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Archive for January, 2009

College financial aid system ‘in crisis’

Posted by gradefund on January 30, 2009

College financial aid system ‘in crisis’

http://www.usatoday.com/news/education/2009-01-24-financial-aid_N.htm

CHICAGO (AP) — Finding financial aid for college this year promises to be tougher than any final exam.

The quest for money that begins for students and parents every January has taken on new urgency in 2009 amid fears that loans and grants will be scarcer than in the past due to the recession.

“The financing system for college is in real crisis,” said Barmak Nassirian, associate executive director of the American Association of College Registrars and Admissions Officers. “Every one of the participants in the system is experiencing hardship — higher education institutions, states, aid donors and families all are cash-strapped.”

Federal student loans remain readily available — with some funding even increased recently by Congress. But the prospect that grants and scholarships may be cut at many schools, combined with the shrinking availability of private loans, has fueled widespread angst at a time when more people than ever are seeking help. Applications for federal aid for the current academic year already are running 10% above last year’s record pace, according to the Department of Education.

Savings held in Section 529 plans — the state-sponsored investment funds for college that are popular for their tax breaks — have been depleted by the worst bear market in decades and home equity values have plummeted. That has sapped two sources most tapped by parents to fund their children’s higher education. Colleges’ endowments have been similarly walloped.

Administrators at Ohio State University see no big immediate impact on aid from the economy but are concerned about what may happen over the longer term, said Bill Shkurti, chief financial officer. The school’s endowment has fallen by as much as 30% from $1.5 billion a year ago but accounts for just 2% of operating revenue, he said.

The University of North Carolina at Wilmington, with a much smaller enrollment and endowment, similarly has taken a hit. In a scenario likely to be repeated on many campuses, financial aid director Emily Bliss says the school is bracing for unpleasant conversations with parents about next year as it relies more on loans in its aid packages and eliminates some of the “free” money.

“Grants and scholarships won’t all come through,” she said. “It’s difficult for us to tell families that, because our heart is breaking for them knowing what they’re going through.”

Private student loans are especially hard hit. Last year, 60 private lenders provided $19 billion to students. Now, 39 of those have stopped lending to students and the remaining firms have made it harder to borrow, according to Finaid.org, a website that tracks the industry.

“The stress level is high,” said Rod Bugarin, financial aid adviser for the New York-based college consulting firm IvyWise.

Numerous revenue-short states are likely to consider cutting aid in one way or another, and public colleges and universities are expected to raise tuition — in some cases by double digit percentages — as they set rates for next year.

Scholarships from civic groups and local companies across the country also are likely to decline, Bugarin said, although it’s too early to know the extent.

What it all means is that families and college counselors are having to hold difficult conversations about reduced savings and the need to take on more debt and lower sights to focus on more affordable schools.

“There are no sure answers because we’re in new territory,” said Bruce Hammond, a Washington, D.C.-based college admissions consultant and co-author of “The Fiske Guide to Getting into the Right College.” “But students with high need and lesser credentials are going to have to brace themselves for less aid.”

Jean Kliphuis, 46, of Huntington, N.Y., is concerned about the tightening vise of college costs and how to pay for them as she studies aid prospects for daughter Katie, a high school senior who has applied to six schools. Jean is a librarian and her husband Tim is self-employed in the office equipment business. As middle-income parents of three children, their tab for college could be overwhelming if they didn’t do all their homework on aid options.

“There is money out there, but you have to jump through a lot of hoops to get it,” Kliphuis said. “So my husband and I are jumping through the hoops.”

The key to success in the “convoluted” financial aid process is good information, she said, and there’s lots of it available through schools’ aid offices and online at such sites as Collegeboard.com and Princetonreview.com.

Indeed, the news isn’t all bad. The federal government has authorized some $95 billion in grants, loans and work-study assistance to help almost 11 million students and their families pay for college this year, and its recent commitments mean that total will all but certainly be exceeded next year.

“It’s scary, but not as scary as people might think,” said Lauren Asher of the California-based Institute for College Access and Success, an independent nonprofit group.

Among the encouraging developments for parents and students:

• The government broadened student borrowing in the midst of the credit crunch, ensuring the continued flow of federal loans that families depend on ahead of costlier private ones. Among other changes, annual borrowing limits for unsubsidized Stafford loans, which students can take out regardless of income, were raised by $2,000 and parents can now defer repayment of federal loans until after their child leaves school.

Stimulus proposals that would give students more financial aid also are progressing through Congress.

“This certainly has been an unprecedented disruption in the student loan marketplace,” said Mark Kantrowitz, publisher of Finaid.org. “But Congress and the Department of Education have acted quickly to avert a crisis.”

• No school is known to have withdrawn pledged financial aid this academic year despite financial setbacks that have prompted them to make cuts elsewhere. A number of top institutions, from Harvard, Yale and Duke to smaller institutions with large endowments, announced expanded aid last year and have insisted they will stick to those commitments.

Aid can make a huge difference in affordability. The average list price of tuition and fees for the current academic year is $6,585 for in-state students at four-year public universities and $25,143 at private colleges, with some costing far more. But grants and tax breaks lower the average net price to about $2,900 at public universities and $14,900 at private schools, according to the College Board.

• Some students will benefit from the turmoil, especially at colleges with high tuitions and scarce resources.

“These places continue to jack it up,” Hammond said of tuition increases, “so if you can pay the full outrageous fee in this economy, as long as you can walk and chew gum you will be admitted. And if you’re pretty good — average, even — you might get a $10,000 merit scholarship.”

Admissions experts recommend considering a range of fallback options, from lower-cost public schools to community colleges or even waiting a year to save more money. And colleges and parents alike are hedging their bets on next year and beyond.

Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

 

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Posted in Alternative Payment, Financial Aid, Rising Tuition | 1 Comment »

Data Show College Endowments Loss Is Worst Drop Since ’70s

Posted by gradefund on January 30, 2009

Data Show College Endowments Loss Is Worst Drop Since ’70s

 

Published: January 26, 2009
The value of university endowments fell about 23 percent on average in the five months ended Nov. 30, according to two newly released reports.

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The steep declines are forcing colleges and universities across the country to contemplate wage freezes, layoffs and a halt to construction projects.

The drop found by the reports is the biggest in the value of college and university endowments since the mid-1970s, said John S. Griswold Jr., executive director of the Commonfund Institute, which manages money for educational institutions and other nonprofits.

“It’s been very sudden in some ways,” Mr. Griswold said. “There were people predicting the decline a year ago or more, but I don’t think anyone could claim to see the extent of this. These are unprecedented numbers.”

The reports, prepared for the National Association of College and University Business Officers by the financial services company TIAA-CREF and the Commonfund Institute, drew on data from 796 institutions for the 2008 fiscal year, which ended June 30, and on additional statistics gleaned from a follow-up survey with 435 for the period from July 1 to Nov. 30.

They found that while endowments gained in value by about 0.5 percent in the old fiscal year, they lost nearly a quarter of their worth in the subsequent five months, a period in which the financial markets sank.

“It’s a rolling contagion that hit us,” Mr. Griswold said.

The pain was spread among institutions large and small, private and public. When endowments were categorized by size, even the least affected — those worth more than $1 billion — were found to have lost an average of 20 percent. Those of $500 million to $1 billion saw the biggest decline, about 25 percent. Public institutions lost an average of 24 percent, private institutions 22 percent.

“Both public and private institutions are going to be very challenged, just in different directions,” said P. Brett Hammond, chief investment strategist of TIAA-CREF. “States are in trouble themselves, and the downturn in state support comes along with declines in investments. In the private sector, at the same time endowments have declined students need more help than ever.”

Cornell is facing a 10 percent budget shortfall for the current fiscal year because of a 27 percent decline in its endowment over the last six months, a drop in state financing and alumni giving, and students’ need for more financial aid, according to a report issued this week by the university’s president, David J. Skorton. To close the gap, the university plans to freeze campus construction and draw on $150 million in reserve cash and $35 million more from the endowment than was planned.

Syracuse University has already announced layoffs, and Dartmouth, whose endowment lost 18 percent of its value from July 1 to Dec. 31, has said they are inevitable.

“We continue to fund approximately 35 percent of the college-only operating budget through endowment distributions, and we do not have additional revenue sources that can replace this level of support,” Barry P. Scherr, Dartmouth’s provost, and Adam Keller, executive vice president, said in a statement issued last week.

“We anticipate that some of our endowment investments will continue to show losses,” they added, “and that many of our generous donors will be unable to give at the same levels for some time to come.”

Charles L. Schearer, president of the private Transylvania University in Lexington, Ky., said the endowment there, which finances about a quarter of the operating budget, had lost 28 percent of its value since June 2007. Transylvania has cut back on staff travel, declined to fill job vacancies, frozen overtime and halted all construction projects. The university is planning a major fund-raising push in the next year to help make up for the endowment losses.

“We’re going to have to capture some of that money back,” Dr. Schearer said in an interview. “We’re not looking at this as if there will be a rapid recovery. We’re anticipating a slow and gradual recovery.”

Sixty percent of the institutions responding to the follow-up survey said they did not expect to change the amount they draw from their endowments in the current fiscal year.

Mr. Griswold thinks that wise.

“People aren’t making snap decisions, decisions that seem based on a panic reaction,” he said. “That’s terrific. They should keep a steady hand on the helm.”

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Stimulus Plan Would Provide Flood of Aid to Education

Posted by gradefund on January 30, 2009

Stimulus Plan Would Provide Flood of Aid to Education

 

Published: January 27, 2009
WASHINGTON — The economic stimulus plan that Congress has scheduled for a vote on Wednesday would shower the nation’s school districts, child care centers and university campuses with $150 billion in new federal spending, a vast two-year investment that would more than double the Department of Education’s current budget.

The proposed emergency expenditures on nearly every realm of education, including school renovation, special education, Head Start and grants to needy college students, would amount to the largest increase in federal aid since Washington began to spend significantly on education after World War II.

Critics and supporters alike said that by its sheer scope, the measure could profoundly change the federal government’s role in education, which has traditionally been the responsibility of state and local government.

Responding in part to a plea from Democratic governors earlier this month, Congress allocated $79 billion to help states facing large fiscal shortfalls maintain government services, and especially to avoid cuts to education programs, from pre-kindergarten through higher education.

Obama administration officials, teachers unions and associations representing school boards, colleges and other institutions in American education said the aid would bring crucial financial relief to the nation’s 15,000 school districts and to thousands of campuses otherwise threatened with severe cutbacks.

“This is going to avert literally hundreds of thousands of teacher layoffs,” Education Secretary Arne Duncan said Tuesday.

Representative George Miller, Democrat of California and chairman of the House education committee, said, “We cannot let education collapse; we have to provide this level of support to schools.”

But Republicans strongly criticized some of the proposals as wasteful spending and an ill-considered expansion of the federal government’s role, traditionally centered on aid to needy students, into new realms like local school construction.

And they were joined by some education experts from across the political spectrum in wondering how school districts could spend so many new billions so fast, whether such an outpouring of dollars would lead to higher student achievement, and what might happen in two years when the stimulus money ends.

Analysts were also turning up surprises in the fine print.

One provision, which was sought by the student lending industry and went unmentioned in early Congressional summaries of the stimulus package, would temporarily increase subsidies to banks in the guaranteed student loan program by tying them to a new index, partly because recent federal intervention in the credit markets has invalidated the previous index. A spokesman for Sallie Mae, one of the largest student lenders, said the change was needed to keep student loan markets fluid. Critics said it represented a potential new windfall for lenders.

“This just continues the well-established tradition of welfare for the student loan industry,” said Barmak Nassirian, an expert in student lending.

The formulas by which the stimulus money for public schools would be allocated to states and local districts are complex, but take into consideration numbers of school-age children in poor families. The level received per student would vary considerably by state, according to an analysis by the New America Foundation, a research group that monitors education spending. New York would be among the biggest beneficiaries, at $760 per student, while New Jersey and Connecticut would fall near the bottom, with $427 and $409 per student, respectively. The District of Columbia would get the most per student, $1,289, according to the foundation’s analysis.

The foundation contends, however, that the formula does not effectively allocate the most money to states with the greatest need.

In recent years the federal government has contributed 9 percent of the nation’s total spending on public schools, with states and local districts financing the rest. Washington has contributed 19 percent of spending on higher education. The stimulus package would raise those federal proportions significantly.

The Department of Education’s discretionary budget for the 2008 fiscal year was about $60 billion. The stimulus bill would raise that to about $135 billion this year, and to about $146 billion in 2010. Other federal agencies would administer about $20 billion in additional education-related spending.

“This really marks a new era in federal education spending,” said Edward Kealy, executive director of the Committee for Education Funding, a coalition of 90 education groups.

The bill would increase 2009 fiscal year spending on Title I, a program of specialized classroom efforts to help educate poor children, to $20 billion from about $14.5 billion, and raise spending on education for disabled children to $17 billion from $11 billion.

Those increases respond to longtime demands by teachers unions, school boards and others that Washington fully finance the mandates laid out for states and districts in the Bush-era No Child Left Behind law, and in the main federal law regulating special education.

“We’ve been arguing that the federal government hasn’t been living up to its commitments, but these increases go a substantial way toward meeting them,” said Joel Packer, a lobbyist for the National Education Association, the nation’s largest teachers union.

Frederick Hess, an education policy analyst at the American Enterprise Institute, criticized the bill as failing to include mechanisms to encourage districts to bring school budgets in line with property tax revenues, which have plunged with the bursting of the real estate bubble.

“It’s like an alcoholic at the end of the night when the bars close, and the solution is to open the bar for another hour,” Mr. Hess said.

The bill would, for the first time, involve the federal government in a significant fashion in the building and renovation of schools, which has been the responsibility of states and districts. It includes $20 billion for school renovation and modernization, with $14 billion for elementary and secondary schools and $6 billion for higher education. It also includes tax provisions under which the federal government would pay the interest on construction bonds issued by school districts.

Mr. Duncan said the bill’s school renovation provisions would create a “huge number of construction jobs,” because so many school buildings need repairs.

But Representative Howard P. McKeon, Republican of California and the ranking minority member of the House education committee, said, “By putting the federal government in the business of building schools, Democrats may be irrevocably changing the federal government’s role in education in this country.”

In higher education, the bill would increase spending on Pell Grants, the most important federal student aid program, to $27 billion from about $19 billion this year.

“It’s a very good idea to increase Pell Grants in the stimulus,” said Terry Hartle, a senior vice president for public affairs at the American Council on Education, which represents colleges and universities.

But Mr. Hartle said that even he was having difficulty tracking all the new spending.

“A lot of things will go through, and only later will we know exactly what happened,” he said.

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Financial Aid Applications Rise by 10 Percent

Posted by gradefund on January 22, 2009

Financial Aid Applications Rise by 10 Percent

Posted January 13, 2009
Like a Midwestern tornado, the economic downturn appears to be touching down and wreaking financial aid havoc for some colleges while leaving others unscathed. Financial aid officers at Boston College, the University of Central Florida, and Washington University in St. Louis all report no dramatic increase in requests for scholarships. But foot traffic and calls to the aid office have spiked 50 percent this January at Prairie View A&M University in Texas. And “the line is out the door” at Quinsigamond Community College in Worcester, Mass., says Iris Godes, assistant vice president of enrollment management. Enrollment is up by about 6 percent, but financial aid applications are up 23 percent so far in 2009. Godes, who has been working in college financial aid offices for 21 years, says people who have lost jobs and savings in the economic downturn are now scrambling for new money to pay for college. “I have never experienced in my life this anxiety level of parents,” she says.

Nationally, 1.4 million more students filled out the Free Application for Federal Student Aid (the most important aid application) in calendar year 2008 than in 2007, a 10.4 percent increase, the Department of Education reports. Likewise, the College Board says its scholarship database experienced a 30 percent jump in visitors in December 2008 compared with 2007.

The biggest federal aid programs guarantee Pell grants and Stafford student loans to all students who qualify, no matter how many people apply. And some colleges have announced that they are pouring more money into scholarships next year. Boston College, for example, has announced it will cut its overall spending by 2.5 percent to free up $3 million extra in financial aid. And the University of Toledo announced it will offer free tuition to low-income B students from many major Ohio cities.

But those increases don’t appear to be making up for the many smaller aid programs—including Federal Supplemental Education Opportunity Grants and Perkins loans, as well as school-based scholarships and charitable grants—that expect to have limited or reduced funding this year. As a result, many aid officials say demand is starting to outstrip supply for some kinds of scholarships, forcing some schools and charities to make cuts.

Arkansas State University-Jonesboro, for example, has been so swamped that it has already cut off applications for merit scholarships for next fall, says financial aid director Terry Finney. The state of Rhode Island is reducing the amount of grants it will hand out to needy students. And many charities have said the declines in their investments are forcing reductions in the size and number of scholarships they’ll award this year.

“Demand has never been greater and money never been lower,” worries Godes.

 

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Colleges cut instruction spending

Posted by gradefund on January 22, 2009

Colleges cut instruction spending

By Mary Beth Marklein, USA TODAY

http://www.usatoday.com/news/education/2009-01-14-college-spending_N.htm

Most of the nation’s colleges are gradually paring back their investments in classroom teaching, an analysis of federal data shows. And all colleges have in recent years been spending a greater share of their revenue on expenses other than instruction, including computing centers, student services, administrative salaries and lawn care.

Those are among findings of a report released today that sheds light on where various types of colleges and universities get their money and how they spend it. While instruction remains the largest share of education and general spending at most colleges, much of the revenue raised by increasing tuition is not going to that core function of higher education, it concludes.

With one notable exception, “Students are paying for more and arguably getting less, particularly in the classroom,” says Jane Wellman, director of the Delta Cost Project, a Washington-based non-profit that released the report. It is based on federally reported data from 2002 to 2006 of nearly 2,000 public and private institutions that enroll about 75% of all college students.

The exception is private research universities, which spend more per student than any other sector, but which enroll fewer students overall than most other institutions.

The report found that total spending on education and related services, including academic and administrative support, remained flat or declined between 2002 and 2006 everywhere but at those institutions, which can draw from more sources, including endowment income.

That could change as more private research universities, including Cornell, Harvard and Yale, see precipitous drops in their endowments.

At public colleges and universities, much of the decline in instruction spending — which is primarily faculty salaries and benefits — can be linked to a decline in state appropriations.

“I don’t think institutions have decided to disinvest in instruction,” Wellman says, but their spending patterns do show “a lack of a strategic approach.”

“The quickest place to cut costs is in instructional programs. When the primary focus is on balancing the budget from year to year, you grab what you can and spend where you must,” Wellman says.

Existing data can’t speak to the quality of education, nor is it detailed enough to determine whether specific spending is justified. A key goal of the report is to encourage institutions and policymakers to be more transparent about their finances.

“Policymakers and the public are showing increasing skepticism about spending in higher education, questioning whether tuition increases are helping to expand access and improve quality,” it says. “The data in this report show that this is a valid question.”

Other findings:

•More students, particularly low-income and minority students, are attending the colleges and universities with the least to invest in students. “Basically what we’re asking is (for) a set of folks who don’t have resources to pay more, even as we disinvest in their instruction,” says Kati Haycock, president of the Education Trust, a non-profit that works to increase access to college.

•If tuition increases were tied to increased spending on education-related expenses, tuition at most public institutions would have dropped between 2002 and 2006. At public research universities, about 8% of tuition increases can be linked to increased spending on education-related expenses.

•At some point between 2002 and 2004, most private four-colleges began spending a larger share of their budget on administrative and academic support than on instruction. The exception: private research universities.

Posted in Economy and School, EducationalSpending, School Reform | Leave a Comment »

Stimulus gives schools $142B — with strings

Posted by gradefund on January 22, 2009

Stimulus gives schools $142B — with strings

By Greg Toppo, USA TODAY

http://www.usatoday.com/news/education/2009-01-19-school-stimulus_N.htm

The USA’s public schools stand to be the biggest winners in Congress’ $825 billion economic stimulus plan unveiled last week. Schools are scheduled to receive nearly $142 billion over the next two years — more than health care, energy or infrastructure projects — and the stimulus could bring school advocates closer than ever to a long-sought dream: full funding of the No Child Left Behind law and other huge federal programs.

But tucked into the text of the proposal’s 328 pages are a few surprises: If they want the money — and they certainly do — schools must spend at least a portion of it on a few of education advocates’ long-sought dreams. In particular, they must develop:

• High-quality educational tests.

• Ways to recruit and retain top teachers in hard-to-staff schools.

• Longitudinal data systems that let schools track long-term progress.

“The new administration does not want to lose a year on the progress because of the downturn in the economy,” says Rep. George Miller, D-Calif., who chairs the House Education Committee. “So I think these are all things that are clearly doable.”

Testing, a key part of the No Child law, has gotten short shrift from most states, says Thomas Toch of Education Sector, a Washington, D.C., think tank.

“Existing state tests are not as good as they could be,” he says. “Putting new money into building stronger state assessments is what’s needed.”

But he and others say a big challenge will be to ensure that states don’t simply cut their own education budgets in anticipation of massive federal increases. “That’s going to be a challenge because the states are all hurting,” Toch says.

The plan also will help schools modernize and fix buildings. Kati Haycock, president of The Education Trust, an advocacy group, says she’s “pretty excited” about the requirement that states spend a portion of the stimulus cash attracting their best teachers to schools that serve low-income and minority students. “There’s nothing they could do with it that would be more important for high-poverty kids.”

But Charles Barone, a former congressional staffer who helped design the education reform law, says the plan doesn’t go far enough. He predicts states won’t do much to change how they hire teachers — and they’ll still get their money. “All they’re going to have to do is copy and paste what’s in their current plan to get this money,” says Barone, who now consults about education and writes a popular blog.

“This is a once-in-a-lifetime opportunity,” he says. “It seems to me you’d ask more from states and districts in terms of the kind of changes you’ve been talking about for years.”

Posted in Economy and School, EducationalSpending, School Reform | Leave a Comment »

Students Covering Bigger Share of Costs of College

Posted by gradefund on January 22, 2009

Students Covering Bigger Share of Costs of College

 

Published: January 15, 2009

http://www.nytimes.com/2009/01/16/us/16college.html?_r=1&ref=education

College students are covering more of what it costs to educate them, even as most colleges are spending less on students, according to a new study.

The study, based on data that colleges and universities report to the federal government, also found that the share of higher education budgets that goes to instruction has declined, while the portion spent on administrative costs has increased.

It describes a system that is increasingly stratified: the smallest number of students — about 1 million out of a total 18 million students — attend the private research universities that spend the most per student. The largest number of students — 6 million — attend community colleges, which spend the least per student, and have cut spending most sharply as government aid has declined.

“Students are paying more, and a greater share of the costs, but are arguably getting less,” said Jane Wellman, the executive director of the Delta Project on Postsecondary Education Costs, Productivity and Accountability, which drafted the study.

The Delta Project, a nonprofit, nonpartisan organization, seeks to increase college affordability by controlling costs, a goal it says can be accomplished without sacrificing quality. The study is a rare effort to look inside what researchers call the black box of higher education: the question of why it costs so much and where the money goes.

Colleges have justified rising tuition, in part, by saying that it does not cover anywhere near the full cost of educating a student. That is still true, but less so; the study found that students are contributing a greater share of the cost of their education at all kinds of institutions, even after accounting for scholarships and other tuition discounts.

In 2006, the last year for which data is available, students at public colleges and research universities paid about half the cost of their education — defined as the cost of instruction, student services and a portion of spending on operations, support and maintenance. That is up about 10 percentage points since 2002. At community colleges, students covered about 30 percent of their education, up from 24 percent.

At private institutions, the increases were less steep, but students cover a greater share: at private colleges that offer bachelors degrees — essentially, liberal arts colleges — the student share went to 63.5 percent in 2006 from 61.1 percent in 2002. At those that offer masters’ degrees, it went to 83.6 percent in 2006 from 80.4 percent in 2002.

At public institutions, spending on instruction declined from 2002 to 2005, and increased in 2006, but the increases did not make up for earlier reductions.

Spending on instruction decreased at private institutions, as well, except for private research universities, where it rose slightly.

“The institutions whose primary mission is teaching — the masters and community colleges and bachelors colleges, are slowly disinvesting in the teaching function,” Ms. Wellman said.

And the percentage of the budget going to instruction declined everywhere between 1995 and 2006 — to 63 percent from 64.4 percent at public research institutions, to 50.2 percent from 52.8 percent at public community colleges, and to 38.9 percent from 40.7 percent at private bachelors colleges.

The biggest decline occurred at private research universities, where the percentage of the budget devoted to instruction went to 57.9 percent in 2006 from 62.3 percent in 1996.

Meanwhile, the share spent on administration and support increased everywhere. At public research universities, those costs consumed 28.3 percent of the budget in 2006, up from 27.7 percent in 1995. At private research institutions, they accounted for 32.9 percent of the budget, up from 30.1 percent, and at public community colleges, 37.7, up from 35.9 percent.

Tuition increased faster than spending on education, with students at public institutions taking on the biggest increases, as states contributed less per student.

Had tuition increased only to match spending, the report’s authors calculate, it would have increased only 2.5 percent at public research universities, where it went up 29.8 percent. At private colleges, it would have increased 1.9 percent, rather than 12.5 percent. And at state and community colleges, tuition would have declined, by 2.1 percent and 5.8 percent. Instead, it rose 29 percent and 18.1 percent.

As state revenues decline, Ms. Wellman predicted, the problem will only get worse. “We see the picture ahead being more of the same, but dramatically more of the same,” she said.

 

This article has been revised to reflect the following correction:

Correction: January 19, 2009
An article on Friday about a study that found that college students are paying a higher proportion of the cost of their education included incorrect preliminary data provided by the authors of the study, the Delta Project on Postsecondary Education Costs, Productivity and Accountability. At private colleges that offer master’s degrees, the portion of education costs paid by students rose between 2002 and 2006 to 83.6 percent from 80.4 percent, not from 75.5 percent. At private institutions that offer bachelor’s degrees, the percentage rose to 63.5 percent from 61.1 percent, not from 57.7 percent. At private research universities, the percentage declined to 55.8 percent from 57.6 percent; it did not rise from 55.3 percent.

Posted in Education Incentives, Rising Tuition, Student Loans | Leave a Comment »

School officials want a cut of federal bailout

Posted by gradefund on January 15, 2009

School officials want a cut of federal bailout

By Greg Toppo, USA TODAY

http://www.usatoday.com/news/education/2009-01-12-school-stimulus_N.htm

If banks, insurance companies and automakers are getting a piece of Washington’s bailout largesse, why not cash-strapped schools?

That’s the thinking of officials at a few hard-pressed school systems, who have set wheels in motion to get a share of the $700 billion Troubled Asset Relief Program, or TARP, intended for ailing financial institutions, and the economic stimulus package now before Congress.

 

EDUCATION & ECONOMY: Private schools feel the pinch
FULL COVERAGE: Latest education news

 

In Olmstead Falls, Ohio, Superintendent Todd Hoadley sent in the paperwork two days before Thanksgiving to request $100 million from the federal government, half of it for school construction. He has yet to see a check and concedes he dabbling in a bit of hyperbole by latching onto the program, but he says the problems are real.

“We were trying to make the statement: ‘Don’t forget public education,’ ” Hoadley says.

In Olmstead Falls, 1,200 students cram into a 40-year-old high school built for 800. The school board wants to cut $1 million from the district’s $34 million budget, and Gov. Ted Strickland has asked advisers to see what a 25% statewide school funding cut would look like.

Hoping for some help

In Florida, Broward County school board members directed Superintendent James Notter in early December to devise a plan seeking as much as $500 million from the pot of federal money.

The 260,000 student district, sixth-largest in the country, has trimmed $128 million from its operating budget the past two years.

School districts across the nation are quietly hoping that the federal government finds a way to include them in aid proposals. The National School Boards Association has published a list of priorities that includes money for construction and modernization as well as cash to reduce the cost of debt-servicing on bonds.

Also hoping for a slice of the pie: after-school and arts advocates, career and technical programs and Head Start.

Though no district yet has followed Hoadley and applied for the bailout, most are counting on Congress’ stimulus plan to include as much as $25 billion for school construction, teacher training and other chronically underfunded line items. Educators say they need the cash as they face budget cuts in the next two years. Nearly half of districts are cutting hiring and supplies, a November survey by the American Association of School Administrators found. One in five has laid off staff.

Trimming past the fat

“This has become, in my opinion, an economic development problem because we are endangering the preparation of the workforce,” says Miami-Dade Schools chief Alberto Carvalho.

A proposed Senate plan would give schools $2.5 billion for construction, but funding for the rest remains unclear until Congress acts, probably by mid-February.

“This is the first time that we’ve been in a big stimulus package like this since the ’70s,” says the administrators association’s Bruce Hunter. “That’s a big deal.”

In Miami, Carvalho says he has spent the past few months trimming nearly $280 million — but he faces another midyear cut of more than $100 million.

“We’re well past cutting through the fat, through the flesh, muscle,” he says. “We’re now sawing into bone.”

He has led a handful of Florida superintendents calling for federal aid to schools as state lawmakers, meeting this month in special session, consider nearly $500 million in school cuts.

In Florida and elsewhere, most schools are seeing the grim results of higher expenses and lower tax revenue. But in a few cases, they’ve taken hits from large investments gone sour. In Wisconsin, five small districts that funded retiree benefits by investing $200 million — much of it borrowed from an Irish bank — in collateralized debt obligations are suing after their “safe” investments went south.

Schools created the mess?

Mike Petrilli of the Thomas B. Fordham Institute, a Washington think tank, says many districts’ financial woes can be traced to long-term teacher contracts that have locked them into automatic raises and growing pension expenditures without the flexibility to cut costs “in a smart way.”

“School districts have gotten themselves into this mess by making promises they can’t fulfill,” he says. “And now the chickens are coming home to roost.”

When Hoadley filed for the bailout, he sent it directly to U.S. Treasury Secretary Henry Paulson and to the Federal Reserve of Cleveland, where an official said he didn’t think school districts qualify for TARP funding. Then, a few weeks later, Hoadley looked on as lawmakers offered the auto industry a piece of it.

The rules, he says, keep changing — who will get the rest?

“One wonders where that’s going or what that’s going to go for,” Hoadley says. “Hopefully it’s going to come our way.”

Posted in Economy and School | Leave a Comment »

Universities offering in-state tuition to out-of-state students

Posted by gradefund on January 15, 2009

Universities offering in-state tuition to out-of-state students

http://www.usatoday.com/news/education/2009-01-12-in-state-out_N.htm

ST. LOUIS (AP) — For 20 years, Southern Illinois University’s student numbers have languished, proving so vexing it cost a top administrator his job in 2006.

Much of the problem, the chancellor contends, is that would-be students from Illinois bolted to other states on the promise of sweet tuition deals.

Now, the university is fighting back: This fall, it will begin offering in-state tuition to first-year students from neighboring Missouri, Kentucky and Indiana.

Across the country, a bidding war of sorts has developed over prospective students seeking bargains in a bad economy. While some universities have long tried to lure students across state lines with lower tuitions, such incentives are gaining popularity as the nation’s financial meltdown has withered families’ college savings and home equity to help pay soaring education costs.

 

 

“We’re certainly seeing an acceleration of that” push to offer tuition cuts for its out-of-state scholars, said Bob Sevier, senior vice president of Iowa-based Stamats, a consultant to colleges and universities about marketing, student recruitment, fundraising and strategic planning.

“It’s something that should have been done a long time ago. This is not a gimmick. This is good public policy,” Sevier said.

And to Sam Goldman, Southern’s chancellor, it’s unavoidable. “We’re in probably the most competitive environment I’ve ever seen in higher education right now,” said Goldman.

Other universities have similar designs on recruitment.

In North Dakota, for example, the state’s Board of Higher Education recently approved offering in-state tuition to out-of-state and international prospects.

That’s something Minot State University last month pushed to make big use of by hiring two new recruiters, hoping to lure more students from Canada and Washington state.

Such efforts come when “the economic downturn is kind of churning the college market a little bit,” prompting many colleges and universities to evaluate ways to remain viable, Paul Hassen, a spokesman for the National Association of State Universities and Land Grant Colleges.

“The higher education market changes constantly, and each institution has its own challenges and opportunities,” he said. “Programs such as offering in-state rates to out-of-state students or some other way of packaging a pricing structure will occur. It’s a matter of fiscal survivability.”

Last month, an independent report on American higher education flunks all but one state — California, which got a C — when it comes to affordability. The biennial study by the National Center for Public Policy and Higher Education, which evaluates how well higher education is serving the public, found that almost everywhere the average family’s cost of education is up.

In Illinois, the average cost of attending a public four-year college has jumped from 19% of a family’s income in 1999-2000 to 35% in 2007-2008.

At Southern Illinois, tuition has jumped from $2,865 in 1999 to $6,975 this year for in-state students; during the same span, non-resident tuition ballooned from $5,730 to $17,437. The school’s student numbers shrank by 1,650 along the way to 20,673 now — well below the 24,084 that went there in 1990.

That lagging enrollment came to a head in November 2006, when the university’s president, former five-term congressman Glenn Poshard, ousted Walter Wendler as the Carbondale school’s chancellor. “We’re the only public university in the state losing students. We have to turn this around,” Poshard said then.

In trying to do just that, Southern Illinois University’s board voted to extend in-state tuition to first-year students from Missouri, Kentucky and Indiana. After the first year, the students could qualify as Illinois residents.

Such moves apparently have worked elsewhere. According to Hassen’s group, Penn State from 2005 to 2008 has seen 47% more out-of-state students accepting offers from the school since it began offering a reduced tuition rate at 19 of its 20 campuses for the student’s first two years.

Other university systems, while also trying to pad out-of-state recruiting, aren’t feeling as generous.

University of California officials, for instance, reportedly are mulling expanding its out-of-state recruiting but not give those students in-state rates. Out-of-state students in that university system now pay $20,000 a year more than in-staters — a premium that can be a handy revenue stream when the state’s budget is tight.

In Carbondale, Goldman says it’s far too soon to tell whether Southern’s tuition push to lure more out-of-state students is making a difference, though he insists the feedback so far has been encouraging.

“I’ve bumped into people from out of state here who have said, told me point blank, that because we reduced it they are coming here,” he said. For each student, “the tangible difference is $10,000. It’s that much. It’s like we’re giving them a scholarship; it’s not, truly, but that’s the equivalency.”

Posted in Cheaper Tuition, Economy and School | Leave a Comment »

Should Students Be Paid for Good Grades?

Posted by gradefund on January 15, 2009

Should Students Be Paid for Good Grades?

By Laura Fitzpatrick Wednesday, Jan. 14, 2009

http://www.time.com/time/nation/article/0,8599,1871528,00.html

 

Back in the day, a good report card earned you a parental pat on the back, but now it could be money in your pocket. Experiments with cash incentives for students have been catching on in public-school districts across the country, and so has the debate over whether they are a brilliant tool for hard-to-motivate students or bribery that will destroy any chance of fostering a love of learning. Either way, a rigorous new study — one of relatively few on such pay-for-performance programs — found that the programs get results: cash incentives help low-income students stay in school and get better grades. (See TIME’s special report on paying for college.)

According to a study released today by the social-policy research group MDRC, a nonpartisan organization perhaps best known for evaluating state welfare-to-work programs, cash incentives combined with counseling offered “real hope” to low-income and nontraditional students at two Louisiana community colleges. The program for low-income parents, funded by the Louisiana Department of Social Services and the Louisiana Workforce Commission, was simple: enroll in college at least half-time, maintain at least a C average and earn $1,000 a semester for up to two terms. Participants, who were randomly selected, were 30% more likely to register for a second semester than were students who were not offered the supplemental financial aid. And the participants who were first offered cash incentives in spring 2004 — and thus whose progress was tracked for longer than that of subsequent groups before Hurricane Katrina abruptly forced researchers to suspend the survey for several months in August 2005 — were also more likely than their peers to be enrolled in college a year after they had finished the two-term program. (Read “Putting College Tuition on Plastic.”)

Students offered cash incentives in the Louisiana program didn’t just enroll in more classes; they earned more credits and were more likely to attain a C average than were nonparticipants. And they showed psychological benefits too, reporting more positive feelings about themselves and their abilities to accomplish their goals for the future. “It’s not very often that you see effects of this magnitude for anything that we test,” notes Thomas Brock, MDRC’s director for young adults and postsecondary-education policy.

Although U.S. college enrollment has climbed, college completion rates have not. Only a third of students who enroll in community colleges — which educate nearly half the undergraduates in the U.S. — get a degree within six years. Hence the interest in this study among such philanthropic powerhouses as the Bill & Melinda Gates Foundation, which helped fund the MDRC study. (MDRC, by the way, was created in 1974 by the Ford Foundation and a group of federal agencies; originally named the Manpower Demonstration Research Corporation, it now goes only by the abbreviation.)

Given that the follow-up study of the program was disrupted as the schools struggled to rebuild enrollment and facilities in the wake of Katrina, it’s difficult to draw any long-term conclusions about the effects that cash incentives will have on community-college students. However, there could soon be more data to parse: with a grant from the Gates Foundation, MDRC plans to test cash incentives at community and state colleges in California, New Mexico, New York and Ohio.

Despite the study’s impressive, albeit short-term results, some critics in higher education are concerned that cash incentives will encourage students to start taking easier courses to ensure they’ll do well enough to pocket the money. “Everyone knows what the gut classes are when you’re in college,” notes Kirabo Jackson, an assistant professor of labor economics at Cornell who has studied cash incentives for high school students. “By rewarding people for a GPA, you’re actually giving them an impetus to take an easier route through college.” Other critics note that students’ internal drive to learn may be sapped as they focus on getting an external reward.

But those involved with the study note that particularly in this economy, cash incentives could help part-time students devote more hours to their studies. Faced with soaring bills for tuition, books and housing, many college students need a job just to get by. In the Louisiana program, all the participants were low-income parents, three-quarters of whom were unmarried or living without a partner. “We’re talking about adults who have quite a number of other responsibilities,” says Brock. “When you’re talking about minors who are required by law to be in school, that’s a different situation.”

Arnel Cosey, assistant vice chancellor for student affairs and provost for the City Park Campus at New Orleans’ Delgado Community College, one of two schools in the study, says she understands why some people are concerned that cash incentives are nothing more than bribery. “But on the other hand, I think because I am involved with these students daily, I’m not sure that I’m opposed to bribing,” she says. “If that’s what we need to do for these people to reach these goals, which ultimately will lead to them having a better life, I wish I had more money to give.”

Besides, as Cosey adds, if all goes well, students will be getting cash incentives for their work soon after graduating — in the form of a paycheck. “Most of us wouldn’t turn up at work every day if we weren’t getting a check,” she says. “What’s wrong with starting the payment a little early?”

Posted in Alternative Payment, Education Incentives, Paid for Grades | Leave a Comment »