Federal Student Loans

Access to what and for whom? A closer look at federal Parent PLUS loans

June 6, 2014
A recent report from AEI considers the federal Parent PLUS loan program: the types of institutions that benefit from the program, the types of families that are borrowing from the program, where PLUS loan borrowing is most common, and how the graduation rates of PLUS institutions compare to others. The report also contemplates whether PLUS receiving institutions are making or have made an effort to keep tuition prices under control. 

PLUS loans are unsubsidized loans made to the parents of undergraduates for any amount up to the cost of attendance.  A student must be a dependent and enrolled at least half time to be eligible.  PLUS loans have a higher interest rate than other federal loans, repayment begins immediately, and like other student loans they are not dischargeable in bankruptcy.  PLUS loan debt is incurred by parents not students. 
 
Among the report’s key findings:
 
  • In 2011 the Department of Education tightened the underwriting criteria for Parent PLUS loans by tightening the definition of “credit-worthy.” 
    • As a result, 40% of parents who applied for a PLUS loan in 2013-2014 were denied, up from 22% in 2010-2011. 
  • Of the institutions that serve PLUS loan students, 30 colleges account for 17% of the loan volume  These institutions are primarily flagships that accept large numbers of out-of-state students.
    • The report suggests that PLUS loans are being used by students to attend the out-of-state university of their choice and by universities to raise additional tuition revenues. 
  • According to the report, students who benefit from PLUS loans are more often from high-income families with college-educated parents. 
  • About one quarter of PLUS loan recipients and one fifth of PLUS loan dollars go to colleges with graduation rates lower than 50%. 
  • About a quarter of PLUS loan students and PLUS dollars go to institutions where the three-year change in net price exceeded 10% after adjusting for inflation. 
  • On average, parents who took out PLUS loans accrued more than $15,000 in debt.
  • Research indicates that many families are not using Parent PLUS loans to gain access to “high performing” institutions.
 
The report also looked at the types of families who are taking out PLUS loans.  With the exception of families in the lowest income quartile, the share of families borrowing Parent PLUS loans is similar across income, parental education, and marital status.  There are some key differences however:
 
  • Two-parent households that are more affluent and college educated take out larger loans – they are less likely to qualify for need-based aid. 
  • Of those who borrow, PLUS loans make up one third to one half of the aid the students receive, regardless of income, parental education or marital status.
  • Thirty one percent of students whose parents are PLUS loan borrowers are from single-parent households. 
  • Low-income and first-generation students are more likely to use PLUS loans at minimally selective and open admission four-year colleges, for-profits, or two-year institutions.  High income families and families with advanced degrees are more likely to use PLUS loans at very to moderately selective institutions. 
 
The report makes the following conclusions:
 
  • Most families who use PLUS loans are not gaining access to institutions with high graduation rates.
  • PLUS loans are rewarding institutions that increase tuition.
  • The U.S. Department of Education needs to collect and report better data on the PLUS program.
 
 

The Graduate Student Debt Review: The State of Graduate Student Borrowing

March 28, 2014
A recent policy brief from the New America Foundation reports that the largest overall changes in student borrowing are at the graduate student level, with graduate student debt having increased significantly from 2008 to 2012.
 
Among the report’s findings:
 
  • The debt burden for a borrower earning a graduate degree increased (in inflation-adjusted dollars) from $40,209 in 2008 to over $57,000 in 2012.
  • The increase in graduate student debt is seen across a broad range of fields, not just law and medicine, two fields with expected patterns of high borrowing.
  • Roughly 40% of the $1 trillion in outstanding federal student loans financed graduate and professional degrees.
 
The report cautions against conflating undergraduate and graduate debt in discussions of college costs and student loans. Graduate degrees, the report argues, while providing an increase in earnings for recipients, are not the foundation for American economic opportunity and may not be what taxpayers feel comfortable subsidizing.

The Parent Trap

  • By
  • Rachel Fishman,
  • New America Foundation
January 8, 2014

In fall 2011, the U.S. Department of Education quietly tightened the credit check criteria for Parent PLUS loans, a federal program that provides loans to parents to send their children to college above and beyond the federal loans available to students. As a result, many families and higher education institutions were shocked to find that parents approved for the loan one year were suddenly denied the next. Students in the middle of their academic careers found themselves scrambling to cover a much larger portion of their bill upfront.

Cohort Default Rates Provide Insights into Outstanding FFEL Loans

October 23, 2013

Updated 10/24/2013 6 PM: This post was updated to include a better description of the Asset Backed Commercial Paper conduit program.

Hidden amidst the shutdown furor was the annual release by the U.S. Department of Education of new student loan default rates. The data measure how many borrowers who entered repayment in a single year defaulted on their federal student loans within two or three years. This year, the data show that 10 percent of borrowers default within two years of entering repayment and 14.7 percent do so within three years. As has historically been true, for-profit and community colleges had the highest default rates, well above those at public or private non-profit 4-year schools.

The overall trend here is not pretty. This is the sixth consecutive year in which two-year default rates increased, and they are now at the highest they’ve been since 1995. But with the growth in borrowing, this means there are significantly more people entering repayment and defaulting. More than 1.1 million more borrowers entered repayment in fiscal year 2011 compared to two years prior, and 10 percent defaulted, as compared to 8.8 percent in fiscal year 2009—an increase of more than 230,000 defaulters. Over those two years, enrollment in postsecondary education also increased, by more than 590,000 students, while the number of borrowers who entered repayment skyrocketed by 1.8 million students. See the chart below for more specific default rate figures.

2yrcdr.png
 

Source: U.S. Department of Education

But beyond the school-based cohort default rates, the Department of Education also released some other interesting default rates: those for guaranty agencies and lenders under the Federal Family Education Loan (FFEL) Program.

FFEL is the now-defunct program replaced by the Direct Loan Program. Vestiges of the program remain, however, in the form of more than $400 billion in outstanding loans issued before the change. Under FFEL, government-backed loans were issued through a set of lenders, and 35 private non-profit organizations called guaranty agencies performed various administrative tasks, including providing federal default insurance to the lenders.

Default rates for lenders don’t carry much weight – there are no sanctions associated with high default rates. Each lender has a calculated two-year and three-year default rate, both for loans they originated and for loans they currently hold. Current lender two-year default rates range from 0 percent for over 500 lenders, including many who don’t hold any loans anymore, to a shocking 89 percent for Citibank, which still holds about 2,000 loans. Among the largest FFEL loan-holders (the 28 companies that hold 10,000 or more loans), rates average about 7 percent. Sallie Mae, the largest FFEL lender, has a default rate of 4.1 percent on the nearly 27,000 loans totaling almost $20 million it still holds from this cohort.

And the Department holds one set of loans with a very high default rate. During the financial crisis, in order to help FFEL lenders continue to make new loans, the Department of Education set up a financing vehicle called the Asset Backed Commercial Paper conduit program. The Department purchased some of the participants' FFEL loans, including all loans that were more than 210 days delinquent, as required by the contract. Those loans, now held by the Department but purchased through the conduit, carry a two-year default rate of 51.7 percent and a three-year rate of 56.6 percent. The requirement that the Department purchase those delinquent loans explains the abnormally high default rate.

The guaranty agency default rates provide another way of judging the results in the FFEL program. When a FFEL borrower defaults, the lender can file a claim to a guaranty agency to recover most of the outstanding loan balance. Then the guaranty agency—a true middleman—uses federal money to reimburse the lender, and the Department of Education reimburses those costs (this is known as “reinsurance”). But guaranty agencies with high default rates can’t receive the full amount of reinsurance reimbursement. If guaranty agency rates are below 5 percent, they get a 95 percent reimbursement; for rates between 5 percent and 9 percent, 85 percent; and for default rates that are 9 percent or higher, 75 percent.

As it turns out, at least when it comes to two-year cohort default rates, five of the reported guaranty agency default rates exceeded 9 percent for the 2011 cohort – Student Loan Guarantee Foundation of Arkansas, Texas Guaranteed Student Loan Corporation, Higher Education Assistance Authority (Alabama and Kentucky), Florida Department of Education, and Oklahoma College Access Program. Still, in every one of those states except Oklahoma, the statewide student two-year and three-year cohort default rates are even higher than the guaranty agency two-year default rate.

And although some guaranty agencies are private non-profit organizations, while others are state-based and may receive some state resources, there doesn’t seem to be much difference in their performances. The non-profits’ average default rate is 6.2 percent – effectively identical to the 6.3 percent default rate among state-based guaranty agencies.

Two-year cohort default rates don’t set a particularly high bar, as it stands, either for guaranty agencies and lenders or for students. Guaranty agencies are not held accountable for their borrowers’ defaults. Schools are – for rates at or above 25 percent three years in a row, or higher than 40 percent in one year, schools lose eligibility for Title IV federal financial aid – but not as much as they once were. The last time rates reached about 10 percent, in 1995, more than 200 schools were sanctioned by the Department of Education. Since then, the number of schools subject to sanctions has dropped precipitously – to just 8 colleges for the 2011 cohort. The 2010 cohort – the most recently available class of students – illustrates the limitations of the default rate. Consider that schools’ two-year default rates jumped from 9.1 percent to 14.7 percent when a third year was included in the window. And default rates in a cohort (unsurprisingly) continue to grow every year – even outside the 2-year or 3-year window.

Thanks to a change enacted in the 2008 Higher Education Act reauthorization, cohort default rates will get moderately stronger next year as the Department finally transitions to relying on three-year rates to determine whether a disconcertingly large share of a school’s students are unable to pay their loans. This year, over 130 schools would be in danger of facing sanctions if their default rates did not change in the third year of calculations (to date, only two official three-year default rates have been calculated). The hope is that a longer window would be harder for schools to game by utilizing temporary measures such as deferment or forbearance to avoid default up to the edge of the two-year window.

Default rates are by no means a perfect measure of a school’s value to students, but they are part of a scaffolding of restrictions on colleges – a sort of baseline quality metric to help students avoid low-value schools and to avert wasted taxpayer dollars. The numbers released by the Department offer valuable insights into students’ struggles.

How to Waste Millions of Dollars on Something Students Hate More than Sallie Mae

September 26, 2013

Sallie Mae might be the most unpopular entity in education (just look at social media if you think otherwise). As a recent post by Rohit Chopra at the Consumer Financial Protection Bureau notes, the Delaware-based loan giant had the worst overall performance record among the four companies that won competitive contracts to service new federal student loans. In response, Sallie Mae’s contract to service federal loans says the company will get fewer loans to work with next year (meaning they get paid less) and other servicers get more.

Meanwhile, the U.S. Department of Education is required to give a completely different group of servicers a free pass, even if their results may be substantially worse than the four competitively chosen companies. And it pays them more per borrower than Sallie Mae, too. But this is no accident. It’s an intentionally wasteful policy vigorously sought after by several members of Congress.

 

Not-for-profit but politically connected

These companies are known as nonprofit loan servicers. Many of them used to be loan companies back when students could borrow through either the bank-based federal loan program or the government run Direct Loan Program. But after Congress ended the bank-based option in 2010, saving taxpayers $68 billion in the process, all new loans were supposed to be made by the government and serviced by companies that won a competitive contracting process.

Enter Congress. Several members demanded that a role be maintained for their local loan companies, which were nonprofit and often quasi-state agencies. As a concession, legislators agreed to guarantee these nonprofit loan companies would each receive a minimum of 100,000 borrower accounts to service instead of the four competitive winners. It was a straight politics play to keep directing federal subsidies to home companies based upon political connections and cloaked in claims of local expertise. There were no demands for results or accountability. It was a kickback calculated in students to provide the same services already contracted for elsewhere.

 

Paying more, often for the same product

In addition to getting a guaranteed allocation regardless of results, these agencies also received a special allocation in the bill that gave them this earmark—about $1.2 billion more over 10 years to service a fraction of the loan volume that the bigger companies are overseeing. As the table below shows, this includes paying the nonprofit servicers about 22 percent more than the large ones for borrowers that are in their grace period of current repayment status. For the 100,000 accounts, that’s as much as an extra half a million dollars a year for servicing borrowers who are just doing what they should be.

Not only are taxpayers paying more for these nonprofit servicers, but in many cases those dollars are buying the same platform as the cheaper companies that won competitive contracts. Looking at the publicly posted contracts of 11 nonprofit servicers shows that in nearly half the cases the government is simply paying more money for a product they are already getting from the competitively determined contractors. Five of the 11 servicers indicated an initial plan to subcontract with Nelnet or the Pennsylvania Higher Education Assistance Authority (PHEAA) to use their platforms, but getting paid at a price that is between 10 and 32 percent higher than what those two companies are receiving per borrower.

Since those initial plans, consolidation among nonprofit servicers means that over 70 percent (five of the remaining seven) are getting more money to use other companies’ platforms. The Department announced in July that the platform run by Campus Partners and EdManage, which are owned by the South Carolina Student Loan company would be shutting down. In addition to EdManage, three other providers—COSTEP in Texas, EDGEucation in North Carolina, and KSA in Kentucky—had planned to use this platform. As a result, the loans of the Texas, North Carolina, and South Carolina servicers are being transferred to MOHELA and the loans serviced by KSA are being moved to Aspire. But these companies are already using PHEAA’s servicing platform, just increasing the extent to which nonprofit servicers are relying on a product the government is already getting for less. That does not sound like the local expertise many of these companies cited in trying to justified their continued existence to Congress during negotiations on the 2010 bill.

 

What about results?

Judging how well these servicers are actually doing is not an easy task. The 100,000 accounts each got were randomly assigned, but they all came from the company that used to service all of the government-held student loans back when there were two competing federal loan programs. Because of this competition, the loans held by this company had some characteristics that could make it different from the broader loan population. First, it was from schools that had been in the government-based system for longer, which means the quality of loans would be affected by the types of schools the bank-based program was able to recruit to participate versus those with riskier loans it may not have wanted to serve as much. Second, these were likely not new borrowers, so they may have already been in repayment or even defaulted. Third, the sample could include some of the bank-based loans that were sold to the government during the credit crunch, which are generally among the worst debts in the program. Comparing the nonprofit servicers to the competitively determined ones is also not easy because only two of the five different metrics each is measured upon are in common—measures of borrower and federal personnel customer satisfaction. None of the information on actual outcomes is consistent across the two groups.

 

Students don’t seem happy...

Comparing nonprofit and competitive servicers on the metrics they do have in common suggests that the extra money spent on the former is buying little more than unhappier students. This is measured by a survey of borrowers done under the framework of the American Customer Satisfaction Index, which can be uniformly applied across a range of sectors and types of industries. The table below shows the average scores on the borrower satisfaction measure over the last two quarters of the 2012-2013 year for all servicers that had received marks for at least three quarters. Presenting the data in this way ensures servicers are not judged based upon only their first score, which tends to be a bit lower, and have the results partially smoothed out. For reference, the national average is about 76 and a “good” score would be in the 80s.

As the table shows, the competitively determined contractors scored as high as or higher than every single one of the seven nonprofit servicers with data. The five additional servicers that lacked enough data would also have come up well short, with most having scores in the mid to high 60s. And the two most liked serivcers—Great Lakes and Nelnet—scored approximately 10 points higher than the worst nonprofit, an offshoot of the South Carolina Student Loan Corporation. Even Sallie Mae, the bane of students everywhere (or at least on Twitter) bested every nonprofit with data for this period.

 

...Federal personnel think things are only OK

Below is the same table, but for the federal personnel scores. The results are a bit more tightly clustered, with Utah-based CornerStone even exceeding three of the competitive winners. But the bottom group, especially the Oklahoma result, is not pretty.

Now it is possible that maybe some of the scores are affected by the quality of a given servicer’s sample—defaulted borrowers may look more negatively upon their servicer than someone in active repayment. But regardless of the scores, the saddest thing across the two tables is that no one appears to be providing above average customer service.

 

Outcomes vary, but unclear why

Since there’s no way of knowing whether the borrower populations across each servicer are equivalent, it’s hard to tell whether variations are the result of differences in quality or the underlying borrowers. It could be that only 72 percent of loans in repayment or delinquent status overseen by the Kentucky Higher Education Student Loan Corporation’s servicing arm were current or in grace status at the end of the fourth quarter of 2012-13 because it received a disproportionate number of defaulted loans, while Aspire’s 93 percent mark on the same metric could be a result of having more borrowers at flagship public four-year schools. There simply aren’t enough data to know for sure. Because of those caveats, the table below simply shows the results on the three outcome metrics for all servicers in the fourth quarter of 2012-13 for all entities that had servicing results for at least two quarters.

Sequestration Silver Lining

The number of nonprofit servicers in the program—and thus the size of the giveaway—would likely be even larger were it not for sequestration. Funding limitations stemming from that process have prevented the Department from giving any additional volume to nonprofit servicers (see slide 10 for more). But it’s unclear if more companies will come on board if funding conditions improve.

 

What are we paying for?

The continuation of nonprofit servicers in the student loan program was a much debated concession made in the heat of negotiations over not just ending the bank-based system but reforming health care as well. It was politically expedient and of dubious policy merits. But with three years of hindsight we now have a clearer picture of just what this set of exemptions bought taxpayers and students. For a 10-year investment of more than $1 billion we are getting servicing that is less liked by students than even Sallie Mae, on platforms that in most cases were already available for less money. The data are less clear on how these entities actually perform in terms of loan results, but given the first two conditions, they would certainly have to be substantially better than what the bigger servicers are doing to even remotely justify this continued giveaway.

What Might Ratings-Based Financial Aid Look Like?

September 18, 2013

Last month, President Obama stood before a crowd at the University at Buffalo to propose a new higher education affordability initiative. The plan calls for the U.S. Department of Education to rate colleges prior to the 2014-15 academic year. Then the Department would tie financial aid to those ratings by 2018 – a carrot-and-stick approach to college quality. But we wonder if the Department’s version will really have the teeth to penalize bad actors, and how feasible it really is.

So far, there’s not much information on the White House’s plan. For the most part, all we have to go off of is a White House fact sheet that summarizes the plan. According to the fact sheet,

“Over the next four years, the Department of Education will refine [the ratings], while colleges have an opportunity to improve their performance and ratings. The Administration will seek legislation using this new rating system to transform the way federal aid is awarded to colleges once the ratings are well developed. Students attending high-performing colleges could receive larger Pell Grants and more affordable student loans." [emphasis added]

There are a few items of note here. First, the White House acknowledges that any such effort will require congressional approval. That means that, at least without a sea change in the political environment, this may never come to fruition. But second, and more interestingly, the White House’s examples look at only the “carrot” side of the carrot-and-stick – more available aid for high-performing schools, without any clear punitive measures for poor-performing ones.

Of course, it’s far too early to say what implementation would look like. But it closely resembles an idea that the New America Foundation first published in Rebalancing Resources and Incentives in Federal Student Aid, and which Senior Policy Analyst Stephen Burd dug into deeper in Undermining Pell. Our proposal included both the “carrot” and the “stick” – a Pell bonus for high-performing schools that enroll a larger share of low-income students, and a Pell matching requirement for wealthy schools that divert aid away from low-income students.

The New America Pell Grant bonus differs somewhat from the administration’s. The administration plans to use a ratings system that will likely include a broad range of quality metrics; we would give the bonuses to public and private four-year schools that enrolled large shares of low-income students or to community colleges with strong student outcomes. Our Pell Grant bonus would be double the size of the maximum grant (currently $5,550).

We used data from the Federal Education Budget Project to calculate the costs and estimated the Pell bonuses alone (without the baseline costs of the Pell Grant program at these eligible schools) at $23.6 billion over 10 years for public and private four-year schools and $34.9 billion for community colleges. Those figures include schools that qualified for the proposed bonus based on 2010 data, as well as schools on the cusp of qualifying, which we assume would be willing to work a little harder for a substantial payoff.

At four-year schools, we found that the federal government already disburses $1.2 billion in Pell grant funding to already-qualifying schools,  and another $344 million to the 86 near-qualifiers. That made the math pretty easy – for the additional costs of the program over the baseline, we simply rounded up to provide a conservative estimate, and then counted up 10 years with built-in inflationary increases.

At community colleges, the math was a little trickier. We wanted to use quality metrics, a more simplistic version of those the Department of Education might use under a new rating system. It’s tough to see how community colleges are performing, though, because of limitations in the data. For example, the Department collects graduation rates only for first-time, full-time students, but public two-year colleges serve largely nontraditional students who don’t meet those qualifications. And students who transfer from a two-year to a four-year college without an associate’s degree are only marked as transfers, with no way to track them through the rest of their educational experiences.

Recognizing the data were so prohibitively absent as to keep us from finding a great measure, we calculated a combined graduation-and-transfer rate as a proxy. If the schools had a combined rate of at least 50 percent, they were eligible for a bonus. Many of the schools didn’t have good enough data for us to even arrive at a figure, but of the remaining schools, 262 were eligible, with Pell disbursements totaling $1.5 billion. We found another 120 who were close enough to qualify if they stretched a little further, and added their $1.2 billion in existing Pell money. We rounded up to $3.0 billion to account for missing and not-yet-successful institutions, baked in an inflationary increase, and added up the five- and 10-year costs. Again, those costs are in addition to, not including, the amount of Pell money that already goes to those schools.

Obviously, the New America proposal is not identical – or even similarly oriented – to the White House’s proposal. Ours focused on the needs of low-income students, not the quality of institutions (though with better data on colleges, a stronger focus on quality could be a rising tide that lifts all students).

But our proposal is instructive in a few ways. For one thing, the plan is going to be expensive. New America’s proposal, taken in total, is deficit-neutral, and we made up for the costs of the plan with savings from other proposals. Congress won’t be so lucky, and given the ongoing fiscal debates lawmakers are having, a plan that has one-year costs of upwards of $5 billion won’t be the most popular one. For another, the careful wording in the White House fact sheet means there’s no clear protection against bad behavior, at least in this part of the plan – just an incentive for good behavior. That may arguably be less effective than having both.

Any plan to tie financial aid to ratings is a long way off, and even the ratings system is a few years down the line. By 2018, we’ll have a different president, many different members of Congress, and undoubtedly new approaches to reforming higher education. It remains to be seen whether the plan will be strong enough to survive all that, or whether the 2018 political climate will actually be more amenable to these types of proposals. In the meantime, the New America Foundation will be watching for signs of life with this proposal, as well as the president’s other ideas.

New Pell Grant, Federal Loan Data Reveal Changing Tides in Financial Aid

September 12, 2013
Publication Image

New data published by the U.S. Department of Education and by the Congressional Budget Office reveal changing tides in the American higher education system. And they uncover some interesting – and previously unknown – facts about federal financial aid.

The Department of Education’s Federal Student Aid (FSA) Data Center recently released data on the number of federal loan recipients and the total amount of loans disbursed in the 2012-13 academic year. (You can see those preliminary data by school in our easy-to-use database, the Federal Education Budget Project.) For the first time, the FSA data contain a breakdown between how much undergraduates and graduate students are borrowing, rather than rolling graduate and undergraduate Unsubsidized Stafford loans into one figure.

It’s a very important distinction. The data show that a whopping 41 percent of loan issuance in AY 2012-13 was for graduate and professional students. Meanwhile, graduate students were only 17.5 percent of all student loan recipients.

gradloanrecips.png   gradloandisburse2.png

Sources: New America Foundation, Federal Student Aid Data Center

Most people typically have undergraduates in mind when they think about the federal loan program, but in reality, the program is nearly as much about financing graduate studies as it is about undergraduate programs. Sure, graduate school can cost more than an undergraduate education, but that’s not necessarily why graduate loans feature prominently in the breakdown. Actually, it’s because the federal government does not limit how much graduate students can borrow for PLUS loans (and limits Graduate Stafford loans to $20,500 annually), but it imposes annual caps as low as $5,500 on undergraduates.

There’s another reason worth separating out loans for undergraduates and graduate students in the data. Under a bipartisan bill passed earlier this summer, interest rates will no longer be the same for Unsubsidized Stafford loans for graduates and undergraduates (both loan types had been set at 6.8 percent prior to AY 2013-14). Instead, starting this year, undergraduates will pay much lower interest rates on their loans (3.86 percent) than will graduate students (5.41 percent).

And that’s not the only news in federal student aid. Remember the Pell Grant funding cliff? For years we've heard about an impending drop-off in funding for the program – and it’s still baked into the budget, albeit a few years further out than first estimated. The Congressional Budget Office (CBO) reminds us of that looming funding cliff in a new report called The Federal Pell Grant Program: Recent Growth and Policy Options.

The CBO uses data on Pell grant aid and recipients to give policymakers an idea of what has driven costs in the past, what types of changes would reduce costs, and by how much. (Heads up: the biggest single cost-saver would be to allow only the lowest-income of the current Pell grant-eligible population to receive grants by requiring that they have a zero “expected family contribution” [$10.0 billion in 10-year savings], while the greatest cost would be increasing the maximum grant to $6,400 in AY 2014-15 [$5.3 billion over 10 years]).

Another interesting point in the CBO paper looks at the skyrocketing costs of the Pell Grant program. The big cost increases in the program in recent years owe a lot to community colleges. Much of the increase in the number of Pell recipients is due to a growing share of Pell students, more so than other factors, like growing enrollment. We wrote about that in 2011 after arriving at the same conclusion. Even so, Pell students still make up a far smaller share of total enrollment in community colleges than in the for-profit sector.

Both sets of data offer interesting insights into the growing and changing beast of federal student aid programs. The FSA data show the dramatically oversized influence of graduate and professional students in the distribution of loans, while the Pell data show the evolving nature of undergraduate aid. Both are work a close look as Congress returns to Capitol Hill and gets back to legislative business, so check out the Federal Education Budget Project to find your state or college.

Gainful Employment Liveblog Day 3

September 11, 2013

We are back for the final day of the first session of negotiations on gainful employment. This session will only be a half day. Here are links to liveblogs from Day 1, Day 2 Morning, and Day 2 AfternooonA summary of the regulatory text under consideration is here.

Working Groups

After a half hour closed session, the committee has agreed to the following six working groups:

  1. Repayment rates--led by Jack Warner from the South Dakota Board of Regents
  2. Placement rates--led by Della Justice, from the Kentucky Attorney General's office
  3. Transition periods/opportunities to improve--led by Belle Wheelan from SACS and Marc Jerome from Monroe College
  4. Program level cohort default rates--led by Brian Jones from Strayer University
  5. Upfront requirements--led by Barmak Nassirian from AASCU
  6. Student consequences--led by Eileen Conner from the New York Legal Assistance Group

Groups will try to get materials in by September 30, but make no promises. The Department does ask that the extent to which thresholds are recommended that they be justified.

Gainful Employment Liveblog Day 2--Morning Session

September 10, 2013

After about a half day of negotiations yesterday (once process stuff got out of the way) we're now back for the second and last full day of negotiations for this first session. Below are occasional updates from the morning negotiation sessions. Yesterday's liveblog is here and the afternoon session can be found here.

Gainful Employment Negotiations Day 1 Liveblog

September 9, 2013

The U.S. Department of Education kicked off its first day of negotiation sessions on how to define what it means to provide a program of training designed to lead to "gainful employment in a recognized occupation." The morning was spent mostly with logistical issues, with the only highlights being the rejection of attempts to add three more members to the committee from a Florida law school, the Chamber of Commerce, and Bridgepoint University. A summary of the regulatory text under consideration is here.

Here are links to liveblogs from Day 2 Morning, Day 2 Afternooon, and Day 3.

Agenda

Here's the order of items for discussion that the panel hopes to cover by the end of midday Wednesday:

  1. Department overview
  2. Upfront Eligibility
  3. Department accountability metrics (should they be phased in?)
  4. Other accountability metrics
  5. Consequences (including for students)
  6. Data correction, challenges, appeals
  7. Reporting requirements
  8. Disclosure requirements
  9. Approval of new programs
  10. Other
  11. Recognition and rewards--exceptional performance
  12. Conforming regulatory changes--second session

What follows are occasional updates on what's going on at the negotiation sessions, which will not have a transcript or audio recording produced.

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