Building a Bigger and Better Summit

It was really hard to watch the American Graduation Initiative get cut from SAFRA. It was one of the most promising initiatives for higher education in decades, representing a real shift from a culture of focus on college access to one focused on student success. I was crushed to see it go unfunded.

Of course, I'm feeling a little better since Jill Biden called for a White House summit on community colleges, to be held this fall. An Obama conference is a decent consolation prize. It's actually a coup, when you think about how seriously community colleges have been taken by policymakers in the past (read: not at all).

Washington needs to make the most of this opportunity. Doing this requires pushing far beyond a pleasant conversation about "best practices and successful models." Because let's be honest-there aren't very many "best practices" we can feel confident in scaling up right now. That's why building the body of research evidence on effective community college practices was a goal of AGI.

Instead Dr. Biden should move the ball forward on a serious conversation about the role of the two-year colleges in American higher education by asking the toughest questions. These should include:

• What constitutes positive, measurable outcomes for students at these schools? What does "making community colleges better" mean?

• Is making community colleges "more accessible" desirable, if it means bringing into college more students with less academic and financial preparation? Under what conditions?

• Are there efficiencies that can be gained without compromising the quality of the academic experience? For example, should state systems of community colleges be encouraged to specialize their in-person academic offerings and expand (and coordinate) their online offerings?

• What role should data play in informing decision-making of community college leaders? Data of what kind, and collected by whom?

• Which additional resources will generate the greatest returns for community college students?

Dr. Biden must emphasize that the entire sector needs to work together, across geographic boundaries (such as urban/rural and state lines), to come up with some common answers. Sure, community colleges grew out of independent communities but they now serve a much larger, national role. Collective thinking about solutions will benefit them, and help them to establish greater visibility and a more powerful voice.

This serious day will be a very important one. We can't be naïve. Even those who think the nation needs more college-educated adults and believe in accessible higher education openly discredit the work of community colleges. Know a kid who wants to earn a bachelor's degree? Some folks will counsel that kid to avoid community colleges. Their advice is based on pretty rock-hard statistical data, but its implications are troubling. Have we basically given up on a two-year route to a four-year degree? Or can we do more to change those numbers in the near future? I hope the answer from the Summit is a convincing "yes." We need the Obama Administration to lead the way.

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Stand Up for SAFRA

It's all about the bankers-- again. As I've said in this blog numerous times, the Student Aid and Fiscal Responsibility Act is poised to dispense critical aid to low-income college students and the colleges they attend-- if the lending industry doesn't kill it first.

The savings that would result from a move to direct lending are substantial. Money would go directly to the neediest college students and to community colleges, a sector that is swamped and struggling in this recession. This investment in human capital is in so many ways a no-brainer-- it'll generate a large return, benefit folks in nearly every community in the country, and support the American dream.

Of course, the bankers will have none of it. In the current system they draw profits on the backs of students, lending them money and selling those loans to the government. They are so eager to hold onto those profits that they argue that the status quo is actually good for students. Disgusting, but not surprising. This is how the power elite maintains its position.

What's terribly sad is that some Democrats from states with pathetically low college attainment rates are actually buying into this hooey, giving credence to the banks' arguments that there are ways to save money while preserving their profits.

Senators Thomas R. Carper of Delaware, Blanche Lincoln of Arkansas, Ben Nelson of Nebraska, Bill Nelson of Florida, Mark Warner of Virginia and Jim Webb of Virginia ought to be ashamed of themselves. Just look at the state of their higher education systems:

• Delaware ranks last in the nation in community college completion rates--just 10.8% of those who start at a two-year college finish an associates degree in 3 years.
• Nebraska's commitment to low-income students is pathetic--for every dollar in federal Pell Grant aid to students, the state spends only 19 cents.
• Arkansas has one of the largest black/white gaps in college completion in the country (16 percentage points)
  
• Florida doesn't make college affordable--the state's poor and working-class families must devote 24% of their income, even after aid, to pay for costs at public four-year colleges.
• Virginia is a place of great inequity--just 29% of black young adults are enrolled in college, compared to 42% of whites.

The children in these states deserve the support for an affordable higher education that SAFRA will provide. Their leaders should (quickly) stop stalling, develop backbones, and stand up to the banking industry.

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Making SAFRA Count

The end of last year was a busy time for me as I waited out the birth of my daughter who decided to spend an extra 10 days lounging in utero before emerging into the Wisconsin winter. I was so focused on strategies to promote her exit (sidenote: talk about an area in need of better research-give gobs of data on live births for hundreds of years, docs still refuse to hazard a prediction of labor occurring on any given night!), I virtually shut out the world of higher education policy. Imagine!

Thankfully, others were hard at work around and over the holidays, thinking about ways to make sure that the substantial, timely, and hard-won investment which will (fingers crossed) soon come to higher education via the Student Aid and Fiscal Responsibility Act (SAFRA) are most effective. Evidence of that work is contained in a December Lumina Foundation memorandum to the U.S. Department of Education, awkwardly (but accurately) titled "Structuring the Distribution of New Federal Higher Education Program Funding to Assure Maximum Effectiveness."

The memo gets it (mostly) right. There's great potential for this money to count, but also a real possibility it will do next to nothing if mismanaged. For example, if definitions of key terms like "college completion" are vague, and standards for "rigorous" research evidence ambiguous, then funds will likely go to continuing business as usual-for example, supporting programs that purport to increase college access while doing little to change rates of success-leading some to ask, access to what?

To avoid this the Department of Education needs a distribution system based first and foremost on one principle: keep it simple. It should make states define college completion and disseminate that definition-then stick to it. It's easiest to tell if plans are straightforward and consistent with intended principles if prospective grantees are forced to explain their ideas in a concise manner. Lumina gets this, and its team recommends a two-step process that requires a concept paper in advance of a full proposal.

So the good news is that this Lumina paper hits many of the key issues and makes some solid recommendations. That said, its authors missed an opportunity to address one important issue. The section titled, "How will the U.S. Department of Education know if these investments are actually helping to meet the President's goal?" is essential. It goes to the heart of one major goal of SAFRA-to increase the body of knowledge about what works in promoting college completion, and therefore the field's capacity to create lasting change.

As I recommended to ED's Bob Shireman early last year, we can do higher education a great service by holding a high bar for what constitutes research on college completion. Too often research in higher education hypothesizes that policies or practices advance desired outcomes, but utilizes insufficient methods to establish causal linkages between the two. As a result, we often don't know whether the results we see can be directly attributed to the new practice or investment.

In this case, ED should define "research" and "researchers" and "evidence," ideally in ways that are consistent with current practices at the Institute for Education Sciences; and require states to use those definitions. There should be a prescriptive process for selecting researchers (so as to make sure that truly independent evaluations are conducted) and proposals that allow for sustained research should be prioritized (e.g. those that leverage supportive foundation funding to continue the work to assess mid and long-range outcomes). I'd also like to see ED involved in increasing the capacity of researchers to do this kind of work, since it's far from clear how the demand for new work can be met by the current supply of higher education researchers. Maybe an IES pre- and/or post-doc training program targeted to postsecondary education?

Sure, this would require setting aside sufficient funds for the research side of the initiatives-but absent that investment, we'll likely never know whether the money spent on SAFRA-funded programs and policies had any real effect. That would, of course, be business as usual-precisely what we must avoid if we want to make this once-in-a-lifetime opportunity really count.

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Pondering Perkins

Since 1958, the Federal Perkins Student Loan Program has been providing low-interest loans to needy students via campus-based revolving funds. More than 600,000 students (mostly undergraduates with family incomes under $30,000) receive a Perkins each year. The current Perkins differs from other federal loan programs, most notably the Stafford, because it is subsidized (the interest doesn't begin accruing until 9 months after graduation) and has a lower interest rate (5%, compared to the 6.8% Stafford).

The Student Aid and Fiscal Responsibility Act (SAFRA) would change the Perkins in some notable ways, not all of which are clear improvements. The proposed changes are rather intricate, and as I've spent a fair bit of time puzzling over them lately I want to bring some of my nagging questions to this wider audience in an effort to gain some insights and answers. (In full disclosure, the financial aid officer at my university, Susan Fischer, is a vocal opponent of the changes. I have listened to her views, and considered why UW-Madison might resist the changes. Of course, what I'm writing here are my own thoughts, not hers.) Don't get me wrong-- I am generally very supportive of this piece of legislation, which I do think will expand college attainment and improve the American higher education system. I raise these issues in the hopes that tinkering with a few details might make it more effective.

As I understand it, the Obama Administration has several goals for changing the program: (1) increase efficiency via a move to direct lending, (2) expand access by substantially increasing the dollars allocated, and (3) create incentives to keep tuition (and private loan reliance) down by changing the allocation formula (right now the institutional 'fair share' is based partly on tuition costs, and this is thought to contribute to rising tuition).

In a nutshell, goal #2 would appear to be achieved via accomplishing goal #1-- moving to direct lending enables the investment in Perkins to grow from $1 to 6 billion. Goal #3 would appear to be achieved with a new formula that distributes money to campuses based partly on how much non-federal aid they provide, whether they charge below-average tuition and fees, and enrollment of Pell Grant recipients. But what worries me are some of the proposed accompanying changes and plausible unintended consequences. In particular:

(A) In the new version, Perkins becomes an unsubsidized loan, rather than a subsidized one. This would make the Perkins akin to the Stafford, albeit at a somewhat lower interest rate. This makes the program more expensive for students (anyone who thinks even $500 a year in additional interest doesn't matter to the decisions of poor kids just isn't paying attention), and therefore less attractive.How does this enhance access?

(B) In the new version, a match is required from colleges, which they are interpreting as "pay to play." If they do acquiesce, they'll likely draw that money out of need-based funds, or through raising tuition. This would seem to work at cross-purposes with the intentions of the allocation formula, and again, not increase access.

(C) The new allocation formula is likely to benefit private not-for-profit 4-year colleges the most (for more on why, see this cogent analysis by Education Sector).

(D) Most troubling, I am told that another big change is coming with the new Perkins (though I admit, I cannot find evidence of this change in the current legislative language-- I expect it's to come in the rule-making): Packaging rules will require that Perkins be packaged after the Stafford. In other words, financial aid officers must first offer (and students must accept) the unsubsidized Stafford at 6.8% interest, before offering the 5% Perkins. This strikes me as a substantial barrier, likely resulting in few students even getting to the Perkins. Everything we know about loan aversion among low-income populations, and the unwillingness of some of the lowest-cost colleges to even offer their students loans points in this direction. Again, how does this enhance access?

Are there other ways to achieve the same objectives? In particular, is it absolutely necessary to end the subsidy, and change the packaging rules? Could savings be achieved, instead, by ending those abysmal TEACH Grants and perhaps sacrificing GRAD Perkins as well? It might also make sense to keep the subsidy and end the 9-month grace period.

In summary, before we effectively end a mean-tested program offering low-interest loans, have we thought through every alternative and pondered every possible unintended consequence? I realize Perkins may feel like small potatoes in the context of this big bill, but with every penny mattering to our students in this recession, I think the proposed changes to the Perkins deserve closer attention.

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