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On December 7, 2011, President Obama held a roundtable discussion on making college more affordable. The meeting included White House senior officials, Secretary of Education Arne Duncan and a dozen college presidents and higher education “thought” leaders from across the country to discuss rising college costs and strategies to reduce these costs while improving quality. According to a press release issued from the White House, the President conveyed the urgent need to pursue bold and innovative solutions to help Americans attain a higher education at an affordable price. Attendees shared how they have worked to promote innovation, reduce costs and increase productivity during a period of reduced funding.
The House Subcommittee on Higher Education and Workforce Training held a hearing on rising costs and Secretary of Education Duncan called on the financial aid community to start thinking about ways to reduce costs. (See articles below.)
It should be noted that for-profit institutions were not included in the discussion.
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On November 30, 2011, the Subcommittee on Higher Education and Workforce Training, chaired by Congresswoman Virginia Foxx (R-NC), held a hearing titled, “Keeping College within Reach: Discussing Ways Institutions Can Streamline and Reduce Tuition.”
Congresswoman Foxx stated that
“[t]his troubling trend of higher prices has several causes, including weak local economies, increased spending on student services and academic support, and state budget crises. Leaders in Washington have long recognized the value of higher education in preparing students to compete in the global workforce....However, as our nation struggles with trillion dollar budget deficits and unprecedented national debt, continuing to increase federal subsidies to supplement the growing cost of college is simply unsustainable…colleges and universities must do their part to streamline costs and lessen the burden for students whenever possible.”
Congressman Rubén Hinojosa (D-TX), the ranking Democrat, said that the recent federal investment in Pell Grants, loan-forgiveness programs and tax credits represented great strides toward tackling rising costs. However, Congresswoman Foxx said that President Obama’s recent expansion of the loan forgiveness program is not a long-term solution and colleges had to find new ways to become more affordable.
Lumina Foundation President Jamie Merisotis outlined strategies to improve productivity in higher education, including performance funding to incentivize institutions to graduate more students with quality degrees and credentials; student incentives with incremental increases in tuition discounts to encourage students toward completion; online general education courses that can be completed quickly; and improving operational and business efficiencies.
Jane Wellman, Executive Director of the Delta Cost Project, testified that “Tuitions are continuing to rise, but much faster than spending or costs. The reason is because of cost-shifting—tuitions are going up in part to replace revenues from state [and] local appropriations or because of declines in gifts or endowment earnings.” Ms. Wellman noted that another factor responsible for the increasing tuition prices is the increasing cost of employee benefits.
Some institutions are finding ways to reduce the students’ financial burden and these practices were described during the hearing. Grace College Seminary President Dr. Ronald E. Manahan discussed a recently implemented accelerated degree program. Colorado Mesa University President Tim Foster described his university’s innovative work program to benefit students and lower on-campus operating costs. Congresswoman Foxx concluded the hearing by stating that best practices should be shared and families can better plan if the most up-to-date information on tuition and fees is available to the public.
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On November 29, 2011, in a speech delivered at the Department of Education’s FSA Conference, Secretary of Education Arne Duncan called on colleges to “start thinking more creatively—and with much greater urgency” about how to contain the rising costs of college and reduce the burden of student debt. In his speech, Secretary Duncan highlighted the two recent programs announced by the Obama Administration that aim to alleviate debt burden and assist students with repayment—the Special Direct Consolidation Loan and “Pay as You Earn” Income-Based Repayment/Income Contingent Repayment Plans. He also described some of the steps institutions are taking to control costs, such as redesigning courses, making smarter use of technology, and accelerating learning.
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On November 29, 2011, the Advisory Committee on Student Financial Assistance released its final recommendations concerning a study it conducted on the effects of regulations on higher education. The overall finding is that the higher education community perceives the regulations under the Higher Education Act to be unnecessarily burdensome. Additionally, the majority of the respondents believe that the specific regulations cited in the study can be improved without adverse effects on program integrity or student access.
The final report lists 15 regulations found to be most burdensome or overly burdensome, which are as follows:
- Two Pell Grants (which has been eliminated);
- Reporting timeframes;
- Reporting volume and scope;
- Return of Title IV funds;
- Non-allowable charges;
- TEACH Grant eligibility;
- Proration of loan limits;
- Prior year charges;
- Conflicting information;
- Self-certification;
- Tolerances;
- Opening bank account;
- Return of uncashed checks;
- Entrance counseling; and
- FSEOG priority awarding.
Based on its findings, the Advisory Committee made the following recommendations:
- Congress should direct the Secretary of Education to convene at least two review panels of higher education representatives to provide advice and recommendations on the 15 regulations cited in the report and the feasibility of alternative approaches to the current system of regulations, including the provision of regulatory relief based on performance indicators. Such panels should be incorporated as routine collaboration during retrospective reviews of regulations.
- The Secretary of Education should conduct an immediate review of the 15 regulations cited in the report, including the analysis of the feasibility of implementing the proposed solutions and identifying any adverse effects on program integrity, student success, and cost of compliance.
The research was mandated by Congress in the Higher Education Opportunity Act of 2008 and the Advisory Committee was to determine “the extent to which regulations are burdensome and need to be streamlined, improved or eliminated.
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On December 2, 2011, the Department of Education published final regulations for the Family Educational Rights and Privacy Act (FERPA) that are intended to safeguard student privacy while giving institutions more flexibility to share more data on borrowing, enrollment and other items. The notice states that “[t]hese amendments are needed to ensure that the U.S. Department of Education continues to implement FERPA in a way that protects the privacy of education records while allowing for the effective use of data.” The Department believes that improved access to student data will facilitate States’ ability to provide for increased evaluation of education programs, ensure that limited resources are effectively used, identify best practices, and increase accountability and transparency in order to promote innovation and continuous improvement in education.
In a press release issued on December 2, 2011, the Department commends the revised regulations. “In the past, uncertainty about where state sunshine laws left off and where FERPA picked up created confusion for institutions about when and with whom student information could and should be shared. Schools need the flexibility to pursue routine uses of information without getting prior consent while allowing them to prevent those who may misuse or abuse student information from accessing it. The regulations announced today allow school to do just that.”
One of the changes made to the FERPA rules relates to the Directory Information exception where schools are permitted to disclose certain information on students without consent if it has been properly designated as directory information. The Department has changed its directory information regulations to help schools lessen the burden of obtaining consent for more mundane uses of student information, while allowing schools to choose the purposes for which directory information should be disclosed. Schools can now adopt limited directory information policies that allow the disclosure of directory information to be limited to specific parties, for specific purposes, or both.
Another provision of FERPA that has changed helps facilitate research and evaluation of federal- and state-supported education programs through the use of State longitudinal data systems. The new regulations clarify who may receive student information to conduct evaluations of education programs, and under what circumstances these types of disclosures may occur. The regulations also provide an Appendix of best practices for written agreements that cover the circumstances of these disclosures, as well as best practices for reasonable methods an entity disclosing student information must take to ensure to the greatest extent practicable that those conducting an evaluation protect privacy and comply with FERPA.
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On December 1, 2011, the National Consumer Law Center issued its report titled, State Inaction: Gaps in State Oversight of For-Profit Higher Education, which states that many states are falling short in their oversight of for-profit colleges because of lack of staff to enforce regulations, a shortage of money to pay for oversight activities, and systemic conflicts of interest within the boards responsible for supervising institutions.
The report points out that there are a number of state Attorney General offices that have increased their oversight and enforcement over for-profit institutions, including Florida, Illinois, Kentucky, Massachusetts, Nevada, New York, Oregon, and Pennsylvania. The report also points out that Alabama, Tennessee, and Wisconsin have increased their oversight of for-profit institutions. The report states that the states with the most effective oversight have adequate staff for the number of schools in operation. States with particularly high ratios of for-profit schools in the state to agency staff include: Delaware (87:1), Massachusetts (70:1), Oklahoma (110:1), Washington (187:1), and Wyoming (125:1). In addition, the report found that there is the most effective oversight when there are no conflicts of interest, such as those found in certain states (i.e., Florida, Kentucky, and Arizona) where the members of the industry comprise the majority of the supervisory board.
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After over a year of deliberations, the Department of Education’s Committee on Measures of Student Success, authorized by the Higher Education Opportunity Act of 2008, issued a draft report, which provides recommendations on how the Department of Education should track and evaluate graduation rates and other measures of success for students attending community colleges. The Committee was established to advise the Secretary of Education on actions it can take in assisting two-year degree-granting colleges in meeting graduation rate disclosure requirements under the Student Right-to-Know Act.
The Committee concluded that the graduation rate measure is incomplete and does not adequately convey the wider range of student outcomes at two-year institutions, although the recommendations could ultimately apply to all colleges. Some of the shortcomings include the following:
- The student cohort used in calculating completion/graduation rates excludes a large number of students who typically enroll at two-year institutions;
- The period of time for tracking student outcomes fails to account for many students who may take longer to complete their programs;
- There is no information on the academic preparedness of students in the graduation rate cohort;
- There is no information on students who have not graduated but who may be on the path to a degree; and
- Data are not collected on other important outcomes that students at two-year institutions achieve.
The Committee made some of the following recommendations:
- The Department should add a part-time degree-granting cohort in IPEDS;
- The Department should have institutions identify in their graduation rate cohorts those students who were not college ready;
- The Department should have institutions report graduation rates for students who received federal financial aid;
- The Department should clarify the definition of a degree-seeking student; and
- The Department should have institutions report on IPEDS an unduplicated count of students in the degree- or certificate-seeking cohort who achieved the following outcomes within 100 percent, 150 percent, and 200 percent of the normal time frame.
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On November 15, 2011, the Office of Management and Budget (“OMB”) announced that the Administration has cut wasteful improper payments by $17.6 billion dollars in 2011 as part of the Obama Administration’s Campaign to Cut Waste due to errors in Medicare, Medicaid, Pell Grants, and Food Stamps. Combined with the improper payment cuts in 2010, agencies have avoided making over $20 billion in improper payments in the two years since President Obama issued an Executive Order initiating an aggressive campaign against wasteful payment errors.
The rate of improper Pell Grant payments has decreased from 3.12 percent in 2010 to 2.7 percent in 2011. While the error rate has decreased in improper Pell Grant payments, the actual dollar amount of improper payments has increased from $600 million in 2009 to $1 billion in 2010 and 2011. This is because the program has grown in dollar volume.
The press release stated that the decrease in improper payments is due to the Department of Education’s process to allow FSA applicants who are filling out the applications online to go to the Internal Revenue Service (“IRS”) website to retrieve their income information and transfer it to the FAFSA.
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The Government Accountability Office (GAO) released a report (GAO-12-143) in response to a Congressional inquiry on student outcome titled, Postsecondary Education: Student Outcomes Vary at For-Profit, Nonprofit, and Public Schools. The GAO reviewed the research on student outcomes and found that very little information is available about the quality of education being provided by for-profit institutions.
The GAO found that three studies show that a higher proportion of bachelor’s degree recipients from for-profit schools took out student loans and that they generally had higher total student loan debt than bachelor’s degree recipients from nonprofit and public schools. For example, one study shows that, among students who graduated in 2007-2008, the percentage of students who borrowed was greater at for-profit schools (99 percent) than at nonprofit (83 percent) and public schools (72 percent). Two studies show that for-profit schools have higher default rates than four-year public schools, but the results are mixed when comparing for-profit schools to other types of schools. One ongoing study shows that for-profit schools had a higher proportion of students default on their student loans than four-year nonprofit schools and two-year nonprofit and public schools, while another study did not find any statistically significant differences between for-profit schools and other types of schools. On 9 out of 10 licensing examinations, graduates of for-profit schools generally had a lower pass rate over the 2008-2010 period.
Senators Richard Durbin (D-IL) and Tom Harkin (D-IA) issued a press release following the release of the GAO report stating:
“Every high school student in America should read this damning report on for-profit colleges. When it comes to loans and debt, students at for-profit colleges have higher debt levels, higher default rates and worse outcomes than their peers attending non-profit or public institutions. For years, for-profit colleges have claimed this is because they serve low-income and minority students,” said Durbin. “I don’t buy it and, according to today’s report, neither does the GAO. It is too easy for these for-profit schools to place the blame on a failing student. The blame lies with for-profit schools.
“Once again a report reveals that too many students at for-profit colleges end up without a diploma and saddled with debt. But that is not news anymore,” said Harkin. “What this report shows is that the industry’s long-standing excuse – that it’s the students’ fault that the schools have such poor success rates – does not hold. Instead, as our investigation has uncovered, it’s the schools that go out and recruit these students using taxpayer dollars but fail to provide them with a quality education. This is what we’ve been saying all along: the problem is not the students, but the schools.”
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On November 22, 2011, the Government Accountability Office (GAO) released a report titled, For-Profit Schools: Experiences of Undercover Students Enrolled in Online Classes at Selected Colleges (GAO-12-150), which reflects its observations related to enrollment, cost, financial aid, course structure, substandard student performance, withdrawal, and exit counseling. The report was the result of undercover GAO agents who acted as “secret students” attending online classes at 15 for-profit institutions. GAO found that 8 out of the 15 colleges appeared to be following existing policies related to academic dishonesty, exit counseling, and course grading standards. However, at the other 7 out of the 15 colleges, one or more staff appeared to act in conflict with the school policies.
Senator Tom Harkin (D-IA), Chairman of the Senate Health, Education, Labor and Pensions (HELP) Committee, issued a press release on November 22, 2011, expressing concern about the findings of the GAO report. “The findings of this report underscore the need for stronger oversight of the for-profit education industry in order to ensure that students and taxpayers are getting a good value for their investment in these schools.”
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The Government Accountability Office (“GAO”) was asked to conduct a study of distance education programs so that oversight could be improved. The report titled, Higher Education: Use of New Data Could Help Improve Oversight of Distance Education (GAO-12-39), was released on November 17, 2011, and found that more new data could help improve the oversight of distance education programs.
The study found that while distance education can use a variety of technologies, it has grown most rapidly with the use of the Internet. Further, online asynchronous instruction is the most common because it is convenient and flexible. Students enrolled in distance education programs enroll mostly in public schools and represent a diverse population, including current and former members of the military and those with disabilities.
Accrediting agencies and schools assess the academic quality of distance education, but accrediting agencies reported some oversight challenges, including keeping pace with the growing number of new online programs. Schools appear to be collecting outcome data, including data on student learning, to improve their courses. The Department of Education has increased its monitoring of distance education but lacks sufficient data to perform its oversight activities. The report noted that in 2009, the Department began selecting 27 schools for distance education monitoring based on an analysis of risk factors, but it did not have data to identify schools with high enrollments in distance education, which may have impeded the Department’s ability to identify high risk schools.
Between 2011 and 2013, the National Center for Education Statistics (“NCES”) will start collecting survey data on the extent to which schools offer distance education as well as enrollment levels. However, the Office of Federal Student Aid (“FSA”), which is responsible for monitoring Title IV compliance, was not involved in the process of deciding what distance education information would be collected, which could have helped FSA in its oversight. The GAO recommended that the Department should develop a plan on how it could best use the new distance education data NCES is collecting and provide input to NCES on future data collections.
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On November 17, 2011, the Consumer Financial Protection Bureau (CFPB) published a notice and request for information regarding Private Education Loans and Private Education Lenders in the Federal Register. The request seeks information on private education loans and related consumer financial products and services that are currently being offered to or used by students and their families for the financing of postsecondary education. Comments are due January 17, 2012.
The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (“Dodd-Frank”) requires the CFPB and the Department of Education, in consultation with the Department of Justice and the Federal Trade Commission, to prepare a Report on Private Education Loans and Private Education Lender to be submitted to the Congressional leadership. The Report is expected to address (1) the scope and use of private education loans, (2) information and shopping for private education loans, (3) institutional loans, and (4) repayment.
A more informal request for commentscan be found on the CFPB website.
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