology it uses to estimate improper payment rates, and as a result, the estimates have varied wildly. For example, the Department claims that it made $258-million in improper payments to lenders and guaranty agencies in the 2006 fiscal year, but only $2 million in fiscal year 2007. The report goes into great detail about flaws in the Department’s methodology, but lays some of the blame on the overwhelming complexity of the FFEL program.

New IRS Form Questions Colleges on Spending, Endowments

Colleges will soon have to provide the Internal Revenue Service (IRS) with greater detail about their finances, including how they use their endowments and compensate top executives, on a new reporting form that the IRS said it will release shortly. The announcement came almost a month after Sen. Charles Grassley (R-IA) and Rep. Peter Welch (D-VT) convened a roundtable on endowment spending at which they asked the IRS to create a special 990 tax form for colleges. The lawmakers especially wanted the new form to include more questions on expenses, revenues, and use of endowment income. In addition to covering these topics, the new IRS questionnaire will asks schools about related business opportunities and lavish perks offered to employees -- at least in part to determine whether colleges are taking advantage of their non-profit status.

Higher Ed Roundup: Week of September 8 - September 12

Ed Policy — Fri, 12 Sep 2008 21:12:00 -0400

No Loan Crisis Here, Report New England Colleges

Sen. Grassley Requests New IRS 990 Form for Colleges

Survey Reveals How Families Pay for College

No Loan Crisis Here, Report New England Colleges

Fears that there would be a major breakdown in federal student loan availability have been greatly exagerrated, according to a new report by the New England Board of Higher Education. In a survey of 76 of its member institutions, the board found that the vast majority of colleges and universities in New England aren't experiencing any major problems obtaining loans for their students. According the report, 40 percent of colleges reported that the Ensuring Continued Access to Student Loans Act of May 2008 had a "favorable impact" on loan availability, while 44 percent reported the legislation had "no impact," primarily because they were not experiencing any problems accessings loans to begin with. The board noted that students are overwhelmingly taking advantage of the increase in borrowing limits that Congress approved as part of that legislation. In addition, there has been a substantial increase in applications for PLUS loans for parents, as high cost private student loans become harder to obtain. While colleges expressed some concern about the tightening of lending standards by private loan providers, the report concluded that "instances in which students have not been able to attend college due to inadequte loan availability are exceptional."

Sen. Grassley Requests New IRS 990 Form for Colleges

A year after asking t he IRS to revamp the 990 tax form used by colleges and other nonprofits, Sen. Charles Grassley of Iowa, the ranking Republican on the Senate Finance Committee, now wants the agency to develop a form specifically for colleges. Speaking at a roundtable discussion on Monday on college endowments, Grassley said that the public needs more transparency from colleges. Last December, the IRS revealed a new form 990 for nonprofits that will go into effect for the 2008 tax year that requires schools to report the value of their endowments. According to Grassley, the new form doesn't go far enough. "While the new 990 requests some information about endowments, it does not require institutions to report information about their student populations or costs," he stated.

Survey Reveals How Families Pay for College

Nearly 40 percent of college tuition bills are financed by loans taken out by both students and their parents, while 32 percent of college costs are met by parental contributions, 15 percent by grants and scholarships, and 10 percent by student financial contributions. A survey, "How America Pays for College," commissioned by Sallie Mae and conducted by Gallup, also finds that 14 percent of families surveyed rely solely on loans to pay for college, 9 percent tapped a college savings account (such as a 529 plan), and 12 percent received money from relatives or friends. Of the 23 percent of costs paid for by student borrowing, more than half came from federal loans and about 20 percent came from private loans. Parents were much less likely to borrow, with only about 3 percent reporting that they had taken out federal PLUS loans.

Don't Table Endowments

Ben Miller — Tue, 09 Sep 2008 16:52:00 -0400

Speaking at a Congressional roundtable on college endowment spending on Monday, college leaders and lobbyists offered a multitude of reasons why requiring institutions of higher education to spend a minimum amount of their endowments each year is bad policy and fundamentally unworkable. Among their arguments, they claim that a mandatory payout of endowment funds would be overly burdensome on institutions; would harm future generations of students on their campuses by depleting present resources; and would serve no public good.

We respectfully disagree. At Higher Ed Watch, we have offered a proposal for a mandatory payout that renders most of these objections moot. Our plan would require the wealthiest colleges to spend a specific percentage of the market value of their endowment funds each year, with the difference between their current spending rate and the new threshold going to concrete, measurable projects aimed at improving socioeconomic diversity among students and applicants.

Co-hosted by Sen. Charles Grassley (R-Iowa), the ranking member of the Senate Finance Committee, and Rep. Peter Welch (D-Vt.), who moderated the discussion, yesterday's event featured experts on college endowment practices, higher education leaders and lobbyists, and watchdog groups [Disclosure: the author of this post participated in the roundtable.] Ostensibly, the event's three major goals were to (1) provide a better understanding of the link between college costs and tuition, (2) define and classify university endowments, and (3) debate whether institutional endowments should be subject to a mandatory annual payout. Ultimately, the discussion largely focused on reasons that colleges believe requiring a minimum spending rate would be inadvisable.

Let's take a closer look at the arguments advanced by participants yesterday and show how our proposal addresses them.

Argument: A mandatory spending rate is too burdensome for colleges with small endowments

Most colleges do not have large endowments. According to Molly Broad, the president of the American Council of Education, the vast majority of postsecondary endowment funds (about 70 percent) are controlled by 75 universities. The rest is divvied up among the thousands of other colleges nationwide.

It is true that many schools with smaller endowments would be unable to meet an annual spending requirement. That's why Higher Ed Watch's proposal would leave these institutions alone. Our plan would require a mandatory payout level only from colleges with endowments over $500 million or some other agreed upon metric.

The 75 schools or so that would be affected represent a fraction of national postsecondary enrollment, but they are also among the premier colleges and universities in the world. As a result of their reputation, these institutions confer substantial benefits to their graduates. We believe that colleges should be doing more to ensure that those benefits are accessible to students across all socioeconomic brackets.

Unfortunately, that largely doesn't appear to be the case. Apart from isolated shining examples, such as Amherst and Smith colleges, where 20 percent or more of the student body is Pell eligible, America's wealthiest schools enroll a small and apparently decreasing number of low-income students. According to an analysis published this May by the Chronicle of Higher Education, only 13.1 percent of students at the 75 wealthiest private institutions in the 2006-07 school year received Pell Grants. Moreover, the Chronicle found that the number of Pell Grant recipients at these institutions actually decreased from 14.3 percent in the 2004-05 school year.

Argument: Forced endowment spending on tuition reduction wouldn't serve the public good

College leaders were very clear at Monday's roundtable that there is at best a tenuous link between endowment spending and a further lowering of tuition because institutions already use endowment funds to subsidize tuition and fees. They argued that mandating higher spending rates would lead to nothing more than a small decrease in tuition -- at best.

But reducing college prices is not a cure-all for college access problems. Ironically, the reduction in the proportion of Pell Grant recipients at wealthy schools occurred after several took steps to substantially reduce their tuition burden for financially needy applicants. This suggests that colleges need to do more than lower tuition costs to improve socioeconomic diversity on campus.

This is where mandating a minimum payout rate for endowments could be useful. Rather than just requiring colleges to spend more of their endowments on the nebulous, seemingly catch-all category of "student aid," colleges under our plan would be required to use additional funds to take proactive measures to attract more low-and moderate income students to their campuses, and help them succeed and graduate once there.

With such a mandate, colleges would not be able to use the increased endowment spending to supplant, rather than supplement, existing student aid dollars, or use them in a fungible way to finance extravagant capitol projects, such as dormitory amenities or new fitness centers for athletes.

Instead, the newly tapped endowment money could go to projects such as:

Centers of Excellence for Low-Income Student Success
Under the recently-passed Higher Education Act reauthorization legislation, colleges can apply for grants to create centers of excellence for veteran students. These centers are to consist of full-time staff members whose job will be to coordinate all aspects of veteran student life, running the gamut from academic and career advising, access and persistence monitoring, outreach, housing support, and tutoring assistance. We would like to see colleges use the additional endowment funds to create similar centers for low- and moderate-income students.

Improved High School Outreach
In Creating a Class: College Admissions and the Education of Elites (Harvard University Press, 2007), Mitchell Stevens, an associate professor of educational sociology at New York University, documents the mutually beneficial nature of close relationships between admissions officers at an elite New England liberal arts college and guidance counselors at prestigious public and private high schools. Admissions officials who are familiar with specific schools and counselors end up devoting more time to these schools, which aids their efforts to locate talented students. Under our plan, colleges could use additional endowment funds to buttress their efforts to build stronger relationships with officials at high schools that predominantly serve lower-income students.

Local Outreach
Increased endowment spending on preparing low-income students for a college education need not solely target individuals guaranteed to attend one of these wealthy institutions. Many colleges with large endowments are located in economically depressed cities and counties where an influx of money could have substantial effects on improving the educational outcomes of students in local school districts. For example, my alma mater Brown University, promised in February of 2007 to create a $10 million endowment for the Providence School District. This fund could be an important source of support for a district where 38 percent of its students are impoverished and just 28 percent of its fourth grade students scored proficient or higher on state mathematics tests.

Argument: Spending too much from endowments now would harm future generations

Many wealthy colleges claim that spending more endowment funds today would be unfair to future classes of students because it would deplete available resources -- a concept known as intergenerational equity. There are two problems with this argument. First, most colleges already are spending over 4 percent of their endowment funds each year, meaning they would likely be forced to contribute only a few tenths of a percentage point more. Surely this is not enough to drain what are extremely well-managed funds.

Second, the schools are adopting a notion of intergenerational equity that is far too narrow. Rather than thinking solely about the potential harm to future classes of students on a given campus, colleges should be thinking about the societal implications of continuing our current policies. According to the Advisory Committee on Student Financial Assistance, an estimated 170,000 otherwise qualified low- and moderate-income students do not attend college each year. These individuals are put at a significant disadvantage in the workplace and are likely to generate much less income over their lifetimes. Failing to attend college also has implications for individuals' children. The National Center for Education Statistics found that students whose parents had a bachelor's degree or higher enrolled in college at a rate 22 percentage points higher than students whose parents had no more than a high school diploma. Enrolling a low-income student today increases both their expected lifetime earnings and the likelihood that their children will go to college, having a positive impact on the college access of future generations.

Obviously the endowment issue is far more complex than just requiring a blanket payout rate for all institutions. But for the wealthiest colleges there should be fundamental questions raised about whether their lack of socioeconomic diversity is hindering them from fulfilling their greater educational mission. This also has implications for taxpayers, who forgo the billions of dollars the government loses by not taxing donations to, and earnings from, endowments. For these reasons, we believe that a mandatory endowment payout rate for higher education is an issue worthy of further debate and negotiation.

(Click here for more materials from the roundtable and here for comments prepared by this post's author for the roundtable.)

UPDATE: Video of the roundtable is now available here.

Higher Ed Roundup: Week of September 1 - September 5

Ed Policy — Fri, 05 Sep 2008 14:21:00 -0400

Cuomo Moves to Sue Loan Company

Education Department Reports 43 Percent Growth in Direct Loan Program

Audit Urges Restructuring of PHEAA's Board

Congress Returns, and so Does the Endowment Debate

Cuomo Moves to Sue Loan Company

New York Attorney General Andrew Cuomo has announced that he is planning to sue Goal Financial, one of the nation's largest federal loan consolidation companies, over alleged improper marketing tactics. Cuomo claims that Goal, which also provides direct-to-consumer private loans, lured students with promises of i-pods, cash, and gifts and misled students about the benefits of the loans they offered. The New York Times reports that while other direct-to-consumer student loan marketers are cooperating with Cuomo's office, Goal is being sued because it has refused to change its practices. This forthcoming suit is the latest in a long-term investigation of the student loan industry by Cuomo, which up to this point has primarily focused on sweetheart deals between lenders and colleges.

Education Department Reports 43 Percent Growth in Direct Loan Program

In the wake of the student-loan credit crunch, the U.S. Department of Education reported last week that it has experienced subtantial growth in the Direct Student Loan program over the past year. The Department said that it has originated nearly $11 billion in loans this year to 1,156 colleges compared to $8 billion to students at 851 colleges at the same time last year, representing a 43 percent increase in loan volume. The largest share of this growth came from Pennsylvania State University, which switched to the Direct Loan program in March after the state's largest lender, the Pennsylvania Higher Education Assistance Agency (PHEAA), temporarily suspended its participation in the Federal Family Education Loan (FFEL) program. So far this year, Penn State students have borrowed more than $100 million through the Direct Loan program. In an interview with The Chronicle of Higher Education, which first reported this story, Anna Griswold, Penn State's executive director of student aid, said that she was "pretty pleased" with the transition, and that she expected operations to run smoother than they did working with PHEAA. "When there was a problem" with PHEAA, she stated, "getting it resolved took a little bit more effort."

Audit Urges Restructuring of PHEAA's Board

More than a year after documents revealed that executives at Pennsylvania Higher Education Assistance Agency (PHEAA) lavished themselves with expensive hotels and falconry lessons, the Pennsylvania state auditor is urging reform, starting from the top. In his report, state auditor Jack Wagner described bloated compensation packages for several PHEAA executives and board members, including salaries of more than $164,000 paid to 12 executives and an all-expenses-paid trip for employees and their families to an amusement park.

The report recommended that PHEAA reduce the number of legislators on its board from sixteen to eight and add five representatives of institutions of higher education, a current student, and two members from the state's finance and business community. In it's response to the report, PHEAA noted that it is already working to reform employee compensation practices but argued that reducing the number of legislators on the board might lead to reduced state funding or loss of the lender's tax-exempt status.

Congress Returns, and so Does the Endowment Debate

Sen. Charles Grassley (R-IA), who has led the effort to expose the ways in which elite colleges have hoarded their wealth, will bring the debate back to Capitol Hill on Monday with a roundtable discussion on college costs. Grassley and other lawmakers say they have been alarmed by recent reports that show that many college endowments are growing at rates exceeding 20 percent, but payouts from these endowments to support students have not kept pace with the rising cost of tuition. Grassley has proposed requiring colleges to spend a minimum of 5 percent of their endowments each year to make college more affordable for financially-needy students. Several colleges, such as Harvard and Yale Universities, have responded to the pressure by expanding the reach of their institutional financial aid programs. The Sept. 8 roundtable, which the Senator is sponsoring with Rep. Pete Welch (D-VT) will include experts on college endowment practices, college leaders and lobbyists, and advocates supporting Grassley's proposal.

Weekly Roundup: February 25 - February 29

Ed Policy — Fri, 29 Feb 2008 21:22:00 -0500

PHEAA Temporarily Suspends Federal Student Loans

Spellings Takes the Heat for President Bush's Education Budget Request

Public Colleges and Universities Pinched by State Budget Shortfalls

Brown University Increases Financial Aid

PHEAA Temporarily Suspends Federal Student Loans

The Pennsylvania Higher Education Assistance Agency (PHEAA) announced on Wednesday that it will temporarily stop providing federal loans through the Federal Family Education Loan Program (FFELP), blaming increased turmoil in the capital markets. PHEEA stopped making out-of-state loans two weeks ago.

PHEAA executives stressed that the move will have a minimal impact on students, since other lenders, especially commercial banks, are in a position to pick up the loans. The 2.7 million students and parents who already have loans will not be affected. PHEAA will continue to guarantee and service FFELP loans.

These reassurances were intended to calm a panic about loan availability that , incidentally, PHEAA has helped promote. Just last week, PHEAA convened an emergency student loan funding summit at which PHEAA chairman William Adolph, in an effort to secure federal support for lenders, warned that "millions of college students may now face foreclosure on their plans for a higher education." We are grateful that Adolph is sounding a more responsible note now.

Spellings Takes the Heat for President Bush's Education Budget Request

Education Secretary Margaret Spellings came under fire from members of both political parties on Tuesday when she appeared before the House Appropriations subcommittee that sets the Department of Education's budget. In her opening statement, Spellings touted President Bush's request to increase spending on Pell Grants by $2.6-billion in order to raise the maximum grant to $4,800 in the2009 fiscal year. Lawmakers, however, complained that the Administration was robbing Peter to pay Paul, by proposing to eliminate other federal student aid programs, including Supplemental Educational Opportunity Grants and Perkins Loans, to finance the Pell Grant increase. They also complained about proposed reductions in spending on historically-black colleges and universities and other minority-serving institutions. The budget request "doesn't reflect the committee's values," Rep. Tim Ryan (D-OH) told Secretary Spellings.

Public Colleges and Universities Pinched by State Budget Shortfalls

The slowing American economy has prompted several state legislatures and governors to propose cutting higher education spending for the next school year. The Florida public university system, for example, has instituted a hiring freeze, is turning away more applicants, and is considering an 8 percent tuition hike. Public colleges in New Jersey, meanwhile, are bracing themselves for a 4 percent decrease in their state funding, though this is a less severe reduction than many had predicted. In Rhode Island, Gov. Don Carcieri has asked colleges to give back $3.7 million this spring and anticipates a $17.8 million cut next year.

At the same time, data released this week by the State Higher Education Executive Officers (SHEEO) shows that state funding per-pupil increased in 2007, to an average of $6,771, but that is down from an all-time high of $7,621 in 2001. The SHEEO reports that colleges are increasingly relying on tuition for revenue.

Brown University Increases Financial Aid

Brown University became the latest elite institution to join the affordability race, announcing this week that it will eliminate tuition for students from families that make less than $60,000 a year and replace loans with grants for students from families with incomes of $100,000 or less. The university will, however, introduce work-study for first-year students, ending a long-standing "no-work" rule for freshmen. The move represents a 20 percent increase in Brown’s financial aid budget to more than $68 million and an increase in the school’s endowment payout rate for financial aid from 5.5 to 5.89 percent.

Turning up the Heat on Endowments

Ben Miller — Tue, 29 Jan 2008 00:00:00 -0500

As the old adage goes, you reap what you sow. For many years colleges and university endowments, which receive very advantageous government tax breaks, have grown at extraordinary rates. Now, two high-powered senators are starting to ask questions about just what these wealthy institutions have been doing with their funds. While we applaud Congress’ efforts, we are afraid that too much of a focus by the Senators on tuition, rather than low-income student access, could lead to more improperly tilted financial aid policies — and an increasingly bifurcated educational system.

[slideshow]What prompted this latest attention to school wealth was the release of the 2007 Endowment Study by the National Association of College and University Business Officers. Going beyond the massive returns already disclosed by individual colleges, the study found that schools with endowments over $1 billion earned an incredible 21.3 percent rate of return for the 2007 fiscal year, only slightly more than the 19.3 percent return for colleges with endowments between $500 million and $1 billion. Even in aggregate, the 785 schools surveyed reported an average return of 17.2 percent.

Despite the massive gains, the study also found that spending from endowments did not keep pace — schools with endowments over $500 million had a spending rate of just 4.4 percent, while the sample as a whole averaged just 4.6 percent. Both numbers are beneath the previous year’s figure and fall well beneath the 5 percent spending rate standard required of other private tax-exempt foundations.Not to mention the 6 percent figure that used to be required of other private tax-exempt foundations prior to 1979.

The study’s findings did not take long to spur Congressional action. That same week, Senators Max Baucus (D-MT) and Chuck Grassley (R-IA), the Chair and Ranking member, respectively, of the Senate Finance Committee, sent a letter to the 136 colleges with endowments over $500 million. Among a litany of requests, the Senators asked the colleges to provide data on stated versus actual tuition rates, how endowment resources are used for financial aid, what kind of low-income recruitment efforts are taking place at the university, and how much of endowments are restricted. Most telling, though, was the Senators’ request on the endowment spending rate, which included the line, "If either the actual and/or targeted payout is below 5%, please explain how this meets the needs of the current student body."

As strong supporters of a 5 percent spending requirement, we at Higher Ed Watch are heartened by the Baucus/Grassley letter. We are also glad to see the Finance Committee pushing forward on the issue after bringing it up in September. That being said, we are concerned that the Senators may use the right means for the wrong ends.

In the press release accompanying their letter, Baucus and Grassley couch their requests in terms of rising tuition and how endowments need to be used to help ease the cost of college. This is certainly an important goal, but it suggest an imbalanced focus on affordability over access. Both are important.

Solely requiring endowment spending for the sake of spending opens the door to policies mimicking the recent aid expansions to well-off families by Harvard and Yale. As we noted two weeks ago, these policies benefit not only a small group of applicants, and generally not the neediest. Even more troubling is the fact that Yale’s plan, albeit flawed, appears to have satisfied Grassley. He called the upper-income aid expansion "an example for well-funded schools to do the same." A willingness to be sated by policies that use spending on wealthy students could set an unwelcome precedent. Instead, it would be better if other colleges with large-endowments followed older policies that eliminated contributions for families below a certain income.

The Senators, meanwhile, should note a recent study in the Journal of Blacks in Higher Education. Looking at Pell Grants, an imperfect but useful measure of low-income students, the study found that the number of Pell recipients actually dropped at many prestigious institutions from 2004 to 2006 — a disconcerting trend given their already low numbers. Stanford, for example, saw a decline in its percentage of students receiving Pell Grants from 14.2 percent to 12.6 percent, while Yale dropped from 10.5 percent to 9.4 percent. As Tom Mortenson, a scholar who conducted his own study of low-income access told the Hartford Courant, "Yale seems to think its mission is to create Presidents of the United States."

The best solution for Grassley and Baucus would be to shift their focus away from the generic catch-all phrase "tuition reduction," and instead emphasize the need for schools to take more pro-active, demonstrable measures to "prepare, recruit, enroll, and retain low-income students." This is a more clear-cut goal that builds and expands on existing aid policies that are targeted to the population most sensitive to the price of higher education. It also would discourage schools from simply opening up their coffers to the richest students.

Society forgoes revenue to give colleges the tax breaks that helped boost their endowments to massive sizes. It's time that those funds be put toward those students that will benefit from them the most.

Minority Recruitment: Athletics Success, Admissions Failure

Lindsey Luebchow — Wed, 23 Jan 2008 15:00:00 -0500

Diversity and minority recruitment are hot button words in most four year college admissions offices. There's congratulations when enrollment demographics show greater racial diversity and consternation when minority numbers drop.

But are college admissions office recruitment efforts working? Colleges will, in a knee-jerk fashion, say: yes, look at our racial and ethnic percentages! College access for minorities is a reality here! But how much is minority recruitment in admissions offices really contributing to the diversity of college campuses?

Unfortunately, at some Division I schools, not much. The black-white diversity on many campuses is not always the result of better minority recruitment. It’s often the result of athletics, and in particular, football.

Inside Higher Ed analyzed data from the NCAA and found that at 46 colleges (of the almost 330 colleges that participate in Division I athletics) athletes comprise at least a third of the black male student population. At 96 schools, athletes comprise at least 20 percent. Compare that to the percentage of all male students who are athletes: 3 percent.

The concentration of athletes in the black male population at public universities in predominantly white states and at smaller elite institutions with high admission standards is particularly striking. For example, at Oregon State University, 46 (35 football) of 122 black male undergraduates, or 38 percent, were athletes. At Wake Forest University, 69 (53 football) of 128 black male undergraduates, or 54 percent, were athletes.

What’s troubling about these statistics isn’t the large number of black student-athletes; it’s the low number of black non-athletes. Minority athletic recruitment is a well-oiled machine, and coaches do a great job recognizing potential in black athletes and providing them with a path to access higher education. (Of course, the issue then becomes, are these schools actually treating these players like students and supporting their academic development, or are they using them as professional money-makers?)

The problem arises when athletic recruitment is used as a substitution for minority recruitment in the non-athlete student population. An admissions office can tout the racial diversity of its student body as a sign of minority recruitment success when in reality it is simply masking its own failures with the athletic department’s success.

This "masking" could become a strategy at schools with large endowments who—in response to criticism from Higher Ed Watch and Congress that they are hoarding their wealth—have been promising to spend more of their money on efforts to increase both socioeconomic and racial diversity. When these schools report their diversity numbers without mentioning how many of their minority students were recruited for athletics, we don’t get a true picture of whether their academic minority recruitment strategies are producing results.

Unfortunately, the NCAA does not collect data from the Ivy League because they don’t give athletic scholarships, so we don’t know the percentage of black males who are athletes at some of the wealthiest schools. But it’s likely that their student populations are similar to other top-tier, wealthy schools like Stanford, Duke, Northwestern, and Notre Dame.

It’s important that schools are held accountable for their recruitment of non-athlete minorities. Many young black males believe that their only path to success is through athletics. If colleges don’t actively recruit them for academic achievement and potential, that perception becomes a reality in many high schools throughout the country.

And admissions offices should take note—there are lessons to be learned about recruitment from athletic departments. Coaches and their staffs are highly successful at finding athletic talent (and the potential for talent) in all types of places. They scour the country looking for students in communities across the socioeconomic spectrum, including in many places not normally paid attention to by the traditional higher education community. Admissions offices should communicate with athletic staff and consider how they can replicate successful recruitment models.

Minority recruitment takes money, time, and new ideas. Many wealthy schools are promising to revamp their recruitment efforts—we just need to make sure those efforts are coming from both the admissions office and the athletic department.

Roundup: Week of January 14 - January 18

Ed Policy — Fri, 18 Jan 2008 00:00:00 -0500

University of Phoenix Found Guilty of Securities Fraud, Must Pay $280 Million

A federal jury handed shareholders a major victory on Wednesday over the University of Phoenix, the largest for-profit university in the country. After only two days of deliberations, the jury found that the Apollo Group, the university's parent company, was guilty of securities fraud for withholding crucial information from investors and ordered it to pay approximately $280-million to the shareholders who had sued. In 2004, the company repeatedly failed to disclose in its Security and Exchange Commission filings and in its conference calls with financial analysts the existence of a U.S. Department of Education review that had blasted its student recruiting practices. That report, which found that the university had violated a federal law that bans colleges from compensating admissions officers on the basis of enrollments, became public only after the university reluctantly agreed to a $9.8-million settlement with the Department in which it denied any wrongdoing. The report's findings are also at the center of a separate False Claims Act lawsuit that has been brought against the university by two former admissions officers.

Elite Football Players Spend 45 Hours a Week on Sport, Study Finds

Between their sport and their studies, high-level college football players are working essentially two full-time jobs, according to a study released this week by the NCAA. The study found that student-athletes in the Football Bowl Subdivision, previously known as Division I-A, spent an average of 44.8 hours a week on their sport. While NCAA rules limit coaches to taking up 20 hours a week, players reported spending significant amounts of time watching game film, lifting weights, or engaging in other activities for their sport. In addition, players reported spending roughly 40 hours a week on academics, meaning that over 50 percent of their week was filled with either sports or coursework. Other sports, such as men’s golf and baseball, also exceeded the 40 hour mark, while women’s basketball and softball reported spending over 35 hours weekly. Not surprisingly, a majority of the athletes from those men’s sports indicated that they felt more like athletes than students. NCAA President Myles Brand both decried and defended the trend, noting "once you get past 40 hours, you’re really pushing it," but also saying that students studying music would be more likely to refer to themselves as musicians first.

College Endowments Earned Average Return of 16.9% in 2007

We’ve already reported on the strong endowment gains posted last year by Yale, Harvard and Stanford universities, but colleges overall earned a healthy 16.9 percent average return on their invested funds for the 2007 fiscal year, according to a survey released this week. A driving factor behind the solid growth, the highest average return in eight years, was international stocks, which earned a 28.3 percent return. The growth was most pronounced among the wealthiest schools, as institutions with $1 billion or more in their endowments earned a 21 percent return compared with 19.4 percent for endowments between $500 million and $1 billion. More troubling, however, is that the survey found that institutions spent only 4.4 percent of endowment assets on average, well below the 5 percent spending mark advocated for by Higher Ed Watch.

Ed Dept. Begins Holding Hearings on Regulations for Subsidy Cuts

Just as it did last week with TEACH Grants, the Department of Education began holding meetings this week to set the regulations governing the lender subsidy cuts and aid expansion passed by Congress last September. Among the biggest concerns addressed by the department was how to prevent for-profit loan companies from receiving benefits intended for non-profit lenders. The panel also addressed the question of whether the new regulations should pre-empt existing state laws governing college-lender interactions — a position supported by student-loan industry and some college lobbyists but opposed by Higher Ed Watch and other advocates for students.

Roundup: Week of December 10 - December 14

Ed Policy — Fri, 14 Dec 2007 00:00:00 -0500

Boehner Paid $110k in Legal Fees as Part of Insider Trading Investigation

The office of House Minority Leader John Boehner (R-Ohio) appears to be a target in an ongoing investigation by the Securities and Exchange Commission into allegations that Al Lord, the executive…

Note: This post pre-dates Higher Ed Watch's shift to a new publishing system. For the complete original post, including any comments, please click here.

Flawed Reasoning on Endowments

Ed Policy — Wed, 24 Oct 2007 01:00:00 -0400

Sen. Hillary Rodham Clinton (D-NY) has followed the lead of Sen. Charles Grassley (R-IA) in pushing colleges and universities to make greater use of their endowments - echoing a proposal of the New America Foundation. Needless to say, associations representing wealthy colleges have not reacted favorably. Several…

Note: This post pre-dates Higher Ed Watch's shift to a new publishing system. For the complete original post, including any comments, please click here.