Tuition & Student Loans

Don’t craft student loan policy based on Governor O’Malley’s experience

Posted on by Don Heller

Untitled-300x94Former Maryland Governor Martin O’Malley recently declared his candidacy for the Democratic nomination for president, challenging front-runner Hillary Rodham Clinton. Among his key proposals as a candidate are to offer students in public colleges and universities “debt-free college” and for states “to immediately freeze tuition rates.”

While these may sound like good ideas to address the rising price of college, what is concerning is that Governor O’Malley has evidently crafted these proposals based on his own experience with student loans. As The Washington Post recently wrote,

The proposition is deeply personal for O’Malley: Aides say he and his wife have already incurred $339,200 in loans to put the two eldest of their four children through universities. . . “Right now, student loan debt is holding us back — student by student, family by family, and as a nation, we have to do better,” O’Malley said during an event at Saint Anselm College in Manchester.

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Awarding financial aid to students earlier

Posted on by Don Heller

Untitled-221x150Grants and scholarships are critical for helping many students afford college. Data from the College Board show that the largest single grant program, the federal government’s Pell Grant program, awarded $33.7 billion to 9.2 million students in the 2013-14 academic year. Without the support of Pell Grants, millions of students across the country would not be able to enroll in college.

A limitation of Pell Grants for traditional students who are graduating from high school and contemplating attending college, like many other financial aid programs, is that most students do not find out about their eligibility for the grants until late in their senior year in high school. This is often too late for students to take the steps necessary to prepare themselves for college – including preparing academically, financially, and socially – to have an impact on their college going behavior.

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Why I won’t sign the petition to cancel all student debt

Posted on by Don Heller

Screen Shot 2016-05-25 at 9.42.01 AMAs I have written in the past, a lot of attention is currently being paid to the topic of student loan debt in the United States (a couple of representative posts can be found here and here). Earlier this year, President Obama proposed to make community college free for all students, motivated at least in part by concerns over the growing volume of student loan debt in the nation. With the 2016 presidential campaign starting to gear up, there are already indications that student loans will be an important topic of debate.

I recently received in my email inbox a request to sign a petition to “forgive all student loan debt” in the country. The email did not come from some fringe group that was an offshoot of the Occupy Movement that first started a few years ago, and included as one of its platforms the elimination of all student loan debt. The email came from the American Federation of Teachers, the second-largest teacher union in the country, representing over 1.6 million members. The AFT, in conjunction with other groups, is calling on President Obama and Congress to wipe out all of the existing $1.3 trillion in loan debt held by current and former college students in the nation.

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Candy, escort services, and college financing

Posted on by Don Heller
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Courtesy Wikipedia

Earlier this year, I wrote about the student at Duke University who reported she was paying for college by acting in pornographic movies. Her story received a lot of publicity, including much that decried the need for this woman to resort to a career in pornography to pay her tuition bills. As I asked at the time,

A telling story of the state of college affordability in the nation? Not at all. It is simply the story of the choices made by one young woman, and we should not attach any importance to what she has done.

This school year, a similar story is making the rounds, most prominently in an article in The Atlantic last fall, “How Sugar Daddies Are Financing College Education.” According to the story, a website called SeekingArrangement.com reports it has over 2 million women members (“Sugar Babies”) who join the site “where beautiful, successful people fuel mutually beneficial relationships” in order to meet “Sugar Daddies.” This might sound like any other dating website, albeit one for people who have a self-inflated image of themselves. But The Atlantic article alleges that this site differs from others in that the women there are looking to get paid for their relationship with the men on the site, or to put it more directly, they are offering escort or prostitution services. A follow-up article in The Atlantic this month highlights colleges and universities across the country that have a proportionally large number of women registered on the site. Other media have covered the phenomenon of sugar babies and sugar daddies as well.

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Free community college for all students: Not a good idea

Posted on by Don Heller
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Jessica Kourkounis, Getty Images

Earlier this month, President Obama began releasing previews of some important proposals he will be making in his State of the Union speech tonight. Included is the idea of providing the first two years of community college for free for all students in the country. While this may sound like an intriguing idea, in an op-ed on The Conversation website I explained why this isn’t the best use of federal funds.

A look inside federal higher education proposals

Posted on by Don Heller

kivaIn the last month, the Department of Education and President Obama have released two important proposals affecting higher education. The first, released by the department last month, was for the long-awaited college ratings plan that the president had first proposed 16 months earlier. This plan would evaluate over 6,000 colleges that participate in the government’s Title IV federal student aid grant and loan programs.

President Obama’s more recent policy idea was one he offered up January 9 in Knoxville, Tennessee, where he suggested that the first two years of community college be offered for free to all students in the country. Under the president’s plan, the costs would be covered through a federal-state partnership, where the federal government would pick up 75 percent of the tuition and participating states the remaining 25 percent.

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The Department of Education’s college ratings plan: Stay tuned

Posted on by Don Heller
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Jessica Kourkounis, Getty Images

The U.S. Department of Education has finally released the outline of its college ratings plan, 16 months after the idea was first proposed by President Barack Obama. When he first suggested the plan, he said, “Bottom line is this: We’ve got a crisis in terms of college affordability and student debt. … It is time to stop subsidizing schools that are not producing good results and reward schools that deliver for American students and our future.”

The plan – and it truly is just a plan, not a fully-formed program – focuses on many of the measures that department officials have been talking about over the ensuing period. This includes such metrics as average net price (after taking into account financial aid), the net price paid by students from families of different income levels, proportion of students receiving Pell Grants (the primary federal need-based grant program, an indicator of how many low- and moderate-income students a college enrolls), proportion of first-generation college students, graduation rates, and loan repayment rates.

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Missing the mark on “missing the mark”

Posted on by Don Heller

NY-times-logoThis week’s New York Times contained a piece by economics columnist Eduardo Porter titled “Why Aid for College is Missing the Mark.” In the article, Porter argues that the “Bennett Hypothesis” – the assertion first made 27 years ago by former Secretary of Education William Bennett that increasing federal subsidized loans leads to rises in tuition prices – is the primary culprit behind the well-documented increase in tuition prices across the country over the last few decades. As Porter puts it, “Nearly two decades later, it seems, he was broadly right. Indeed, [Bennett] didn’t know the half of it.” Powerful words, but the problem is that Porter is in large part wrong regarding what Secretary Bennett actually said, as well as in his interpretation of the current situation.

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A 0.000007 percent chance

Posted on by Don Heller 




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Hamilton Place Strategies




Student loans continue to be a popular topic in the media, with most of the stories (at least upon a quick glance) focusing on how terrible the growing volume of student loans is. A Google news search on one day for the phrase “student loan debt” turned up the following headlines among the top results:


    

  • Student debt threatens the safety net for elderly Americans
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  • Student loan and mortgage loan debt: A public health crisis
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  • Student loan debt and the homeownership dream
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  • Student loan debt is weighing college graduates down
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  • Student debt hurts more than your wallet
    • 



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Undermatching is overblown

				

			Posted on  by Don Heller		

			


	

		
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Troy Simon, a student at Bard College who was homeless as a child, is greeted by President Obama at a White House summit on college access in January (Chronicle of Higher Education)


The Chronicle of Higher Education website this morning had a feature article titled “The $6 Solution,” which focuses on a college access issue known as “undermatching.” Undermatching is the notion that some high-achieving students, usually those from low-income families, enroll in colleges that are less-selective in admissions and below their potential skill level. The reason undermatching matters, according to those who are researching the phenomenon, is because attending less-selective colleges generally lowers the odds that a low-income student will complete a college degree.


Even before this article in the Chronicle, undermatching had received quite a bit of publicity. A  front-page article on the phenomenon in The New York Times last March was followed by a piece in the Sunday Review section of the same paper a couple of weeks later. In January, President Obama held a White House Summit on college access, where undermatching was prominently featured (the photo above is from that summit).


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