Institutional Aid

Lift the Veil

Stephen Burd — Thu, 03 Apr 2008 17:44:00 -0400

As Congress works to finalize legislation to reauthorize the Higher Education Act for the next five years, higher education lobbyists are making one last ditch effort to dissuade lawmakers from requiring colleges to provide even the most basic information about how they spend their own institutional financial aid dollars.

At issue are provisions in both the House and Senate reauthorization bills that aim to provide prospective students, their families, and policymakers with more detailed data about their aid policies, as well as other types of consumer information, such as graduation and retention rates. Both bills ask colleges to report the average amount of grant aid that the institutions award their students and the proportion of students who receive these grants. The House legislation goes a much-needed step further, and requires colleges to provide a breakdown by income of students who receive institutional aid.

The two bills also differ on how this consumer information is to be reported. Under the House measure, colleges would be required to provide the data to the Education Secretary who would then publish it on the U.S. Education Department's College Navigator website, which the agency hopes prospective students will use when picking colleges. In contrast, the consumer reporting provisions in the Senate bill would be completely voluntary. Colleges that chose to participate would publish the information on their websites, using a model form developed by the Education Department.

College lobbyists, not too surprisingly, favor the Senate's voluntary approach. "Institutions provide a substantial amount of data to the U.S. Department of Education through the Integrated Postsecondary Education Data System (IPEDS) each year, and we applaud efforts to assure that this information is used," the American Council on Education (ACE) wrote in a letter in late February to the leaders of the House and Senate education committees on behalf of itself and 13 other college groups. "However, many data elements specified in both bills are not currently collected through IPEDS in the form specified. Mandating that they be provided would create a significant new reporting burden for institutions."

If, however, Congress decides to make the reporting mandatory, ACE wrote, then it should "limit the data elements" required to those that the Department already collects through IPEDS. The groups know, of course, that such a limitation would continue to cloak colleges' institutional aid policies in mystery, as the Department currently asks the institutions little about how they spend their own aid dollars.

At Higher Ed Watch, we believe that colleges should be required to provide more detailed information about their institutional aid policies. The federal government, which spends tens of billions of dollars a year to help low- and moderate-income students gain access to college, has a right and responsibility to know whether institutions of higher education are helping or hindering public policy goals. Are colleges, for example, using the new influx of federal Pell Grant dollars that Congress and the Bush Administration have provided to supplement their own institutional financial aid and insure that low-income students don't have unmet financial need? Or are they using the new federal funding to replace institutional aid dollars they would have spent otherwise and using that money for other priorities, such as building fancy new dorms and athletic centers or providing merit aid to attract better, and often wealthier, students?

These are important questions for policymakers to be able to answer. Hopefully as lawmakers complete work on the Higher Education Act reauthorization legislation, they will stick to their guns and make colleges' financial aid practices more transparent. As we've said before, a little sunshine almost never hurts.

On Down From the Ivory Towers

Ben Miller — Wed, 16 Jan 2008 00:00:00 -0500

Recent announcements by Harvard and Yale universities to expand financial aid are good news for the small number of students helped, but do little to dispel the impression of an ivory tower still removed from regular people.

Here’s a primer for those who may have missed the flurry of media coverage on the Ivory aid plans. Harvard’s plan, announced in December, would spend $22 million to cap parental contributions at 10 percent of income for all students coming from families making between $120,000 and $180,000 a year. Yale’s new policy, released on Monday, is slightly more complex, using over $24 million to cap parental income contributions to less than 10 percent for families making $120,000 or less, while significantly reducing expected contributions of families making between $120,000 and $200,000. The Yale plan would result in reductions of one-half to one-third for affected families.

It's great that Harvard and Yale are making multi-million dollar commitments from their overflowing endowments. But don't miss the order of magnitude involved. Harvard's endowment grew by some $6 billion last year alone. To put that number into perspective, Congress just spent $6 billion to cut undergraduate federal student loan interest rates in half over the next five years -- nationwide. Harvard's $22 million commitment equals about 1/3rd of 1 percent of the growth in its endowment last year.

[slideshow] We repeatedly have urged the richest schools in the nation to put their hoarded wealth to better use — specifically, preparing, recruiting, providing financial support for, and retaining low-income students. Harvard and Yale’s new policies get part of the equation right. At least they're prying open the lock box and not spending it on athletic facilities. But here is where they fall short.

They aren't improving their outreach to needy students, and they're helping a lot of relatively upper income students. As Donald Heller of Penn State pointed out in The Chronicle of Higher Education, the Harvard policy (and by extension Yale’s) belie a suspect conception of who is "middle-class." Families making at least $120,000 annually represent all but the top 15 percent of U.S. households, while families with annual incomes of $180,000 or higher are all but the top 5 percent of U.S. households, according to census data. Despite this, about half of Harvard’s students come from families that are above the upper income limit. Not only are the new Harvard and Yale new aid policies doing litle for low-income students and benefiting more than just "middle-class" families, they are also showing the socioeconomic homogeneity of America’s most elite institutions of higher education.

Defenders of the Harvard and Yale policies are quick to point out that the astronomical growth in college costs means that even relatively affluent families have trouble paying for their children’s education. Addressing this issue through aid expansions, however, could have troubling effects on low-income students.

The Traditional Higher Ed Community's View

A number of folks in the traditional higher ed community are concerned about the ways that Harvard and Yale’s policies could work to squeeze out low-income students, both at those institutions and elsewhere across the country.

Argument one is that improved and less confusing aid offers are likely to create an influx of wealthier applicants to the top Ivies. At Harvard this means increased competition for a static amount of spots, an issue that Yale at least addressed with an announced plan to expand enrollment by 700 students. Receiving more applications means a greater strain on existing admissions resources. Asking already overbooked admissions officers to review more files could detract from pro-active recruitment efforts that are necessary to increase low-income applicants. Yale has partially addressed these concerns by sending current students out as ambassadors to schools with large numbers of low-income students, but these individuals will not be able to create the lasting relationships with guidance counselors that play a crucial role in locating and admitting students.

Argument two and more disconcerting is the prospect that the decision to expand aid so far up the income spectrum at Harvard and Yale will prompt other institutions to shift their aid policies toward the affluent, as opposed to growing their financial aid budgets. Making Harvard and Yale more affordable could pressure poorer rivals to offer more "merit aid" (at the expense of need-based aid) to avoid losing wealthier applicants. On a national level this could be detrimental for low-income students who are less willing to take on high levels of debt and whose decision to attend college is more likely to be affected by the available financial aid.

Our Take:

Harvard and Yale's policies are good for the small number of talented students that they help. We wish those two schools were contributing more than 1/3rd of 1 percent of the growth in their endowments to student assistance and that specifically they contributed more of their wealth to low-income (high school and college) student preparation, recruitment, support, and retention.

There may be some adverse consequences to the plans for low-income students who are not able to take advantage of Harvard and Yale's policies elsewhere. But the far bigger college affordability issue is not what Harvard and Yale are doing on financial aid for a small number of students or even what other institutions do in response. It's what the Governors are about to do to millions.

As the economy turns down, state budgets are apt to tighten. In turn and forced by state constitutions to balance their budgets, Governors are apt to cut state funding for higher education, as they have done historically in times of economic recession. In response to state budget cuts, public colleges and universities, which educate more than three out of four post-secondary students nationwide, are apt to raise tuition and lessen the proportionate growth in their need-based financial aid.

In other words, the combined effect of the new Ivy policies and a coming downturn in the economy means we're likely to see an increasingly bifurcated system of higher education nationally. College will become more affordable for the talented lucky few, while becoming less affordable for the masses attending public community colleges and state universities. Unless that is, actions are taken by Congress to prevent the phenomenon from occuring. More on that though in the weeks ahead.

(Photo used under a Creative Commons license from Flickr user omerka.)

Naughty and Nice

Ed Policy — Thu, 20 Dec 2007 00:00:00 -0500

Santa has some tough decisions to make this Christmas. We've decided to help him out with our own list of who's been naughty and who's been nice this year in higher education.

Let us know who, if anyone, you think should be added to the list…

Note: This post pre-dates Higher Ed Watch's shift to a new publishing system. For the complete original post, including any comments, please click here.

Questions Colleges Need to Answer

Ed Policy — Wed, 07 Nov 2007 00:00:00 -0500

With Congress providing a significant increase in Pell Grant aid, federal lawmakers have some pressing questions to ask colleges about how they spend their institutional aid dollars. Will colleges use the influx of Pell Grant dollars to supplement their aid and insure that low-income students don't have

Note: This post pre-dates Higher Ed Watch's shift to a new publishing system. For the complete original post, including any comments, please click here.

Wanted: More Transparency from Colleges

Ed Policy — Tue, 18 Sep 2007 01:00:00 -0400

Now that Congress has approved a substantial increase in need-based, federal financial aid, it is important that students, families, and policymakers learn more about how colleges are spending their own institutional financial aid dollars. It would be disappointing if the new infusion of need-based, federal financial aid had the unintended…

Note: This post pre-dates Higher Ed Watch's shift to a new publishing system. For the complete original post, including any comments, please click here.

Merit Aid Explosion?

Ed Policy — Thu, 13 Sep 2007 01:00:00 -0400

Last week, Congress approved legislation that would transfer more than $20 billion over the next five years from over-subsidized banks to need-based student financial aid. The primary beneficiaries of the legislation are low- and middle-income students whose abilities to enroll in and complete college are restricted…

Note: This post pre-dates Higher Ed Watch's shift to a new publishing system. For the complete original post, including any comments, please click here.

Buried Treasure in the U.S. News Rankings

Ed Policy — Tue, 04 Sep 2007 01:00:00 -0400

The U.S. News & World Report's annual ranking of colleges and universities, "America's Best Colleges 2008," was published last week with typical fanfare. High school students and their parents likely flipped immediately to the "top schools" ranking, where they found-gasp!-that Princeton University earned the top spot…

Note: This post pre-dates Higher Ed Watch's shift to a new publishing system. For the complete original post, including any comments, please click here.

Roundup: Week of March 26 - March 30

Ed Policy — Fri, 30 Mar 2007 01:00:00 -0400

Limited Impact of Merit Scholarships on Enrollment

A new study conducted by James Monk at the Cornell Higher Education Research Institute found the correlation between merit scholarships and higher yields of targeted students at private colleges may be

Note: This post pre-dates Higher Ed Watch's shift to a new publishing system. For the complete original post, including any comments, please click here.

Roundup: Week of March 19th - March 23rd

Ed Policy — Fri, 23 Mar 2007 01:00:00 -0400

FAFSA Gets a Little Easier

The House and Senate introduced bills to drastically reduce the FAFSA from five pages down to two. Both bills would allow students and their parents to simply check a box on their…

Note: This post pre-dates Higher Ed Watch's shift to a new publishing system. For the complete original post, including any comments, please click here.

Roundup: News You Need to Know, Fri., Feb. 23rd

Ed Policy — Fri, 23 Feb 2007 00:00:00 -0500

Negotiated Rulemaking Participants Debate Higher Ed Performance Standards

Three days of negotiated rulemaking on higher education accreditation will end today, with accreditors, college heads, business leaders, and members of the Department of Education discussing what regulatory solutions…

Note: This post pre-dates Higher Ed Watch's shift to a new publishing system. For the complete original post, including any comments, please click here.