Fact Sheet: Focusing Higher Education on Student Success

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Fact Sheet: Focusing Higher Education on Student Success

July 27, 2015

Editor’s Note: State-by-state data follows in table below.

U.S. Secretary of Education Arne Duncan today laid out his vision for America’s higher education system of the future. Duncan noted that while more students are graduating college than ever before at our nation’s world-class colleges and universities, for far too many students, the nation’s higher education system isn’t delivering what they need and deserve. America’s students and families need, and the nation’s economic strength will depend on, a higher education system that helps all students succeed. That starts with making college more affordable but goes much further – to focus on whether students are actually graduating in a timely way with a meaningful degree that sets them up for future success.

Today, nearly half of all students who begin college do not graduate within six years, and the consequences of taking on debt but never receiving a meaningful degree can be severe. Students who borrow for college but never graduate are three times more likely to default. A stronger focus on outcomes for students means change for everyone – schools, students, states, accreditors, and the federal government.

College Is More Important – but More Expensive – Than Ever Before

A postsecondary credential has never been more important

In today’s economy, higher education is no longer a luxury for the privileged few, but a necessity for individual economic opportunity and America’s competitiveness in the global economy. At a time when jobs can go anywhere in the world, skills and education will determine success, for individuals and for nations. As a result, college education remains the best investment a student can make in his or her future.

  • College graduates with a bachelor’s degree typically earn 66 percent more than those with only a high school diploma; and are also far less likely to face unemployment.[1]
  • Over the course of a lifetime, the average worker with a bachelor’s degree will earn approximately $1 million more than a worker without a postsecondary education.[2]
  • By 2020, an estimated two-thirds of job openings will require postsecondary education or training.[3]

Students – including many older students juggling work and family responsibilities – recognize that higher education is a key to opportunity, and that has fueled a substantial increase in college attendance rates in recent years. Unfortunately, because of the rising cost of college and the fact that too many institutions of higher education are not delivering the quality education that students need and deserve, too many students are either not completing degrees or are completing programs that are not valued by employers.

College has never been more expensive

Even as a college degree or other postsecondary credential or certificate has never been more important, it has also never been more expensive. Colleges have not focused on keeping costs down, and tuition has spiraled out of control. Meanwhile, states have slashed their investments in higher education, and Congress has failed to protect the purchasing power of Pell Grants over the decades. Consequently, college costs for hardworking students and families have grown dramatically, with wages failing to keep up.

  • Over the past three decades, tuition at four-year colleges has more than doubled, even after adjusting for inflation.[4]
  • Between 1992 and 2012, the average amount owed by a typical student loan borrower who graduated with a bachelor’s degree more than doubled to a total of nearly $27,000.[5]
  • Even after historic investments by the Obama Administration, the maximum Pell Grant in 2015 covers only about 30 percent of the cost of a four-year public college education – the lowest proportion in history and less than half of what it covered in 1980.[6] Despite that fact, Congressional Republicans have proposed to cut the real purchasing power of Pell Grants even further.

Too many recent college graduates feel the weight of their student loan payments holding them back from fulfilling their full potential. And far too many prospective college students feel as though they are simply priced out of the education they need to set themselves up for future success.

Today, college remains the greatest driver of socioeconomic mobility in America, but if we don’t do more to keep it within reach for middle class families and those striving to get into the middle class, it could have the opposite effect – serving as a barrier instead of a ticket to the American Dream. Every qualified student deserves access to an affordable, high-quality degree or credential that allows them to put their talent to work.

The Obama Administration has made historic investments in college affordability

Since taking office in 2009, the Obama Administration taken strong action to counteract the rising cost of higher education, expanding Pell Grants and making student debt more manageable by expanding loan repayment options that cap payments based on income. Putting in place the largest investment in higher education funding since the GI bill, the Administration has increased total annual aid to students by over $50 billion from 2008 to 2016, and selected annual tax benefits by over $12 billion, which has helped our nation ensure more students are graduating college than ever before.

  • In 2010, the Obama Administration made a landmark investment in Pell Grants, ending student loan subsidies for private banks and shifting over $60 billion in savings back to students and taxpayers.
  • This Administration has raised the maximum Pell Grant award by more than $1,000 since 2008. Under the President’s leadership, the number of Pell Grant recipients has expanded by one-third over that same time, providing college access to millions of additional low-income and middle-class students across the country.
  • The Administration also established the American Opportunity Tax Credit in 2009 to assist families with the costs of college, providing up to $10,000 for four years of college tuition. In 2016, the American Opportunity Tax Credit will help 10 million students and families afford college.
  • Earlier this year, the President unveiled his America’s College Promise proposal to make two years of community college free so students can earn critical workforce skills and the first half of a bachelor’s degree at no cost, as well as a new American Technical Training Fund to expand innovative, high-quality technical training programs.

The Administration has also worked to help Americans manage their student loan debt after leaving school. In addition to fighting to reduce student loan interest rates, the Administration has improved and expanded income based loan repayment options, ensuring that all Direct Loan borrowers can cap their payments at ten percent of their discretionary income and that loan payments are manageable. As late as mid-2012, fewer than a million borrowers were in income-driven repayment plans. The Administration’s expansion effort has nearly quadrupled participation, and delinquencies and defaults are down.

Doing More to Focus on Outcomes

Cost and debt are only part of the story – we need increased focus on student success

Addressing growing college costs and debt is absolutely critical. Many more students need access to vastly more affordable and quality higher education opportunities – including tuition- and debt-free degree options. For too long, though, America’s higher education system has focused almost exclusively on inputs – money for enrolling students – and too little on outcomes – what students get out of college.  We must shift focus toward creating an accountability and incentive structure that provides educational opportunity by ensuring that students are graduating on time with an affordable, meaningful degree or credential.  Otherwise, we will merely be finding better ways of paying for an unsustainable status quo.

The most expensive education is one that doesn’t lead to a degree

While graduating with high levels of debt is holding too many borrowers back from reaching their full potential, the even more damaging outcome is for students who take on debt but never complete their degree. In fact, students’ ability to repay their loans depends more strongly on whether they graduate than how much total debt they take on.[7]

  • Students who take out college loans but don’t graduate are three times more likely to default than borrowers who complete.[8]
  • The median debt of borrowers who default is under $8,900, which is barely half of the median debt load for all students, and the average debt for students in default is $14,500, which is half the average debt of those who graduate.[9]
  • States with the highest default rates for their four-year colleges tend to be near the bottom on completion rate too; and states with the lowest default rates tend to rank higher in four-year completion rates. [See Appendix for state-by-state data].
  • More than 40 percent of first-time full-time students who enroll in a bachelor’s degree program don’t graduate within 6 years.[10]
  • Low-income students, first-generation college students, and minority students, in particular, are being underserved by the current system. Just 9 percent of students from the lowest income quartile graduate with a bachelor’s degree by age 24, compared to 77 percent for the top income quartile.[11]
  • Students from low-income families are also less likely to enroll in and complete college than their peers, even when academic ability is taken into consideration.[12]

The Obama Administration is shifting the conversation toward outcomes

Over the past six and a half years, the Administration has pursued executive actions and put forward policy proposals to address structural flaws in the higher education system and create incentives for all actors to focus on student outcomes.

  • Through its landmark Gainful Employment regulations, the Obama Administration is stopping the flow of federal dollars to low-performing career college programs that leave students buried in debt with few opportunities to repay it.
  • President Obama’s budgets have called for rewarding colleges that do a good job of enrolling and graduating significant numbers of low-income students on time through a new College Opportunity and Graduation Bonus. The President has also called for shifting campus-based federal student aid to schools that provide a quality education at a reasonable price.
  • The America’s College Promise (ACP) proposal in the President’s budget would encourage community colleges to strengthen their programs and increase the number of students who graduate by adopting promising and evidence-based institutional reforms and innovative practices to improve student outcomes. ACP would also ensure that community colleges’ academic programs are fully transferable and their training programs have high graduation rates and lead to in-demand credentials.
  • ACP would also encourage states to continue existing investments in higher education and fund colleges using performance outcomes based on student success, as well as to promote key reforms to increase college completion, including alignment of high schools, community colleges, and four-year institutions to reduce the need for remediation and repeated courses.
  • The Obama Administration has proposed regulations to recognize and reward high-quality teacher preparation programs with TEACH Grant eligibility and encourage all programs to improve through outcomes-driven transparency and accountability systems.
  • The Administration has also proposed encouraging students to complete their studies on time by strengthening academic progress requirements in federal student aid programs.
  • The Administration has greatly increased transparency for students and families so that they can make informed decisions through tools like the College Scorecard and the Financial Aid Shopping Sheet and choose a school that is affordable, best-suited to meet their needs, and consistent with their educational and career goals. A consumer information tool that will be unveiled later this summer will serve as the next generation of college transparency, providing students and families with more data than ever before to help them compare college costs and outcomes as they seek to find the college that is right for them.

Innovative leaders across higher education are leading the way toward a 21st century system
Across the spectrum of higher education – public and private, four-year and two-year, on-campus, online, and hybrid – innovative leaders are showcasing new models to allow more students to get an affordable, quality degree or credential. Just a few of the examples include:

  • University of Maryland, Baltimore County’s Meyerhoff Scholars Program--one of the first programs to take a comprehensive approach to recruiting, supporting, and graduating minority students in STEM fields—has graduated over 900 students since its inception in 1993. Meyerhoff students were more than five times as likely to have graduated from, or be currently attending a STEM Ph.D or M.D/Ph.D program, than students who were invited to join the program but declined and attended another university.
  • Southern New Hampshire University, the University of Wisconsin, and others have demonstrated that flexible, competency-based programs make it possible for working parents, returning vets, and displaced workers to have access to high-quality programs at low cost.
  • Franklin and Marshall College, a selective liberal arts college, has doubled its enrollment of low-income and first-generation students while keeping its graduation rates high.
  • Arizona State University awards about 60 percent more degrees today than it did a decade ago, and has doubled its number of African-American and Hispanic students during the same time period.

Innovative programs are lighting the path toward the future of higher education – one that allows all types of students to pick the environment and learning style that is best for them. Not everyone’s college experience will look the same, but they must all have one thing in common: an unyielding commitment to student success and outcomes.

Much work remains for all involved

Despite the Administration’s historic actions and the leadership of innovative institutions, much work remains to meet our goal of once again having the highest proportion of college graduates in the world. The Administration will continue to act within its power to control college costs and help students graduate on time with a meaningful degree. We need Congress, states, colleges and universities, and accreditors to join in that effort.

We must encourage states to reverse a quarter-century-long trend of disinvestment in higher education, promote reforms to support student success, and embrace their role in overseeing institutions. Thirty states already fund institutions to some extent based on performance indicators and several others are transitioning to such systems.[13]  We need to build on that momentum and progress.  States must also align their secondary and postsecondary systems, reform remedial education, and ensure seamless transitions into college and among institutions by making it easy to transfer credits.  And they must take seriously their historical role in consumer protection through a robust authorization and oversight process, as well as active compliance and monitoring of institutions doing business in their state.

We must encourage accreditors to focus on student outcomes, raise the bar for quality, and promote transparency. As innovation produces a greater variety of options for students, accountability based on results becomes even more important. Accreditors must offer new levels of transparency and quality assurance based on outcomes – not just inputs.

We must encourage institutions to improve their performance by recognizing and rewarding colleges with strong student outcomes, especially with the neediest students, and incentivizing underperforming colleges to improve. All institutions and systems must do more to control costs and innovate to make degrees more affordable, and focus on their success rate with students who have traditionally been least likely to complete their programs and degrees. And for those that are ultimately more concerned about their bottom lines than about their students, we should stop the flow of taxpayer dollars.

In addition to supporting these needed changes, Congress must do more to protect students from unscrupulous career colleges that deceive students into taking on debt they will never be able to repay and stick taxpayers with the bill. We must strengthen, not weaken, accountability in higher education. For too long, Congress has sat on the sideline – or worse, actively fought – the Administration’s efforts to protect students and taxpayers from these predatory and deceptive practices.

 

APPENDIX: Graduation Rates and Cohort Default Rates, by State and Sector, among Students Attending Four-Year Institutions

graduation-rates-and-cohort-default-rates.jpg

 

 

Graduation Rate

Cohort Default Rate

State

All

Public

Private

For-profit

All

Public

Private

For-profit

AK

29%

27%

39%

35%

13%

12%

8%

16%

AL

48%

49%

44%

46%

13%

11%

12%

21%

AR

42%

39%

53%

18%

14%

15%

10%

-

AZ

29%

57%

52%

23%

18%

9%

5%

19%

CA

64%

64%

73%

44%

9%

6%

4%

15%

CO

50%

54%

62%

24%

12%

7%

3%

19%

CT

67%

63%

73%

29%

6%

6%

5%

14%

DC

73%

16%

76%

16%

11%

19%

4%

15%

DE

66%

73%

30%

-

8%

7%

10%

-

FL

51%

50%

55%

51%

14%

13%

9%

20%

GA

45%

44%

58%

16%

13%

11%

9%

23%

HI

44%

47%

41%

22%

8%

9%

6%

-

IA

63%

68%

62%

29%

15%

5%

6%

20%

ID

45%

41%

56%

23%

10%

12%

3%

-

IL

60%

62%

63%

31%

12%

7%

6%

19%

IN

57%

53%

68%

38%

15%

10%

6%

22%

KS

53%

54%

49%

31%

9%

8%

9%

19%

KY

48%

47%

50%

38%

13%

11%

10%

22%

LA

46%

45%

60%

18%

9%

9%

8%

-

MA

69%

58%

75%

30%

6%

8%

5%

13%

MD

65%

63%

73%

31%

8%

9%

4%

-

ME

54%

46%

68%

18%

9%

11%

6%

-

MI

55%

60%

42%

26%

10%

8%

12%

-

MN

62%

59%

71%

39%

10%

5%

5%

13%

MO

57%

55%

61%

51%

10%

10%

8%

21%

MS

49%

50%

48%

-

11%

11%

9%

-

MT

48%

47%

52%

-

10%

10%

5%

-

NC

60%

61%

59%

44%

9%

9%

11%

20%

ND

48%

49%

40%

33%

5%

5%

7%

-

NE

57%

56%

62%

41%

5%

5%

4%

4%

NH

65%

69%

68%

35%

7%

4%

6%

16%

NJ

65%

67%

64%

30%

10%

6%

5%

24%

NM

40%

41%

42%

31%

17%

17%

9%

10%

NV

37%

37%

55%

29%

11%

11%

4%

-

NY

60%

53%

67%

43%

7%

7%

5%

18%

OH

55%

53%

64%

42%

11%

13%

8%

14%

OK

45%

43%

51%

45%

13%

13%

10%

19%

OR

58%

56%

68%

47%

6%

6%

4%

15%

PA

65%

62%

71%

35%

8%

8%

5%

23%

RI

67%

58%

72%

-

7%

7%

6%

-

SC

57%

61%

49%

51%

10%

8%

14%

1%

SD

49%

49%

53%

22%

11%

6%

7%

21%

TN

51%

48%

59%

31%

11%

11%

8%

20%

TX

51%

50%

59%

27%

10%

10%

9%

20%

UT

51%

44%

67%

49%

10%

8%

4%

24%

VA

64%

70%

56%

31%

8%

5%

8%

14%

VT

64%

64%

64%

49%

6%

7%

6%

17%

WA

63%

62%

71%

33%

7%

7%

4%

20%

WI

58%

57%

63%

30%

6%

5%

5%

17%

WV

45%

44%

51%

14%

14%

15%

11%

15%

WY

54%

54%

48%

-

5%

5%

-

-

All

55%

55%

64%

32%

11%

9%

7%

19%

 

DEFINITIONS:
STATE: The state in which the institution is reported to be located, including for distance and online education schools.
COHORT DEFAULT RATE: The three-year cohort default rates (CDRs) represent a snapshot in time.  The FY 2011 rates were calculated using the cohort of borrowers who entered repayment on their federal student loans between October 1, 2010 and September 30, 2011 and who defaulted before September 30, 2013. Source: Office of Federal Student Aid
COMPLETION RATE: The 2013 graduation rate is based on the number of students who entered the institution as full-time, first-time, degree-/certificate-seeking undergraduate students in a particular year, and who graduated within 150 percent of normal time to completion (meaning within six years for a four-year degree). Source: IPEDS

 

 

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https://nces.ed.gov/programs/digest/d14/tables/dt14_502.30.asp;
Bureau of Labor Statistics. Current Population Survey.
http://www.bls.gov/cps/cpsaat07.htm
[2]  Carnevale, Anthony P. "The Economic Value of College Majors Executive Summary 2015." Georgetown University Center on Education and
the Workforce, McCourt School of Public Policy (2015): 1-44.
[3]  Carnevale, Anthony P., Nicole Smith, and Jeff Strohl. "Recovery: Job Growth and Education Requirements
Through 2020." Georgetown Public Policy Institute: Center on Education and the Workforce (June, 2013): 1-14.
[4]  "Tuition Costs of Colleges and Universities."  National Center for Education Statistics. Digest for Education Statistics.
https://nces.ed.gov/fastfacts/display.asp?id=76
[5]  "The Changing Profile Of Student Borrowers." Pew Research Centers. 06 Oct. 2014.
http://www.pewsocialtrends.org/2014/10/07/the-changing-profile-of-student-borrowers/st-2014-10-07-student-debtors-04/
[6]  "House Budget Committee Plan Cuts Pell Grants Deeply, Reducing Access to Higher Education." Center on Budget Policy and Priorities
http://www.cbpp.org/research/house-budget-committee-plan-cuts-pell-grants-deeply-reducing-access-to-higher-education
[7]  Hillman, Nicholas W. "College on Credit: A Multilevel Analysis of Student Loan Default." The Review of Higher Education 37.2 (2014): 169-95.
[8]  Office of Federal Student Aid (FSA) analysis
[9]  FSA analysis and TICAS Project on Student Debt figures
[10]  U.S. Department of Education, National Center for Education Statistics. (2015). The Condition of Education 2015
[11]  "Indicators of Higher Education Equity in the United States." The Pell Institute for the Study of Opportunity in Higher Education, Penn Ahead-Alliance for Higher Education and Democracy (2015): 1-60.
http://www.pellinstitute.org/downloads/publications-Indicators_of_Higher_Education_Equity_in_the_US_45_Year_Trend_Report.pdf
[12]  Staff Report: Barriers to Higher Education. White House Task Force on Middle Class Families.
https://www.whitehouse.gov/assets/documents/MCTF_staff_report_barriers_to_college_FINAL.pdf
[13]  "Performance-Based Funding for Higher Education." National Conference of State Legislatures. 13 Jan.
2015. Web. http://www.ncsl.org/research/education/performance-funding.aspx