Higher Education

NASFAA Consumer Information Task Force Report

August 22, 2014
A recent report from The National Association of Student Financial aid Administrators (NASFAA) argues that consumer information requirements for postsecondary institutions could be enhanced, streamlined or eliminated to limit regulatory burden on institutional officials. The report details 15 recommendations ranging from improving the Department of Education’s College Navigator to repealing the ban on the federal-level student unit record system.

Among the report’s other recommendations:

Chasing the College Dream in Hard Economic Times

July 25, 2014
By: Nicholas Brock

A new report published by ACT examines the financial burdens placed on families in funding their children’s college education, particularly after the economic downturn. Despite the availability of federal student loans used to help lessen this burden, families whose adjusted gross annual income is at least $23,000 are expected to contribute to their dependent students’ education, per the federal government’s expected family contribution (EFC) formula. Because of this, family contribution has become a critical part of the college affordability equation, despite the fact that family income is declining.

Among the report’s other findings:
  • For the 2011–2012 school year, parents contributed approximately 37% of the total cost of college attendance: 28% from parent income and savings and 9% from parent loans.
  • Since 2006, average family income declined by approximately 12%.
    • The average family income for African American and Hispanic families is almost half that of White and Asian families.
  • The net price for a four-year postsecondary institution increased from $10,270 in 2006–07 to $12,110 in 2012–13 (an 18% increase).
    • The net price constituted about 15% of family income in 2006–07 as compared with 19% in 2012–13.
  • Despite declining resources and family income for minority students, college enrollment continued to rise during the recession among these groups..
    • Hispanic and African American students experienced the greatest increase in enrollment between 2006 and 2011 (7.2 and 4.5 percentage points, respectively).
While more work is needed to eliminate the gap in college enrollment between disadvantaged minorities and white students, increased information and access to financial aid has been somewhat successful in moderating the impact of the economic downturn. 

Asset Building News Week, July 14-18

July 18, 2014
Publication Image The Asset Building News Week is a weekly Friday feature on The Ladder, the Asset Building Program blog, designed to help readers keep up with news and developments in the asset building field. This week's topics include postal banking, the safety net, inequality, and education.

The 2013 Tuition Discounting Study

July 18, 2014
The tuition discount rate (institutional grant dollars as a share of gross tuition and fee revenue) for first year students at private, non-profit, four-year institutions has increased to 44.8% for the 2012-2013 academic year and is predicted to rise to over 46% in 2013-14, according to a recent report from the National Association of College and University Business Officers. Colleges and universities use tuition discounting strategies as a way to aid students who might otherwise be unable to pay the “sticker price” to attend. Tuition discounting is also a strategy that is used to increase enrollment and attract talented students.  It has recently become especially important as 17% of institutions saw a drop of more than 10% in their freshmen enrollment from Fall 2012 to Fall 2013.

Among the report’s other noteworthy findings:
  • 87.7% of freshmen received an institutional grant in 2012-13, a figure that is projected to grow to 88.9% in 2013-14.
    • The average institutional grant in 2013-14 is projected to cover over half of tuition and fees.
    • 80% of institutional aid is going directly to help meet students’ demonstrated financial need.
  • Due to high discount rates, the average growth in tuition revenue per freshman has only grown 1.7% in 2012 and is expected to decrease -0.5% in 2013 (both numbers adjusted for inflation).
    • Over the last 13 years, institutions as a whole have experienced relatively flat net tuition revenue (0.4%) which according to the report, means that gross tuition revenue and other fees have primarily gone back to students in the form of aid.
  • Among the institutions who responded to the survey (over 400), undergraduate enrollment had decreased at half of them. Reasons cited include families and students having a higher price sensitivity, colleges dealing with increasing competition from other institutions and the decreasing pool of traditional students.
    • Institutions with increases in enrollment cited better marketing and recruitment strategies as keys to their success.

Staying on Target for College: How Innovation Can Improve the Pipeline to Higher Education

July 3, 2014
Many prospective students, while qualified and prepared for college, often do not know how to navigate the deadlines and paperwork requirements necessary to access financial aid applications and admission to a university, argues a recent report from the American Enterprise Institute.  These students may enroll in low-quality educational options, fail to graduate or even not apply at all. In fact, research shows that for every 100 students who aspire to a four-year college, just 41 enroll in one. This is due, in part, to barriers students face along the way including failing to file the FAFSA or failing to enroll after they have been accepted to an institution.

The report considers a number of innovative ideas to address the complexity of the college process that go beyond traditional counseling and advising. To appeal to policymakers, the report suggests reforms to help take the most promising (and relatively low-cost) ideas to scale and encourage similar innovation.

The report reviewed current innovation in four phases of the pathway to college.
  • College-going aspirations and behaviors: Simple, informational interventions are showing positive results in students’ beliefs about their abilities to go to and be successful in college.
    • Examples include having students view a short video explaining the benefits of a college education or providing online tools that help students assess their level of preparedness for college.
  • Applying to College: While The College Scorecard does a good job of simplifying information and focusing on a few key elements of the college search and application process, research indicates that being more proactive with information may have a bigger impact.
    • For example, sending customized college application packets and fee waivers directly to students’ homes has a significant impact on their chances of applying and being accepted to college.
  • Financial Aid Phase: Because four in ten students ruled out colleges based on sticker price alone, the need to help families navigate the financial aid process is especially important.
    • Online tools and price calculators can help families compare net prices between and among institutions and hands-on interventions can help families submit the FAFSA at the same time as their tax return, increasing the likelihood of enrolling in college by 25%.
  • Matriculation and Retention: Researchers have identified a “summer melt” where 10-20% of students who are accepted and enroll fail to show up on the first day of class, perhaps due to anxiety after receiving the first tuition bill.
    • Low-touch (and low-cost) interventions such as text messages with reminders on key steps needed to complete the enrollment process can decrease attrition (read more about this type of intervention here).
    • Coaching and advising programs specifically targeting freshmen (including online systems that keep in touch with students via text message and/or email) are showing success in increasing retention, and may soon replace less cost-effective approaches.
The report concludes with identifying barriers in adopting these innovations to scale including the lack of data and transparency on colleges’ performance and outcomes, the difficulty of partnering with the K-12 public school systems and managing its bureaucracy, and the reforms needed to provide incentives to schools to adopt new approaches. 

Snapshot Report: Postsecondary Student Mobility Rate: 2011-201

June 27, 2014
By: Nicholas Brock

A new report from the National Student Clearinghouse Research Center examined student mobility rates from 2011-2013. The student-mobility rate is the percentage of students across all levels of study who enrolled in more than one postsecondary institution during an academic year. The report shows that students 20 years or younger accounted for the highest mobility rates, followed by students aged 21 to 24 years old. Furthermore, mobility rates reported were slightly higher among women than men.

Among the report’s other findings:

  • Student mobility rates increased from 8.8% in 2010-11 to 9.4% in 2011-12, stabilizing at 9.2% in 2012-13.

  • Just over 9% of all students attended more than one institution during the 2012-13 academic year.

  • Among students whose first 2012-13 enrollment occurred at a community college, 11.5% had also enrolled somewhere else by the end of the academic year.

  • Of all students who attended multiple institutions in 2012-13, nearly 40% moved between 2-year public institutions and 4-year public institutions (in either direction).

Freshman Year Financial Aid Nudges: An Experiment to Increase FAFSA Renewal and College Persistence

June 20, 2014
A recent paper from EdPolicy Works at The University of Virginia reports on the results of low-touch interventions to increase FAFSA renewal.  Researchers sent college freshmen personalized text message reminders that provided information about FASFA filing deadlines and how to get help with re-filing and financial aid more generally. Not only was the intervention low-cost -estimated at $5 per student - it had a large impact on community college students.  Community college students who received text message reminders were 12% more likely than students who did not receive this outreach to continue on to their sophomore year. The report argues that strategies such as this one, personalized text messages with useful and relevant information on financial aid, hold great promise for supporting an increasingly diverse population of students as they decide where/if to apply to college, file the FAFSA for the first time, and select courses after they enroll.

Among the paper’s others findings:
  • While much effort has been put into helping families initially complete their FAFSA, less has been done to ensure families re-file the FAFSA each year (required for students to maintain their federal financial aid).
    • Research demonstrates that nearly 20% of freshmen Pell Grant recipients in good standing do not successfully re-file their FAFSA, with rates particularly low among community college students and students enrolled in certificate programs.
    • Both of these findings point to FAFSA re-filing as an important gateway to persistence in college.
  • Community college students, in particular, have the potential to be impacted the most from this type of outreach as they are three times more likely to fail to refile their FAFSA than freshmen at four year institutions.
    • In addition, community college students usually get less individualized financial aid advising, are more likely to be first generation students, and typically work longer hours while enrolled in school.
  • Messages had no impact on freshmen at four-year institutions who traditionally have high persistence rates and high re-filing rate.
    • It is worth noting that the authors believe interventions of this type still hold potential for students at four-year colleges and universities, as participants in this study were all from Massachusetts institutions, who on average, have much higher retention rates than the national average.

Recent NCES Reports

June 13, 2014
The National Center for Education Statistics has recently issued two reports, Out-of-Pocket Net Price for College and The Condition of Education 2014, an annual report to inform policymakers about the progress of education in the United States.

Out-of-Pocket Net Price for College reviews trends in out-of-pocket net price (the amount families must pay after subtracting grants, loans, work-study and all other aid from the total price of attendance)  and total price for families and students in 2011-2012. The brief shows that despite an increase in grant and student loan aid, out-of-pocket expenses increased in 2011-12 from the previous year in all but for-profit institutions.  The biggest increase was for students at non-profit, private institutions (net price rose nearly $5,000). Perhaps unsurprisingly, out-of-pocket expenses were higher for each successive income quartile from the lowest to the highest for both dependent (under 24 and financially dependent on their parents) and independent (over the age of 24) students.

According to The Condition of Education 2014 report, 90% of adults ages 25 to 29 had a high school diploma or its equivalent in 2013 (an increase of 4% from 1990) and 34% had a B.A. or higher (an increase of 11% from 1990).

Among the report’s other findings related to postsecondary education:
  • In 2012, the median earnings for 25-34 year olds with a B.A. degree were more than twice as much as those without high school diplomas.
  • Total undergraduate enrollment was 17.7 million in fall 2012, an increase of 48% from 1990.
    • By 2023, undergraduate enrollment is projected to increase to 20.2 million.
  • 60% of all undergraduate students attended 4-year institutions in fall 2012.
  • Of undergraduate students at 4-year institutions that year, 77% attended full time.
  • Of undergraduate students at 2-year institutions that year 41% were full-time students.
  • The average net price of attendance in 2011–12 for first-time, full-time students was $12,410 at public, 4-year institutions, $21,330 at private, for-profit 4-year institutions, and $23,540 at private, nonprofit 4-year institutions.
  • The percentage of first-time, full-time undergraduate students at 4-year institutions receiving financial aid increased from 75% in 2006–07 to 85% in 2011–12.
  • Of the 4.7 million students who entered the repayment phase on their student loans in 2011, 10% had defaulted before the end of 2012.
  • In 2011–12, the average student loan amount of $6,800 represented a 36% increase over the 2000–01 average student loan amount of $5,000 (inflation adjusted).
  • 59% of first-time, full-time students who began at a 4-year institution in fall 2006 graduated within 6 years. 

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 American Freshman: National Norms Fall 2013

May 2, 2014
The annual Freshmen survey, a report from the Cooperative Institutional Research Program at UCLA, recently released findings based on survey responses from over 165,000 first-time, full-time freshmen enrolled at over 200 four-year colleges. The report reveals that college cost and financial aid have become even more relevant in a student’s college choice process than ever before, though academic reputation and job prospects continue to rank as the top reasons a student chooses to attend a particular college. In addition to analyzing students’ application strategies and decision-making processes, the report also reviews students’ attitudes on the most-discussed political issues of 2013 including gun control, gay rights and taxes.  

Key findings of the report include:
  • 55% of survey respondents applied to more than three other colleges in addition to the application they submitted for their current institution. This is an increase of 10 percentage points from 2008.
    • The report reasons that while this increase may be due to the perceived increase in competition to get into college, it might also be due to the growing number of institutions using the common application.
  • The proportion of students enrolling in their first-choice institution is at its lowest point since 1974; just fewer than 57% of students are attending their first-choice school, despite the fact that over three quarters of students were admitted to their first-choice school.
    • High cost of attendance and inadequate financial aid were cited as primary reasons students did not attend their first-choice school, regardless of whether or not they were admitted.
    • The report calls for greater pre-college financial counseling for students given that 51% plan to take out loans to help cover the cost of attending college, 73% count on grants, 78% use family resources, and 62% plan to use their own savings.
  • While academic reputation and job prospects are the top two reasons for selecting a college, the percent of students who indicate that cost of attendance and financial aid packages are “very important” factors in their decision is at its highest point in the last 10 years.
    • More than half of first generation students cite financial aid and cost as “very important” factors in college selection, compared to 43% of continuing generation students.
  • Given the rise in popularity of online learning, the survey asks how familiar college freshmen were with online instructional websites.
    • Fewer than 42% “frequently” or “occasionally” used online learning activities for a class in the past year.
    • Nearly 70% used online instructional websites to learn independently or something of their own choosing and interest in the past year.
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