The holidays may be over, but the higher ed community is still waiting to see what Uncle Sam is going to put into its stimulus stocking. Our bet is it will be much needed tens of billions of dollars, hopefully for both student aid and campus infrastructure.
At some point though, and it may not be in his first budget, President Obama is going to follow through on his campaign promise to grow investment in areas critical to America's economic and civic future while also taking a scalpel to government programs where there is poor targeting, inefficiency, or ineffectiveness. Federal higher education programs won't be free from that examination, nor should they be. The key for advocates and incoming Secretary of Education Arne Duncan, however, is to make sure that savings generated by identified cuts are plowed back into quality education programs.
Since its inception, Higher Ed Watch has focused on identifying waste and inefficiency in the federal student loan programs, because that's where big taxpayer savings were to be had for redirection into increased student financial aid. But other programs deserve examination as well.
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
No Loan Crisis Here, Report New England Colleges
Sen. Grassley Requests New IRS 990 Form for Colleges
Survey Reveals How Families Pay for College
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.
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
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
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.
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.
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.
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…
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