Ed Policy Watch

A new paper by Joseph G. Antolji, Prashant Bharadwaj, and Fabian Lange looks at whether or not American youth have responded to increasing economic rewards for skills and education by investing more in skills and education:

We examine changes in the characteristics of American youth between the late 1970s and the late 1990s, with a focus on characteristics that matter for labor market success. We reweight the NLSY79 to look like the NLSY97 along a number of dimensions that are related to labor market success, including race, gender, parental background, education, test scores, and variables that capture whether individuals transition smoothly from school to work. We then use the re-weighted sample to examine how changes in the distribution of observable skills affect employment and wages. We also use more standard regression methods to assess the labor market consequences of differences between the two cohorts. Overall, we find that the current generation is more skilled than the previous one. Blacks and Hispanics have gained relative to whites and women have gained relative to men. However, skill differences within groups have increased considerably and in aggregate the skill distribution has widened. Changes in parental education seem to generate many of the observed changes.

Plan Underway to Consolidate California Preschool Programs

California State Superintendent of Instruction Jack O'Connell joined California lawmakers on Tuesday to unveil a legislative package that would combine the state's five early education and family programs into one, to be called the California State Preschool Program. The new program, which would include the existing California State Preschool Program, Full-Day State Preschool, the Pre-Kindergarten and Family Literacy Program, Pre-Kindergarten and Family Full Day, the General Care and Development Program would have an $816 million budget, making it the largest preschool program in the country. Local government officials praised the plan, which is designed to help streamline services and cut administrative costs. Currently some local educational agencies administer all five programs at once; with the new umbrella program they say they can redirect funding once used for paper-pushing towards instruction.

White House, Fed Move on Student Loans

Lawmakers Mobilize to Boost G.I. Education Benefits

Education Department Puts Off Review of ABA as Law School Accreditor

Coalition Offers Help to Schools Considering Switch to Direct Lending

When the National Collegiate Athletic Association announced its penalties for poor athlete academic performance this week, it let many high-profile Division I college basketball and football teams off the hook.

After four years of collecting data, the organization was set to enact full scholarship penalties for teams that fail to keep their athletes on track to graduate. But because of the NCAA's generous use of waivers for wealthy, high-profile athletic programs, as well as a flawed penalty structure, many teams with poor academic records found themselves in the clear.

Under the NCAA's Academic Progress Rates (APR) system, teams get points each semester for retaining athletes and for keeping them academically eligible. The NCAA has a system of penalties for teams that post low APRs. For the past three years, most teams have not been subject to the penalties, however, because of squad-size adjustments, or exemptions due to insufficient data.

We hear a lot of rhetoric from politicians about how America's future depends on investing in our children. But this rhetoric is not translating into spending realities. A new report from First Focus, "Children's Budget 2008," provides information on federal spending for children's programs. The report slices the data in a number of different ways, but the overall theme is that the federal government is not prioritizing children when it comes to allocating resources.

The report indicates that federal domestic discretionary spending on children in 2008 was only about 10% of all non-defense spending (a 23% decline since 1960). That's a pretty surprising number when you think about it—it means that as a nation we spend only 10 cents of every discretionary dollar on children.

Recent budget decisions have only exacerbated the downward trend. In the last five years, domestic spending on children's programs has decreased by 6.7%. While mandatory spending on children increased by 5.7% in that time period, overall federal spending was increasing at a much faster rate (almost 10%), meaning that other types of spending are outpacing spending on children. Of all the new real non-defense spending in the past five years, only one penny of every dollar has gone toward children's programs.

Lower Priority for Education Funding

Federal Reserve Chairman Ben Bernanke says the government’s biggest student loan program, the Federal Family Education Loan (FFEL) program, is poorly designed. His suggested solution sounds a lot like an endorsement for an auction. In a letter to Sen. Chris Dodd (D-CT) on Federal Reserve action to help student lenders weather credit market turmoil, Bernanke notes that the structure of the FFEL program is problematic. He writes:

The other side of the profitability equation--the reimbursement spread paid to lenders under this program--is under the control of the Congress and the executive branch. In particular, Congress may well wish to revisit the question of whether setting a fixed spread over the commercial paper rate is the best approach. You may decide that a more market-sensitive approach--flexible enough to provide a wider spread during times of market stress and a narrower one during normal times--could provide a more robust structure.

Here is what’s behind Bernanke’s assessment of the FFEL program and his suggestion for a "more market sensitive approach."

Two Parts to the FFEL Profit Equation

By Art Hauptman

Current arrangements for providing financial support to college students and their families in this country are not meeting many of the objectives for which they were intended. The Spellings Commission summed it up well in its final report: "The entire financial aid system - including federal, state, institutional, and private programs - is confusing, complex, inefficient, duplicative, and frequently does not direct aid to students who truly need it." As a result, the Commission and a number of other groups with wide ranging political agendas have recommended that "the entire student financial system be restructured". But what would that entail?

Since first established in the 1960s, the federal student aid programs of grants, loans, and work-study - in concert with state, institutional, and private efforts - have provided access to a postsecondary education for millions of Americans who otherwise might not have had enough funds to attend. More recently, federal tax offsets against current tuition expenses and tax-preferred incentives for college savings serve as an important source of financial relief for hard-pressed taxpayers from a range of incomes who worry that they will be unable to pay the constantly mounting bill for tuition and other expenses.

Student Loan Credit Crunch Bill Sent to President

One in Five Colleges Considering Switch to Direct Lending

Tuition On the Rise, but Spending for Instruction is Not

Report Calls for Revised Pell Grant Formula

Most Americans do not know how much their local school districts are spending on education, according to a new national survey. This isn't a surprise to Ed Money Watch. Poor understanding of education expenditures spurred the creation of our Federal Education Budget Project. But what does surprise us is the size of the misinformation gap: Americans vastly underestimate per-pupil expenditures, by $6,122 on average.

Education Next and the Program on Education Policy and Governance at Harvard conducted a survey in 2007 of a nationally representative sample of 2,000 American adults. They asked the question: "Based on your best guess, what is the average amount of money spent each year for a child in the public schools in your school district?" Then they matched those answers to the actual per-pupil expenditures of the respondents' districts.

We have written a lot recently about Silver State Helicopters, a Nevada-based company that left the 2,500 students who attended its flight academies in the lurch when it shut its doors without warning on Super Bowl Sunday and filed for bankruptcy liquidation.

As we noted yesterday, Silver States' entire existence depended on the willingness of loan companies -- in this case, the infamous Student Loan Xpress and the Pennsylvania Higher Education Assistance Agency (PHEAA) through its national brand American Education Services -- to make and service high-cost private loans to help students cover the $70,000 cost that they were required to pay up front to attend the unlicensed and unaccredited flight schools. Unfortunately, Silver State students are now stuck repaying these private loans for training they did not ultimately receive.

Silver State is hardly an isolated case.