Stephen Burd: All Related Content

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A Gut Check for the Education Department

March 12, 2013

Does the U.S. Department of Education have the guts to enforce its own federal student aid program integrity rules? Judging by the Department’s record and legislation recently introduced by Senate Democrats, entitled the “Students First Act,” the answer to that question appears to be “No.”

During President Obama’s first term, administration officials went to great lengths – and spent a substantial amount of political capital – to strengthen the agency’s authority to crack down on schools that deliberately mislead students into enrolling. Yet, the Department has shied away from using these expanded powers, even when evidence of abuse has been delivered to the agency on a silver platter.

Career Education Corporation is a case in point. In the fall of 2011, the publicly-traded for-profit higher education company revealed that a significant number of its schools had been cooking the books on the job placement rates they were disclosing to prospective students. But despite this remarkable admission, the company didn’t receive even a slap on the wrist from the Department.

Preserving Need-Blind Admissions Comes at a Price at Grinnell

February 28, 2013

When it comes to private colleges enrolling and supporting low-income students, Grinnell College has been one of the best. Nearly a quarter of its students receive Pell Grants, and the lowest-income students have to take on only a relatively small amount of debt to receive a top-notch liberal arts education.

That’s why it is so disheartening to hear that Grinnell plans to become more aggressive in using so-called “merit” aid for the explicit purpose of recruiting wealthy students. According to college’s president Raynard Kington, this is the price Grinnell will have to pay for maintaining its need-blind admissions policy for the next two years.

Last year, Grinnell’s board raised alarms on campus when it announced that it was considering abandoning its costly policy of admitting students regardless of their financial need. But after months of heated discussions among students, faculty, administrators, and alumni, the board relented and agreed to allow the practice to continue for another couple of years. In return, however, the school must “find a way to curb growth in its discount rate (the percentage of sticker price provided by the college in aid, on average) and to reduce the share of its operating budget paid by the endowment,” according to Inside Higher Ed. They need to, in other words, bring in more students who can pay full freight.

Why Federal Officials Should Require Some Colleges to Match Pell Grants

February 5, 2013

Yesterday at Higher Ed Watch, I argued that a federal solution is needed to ensure that colleges use their institutional aid resources to keep higher education affordable for low- and moderate-income students. But why should the federal government get involved?

The reason is simple: the government is already involved, way involved. It spends nearly $40 billion on the Pell Grant program each year to try to remove the financial barriers that prevent low-income students from enrolling in and completing college through the Pell Grant program. Yet colleges are increasingly undercutting the government’s mission by using their institutional aid dollars to try to attract the students they desire rather than to meet the financial need of the low income students they enroll. Worse yet, there is compelling evidence to suggest that schools are capturing a significant share of the Pell Grant funds they receive and using them for other purposes, such as providing non-need-based aid to recruit high achieving and wealthier students. This is one reason why even after historic increases in funding, the program’s impact is so limited: students and families are not receiving the full benefits as intended.

The enormous growth in non-need-based, or “merit” aid, at four-year colleges over the last two decades has come lately at the expense of the neediest students. Low-income students who attend these institutions often face high levels of “unmet need,” defined as the difference between the cost of attendance and the amount of financial aid they receive. Unmet need forces students to take on significant amounts of debt, including risky private student loans. Financially strapped students also frequently engage in activities that lessen their likelihood of completing their degrees, such as working full-time while attending college or dropping out until they can afford to return.

Making Sure Colleges Remain Engines of Opportunity Not Inequality

February 4, 2013

Do colleges still provide a gateway to opportunity for low-income and working class students? Or are they perpetuating inequality in this country by limiting opportunity to only those who are rich enough to be able to afford it?

That question, which came up during a podcast conversation between my colleague Kevin Carey and New York Times journalist and New America Foundation Schwartz fellow Jason DeParle [author of this riveting article on the subject] last week, is central to proposals we have offered that aim to ensure that colleges use their institutional aid resources to keep higher education affordable for low- and moderate-income students.

Unfortunately this is often not the case. Colleges are, in fact, increasingly raising the barriers to higher education for low income students by redirecting their institutional financial aid dollars to wealthier students.

Rebalancing Resources and Incentives in Federal Student Aid

  • By
  • Stephen Burd,
  • Kevin Carey,
  • Jason Delisle,
  • Rachel Fishman,
  • Alex Holt,
  • Amy Laitinen,
  • Clare McCann,
  • New America Foundation
January 29, 2013

EXECUTIVE SUMMARY

The federal financial aid system is no longer up to today’s demands. Built in a different era, its haphazard evolution over the decades has made it inefficient, poorly targeted, and overly complicated. With the need for higher education never greater and college growing increasingly unaffordable, students deserve a streamlined aid system that is more understandable, effective, and fair.

Ending the Merit Aid Merry-Go-Round

January 16, 2013
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A group of private college leaders are calling for a cease fire in the institutional financial aid arms war. S. Georgia Nugent, the president of Kenyon College, is spearheading a movement to try to get her fellow college presidents to agree to recommit themselves to providing need-based financial aid, rather than merit scholarships and tuition discounts. This is an extremely admirable effort but unfortunately -- as Kenyon College’s own experience shows -- it’s unlikely to have much of an impact.

As Higher Ed Watch has previously reported, public and private four-year colleges are increasingly spending their institutional aid dollars on trying to attract the students they desire than on meeting the financial need of the low- and moderate-income students they enroll. A 2011 report from the U.S. Department of Education’s National Center for Education Statistics shows just how dramatically colleges have changed the way that they spend their institutional aid dollars over the past two decades.

The report found that in the 1995-96 school year, both public and private four-year colleges and universities primarily used institutional aid to try and meet the financial need of their students:

  • At public colleges, 8 percent of first-time, full-time students received merit aid, while 11 percent received need-based aid
  • At private colleges, 24 percent received merit aid, while 43 percent obtained need-based aid

But by 2007-08, merit aid trumped need-based aid at both types of institutions:

  • At public colleges, 18 percent of first-time, full-time students received merit aid, while 16 percent received need-based aid
  • At private colleges, 44 percent received merit aid, while 42 percent obtained need-based aid.

Clearly many of these schools are leveraging their financial aid budgets to buy students who could already afford to attend without the help. In many cases, these institutions are trying to lure in top students who will help them improve their standing in the U.S. News & World Report’s college rankings so that they can enhance their reputations and marketability.

Higher Ed Watch’s Top Ten Posts of 2012

December 19, 2012

Before we take our two-week winter publishing break, we thought we’d revive an old tradition and highlight our most popular posts from the past year.

Nearly half of our best read posts from 2012 deal with students’ lack of understanding of their financial aid options and policymakers’ efforts to try to make the system more transparent for students. Others focus on issues that HEW has long covered: student loan default rates, for profit colleges, Sallie Mae, the horrors of our student loan collection system, and President Obama’s higher education record. And of course, topping the list is a perennial reader favorite, our annual Academic Bowl Championship Series rankings, which we published just last week.

So without further ado, here are our 10 most-read posts of 2012:

Our Wish List for President Obama’s Second Term

November 7, 2012
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Now that President Obama has been reelected, and he has more time to sit back and read Higher Ed Watch, we are presenting our wish list for his second term. [And Mr. President, while you're at it, we're sure you'll enjoy our posts from last week highlighting your first term's biggest higher education hits and misses!]

Among other things, we (the authors of this post) would like to see the Obama administration do the following:

  • Develop long-term solutions for revamping the federal financial aid programs, rather than continuing to scramble to come up with stop-gap measures to shore up funding for these programs in the heat of high-stakes budget battles.
  • Finalize the financial aid shopping sheet and scorecard—and make them mandatory. Students and families need clear, consistent, useable information at key points in their decision-making process. Given that many institutions currently benefit from the lack of this information, voluntary adoption of these efforts will accomplish very little.

President Obama’s Biggest Higher Ed Misses

November 2, 2012

With the presidential election fast approaching, we are taking a closer look at President Obama’s higher education record. Yesterday, we highlighted the administration’s most significant accomplishments in this area. Today, we are examining the administration’s most significant blunders and missed opportunities.

So without further ado, here are the Obama administration’s biggest higher ed misses:

1. Fighting to Keep the 3.4% Interest Rate: Eager to woo the youth vote and tap into America’s anxiety about student debt, the Obama administration launched an all-out “don’t double my rate” PR campaign earlier this year aimed at stopping Congress from allowing the temporary 3.4 percent fixed interest rate on federally-subsidized Stafford loans to revert to 6.8 percent. Not wanting to be on the wrong side of this popular issue during an election year, Republicans and Democrats lawmakers made national headlines for their bipartisan efforts to maintain the lower rate. Largely left out of this debate, however, was any acknowledgement of how small the benefits of this fix would be: after all, it only extended the 3.4 rate for another year, only applied to a subset of new borrowers (those who qualify for subsidized Stafford loans), and only would save eligible borrowers about $9 a month. And it cost the government $6 billion. With the Pell Grant program facing a multi-billion dollar funding cliff, it’s a shame that the administration spent so much political and financial capital on a one-year gimmick that provided neither meaningful relief to financially-distressed borrowers in the short term nor to the Pell Grant program over the long haul.

President Obama’s Greatest Higher Ed Hits

November 1, 2012

With the presidential election only days away, we thought it would be a good time to take a closer look at President Obama’s higher education record. In this post, we highlight the administration’s five greatest hits. Tomorrow, we will examine the administration’s five biggest misses.

So without further ado, here are the Obama administration's most significant higher ed accomplishments:

1. Reforming Student Loans: President Obama achieved his single most significant higher education victory in March 2010 when he signed into law legislation ending the wasteful practice of subsidizing private lenders to make federal student loans. Overcoming the fierce opposition of the student loan industry, the Obama administration and Democratic Congressional leaders eliminated the Federal Family Education Loan program, which had long been racked by corruption, and shifted to 100 percent direct lending, which delivered the same federal loans to students at a much lower cost for taxpayers and without all the scandals. And despite dire warnings from the industry and its allies in Congress about the risks of moving thousands of colleges out of FFEL and into direct lending, the U.S. Department of Education pulled off the transition without disturbing even a single student’s access to federal student loans.

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