I recently had the chance to read a research report titled “With Their Whole Lives Ahead of Them,” published by Public Agenda with financial support from the Bill & Melinda Gates Foundation.  The authors of the report surveyed over 600 young adults between the ages of 22 and 30.  The purpose of the survey was to compare the answers of students who dropped out of college to the answers of students who graduated within the three year (for community colleges) or six year (for four-year colleges) standards as measured by the U.S. Department of Education.  Jean Johnson and Jon Rochkind, along with Amber Ott and Samantha DuPont, wanted to validate the reasons why students depart from colleges before graduating and see if the students themselves offered reasons different than many of the recent research studies.

The authors point out that according to the U.S. Department of Education, only 20 percent of community college students graduate within three years and only 40 percent of four year college students graduate within six years.  In fact, only 27 percent of college students attend the traditional residential college that most people envision as the idyllic college environment.  Even more telling of the changes in college student profiles, 45 percent of students attending four year colleges reported working more than 20 hours per week and 60 percent of students attending two year colleges reported working more than 20 hours per week.

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An August 11th article in The New York Times caught my attention.  Written by Tamar Lewin, the article describes a policy brief released by the College Board which concludes that for the most part, recent graduates are carrying “manageable” debt loads.  Using data published in the Department of Education’s National Postsecondary Student Aid Study, the policy brief notes that while the number of students using loans to pay for their post-secondary educations has increased in the last five years, the volume of students who carry overly burdensome levels of debt upon graduation remains small in comparison.

According to the policy brief, of the students who earned a degree or certificate program during the 2007-2008 academic year, some 41 percent graduated with no debt whatsoever.  Those students borrowing more than $40,000 to pay for their educations represented only six percent of total student borrowing.  Students borrowing money to pay for a certificate program carried substantially less debt overall than those borrowing money to pay for an associate or bachelors degree.  A meager one percent of those borrowing money for a certificate program found themselves $40,000 or more in debt upon graduation while ten percent of those borrowing to complete a bachelors degree carried that level of debt or more upon graduation.  The above statistics found in the College Board’s policy brief are logical when one considers the number of credits required to complete each of the three degree types compared above.  What’s not logical is the $40,000 threshold selected to evaluate reasonable debt loads.  Obtaining a $40,000 loan for a certificate program is almost certain to lead to a negative ROI unless the certificate is related to technical training in an extremely high paying profession.  Even then, it is a risky venture.  While borrowing $40,000 for a four year degree sounds better, it may not be relative to the average loan balance of graduating students.  The College Board briefing does not take into account the students who borrow money to attend college who don’t graduate at all, or the students who attend college until their money runs out.  Using limited outcomes with a broad brush to stimulate policy discussions can be misleading.  With approximately half of college freshmen graduating in six years, we shouldn’t ignore the half that don’t finish.

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It is hard to have a day go by where there is not at least one article in the major media about the high cost of college.  With the recession and its impact on state and local budgets, tuitions are being increased at many public colleges and universities and some institutions are reducing the number of students attending in order to cut costs for next year.  Unfortunately, these actions are not increasing the access and affordability of higher education in the United States.

While access and affordability of higher education have been stated goals of the Spellings Commission, the National Center for Public Policy and Higher Education (NCPPHE) in its annual Measuring Up reports, President Obama, and others, the recommendations for improving affordability are few and far between.  The Spellings Commission stated that colleges need to think more like entrepreneurs and examine partnerships and distance learning as options to improve access and cost.  Many in traditional higher education panned the Spellings Commission’s recommendations although little was said that had not already been identified by many of the other public policy organizations like NCPPHE, State Higher Education Executive Officers (SHEEO), Western Interstate Commission for Higher Education (WICHE), and The National Center for Higher Education Management Systems (NCHEMS).  This past January, I wrote an article for this blog about a survey of college presidents entitled The Iron Triangle: College Presidents Talk About Costs, Access, and Quality.  I was aghast that during a period of economic downturn, most of the presidents surveyed stated that the only solution to improving access was to provide them with more funding at the federal and state levels.  I wonder how many entrepreneurs have succeeded by waiting for more money to pay for a product rather than designing the product to meet the ability of their customers to pay for it.

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I have had a few weeks to think about President Obama’s Stimulus Act and its impact on higher education.  During the same period of time, I have read the daily headlines covering higher education in The Chronicle of Higher Education, Inside Higher Education, and New Realities in Higher Education.  The news is not good. 

In a typical year, the federal government contributes approximately $20 billion to higher education and the states contribute about $80 billion. At the state level, funding for higher education is behind mandated priorities such as K-12 education and Medicaid.  Many governors and legislatures have relied on the public’s willingness to bear tuition increases and in times of budgetary crisis, have pared back funding to higher education assuming that the colleges can increase tuition to offset the state funding cuts.  Given the fall in real estate values and real estate foreclosures, the unprecedented level of job layoffs at companies reacting to the economic downturn, the lower income taxes paid by fewer people working, lower sales taxes paid by people forced to pare back on their discretionary expenditures; it is inevitable that most of the state budgets have to be reduced this year and next.  Some states like Maryland are using some of the stimulus funds to delay cuts to education.  Other states are unable to use stimulus funds to absorb all of the declines in tax revenues and are cutting higher education before K-12.  Among the more notable state cuts that I have read about include:

• Tennessee – $180 million in cuts over two years
• North Carolina – $175 million in cuts this year and $191 million next year
• Washington – $500 million in cuts
• Arizona – $388 million in cuts
• California – $1.1 billion in cuts
• Louisiana – $219 million in cuts

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