Clare McCann: All Related Content

All related content for this individual is listed below.

Friday News Roundup: Week of May 21-25

  • By
  • Clare McCann
May 25, 2012

University of Wyoming reveals more than $15 million in budget cuts

Governor O’Malley signs Maryland tax increase legislation

Kansas tax cuts worry education advocates

New Jersey university planning costs hit $566,000

University of Wyoming reveals more than $15 million in budget cuts
This week, University of Wyoming president Tom Buchanan released a budget proposal that would reduce the state’s operating budget from current fiscal year 2012 levels by $15.7 million annually, beginning at the start of the new fiscal year in July 2013.  The proposal is a response to Governor Matt Mead’s order last month that all state agencies design budget cuts of 8 percent for 2013.  The order was written after forecasts suggested state revenue from natural gas would be lower than anticipated.  Under the University of Wyoming proposal, the school would cut 80 to 125 faculty and staff positions, cutting personnel costs by 3.5 percent.  Additionally, non-personnel spending would be cut by 14 percent in the form of smaller budgets for sports teams, equipment, and technology.  The specific programs that would experience cuts were not identified by the university’s president. More here…

Governor O’Malley signs Maryland tax increase
Maryland Governor Martin O’Malley this week approved two bills passed by the legislature in a special session that would collectively raise taxes by $260 million in fiscal year 2013 in a marathon signing-session that included almost 300 bills.  The bills would transfer some costs of teacher pensions from the state to counties.  In addition, the legislature voted to raise income taxes for the top 14 percent of income earners in the state.  The funds will be used to reverse more than $400 million in pending budget cuts to education and health programs, as well as local aid for municipalities.  The cuts were scheduled to take effect because lawmakers did not pass revenue legislation during the regular session, but during a special legislative session the cuts were averted.  Another bill the governor signed this week raised the age to which students are required to attend school from 16 to 17.  More here…

Kansas tax cuts worry education advocates
Kansas Governor Sam Brownback this week signed a tax reform bill that, according to projections, will leave the state with a $2 to $3 billion budget shortfall within five years, one third of the state’s general fund.  Public school funding consumes about half of the general fund, so education advocates are concerned about potential cuts to school districts.  A report from the state’s deputy commissioner of education Dale Dennis said that if $1 billion in cuts to K-12 schools were put in place, school districts could face substantial strains to their operating budgets, including $29.2 million for Topeka Unified School District. The cuts would be on top of major budget cuts that districts sustained during the recession. Although the governor’s office claims the report is inaccurate because it doesn’t account for his expectations for job growth as a result of the bill’s passage, lawmakers remain concerned.  The governor has suggested other measures – like negotiating with energy companies for lower utility rates – be enacted to fill the hole districts will face. More here…

New Jersey university planning costs hit $566,000
New Jersey Governor Chris Christie introduced a plan earlier this year to restructure several of the state’s largest public universities, including redesigning the University of Medicine and Dentistry of New Jersey and consolidating Rowan and Rutgers universities.  The proposal, introduced in January, has a July 1 deadline.  The governor’s office has required the campuses at the center of the proposal to cover the planning costs associated with the proposed change. The schools will pass on those costs to taxpayers and students through state subsidies and tuition hikes.  A records request reveals that, so far, the schools have spent $566,000 hiring consultants, lawyers, and accountants for the project.  Those figures also do not include the time spent by university staff on the project.  The governor’s office has not issued any public estimates of the cost of the mergers, but is continuing to push the July 1 deadline. More here…

Issues:

Race to the Top Could Mean a Spotlight on Under-Served Students

  • By
  • Clare McCann
May 23, 2012

U.S. Secretary of Education Arne Duncan yesterday released the draft of the Department’s proposed application requirements for the Race to the Top-District (RTT-D) grant competition. Congress provided nearly $550 million for Race to the Top in its fiscal year 2012 appropriations; the Department dedicated $133 million of that to another round of the Early Learning Challenge, and the remainder to the new district-level RTT-D. According to the draft application, the Department would award districts or consortia of districts grants ranging from $15 million to $25 million depending on the number of students served. The Department expects to award about 20 grants in total from the program’s nearly $400 million funding. Applicants can also earn extra points by pulling in funds from the private sector or foundations to supplement their federal grant. The Department hopes that the applications will produce high-quality, innovative plans to aid academically-disadvantaged students – and those students may turn out to be middle schoolers.

The district competition, in a departure from the original Race to the Top competition that awarded grants to entire states, focuses specifically on personalized learning. Applicants must propose plans to create personalized instructional environments for students, the only non-administrative requirement in the application.

The summary of the grant competition plan that the Department of Education released yesterday also specifies that, although they will need to demonstrate buy-in from local unions, districts cannot be held back by states’ unwillingness to participate in reform. (Forty-six states plus the District of Columbia submitted RTT state applications; several states have refused to participate on politics or principle.) Multiple districts have the opportunity to apply under one grant as a consortium, even crossing state lines; that will allow the districts to pool resources and create high-quality applications. The Department will also split the states into independent groups for scoring, so districts from states that won under prior Race to the Top rounds (and therefore potentially with more advanced reform systems) are not pitted against districts in states that didn’t win.

Perhaps most compelling, though, the Department’s application proposal states that applicants may structure their proposals to target students in a particular grade, subject, or school. Could this provision mean that the Race to the Top district-level grant competition will have an added focus for middle school students, a group that has demonstrated significant need for academic support?

Perhaps of all the research on the proven benefits of early education and the national focus on college- and career-readiness among high school students has inadvertently excluded the middle grades from the reform conversation. Meanwhile, 8th grade students have seen far fewer gains in their achievement scores on NAEP—the National Assessment of Education Progress—over the past decade than 4th graders have.  While the proportion of 4th graders scoring proficient and above has grown since 2000 by 16 and 5 percentage points in math and reading, respectively, the proportion of 8th graders scoring proficient has only grown by 9 points in math and 1 in reading. Overall, the 2011 test scores show that only 34 percent of 8th graders are proficient in reading, and 35 percent in math.

Those academic struggles translate to students’ frustration with school. One study found that in urban public schools, as many as 40 percent of students repeat 9th grade, and only 10 to 15 percent of those repeaters go on to graduate. Providing at-risk students with intensive academic interventions and comprehensive support in the middle grades could prevent them from entering high school underprepared, lessening the need for remedial learning courses that don’t earn credits towards graduation.  A 2007 report found that over a third of high school dropouts actually drop out in 9th grade, before they even make it to 10th grade.

The Department will likely allow applicants for the Race to the Top-District competition to select a specific age group for interventions. District leaders may instinctively elect to focus on high school students because applicants must set a target for high school graduation rates of the students served. But those districts may be better served by focusing on the (oft-neglected) middle grades, ultimately sending better-prepared students through the middle-school-to-high-school pipeline. Earlier interventions could prevent thousands of students from dropping out before they even have the opportunity to get their feet wet in high school.

Check back with Ed Money Watch as we track the RTT-D application and feedback process. For a view of how the RTT-D competition could affect early education, check out this post from our sister blog, Early Ed Watch.

Issues:

Recent Budget Bill Provides Glimpse of House’s Early Ed Priorities

  • By
  • Clare McCann
May 21, 2012

In a vote earlier this month, the House of Representatives passed a budget bill, 218-199, that provides a look at how, and if, Congressional Republicans would fund early education programs.  

Issues:

Friday News Roundup: Week of May 14-18

  • By
  • Clare McCann
May 18, 2012

North Carolina House GOP considers merit pay money for schools

Dispute over college tuition roils flagship Texas campus

Alabama education trust fund budget approved

Alaska Governor Sean Parnell vetoes $66 million from Alaska budget

North Carolina House GOP considers merit pay money for schools
North Carolina House Republicans voted in a closed-door meeting this week to reallocate some 2013 funds previously designated for merit pay raises for teachers and other state employees to support teacher salaries and general public K-12 education funding. With $258 million set to expire from the federal Education Jobs Fund, which supports teacher salaries, legislators are working to find replacement state funds and lessen the cuts. The fiscal year 2013 budget contains $121.1 million for the state’s merit pay program. Lawmakers plan to move some of these funds into general funding for K-12 schools to partially replace the Education Jobs Funds. Republican lawmakers have not specified how much funding they will transfer to K-12 schools, and the North Carolina Appropriations Subcommittee on Education is preparing its budget (to be released next week) without the extra infusion of funds. More here…

Dispute over college tuition roils flagship Texas campus
This month, the Board of Regents for the University of Texas system rejected a proposed 2013 tuition increase for in-state students, instead raising tuition for out-of-state students by about 2 percent to more than $33,000. UT-Austin president William Powers Jr. originally proposed the 2.6 percent in-state tuition increase, which would have brought the total cost for those students to over $10,000 a year.  The board vote is in line with Governor Rick Perry’s stated goal of holding in-state tuition costs down to no more than $10,000 through budget cuts. Powers has stated that the school will continue to provide a high-quality education, in spite of the tuition freeze. More here…

Alabama education trust fund budget approved
Alabama lawmakers this week approved a fiscal year 2013 education budget totaling $5.4 billion and sent it to Governor Robert Bentley for his signature. The 2013 budget would cut spending by about $208 million from fiscal year 2012 levels and eliminate about 200 faculty and staff positions in K-12 schools due to an anticipated decline in enrollment. Legislators also made some structural reforms in which they moved funding for several youth programs to the general fund, rather than the education trust fund. Additionally, the budget reduces the total education trust fund by about $190 million in 2013 from fiscal year 2012 levels because a law passed last year requires legislators to move any excess reserves in the fund to a separate reserves account. Nearly 70 percent of the fiscal year 2013 education budget is targeted to K-12 education, while about 27 percent will go to higher education. More here…

Alaska Governor Sean Parnell vetoes $66 million from Alaska budget
This week, Alaska Governor Sean Parnell vetoed more than $66 million in spending from the state’s fiscal year 2013 budget plan.  The governor had previously vetoed far more spending – more than $300 million in fiscal year 2010 and more than $400 million in 2011. Parnell said that the limited cuts in the 2013 budget reflected the legislature’s commitment to holding spending within the governor’s stated spending cap.  The vetoes this year were targeted in part to early childhood education; he cut $1.2 million from the statewide pre-K program and $2.8 million from a parent training program called Parents as Teachers. Still, according to the governor, the state will spend 38 percent more on young children in 2013 than it did in 2012 – almost $14 million total, half of which will come through the Head Start program. More here…

Issues:

House's Sequester Alternative's Effect on Education Spending Still Unknown

  • By
  • Jason Delisle
  • Clare McCann
May 17, 2012

The deadline for sequestration—the automatic, across-the-board spending cuts that were triggered last fall when the “supercommittee” failed to reach a deficit reduction agreement—is drawing near. It takes effect January 2013, part-way through fiscal year 2013. Experts and onlookers have been trying to figure out if and how lawmakers will cancel sequestration before that deadline. The Republican-led House of Representatives now has its answer.

First, a refresher on how Congress got here: As part of an agreement to increase the limit on the national debt last summer, legislators passed the Budget Control Act of 2011, which sets up a framework by which lawmakers are to enact policies to reduce future budget deficits. If they don’t, the law automatically cuts spending through sequestration and sets limits on future appropriations.

Much of the deficit reduction outlined in the law was supposed to come from a bipartisan bill drafted by a joint House-Senate committee, known as the “supercommittee.” Supercommittee members were never able to agree on a bill, triggering the sequestration and spending caps. Unless Congress and the president now agree to override them, the cuts and caps will proceed as outlined in the law. The sequester will automatically cut fiscal year 2013 appropriations by about $93 billion, of which $55 billion comes out of defense programs and $39 billion comes out of non-defense programs. Within those amounts, the cuts will be distributed evenly across all non-exempt programs. (Pell Grants are the only exempt education program.)

Last week, the House passed a bill that, if signed into law, would cancel the sequester that applies to fiscal year 2013 appropriations. The bill includes policies that would reduce spending across a range of non-education programs funded outside the appropriations process. House lawmakers say those cuts would take the place of the automatic spending cuts that would have come through sequestration.

Nevertheless, education programs—nearly all of which are funded through the annual appropriations process—have not yet escaped unscathed in the House-passed bill. The bill leaves in place a cap on total appropriations funding for fiscal year 2013 that the House adopted earlier this year. That cap is $1.028 trillion, $15 billion below the total appropriations level enacted for fiscal year 2012.

The lower spending cap does not guarantee that lawmakers will cut funding for any or all education programs when they finalize fiscal year 2013 appropriations funding (fiscal year 2013 starts October 1, 2012), but education programs will compete with other programs for funding within a smaller pie. Even if the House bill becomes law, Congress must still determine funding levels for education programs during the appropriations process. Thus there is no meaningful way to predict how the House appropriations limit would affect education programs. Moreover, Congress has actually increased total appropriations for Department of Education programs in recent years even when it has cut appropriation funding across all agencies in aggregate.

It should also be noted that the House-passed bill leaves sequestration in place for programs funded outside of the appropriations process, so-called mandatory programs. This won’t mean much for education programs, since almost all are funded through the appropriations process. Some funding for Pell Grants is mandatory, but it is exempt from sequestration by law. That leaves student loans. The sequester would cut funding for student loans by increasing the origination fee borrowers pay when they take out new loans. That increase is likely to be about a half a percentage point, meaning the fee on a $5,000 loan will cost an additional $25.

To be clear, the Senate isn’t likely to take up the House bill. And the Senate shows no signs of adopting an alternative to cancelling the pending sequester.

In other words, if and how Congress will cancel the sequester is still anyone’s guess. Despite the action in the House, a definitive answer isn’t likely until after November elections.

Issues:

Friday News Roundup: Week of May 7-11

  • By
  • Clare McCann
May 11, 2012

Pennsylvania Senate approves alternative to governor’s budget

Missouri legislature sends budget to governor

Kansas House rejects state employee raises, allocates funds for disabled

University of Minnesota regents take wary look at proposed pay, tuition increases

Pennsylvania Senate approves alternative to governor’s budget
The Pennsylvania Senate this week passed a fiscal year 2013 budget plan that restores many of the cuts laid out in Governor Tom Corbett’s proposed budget. The budget, which must be signed by the governor by July 1 according to state law, passed the Senate and moved to the House for approval. It assumes state tax revenue will exceed earlier projections by about $900 million in fiscal years 2012 and 2013 and uses that additional money to increase spending in fiscal year 2013 by about $500 million over the levels Corbett proposed. The increased spending would help to temper proposed cuts to public colleges and universities. It would also increase aid for low-income school districts by $50 million over Corbett’s request. Similarly, it would provide an additional $50 million for accountability block grants, which school districts frequently use to fund full-day kindergarten programs. More here…

Missouri legislature sends budget to governor
Missouri lawmakers voted this week to approve a budget for fiscal year 2013 totaling $24 billion. The budget, now awaiting Governor Jay Nixon’s approval before the start of the fiscal year on July 1, 2012 increases funding for higher education by $3 million from 2012 levels, split across 7 public universities. It also retains funding for one department at the University of Missouri-St. Louis that had been on the chopping block in negotiations earlier this week. The $3 million will be used to help balance funding disparities across the universities. Another bill passed this week diverts revenue earned through casino fees from early childhood education to veterans homes. Instead, funds for early childhood education will come from a settlement reached in a national tobacco lawsuit. Governor Nixon stated that he planned to look carefully at the budget over the next several weeks before signing it. More here…

Kansas House rejects state employee raises, allocates funds for disabled
The Kansas state House voted this week to move $50 million in fiscal year 2013 funding from the transportation department to public K-12 education. Under the funding plan proposed by the House, basic state aid to schools would increase in the 2013 school year by $37 per pupil over current-year levels; that provision will cost the state $25 million. An amendment to devote half of the $25 million to kindergarten-through-fourth-grade literacy efforts failed. Another $25 million taken from the Kansas Department of Transportation budget would provide supplementary property tax aid to school districts. In contrast, a Senate proposal would add $50 million for basic state aid to schools, or $74 per pupil more than the state paid out in fiscal year 2012, and $27 million for property tax funding. The Senate plan allocates the money from the state’s surplus, rather than moving it from another agency. The state legislative session is scheduled to end this week, but with numerous tasks still on its agenda, the legislature may extend the session. More here…

University of Minnesota regents take wary look at proposed pay, tuition increases
The University of Minnesota recently proposed a fiscal year 2013 budget that would increase faculty salaries by 2.5 percent, in-state undergraduate tuition by 3.5 percent, and total spending by 1.5 percent over fiscal year 2012 levels. The Board of Regents, though, is asking for more details on the proposed tuition hike before approving the plan. The tuition growth would raise the cost of attendance to $12,060 for in-state residents, not including fees, room, and board; additionally, out-of-state tuition would increase by 4 percent, up to $17,310. In total, the tuition increase would add $24.6 million to the university’s revenue next year. In addition to increasing salaries for staff and faculty, the extra spending would fund more merit scholarships, new hiring, and a new Center for Social Media at the university. State funding, meanwhile, has declined in recent years and will reach 1998 levels next year. When the university received a smaller cut to state funding than anticipated last year, it saved much of the money to apply to its fiscal year 2013 budget. More here…

Issues:

More Transparency Needed for Veterans Education Benefit Programs

  • By
  • Clare McCann
May 3, 2012

This was originally posted on Higher Ed Watch's sister blog, Ed Money Watch.

Every year the Department of Veterans Affairs (VA) directs a huge chunk of federal spending to higher education for veterans education benefits — more than $1.7 billion in the 2009-10 school year alone. But VA education benefits are often overlooked in education policy discussions. This is largely because of a lack of transparency in the VA budget. The agency doesn’t make good accounting information readily available. On top of these opaque budgeting practices, little information is available on the effectiveness of the current iteration of the GI Bill, how schools spend that money, or the degree to which veterans actually benefit from these programs. That’s starting to change. But policymakers can do more.

President Obama issued an executive order last week to crack down on how schools use VA and Department of Defense (DoD) funds. (Benefits for veterans are provided through a slew of VA programs, most notably the Post-9/11 GI Bill. Active duty servicemembers receive funding through the Department of Defense’s Tuition Assistance Program, rather than through the G.I. Bill.)

Under the president’s order, all schools enrolled in VA’s Post-9/11 GI Bill program (approximately 6,000 institutions) will be encouraged—and all DoD Tuition Assistance participating institutions mandated—to improve transparency and provide documentation of tuition and fees, financial aid information, and details of student outcomes at the school – much like the Consumer Financial Protection Bureau’s (CFPB) proposed “Know Before You Owe” sheet. The order also restricts the recruiting practices of Institutions participating in veterans education benefit programs.

The president’s executive order seeks to improve the quality of services the DoD and VA provide students by developing a complaint system whereby the agency quickly responds to concerns about funding or support services. Media reports earlier this year revealed disturbing figures concerning VA administrative failures. Tens of thousands of veterans education benefits were stalled in processing – as many as 62,000 applicants in one branch alone. As a result, tuition payments hadn’t reached many schools and housing stipends were delayed for months in many cases.  The VA argued that during peak enrollment periods, it often experiences backlog. 

Separately, a new report from the Center for American Progress (CAP), “Easing the Transition from Combat to Classroom,” provides some previously unavailable information on veterans education benefits that also helps to illuminate some of the delays in processing mentioned above. Largely thanks to the passage of the Post-9/11 GI Bill, VA has seen a dramatic increase in federal education funding in recent years commensurate with increasing numbers of veterans and major enrollment growth – 37 percent from 2009 to 2010.

But the administrative concerns that the president seeks to address in his executive order beg a larger question: What is the quality of VA oversight?

Though lawmakers funnel a significant amount of education benefits to veterans through the VA, limited access to information about those funds and programs mean veterans—and taxpayers—are often left in the dark. Public funds are spent with minimal information as to the success of federal efforts. The president’s order may shine a light on certain aspects of VA Post-9/11 GI Bill, but it may not go far enough to provide veterans what they were promised – access to equitable and high-quality education.  That’s going to require more oversight and regulation from the White House and Congress.

Issues:

Congress Kickstarts 2013 Appropriations Process, but Is Still Far from Completion

  • By
  • Clare McCann
May 3, 2012

Congress made some first moves last week toward approving a budget for fiscal year 2013, but it is still far from certain that legislators will even pass a budget this year or at least before the November elections. Both the House and Senate Appropriations Committees have now released their overall funding targets for fiscal year 2013, as well as appropriations subcommittee allocations.

Issues:

More Transparency Needed for Veterans Education Benefit Programs

  • By
  • Clare McCann
May 1, 2012

Every year the Department of Veterans Affairs (VA) directs a huge chunk of federal spending to higher education for veterans education benefits — more than $1.7 billion in the 2009-10 school year alone. But VA education benefits are often overlooked in education policy discussions. This is largely because of a lack of transparency in the VA budget. The agency doesn’t make good accounting information readily available. On top of these opaque budgeting practices, little information is available on the effectiveness of the current iteration of the GI Bill, how schools spend that money, or the degree to which veterans actually benefit from these programs. That’s starting to change. But policymakers can do more.

President Obama issued an executive order last week to crack down on how schools use VA and Department of Defense (DoD) funds. (Benefits for veterans are provided through a slew of VA programs, most notably the Post-9/11 GI Bill. Active duty servicemembers receive funding through the Department of Defense’s Tuition Assistance Program, rather than through the G.I. Bill.)

Under the president’s order, all schools enrolled in VA’s Post-9/11 GI Bill program (approximately 6,000 institutions) will be encouraged—and all DoD Tuition Assistance participating institutions mandated—to improve transparency and provide documentation of tuition and fees, financial aid information, and details of student outcomes at the school – much like the Consumer Financial Protection Bureau’s (CFPB) proposed “Know Before You Owe” sheet. The order also restricts the recruiting practices of Institutions participating in veterans education benefit programs.

The president’s executive order seeks to improve the quality of services the DoD and VA provide students by developing a complaint system whereby the agency quickly responds to concerns about funding or support services. Media reports earlier this year revealed disturbing figures concerning VA administrative failures. Tens of thousands of veterans education benefits were stalled in processing – as many as 62,000 applicants in one branch alone. As a result, tuition payments hadn’t reached many schools and housing stipends were delayed for months in many cases.  The VA argued that during peak enrollment periods, it often experiences backlog. 

Separately, a new report from the Center for American Progress (CAP), “Easing the Transition from Combat to Classroom,” provides some previously unavailable information on veterans education benefits that also helps to illuminate some of the delays in processing mentioned above. Largely thanks to the passage of the Post-9/11 GI Bill, VA has seen a dramatic increase in federal education funding in recent years commensurate with increasing numbers of veterans and major enrollment growth – 37 percent from 2009 to 2010.

But the administrative concerns that the president seeks to address in his executive order beg a larger question: What is the quality of VA oversight?

Though lawmakers funnel a significant amount of education benefits to veterans through the VA, limited access to information about those funds and programs mean veterans—and taxpayers—are often left in the dark. Public funds are spent with minimal information as to the success of federal efforts. The president’s order may shine a light on certain aspects of VA Post-9/11 GI Bill, but it may not go far enough to provide veterans what they were promised – access to equitable and high-quality education.  That’s going to require more oversight and regulation from the White House and Congress.

Issues:

Friday News Roundup: Week of April 23-27

  • By
  • Clare McCann
April 27, 2012

Fewer students mean less Washington state money for schools

More layoffs for massive California school district

Nebraska college system raises tuition 3.5 percent

Nevada legislators question higher education funding formula

Fewer students mean less Washington state money for schools
Though Washington state lawmakers passed a fiscal year 2013 budget that does not include any new cuts to K-12 education, lower-than-anticipated growth in student enrollment means that overall spending levels for public schools will decline by $61 million from 2012 levels. The most recent estimate of student enrollment for 2013 – over 1 million students – dropped by about 10,000 compared to previous estimates. In total, the fiscal year 2013 budget includes $6.8 billion for K-12 school districts; but some districts will receive less state funding than they did in 2012 due to declining enrollment. The enrollment shortfall, one official said, is caused by minimal population influx due to stagnant statewide employment numbers and fewer families moving from private to public schools because of the recovering economy. Although districts allegedly offered financial incentives for parents to enroll their students – thereby guaranteeing more funding for the district – the legislature passed a ban on those practices last year. Predictions from the state suggest that enrollment may increase before the start of the 2014 school year. More here…

More layoffs for massive California school district
The board of the second-largest school district in California, San Diego Unified School District, this week voted to send layoff notices to about 2,600 credentialed and non-teaching staff members contingent on whether the state provides it with additional funds. The district is facing a $122 million deficit for fiscal year 2013; the layoffs would be effective in the 2012-2013 school year. San Diego Unified has already laid off about 2,000 employees since 2008, and anemic state revenue and diminishing state aid to the district are forcing the district to make further cuts to fill this new shortfall. Other districts in the state are also facing shortfalls. However, Governor Jerry Brown’s state budget for fiscal year 2013 would close a $9.2 billion shortfall with cuts, as well as new tax revenue, provided voters approve the tax measure in November. If the tax measure fails, schools and community colleges will face nearly $5 billion in budget cuts on top of those already laid out in the state budget, and the cuts will hit mid-school year, complicating districts’ budgets. More here…

Nebraska college system raises tuition 3.5 percent
This week, the Nebraska State College Board of Trustees voted to raise tuition by 3.5 percent in the 2012-2013 school year at three colleges. The schools affected are Chadron State College, Peru State College, and Wayne State College. The tuition increase means that in-state students will pay an additional $4.75 per credit hour, a total of $71 for a full-time student’s 15-credit semester. The Board also voted to increase online tuition from $10 to $12.50 per credit hour, and established an across-the-board tuition rate – $50 per credit hour – for dual enrollment classes in which high school students enroll in college courses. Graduate student’s credit hour costs will also increase by $6 per hour per the Board’s vote. In all, the three schools enroll about 9,000 students annually. More here…

Nevada legislators question higher education funding formula
Nevada’s chancellor of higher education Dan Klaich testified this week before a legislative committee on his own proposal to rewrite the state’s funding formula for public colleges and universities. But according to the Committee to Study the Funding of Higher Education, the proposal treats each institution’s course completion rates equally regardless of the grades students receive; provides equal funding for courses at universities and community colleges; and cuts rural schools’ budgets severely enough to threaten their ability to stay open. The current funding formula utilizes enrollment and growth figures to divide funding, but the new proposal would also incorporate successful outcomes – course completions, albeit without regard for the grades students earn in the course. The formula would also allow institutions to keep any tuition and fee revenue they collect from their students, rather than redistribute it across campuses as it is now. The committee also voted to create two subcommittees that will review higher education funding in Nevada. More here…

Issues:

2013 Appropriations Process Underway, but Far from Complete

  • By
  • Clare McCann
April 26, 2012

Washington is gearing up for the fiscal year 2013 appropriations process, and lawmakers face major obstacles to completing the process before the new fiscal year begins on October 1, 2012. Republicans in the House want lower overall spending limits than those they passed in the debt ceiling agreement reached less than a year ago. And for their part, Senate Democrats have proposed a slightly smaller budget for the Labor-Health and Human Services-Education Appropriations Subcommittee to divide across the agencies under its jurisdiction. Nearly all federal education programs are funded one year at time through the annual appropriations process, and the developments of the past few weeks will affect the final outcome.

The Budget Control Act of 2011 (the debt ceiling agreement) that Congress passed in August 2011 set limits for discretionary spending (subject to annual appropriations) at $1.047 trillion for fiscal year 2013. The Senate has already skipped the traditional budget resolution process and agreed to stick to that limit. But the Republican-controlled House passed its own budget resolution with a spending limit (called a 302(a) allocation) of $1.028 trillion. That is $19 billion below the amount signed into law last summer. That leaves an already-substantial gap between the House and Senate as they work to reach an agreement.

Congress took another key step in the fiscal year 2013 appropriations process starting last week when the Senate Appropriations Committee released its 302(b) subcommittee allocations. The subcommittee allocations divide the 302(a) allocation – the spending limit applied to the entire appropriations process – across 12 subcommittees.  The Senate would provide $157.7 billion to the Labor-Health and Human Services-Education subcommittee. That is $3 million below the subcommittee’s fiscal year 2012 allocation of $158.0 billion.

Although the 302(b)s don’t specify how individual programs will be funded, or even the total amount that the Department of Education will receive, they demonstrate the direction in which Congress may move throughout the appropriations process.

Then yesterday, the House Appropriations Committee passed its 302(b) subcommittee allocations for 2013. The House 302(b) allocation to the Labor-HHS-Education subcommittee is $150.0 billion, $7.7 billion below the Senate’s allocation. However, the House 302(b) actually provides nearly $11 billion more to the Labor-HHS-Education subcommittee than House Republicans first proposed for last year’s fiscal year 2012 allocation ($139.2 billion). Note that enacted funding for programs covered by the bill was higher, $156.8 billion, after the House and Senate negotiated a final bill.

FY13%20302b%20Suballocations.png

The fiscal year 2013 process is especially complicated by the fact that automatically-triggered cuts (called ‘sequestration’) are set to reduce the fiscal year 2013 appropriations by $94 billion in January 2013 unless Congress passes and the president signs a law averting the cuts. So unless that happens, the spending limits outlined above are moot.

Keep in mind that the fiscal year 2013 budget process is nowhere near complete. Even after each chamber passes its 302(b) allocations, both must assemble and pass detailed appropriations bills and then reconcile the two to create a final bill.

This process has not gone smoothly in recent years and is unlikely to this year considering that sequestration looms. Given Congress’s preoccupation with the presidential election, not to mention members’ own elections, the president is unlikely to sign a budget into law before the start of the fiscal year on October 1 (more likely, it will come after the end of campaign season in November). In the meantime, another series of continuing resolutions may be in store.

Issues:

Substantial Obstacles Exist to Implementing New Community College Graduation Rate Measures

  • By
  • Clare McCann
April 24, 2012

The U.S. Department of Education this month announced that it has developed a preliminary plan to increase reporting requirements for graduation rates at colleges and universities. The “Action Plan for Improving Measures of Postsecondary Success” was developed around input from the Committee on Measures of Student Success (CMSS), a committee appointed by the Department of Education as required by the passage of the Higher Education Opportunity Act of 2008. The pending regulations, which the Department is crafting both for two-year and four-year colleges, are intended to provide a fuller picture of college completion rates. But although the new graduation rates will pull more students under their umbrellas, schools may struggle to meet the data collection needs they trigger.

Community colleges particularly stand to benefit from the new regulations because part-time and transfer students, currently excluded from completion rate calculations, make up a large portion of enrolled students. Returning students – those in degree- or certificate-granting programs who are not entering college for the first time – may also be counted in the new completion rates.

Under the current system by which schools report graduation rates to the Department of Education, the measure is limited to students who complete community college with a degree or certificate. The metric does not give community colleges any credit for students who transfer to four-year institutions, even though that fulfills a central goal of community colleges. Furthermore, schools are not necessarily required to report transfer-out rates, and those that do face difficulties caused by limited data or capacity to analyze existing data. Although the Integrated Postsecondary Education Data System (IPEDS) reports both graduation rates and transfer-out rates, it reports them separately.

The Department of Education’s plan, following Committee recommendations, will include a requirement that institutions incorporate both graduates in degree or certification programs and students who transfer to a four-year degree-granting institution in its calculations of college completion rates. CMSS asserted that a combined graduation and transfer-out rate such as that one would provide a clearer picture of a school’s success.  

The Committee also recommended that institutions of higher education collect additional data, like the number of students earning a degree or certification in their two-year program who subsequently transferred to a four-year institution, those who transferred without completing their two-year program, and those who transferred after completing a two-year program but without earning a degree. Though the data collection requirements would be onerous, the information would provide a far more comprehensive view of schools’ outcomes. However, the Department did not adopt this recommendation in its plan. 

Recalculating graduation rates to include transfer-out students could bring community colleges much closer to President Obama’s goal—laid out in the American Graduation Initiative—of increasing the number of community college graduates by 5 million by 2020. According to the American Association of Community Colleges, counting those transfer students would increase the completion rate from 22 percent to 40 percent. (The Federal Education Budget Project, Ed Money Watch’s parent initiative, collects and displays the graduation and transfer-out rates for every community college that reports such data in its database.)

But perhaps the biggest hurdle for the new regulations is not defining them, but implementing them. To combat these challenges, the Committee recommended that the Department continue to incentivize states to create longitudinal data systems that track students’ postsecondary outcomes. And the Department’s action plan does, indeed, include references to the Statewide Longitudinal Data Systems grant program. It promises to help schools build capacity to collect and disseminate data.

Schools face significant challenges to implementation because there is no national system in place to track students’ transfers – something that would require substantial coordination across states and institutions. Even though some states might possess the capacity to track students within their own state, tracking that student across state lines becomes nearly impossible.

So the Committee also recommended that the Department establish a national data system requiring any school that administers federal student aid to collect and report to it comprehensive data on students (including those who transfer between schools). But such a system is explicitly disallowed under the Higher Education Opportunity Act of 2008 following outcries from privacy advocates and institutions wary of more extensive reporting requirements.

Although the Department has not yet issued a timeline on when it will start to implement the “Action Plan,” it remains to be seen whether schools will have the resources, time, and capacity to achieve the new standards without significant changes to their data collection and reporting systems. That would certainly be a costly endeavor in the current period of fiscal austerity. And without the ability to track students as they move around the country and across institutions, students—particularly those at the highest risk for jumping in and out of schools—could slip through the cracks.

The Federal Education Budget Project maintains the most comprehensive and easy-to-use database available on education funding, student demographics, and outcomes for every school district and institution of higher education in the country.Graduation rates and other data points for two- and four-year institutions are available from the Federal Education Budget Project here.

Issues:

Substantial Obstacles Exist to Implementing New Community College Graduation Rate Measures

  • By
  • Clare McCann
April 24, 2012

The U.S. Department of Education this month announced that it has developed a preliminary plan to increase reporting requirements for graduation rates at colleges and universities. The “Action Plan for Improving Measures of Postsecondary Success” was developed around input from the Committee on Measures of Student Success (CMSS), a committee appointed by the Department of Education as required by the passage of the Higher Education Opportunity Act of 2008. The pending regulations, which the Department is crafting both for two-year and four-year colleges, are intended to provide a fuller picture of college completion rates. But although the new graduation rates will pull more students under their umbrellas, schools may struggle to meet the data collection needs they trigger.

Community colleges particularly stand to benefit from the new regulations because part-time and transfer students, currently excluded from completion rate calculations, make up a large portion of enrolled students. Returning students – those in degree- or certificate-granting programs who are not entering college for the first time – may also be counted in the new completion rates.

Under the current system by which schools report graduation rates to the Department of Education, the measure is limited to students who complete community college with a degree or certificate. The metric does not give community colleges any credit for students who transfer to four-year institutions, even though that fulfills a central goal of community colleges. Furthermore, schools are not necessarily required to report transfer-out rates, and those that do face difficulties caused by limited data or capacity to analyze existing data. Although the Integrated Postsecondary Education Data System (IPEDS) reports both graduation rates and transfer-out rates, it reports them separately.

The Department of Education’s plan, following Committee recommendations, will include a requirement that institutions incorporate both graduates in degree or certification programs and students who transfer to a four-year degree-granting institution in its calculations of college completion rates. CMSS asserted that a combined graduation and transfer-out rate such as that one would provide a clearer picture of a school’s success.  

The Committee also recommended that institutions of higher education collect additional data, like the number of students earning a degree or certification in their two-year program who subsequently transferred to a four-year institution, those who transferred without completing their two-year program, and those who transferred after completing a two-year program but without earning a degree. Though the data collection requirements would be onerous, the information would provide a far more comprehensive view of schools’ outcomes. However, the Department did not adopt this recommendation in its plan. 

Recalculating graduation rates to include transfer-out students could bring community colleges much closer to President Obama’s goal—laid out in the American Graduation Initiative—of increasing the number of community college graduates by 5 million by 2020. According to the American Association of Community Colleges, counting those transfer students would increase the completion rate from 22 percent to 40 percent. (The Federal Education Budget Project, Ed Money Watch’s parent initiative, collects and displays the graduation and transfer-out rates for every community college that reports such data in its database.)

But perhaps the biggest hurdle for the new regulations is not defining them, but implementing them. To combat these challenges, the Committee recommended that the Department continue to incentivize states to create longitudinal data systems that track students’ postsecondary outcomes. And the Department’s action plan does, indeed, include references to the Statewide Longitudinal Data Systems grant program. It promises to help schools build capacity to collect and disseminate data.

Schools face significant challenges to implementation because there is no national system in place to track students’ transfers – something that would require substantial coordination across states and institutions. Even though some states might possess the capacity to track students within their own state, tracking that student across state lines becomes nearly impossible.

So the Committee also recommended that the Department establish a national data system requiring any school that administers federal student aid to collect and report to it comprehensive data on students (including those who transfer between schools). But such a system is explicitly disallowed under the Higher Education Opportunity Act of 2008 following outcries from privacy advocates and institutions wary of more extensive reporting requirements.

Although the Department has not yet issued a timeline on when it will start to implement the “Action Plan,” it remains to be seen whether schools will have the resources, time, and capacity to achieve the new standards without significant changes to their data collection and reporting systems. That would certainly be a costly endeavor in the current period of fiscal austerity. And without the ability to track students as they move around the country and across institutions, students—particularly those at the highest risk for jumping in and out of schools—could slip through the cracks.

The Federal Education Budget Project maintains the most comprehensive and easy-to-use database available on education funding, student demographics, and outcomes for every school district and institution of higher education in the country.Graduation rates and other data points for two- and four-year institutions are available from the Federal Education Budget Project here.

Issues:

Friday News Roundup: Week of April 16-20

  • By
  • Clare McCann
April 20, 2012

Florida Gov. Rick Scott signs $70 billion state budget bill

Mississippi college tuition could grow by 14 percent

Idaho state Board of Education OKs tuition hikes

Georgia Gov. Nathan Deal signs education bills that tweak state funding

Florida Gov. Rick Scott signs $70 billion state budget bill
Florida’s fiscal year 2013 budget, signed into law this week, adds an additional $1 billion for public K-12 schools over 2012 levels. This $1 billion will go towards covering the cost of over 30,000 new students and to fill the shortfall caused by reduced local revenue and the expiration of the ARRA (stimulus) funds. Despite the additional funds, K-12 education funding levels will still be $300 million less than 2012 levels, and much lower than 2008 levels – the state has cut education spending each year since then.  In addition to increases in K-12 education funding, though, the state cuts higher education funding for colleges and universities by $300 million from 2012 levels. The budget increases tuition rates at public postsecondary institutions by 5 percent from the 2011-2012 school year to help cover those cuts. According to Scott’s budget, schools will independently increase tuition by the maximum allowable amount – 15 percent – while maintaining the per-credit fees currently in place. Of concern is that Scott simultaneously denounces any tuition hike over 5 percent and at the same time assumes a 15 percent increase in his budget. More here…

Mississippi college tuition could grow by 14 percent
The Mississippi College Board held a preliminary vote this week to approve a 14 percent tuition hike for public colleges and universities over the next two years. If the bill passes, in 2013 students will pay about $5,800 (an average of $383 over 2012 levels), and approximately $6,200 in 2014.  Average out-of-state tuition will also increase by $1,139 in 2013. These increases are on top of a 7 percent tuition hike in the 2011-2012 school year. Schools say the tuition hike is necessary to make up for declining state funding. Additionally, beginning in fiscal year 2013,  a new law takes effect that will allow colleges or universities to waive out-of-state tuition in favor of in-state tuition for students outside Mississippi, potentially reducing schools’ tuition revenue. The Board’s final vote will be May 7. More here…

Idaho state Board of Education OKs tuition hikes
Idaho’s state Board of Education this week approved tuition increases for public colleges and universities, though the hikes were less than have been approved for schools in recent years. Tuition will be increased even though the state’s fiscal year 2013 state budget provides an 8.6 percent increase for higher education over 2012 levels. Increases for all but two of the schools – University of Idaho in Moscow and Boise State University – were unanimous, and those two passed on a 5-2 vote. Board members say the increases are needed because schools are still recovering from previous years’ spending cuts and struggling to cover the costs of educating undergraduate students. Board members also noted that the schools still provide a good value to students relative to schools with similar tuition levels. Furthermore, school officials said that they will need these funds to retain faculty and provide a variety of course offerings to students. More here…

Georgia Gov. Nathan Deal signs education bills that tweak state funding
Georgia Governor Nathan Deal this week signed a series of bills into law that will tweak the Quality Basic Education funding formula that has been in place for the last 20 years. According to Deal, the goal of the new system is ultimately to base funding levels on student achievement rather than on school enrollments, though not all of the bills dealt with this issue. The legislative changes were largely based on the preliminary recommendations of an education finance commission appointed last summer. One measure passed by the legislature will have schools evaluated by student performance, a provision also included in the state’s No Child Left Behind waiver application. Another bill signed into law will increase funding for the highest-poverty school districts. Although the legislature approved some of the commission’s recommendations, it did not approve one recommendation to repeal a law that requires districts to spend at least 65 percent of their funds on classroom expenses including teacher salaries and curriculum materials. The commission’s final recommendations will be submitted by this September. More here…

Issues:

New Department of Education Tool Maps Early Learning Grant Winners

  • By
  • Clare McCann
April 19, 2012

Several U.S. Department of Education programs provide discretionary funds to states, school districts and other organizations to create or expand early learning opportunities across the country. Now a new tool from the department helps to visualize the winners of grants from those programs.

Issues:

Early Ed: Report Examines Rigorous Early Learning Policies for Illinois English Language Learners

April 16, 2012

Young children who are English language learners face added obstacles to acquiring basic literacy skills. With about a quarter of the under-18 population either themselves immigrants or with at least one foreign-born parent, this challenge is a rapidly growing one for early caregivers and teachers. A new report from the New America Foundation’s Maggie Severns, “Starting Early with English Language Learners: First Lessons from Illinois,” looks at the complex policy challenges states face in serving a growing population of young English language learners.

Programs:

Report Finds States Lack Oversight of Small Family Child Care Homes

  • By
  • Clare McCann
April 16, 2012

A report released last month, “Leaving Children to Chance,” details a deficiency in child care standards: child care programs based in homes are often insufficiently regulated by states.

Issues:

Podcast: Report Examines Rigorous Early Learning Policies for Illinois English Language Learners

  • By
  • Clare McCann
April 16, 2012
Publication Image

Young children who are English language learners face added obstacles to acquiring basic literacy skills. With about a quarter of the under-18 population either themselves immigrants or with at least one foreign-born parent, this challenge is a rapidly growing one for early caregivers and teachers. A new report from the New America Foundation’s Maggie Severns, “Starting Early with English Language Learners: First Lessons from Illinois,” looks at the complex policy challenges states face in serving a growing population of young English language learners. It uses Illinois, a state with rigorous new pre-K standards for English language learners, as a case study.

Issues:

Friday News Roundup: Week of April 9-13

  • By
  • Clare McCann
April 13, 2012

Legislators plan lawsuit to trim aid to shrinking Pennsylvania schools

California teachers’ pension faces $65 billion shortfall

Missouri Senate panel endorses roughly $24 billion budget plan

Idaho State University, University of Idaho to seek smaller tuition increases

Legislators plan lawsuit to trim aid to shrinking Pennsylvania schools
Ten Pennsylvania state legislators are planning to file a lawsuit in Commonwealth Court to end a section of the state’s education finance formula that they argue is unconstitutional.  The “hold harmless” provision guarantees districts at least the same base state funding as they received the previous year, regardless of enrollment shifts.  By overturning the provision, the lawmakers hope to win extra money for fast-growing districts and reimburse them for the funds they would have earned had the provision not been implemented in 1991.  According to one legislator involved with the case, approximately three-quarters of the state’s school districts would stand to lose funds if the provision is overturned.  Because so many lawmakers’ constituents would be negatively affected, he said, a political solution would be difficult to reach. More here…

California teachers’ pension faces $65 billion shortfall
Figures released this week by the California State Teachers’ Retirement System (CalSTRS) show that the pension fund contains only 69 percent of what it needs to cover the cost of the benefits owed over the next thirty years.  To put itself in a secure financial position, CalSTRS deputy chief executive Ed Derman said, the program would need to increase its cash intake by 13 percent over the next three decades – something that would require legislative approval.  This will be problematic, given that lawmakers are currently preparing to debate the governor’s proposal to cut state pension contributions.  The California teachers’ pension system is the second-biggest public pension fund in the country, and its thirty-year shortfall could top $64 billion. More here…

Missouri Senate panel endorses roughly $24 billion budget plan
A fiscal year 2013 budget approved by the Missouri State Senate Appropriations Committee this week totals $24 billion, about $86 million less than the state House approved in its version of the budget.  The plan would cut money for state pre-kindergarten grants and child care subsidies for low-income parents. However, state funding for public institutions of higher education would remain unchanged at fiscal year 2012 levels, as was the case in the House despite a proposal from the governor to cut funding for higher education by 15 percent.  Additionally, public K-12 schools would receive a slight increase in funding – $5 million over 2012 levels. The budget plan is now subject to a vote by the full Senate, which must be completed by May 11, according to law.  More here…

Idaho State University, University of Idaho to seek smaller tuition increases
Idaho State University is set to reveal its lowest tuition increase request in over ten years at an Idaho State Board of Education meeting next week.  Over the past ten years, ISU’s tuition increases have ranged from 4.75 percent in 2006 to 9 percent in 2010.  In 2013, however, the institution is requesting a 4.73 percent increase over current 2012 academic year tuition levels.  The University of Idaho is also recommending a smaller tuition increase – 6.1 percent – than it has in recent years.  This increase would provide a 2 percent salary bump for system employees.  The Idaho legislature voted earlier this year to lift state spending on higher education, providing more than $18 million in additional state funds for public colleges and universities in fiscal year 2013 as it did in 2012. More here…

Issues:

New Legislation Would Attempt to Protect Students from Unnecessary Debt

  • By
  • Clare McCann
April 12, 2012

We have written plenty here at Higher Ed Watch about federal student loan programs. But increasingly, students are borrowing from private lenders to fund their educations, often at less-favorable terms than those for which they might otherwise be eligible. A new piece of legislation introduced in the Senate, the Know Before You Owe Private Student Loan Act (S. 2280), would help students avoid unnecessary or costly private borrowing.

The bill, introduced by Senators Dick Durbin (D-IL) and Tom Harkin (D-IA) late last month, would place added responsibility on colleges and universities and private lenders to help students avoid unnecessary (and generally more expensive) private loans and instead take advantage of federal loans. Private student loans often have variable interest rates (in some cases capped at 18 percent), and lack benefits that come standard with federal loans like deferment, forbearance, and income-based repayment.

The current rules are meant to inform borrowers that they could be eligible for more federal loans and may not have to take out private loans. Congress and the U.S. Department of Education put the regulations in place in 2010. They require only that students or borrowers “self-certify” – sign a form that indicates the student’s expected cost of attendance.

The Senate bill aims to bolster that process. Under the proposed legislation, private lenders would be required to obtain confirmation of students’ enrollment statuses and their costs of attendance (minus Pell Grant awards, other federal grants and loans, and institutional aid) from the institutions of higher education before making loans to students. (Presumably this would introduce a check against students over-borrowing unnecessarily.)

Lenders would then be required to provide quarterly updates to borrowers detailing the status of their loans. The letter would include the amount of interest the borrower had accrued but not paid off, information on growth in the student’s debt since the last quarterly statement was issued, and the current interest rate charged on the loan (most private student loans offer variable interest rates, like those on credit cards, rather than the fixed rates that come standard on federal loans). Private lenders would also be required to report information on their loans to the Consumer Financial Protection Bureau (CFPB). The specifics of that reporting would be set by the CFPB.

As for colleges and universities, they would have to confirm a student’s enrollment status and costs of attendance before the lender could make a loan, and they would be required to ensure students are familiar with federal loan options before taking out a private loan. In this role, institutions would have to check that the student had first applied for all available federal student aid, inform the student of any remaining federal options and how accepting a private loan could impact his eligibility for federal options in the future, and explain to the borrower that they can shop around among private lenders.

These consumer protections are particularly relevant given recent concerns about students taking on unmanageable debt loads. And as we’ve written on our sister blog Ed Money Watch, private loan borrowing occurs most at expensive for-profit schools, where student loan defaults are highest. What is more, fewer than half – only 46 percent – of private loan borrowers in undergraduate programs had exhausted their federal Stafford loan maximum, demonstrating that students are missing opportunities to borrow under the more-favorable federal terms available to them. 

In other words, students could benefit from more information about federal and private student loans. The Know Before You Owe Private Student Loan Act might just do the trick.

Issues:

Preschool Access and Quality Decline in Wake of Recession

  • By
  • Clare McCann
April 10, 2012

The 2011 school year brought a new first for state pre-kindergarten programs: Arizona became the first state to reverse course and entirely eliminate its pre-K program. Though that was the only state to defund pre-K altogether, state pre-K funding across the country declined from 2010 levels by $145 per child on average. Those and other metrics of state pre-K programs are detailed in the National Institute for Early Education Research’s (NIEER) update to its annual yearbook, “The State of Preschool 2011,” released today.

Issues:

Early Learning Challenge Winners Stalled in 2011 State Pre-K Funding

  • By
  • Clare McCann
April 10, 2012

With the latest “State of Preschool” report out today, we were interested in the states highlighted in that report compared to the winners ofthe Race to the Top – Early Learning Challenge (RTT-ELC) fared.

Issues:

House Democrats’ Data on Student Loan Interest Rates Misrepresent the Problem

  • By
  • Clare McCann
April 6, 2012

Democrats on the House Education and the Workforce Committee this week released a document detailing the increased costs to borrowers if interest rates on Subsidized Stafford loans increase from 3.4 to 6.8 percent, as they are scheduled to for loans issued as on or after July 1st, 2012. The post provides some big numbers, stating that “more than 7 million students will incur an additional $6.3 billion in repayment costs for the 2012-2013 academic school year if student loan interest rates double on July 1.” But the committee staff’s claim buries the real story: Whatever the vitriol surrounding the interest rate number in Congress, individual students are not likely to notice much difference in their monthly payments.

There wasn’t much detail accompanying the committee document, so Ed Money Watch has tried to recreate the Democrats’ calculations.

Click here to read the full post on Ed Money Watch...

Issues:

Friday News Roundup: Week of April 2-6

  • By
  • Clare McCann
April 6, 2012

Montana settlement in funding lawsuit means $4.6 million more for public schools

$30 million ‘bullet’ targets New York aid gap

Penn State students, alumni rally against proposed 30 percent cut in state support

Dayton vetoes GOP bill on Minnesota school IOUs

Montana settlement in funding lawsuit means $4.6 million more for public schools
A lawsuit settled this week between the Montana Quality Education Coalition and the state of Montana yielded $4.6 million in additional funding for public K-12 schools for the 2013 school year.  Another lawsuit, filed in 2002 by the Coalition, successfully argued that the state’s financing system was unconstitutional because it did not adequately fund public schools. In 2011, the state legislature passed a bill to increase public K-12 school funding for the 2013 school year by 2.4 percent, or around $3 million. But a political gimmick tied the funding to another bill that would move earmarked funds to state general funds, and when Governor Brian Schweitzer (D) vetoed that bill, the increase for schools was automatically lowered to 1.6 percent. The Coalition filed a lawsuit last November, again challenging school finance in the state. The state Attorney General reached a settlement this week to increase school funding by the full 2.4%. More here…

$30 million ‘bullet’ targets New York aid gap
New York’s state budget plan for fiscal year 2013 includes about $30 million in funding for public K-12 education, to be divvied up by lawmakers over the next several weeks as a way to fill in school district funding gaps.  The funds, which some argue are equivalent to earmarks because legislators use the money as a slush fund to prioritize funds for some districts without any application process, will provide money to districts above and beyond the “foundation” formula.  Foundation funding for fiscal year 2013 will total more than $15 billion, a $415 million increase over fiscal year 2012 levels.  The bullet aid is distributed between the Assembly and the Senate for allocation; the Senate receives $20.1 million, while the Assembly gets $9.1 million.  This year, for the first time, lawmakers are required to specify in legislation the recipients of the funds, and the resolution will have to pass both chambers. More here…

Penn State students, alumni rally against proposed 30 percent cut in state support
Penn State Capital Day, a lobbying effort in Harrisburg for Penn State students and alumni, kicked off this week with a rally on the steps of the Capitol Rotunda.  Participants were protesting Governor Tom Corbett’s (R) proposed 30 percent cut to the Pennsylvania State University’s state budget appropriation in fiscal year 2013.  The cut would reduce state funding for the university by $64.2 million from fiscal year 2012 levels, leaving its total state appropriation at about $150 million.  In 2012, the university’s appropriation was cut by 20 percent from fiscal year 2011 levels.  Corbett’s fiscal year 2013 budget would cut funding for all 14 of the state’s universities by an overall average of 20 percent. More here…

Dayton vetoes GOP bill on Minnesota school IOUs
The state of Minnesota owes its public K-12 schools more than $2 billion because it slowed the pace of scheduled back payments to them in an effort to balance the budget.  The state is expected to pay $315 million of that total this year thanks to higher-than-anticipated state revenue projections.  Governor Mark Dayton this week vetoed a Republican proposal that would have sped up the payments, adding another $430 million for public schools this year out of the state’s reserves. Dayton argued that the bill would place the state back in financial peril and could force it in the future to balance the budget by borrowing from banks.  An alternative proposal from the governor’s Democratic-Farmer-Labor (DFL) political party would end some tax breaks for businesses and redirect the savings to schools. More here…

Issues:

House Democrats’ Data on Student Loan Interest Rates Misrepresent the Problem

  • By
  • Clare McCann
April 5, 2012

Democrats on the House Education and the Workforce Committee this week released a document detailing the increased costs to borrowers if interest rates on Subsidized Stafford loans increase from 3.4 to 6.8 percent, as they are scheduled to for loans issued as on or after July 1st, 2012. The post provides some big numbers, stating that “more than 7 million students will incur an additional $6.3 billion in repayment costs for the 2012-2013 academic school year if student loan interest rates double on July 1.” But the committee staff’s claim buries the real story: Whatever the vitriol surrounding the interest rate number in Congress, individual students are not likely to notice much difference in their monthly payments.

There wasn’t much detail accompanying the committee document, so Ed Money Watch has tried to recreate the Democrats’ calculations.

Because we don’t have access to student loan recipients and loan volume data for 2013 (the data the committee used) we relied on the Department of Education data on Subsidized Stafford loans for the 2011 award year, the most recent year for which data are available. This means that our numbers are slightly different than the committee’s numbers.  We collapsed the data to get the total number of loan recipients and total loan volume originated by state (not for the state in which the borrower lives, but for the state in which the institution is located) and calculated the average loan per recipient in each state.

Next we used the Department of Education’s standard loan repayment calculator to determine the repayment period for each state, given its average loan size. Based on that repayment period, which ranged from 77 to 120 months, and accounting for the minimum $50 payment requirement set by the Department, we used an amortization calculator to measure the total interest paid on the average size loan in each state under both the 6.8 and 3.4 percent interest rates and calculated the difference between the two. It is important to note, that in most states, loans at the 6.8 percent interest rate had  longer repayment periods than loans at the 3.4 percent interest rate.

We found that the difference in student interest payments varied by state depending on the average size of the loans.  In Indiana, where the average loan size for 2011 was relatively low at $3,924, students would see an average increase in interest costs of about $772 over the life of the loan.  In Pennsylvania, where students had an average loan size of about $4,509, interest payments would increase by just over $1,000.

These numbers may sound large, but there is a bit of an illusion because the figures condense 10 years of future repayments into one number. The impact on individual borrowers is far less significant when measured on a monthly basis.

In fact, according to our calculations, students’ minimum monthly payments would increase by, at most, about $9. To calculate this figure, we calculated the monthly payment on an average loan at 3.4 percent interest over the repayment period specified by the Department of Education to reach a $50 payment. Then we calculated the monthly payment for the same loan at 6.8 percent within the same repayment period. In states with high average loan sizes, like Illinois ($5,113), the $50 monthly payments would jump to $59 when the interest rate doubles but the term length is kept the same. States with smaller average loans (for example, South Carolina at $4,103) would see monthly payments increase from the minimum $50 to about $56. The national average would see students pay about $7 more a month over the same repayment period.

Another caveat: The 3.4 percent interest rate applies only to undergraduates, but we are unable to determine the total loan volume only for undergraduate students. It appears the House Committee did not break out the undergraduate data either, which would significantly overstate both the numbers of borrowers and the total loan volume – and therefore the combined increase in costs to borrowers of the interest rate change.

And there’s another factor that we don’t think the minority staff on the Committee took into consideration (though without their original data, it’s hard to say for sure): the time-value of money. The Committee has collapsed 10 years of future interest payments into one amount, but they have not discounted the future payments for the time-value of money. This exaggerates the real cost of the payments today. Put another way, the 1st and 120th monthly payments on a 10-year loan are not of equal value to the borrower today, even though the payment is fixed at $56.

To more fairly represent the additional cost of the 6.8 percent interest rate over the life of the loan in today’s dollars, Democratic committee staff should discount the future payments for the time-value of money.  Of course, had the Committee chosen to simply show the increase in the monthly payments (a smaller number) rather than the value of all future payments combined, the discounting issue would have been moot.  But the Committee can’t have it both ways.

We originally calculated that an average student at a school in Maine (a mid-range state in terms of loan size) would owe an additional $939 dollars in interest as a result of the increase to interest rates. After discounting the payments for the time-value of money, the net present value of those payments is just over $895. In California, where the average loan size was relatively high, students would pay an additional $965 discounting for the time-value of money, as opposed to $1,012 without accounting for the time-value of money.

The numbers the House Education and the Workforce Democrats released appear to be rooted in legitimate calculations. And there’s no denying that borrowers will pay more on their loans when rates go up. But the House Education and the Workforce Democrats probably overstate the story. Given that the state average increased cost of doubling the interest rate tops off at $9 a month per borrower, Congress and the President may not be taking on an issue as big as it first seems.

To see our calculations for all 50 states and the District of Columbia, click here.

Issues:
 
Syndicate content