Bailey points out that the public sector has frequently employed the expertise of private industry in various attempts to solve the nation’s problems.  For example, in March 2010, President Obama reached out to private-sector businesses, agreeing to provide some $150 billion in support of those businesses developing an alternative to foreign oil.  He said to the CEOs in attendance, “’Your country needs you to mount a historic effort to end, once and for all, our dependence on foreign oil…And in this difficult endeavor, in this pursuit on which I believe our future depends, our country will support you.’” 

In another example, Bailey points out that the Review of US Human Spaceflight Plans Committee established by the White House Office of Space and Technology Policy recommended that NASA seek private sector assistance in developing commercial spacecraft.  “The review argued that this would free NASA to focus its attention and investment on developing more advanced capabilities, particularly in deep-space exploration.”  In each of these examples, a significant problem or dilemma has been acknowledged and government has rightly recognized that private sector innovation has the business agility and market understanding to propose and execute a meaningful solution.

In the realm of education, however, the pattern of public-private cooperation has not held true.  Bailey states that “Instead of involving the private sector, education policymakers have actually created policy and funding barriers that skew support to non-profits and prevent for-profits from participating in programs aimed at improving teaching or learning.”  He uses the American Recovery and Reinvestment Act’s Investing in Innovation competition as an example of education policymakers “shutting out” private sector for-profit institutions.  He explains that Congress wrote that legislation in a way that effectively excludes the for-profit education sector. 

In explaining why government is hesitant to engage the private sector in the higher education debate, Bailey recounts some of the most pronounced criticisms of online education.  He explains that many fear that government support for for-profit universities could lead to “market distortion.”  On the other hand, systematically excluding the private sector can lead to its own variety of market distortions and fundamentally, “these concerns do not outweigh the benefits of having a thriving marketplace of private-sector entrepreneurs tackling social problems, particularly in education.”  Interestingly, there also seems to be resistance to government engagement of private sector education institutions because of a belief by some that one should not make a profit on education.  It is difficult, in my opinion, to justify this notion – especially in light of the fact that government engagement of private industry in the areas of clean energy, healthcare, and space exploration has set the precedent that it is okay to turn a profit while addressing some of the nation’s greatest challenges.  Additionally, no president of a non-profit college or university operates continuously on negative margins.  Prudent managers of non-profits are obligated to cover operating costs or explain why not.  The non-profit system actually encourages continued increases of expenditures during good economic times since the tax code questions a non-profit that continually generates a substantial surplus.  In order to reduce surpluses, additional projects are funded.  In addition, the taxpayer subsidies of non-profit entities are already very large.  In addition to allowing families of students to receive education tax credits, alumni and parents are allowed to deduct charitable gifts, and the institution does not pay income taxes on its endowment earnings, the receipt of charitable gifts, and generally, little to minimal property taxes and no income taxes are paid. 

Private enterprise plays an integral part in the fulfillment of national policy initiatives.  As Bailey points out, “Private industry routinely takes technologies pioneered by the government and turns them into cheap, reliable and robust industries.”  Why should online higher education be any different?  The federal government developed the initial product – education (via compulsory, free public K-12 education, and eventually the establishment of government subsidized institutions of higher education) – and placed significant value in obtaining that product.  In an era of considerable funding cuts and a bleak financial outlook for most institutions, it seems that now is the optimal time to engage the private sector for its opinion and ideas in order to reach President Obama’s stated education goals. 

Our military responded to a series of natural disasters this year.  In March, through Operation Tomodachi (Japanese for “friendship”) the Marines, Navy, and Air Force offered humanitarian and disaster relief assistance to the Japanese people affected by an 8.9 magnitude earthquake and tsunami that killed more than 15,000 and left millions more homeless.  Marine helicopter units delivered thousands of pounds of rice, bread, and other food items to the hardest hit areas.  In addition, a significant number of American naval ships responded including the USS McCampbell, the USS Curtis, the USS Mustin, and the USS Ronald Reagan. 

The US Army Corps of Engineers (USACE) moved into action when a series of severe storms this past Spring plagued the nation’s mid-section.  Tornadoes, floods, and other significant weather events left thousands in a desperate state.  The USACE worked diligently to ensure the safety of structures following those storms and to assist in meeting the basic needs of those impacted by the devastation. 

In the wake of devastating Hurricane Irene which pummeled the East Coast in late August,  National Guard and Coast Guard forces were deployed to the hardest hit areas on the East Coast within hours of the storm making landfall.  Select Army personnel were also involved in relief and rescue efforts.  The nation applauded the responsiveness of the military and FEMA personnel after Irene, commending the organizational structure for making necessary changes from lessons learned after Hurricane Katrina.  America’s men and women in uniform also provided assistance to “man-made” events, many that bolstered the cause of freedom and liberty around the world.

In March when the United Nations intervened to uphold a “no-fly zone” in Libya following Muammar Gaddafi’s crack down on anti-government rebels, the United States military was on hand to provide assistance.  US ships (in conjunction with British vessels) fired more than 100 Tomahawk cruise missiles at key Libyan air and ground defense systems.  With the assistance of American and other coalition forces, the people of Libya were ultimately successful in overthrowing the long-seated military dictator last month.

In May, American troops fulfilled a promise made to the American people on September 11, 2001 by capturing and killing notorious terrorist Osama bin Laden.  After months of gathering intelligence, US Special Forces infiltrated bin Laden’s compound in Abbottabad, Pakistan.  The terrorist was ultimately killed in the ensuing firefight though no US service members were lost.  In the aftermath of one of the most significant military operations in American history, President Obama applauded the diligence and commitment of the American armed forces.  In his nine minute address to the American people, President Obama told the nation that, “justice has been done.”

In the midst of these noble efforts and heroic accomplishments, however, the military suffered tremendous losses this past year.  August 6th marked the deadliest day for American forces in Afghanistan since that war began more than a decade ago.  On that day alone, thirty American troops, mostly elite Navy SEALs (some reported to have been part of the bin Laden mission), were killed when insurgents shot down a Chinook helicopter in which they were flying to aid a team of Army Rangers.  The entire month of August saw the loss of 66 US service members, making it the deadliest month for US troops since the war began. 

In total, 6,314 American troops have been killed in Afghanistan and Iraq since 2001.  438 of those troops were killed this year and, tragically, a number of whom were AMU students.  When I learn of the death of one of our students, it brings into perspective the unsung heroism of our nation’s military men and women and the veterans who served before them.  To everyone serving our country or who has served our country in the past, thank you for all that you do and have done to preserve the freedoms that we enjoy at home and abroad. We salute your dedication, commitment, and sacrifices.

In general, the report finds that revenues are down and spending (overall and per student) reflects that decline.  Recession-related state budget cuts meant deep cuts to educational appropriations.  As a result, schools in every sector of the industry raised tuitions (in some cases significantly) in an attempt to make up that difference.  American Recovery and Reinvestment Act (ARRA) funds may alleviate some pressure in the future but because most institutions did not begin receiving those funds until the last part of 2009, the impact of that funding source is not fully captured in the report. 

Some of the most striking statistics are related to community colleges.  In 2009 alone, community colleges were educating more than 6.5 million students, accounting for approximately one-third of all the nation’s college students.  Though shouldering a large portion of the burden of educating the nation’s college students, community colleges also saw the largest funding declines during the decade.   

The authors point out that “nationwide public appropriations for higher education never completely rebounded from the 2001 recession, and the 2008 recession is proving to be more serious and longer lasting.”  This decline in appropriations has trickled down to have a direct impact on the student.  In an attempt to make up the lost appropriations, most colleges and universities increased tuition consistently over the decade.  Unfortunately for the student, however, most such increases failed to make up the entire difference in lost appropriations and did not equate to an increase in spending per student.  On average, increases in tuition revenues made up for only about half of lost appropriations except for at public community colleges where tuition increases accounted for less than half of the difference. 

The findings outlined in Trends in College Spending are particularly salient in the current economic environment.  As the report’s authors note, when compared to the 2001 recession, “…the 2008 recession is proving to be more serious and longer lasting.”  Even though the recession was identified as “over” in mid-2009, the economy has clearly not rebounded and unemployment remains significant (9.1% as of last month).  According to Mark Kantrowitz, publisher of FinAid.org, “the average increase in annual college enrollment during a recession is 567,400 (4.5% of total college enrollment), compared with 150,800 (1.2% of total college enrollment) between recessions.”  Between 2008 and 2009, as reported in the Trends in College Spending report, enrollments in US colleges and universities increased by more than 860,000 students, “nearly a 5 percent increase since 2008 and the single largest one-year increase since the mid-1970s.” 

One of the only positive trends found in the data is related to educational productivity.  In 2002, colleges and universities began providing data on undergraduate credit hours per degree.  The analysis done for the Delta Cost Project report show that colleges and universities are using credits earned more effectively, reducing total credits to be taken to earn a degree.  The authors note that more effective use of credit hours earned has “translat[ed] into a ‘savings’ of nearly a half a semester’s worth of credits.”  This is a very positive finding especially when one considers the increase in tuition rates across the board and decrease in spending per student. 

As the authors point out, the ramifications of the “Great Recession” of 2008 are still being felt and will continue to reverberate through the industry for at least the next several years.  President Obama, however, has stated that it is his hope and intention that America regains its standing as number one in the world for number of college graduates.  In considering the policy implications of the study’s findings, the authors note that even with the improvements in instructional efficiency, much more needs to be done if the nation is to achieve the President’s goals.  The report notes that reaching such an ambitious goal (the United States currently ranks 12th in the world), “will require improvements in educational performance at every level of the educational pipeline, from high school graduation to college completion, averaging 4 percent per year.  The gains in degree/certificate completion reported here are close to 1 percent per year, and by themselves are not enough to meet the attainment goals…” 

NCLB, at the time of its passage, was intended to provide “increased accountability for States, school districts, and schools; greater choice for parents and students, particularly those attending low-performing schools; more flexibility for States and local educational agencies (LEAs) in the use of Federal education dollars; and a stronger emphasis on reading…” The Act ties federal education dollars to performance on standardized testing.  In large part, this stipulation has been the foundation for continued criticisms of the program. 

With federal funds tied to the performance outcomes of standardized testing measurements, many claim that teachers began “teaching to the test.”  Rather than explore the entirety of the curriculum, many teachers and school districts have been accused of focusing solely on the materials that they know will be on “the test.”  This summer, NCLB took a significant hit to its already shaky reputation when more than 100 teachers, principals, and public school officials in Atlanta were allegedly involved in altering students’ answers on the state’s Criterion Reference Competency Test (CRCT) to make it appear as if students were scoring higher on that standardized test than was actually the case. 

Other critics of NCLB claim that the federal government is requiring significant expenditures of the states in order to meet the various requirements of the Act.  For example, by requiring schools to provide “highly qualified” teachers to every student, some school districts may have to increase their teacher salaries.  The federal government has never fully funded NCLB and many states bemoan the various costs associated with the Act that the federal government does not cover.  Some consider the situation a Catch-22: many states are failing because of inadequate and less-than-qualified teachers.  Requiring them to employ more qualified teachers and staff will also require them to spend money, money that many states are having difficulties finding.

Dan Lips, education analyst at The Heritage Foundation, reported in November 2006 that during the Bush Administration, federal spending on public education increased significantly.  The organization states, “Annual U.S. Department of Education spending on elementary and secondary education has increased from $27.3 billion in 2001 to $38 billion in 2006, up by nearly 40 percent.”   Lips noted in his report that this increase in funding had done little to improve the quality of American public schools and many were facing the same challenges that were in front of them at the inception of NCLB.  Beginning in 2006, however, federal education spending dropped significantly until 2010 when it jumped again to levels even higher than federal education spending in 2006. 

Last week, President Obama announced that he would allow states to liberate themselves from the burdens of some of the elements associated with No Child Left Behind.  Obama stated that he was providing greater flexibility to states because “’We can’t let another generation of young people fall behind.’”  Specifically, States will have an opportunity to apply for a waiver which would allow them greater autonomy in dealing with troubled or failing schools.  In order to expect the waiver to be granted, however, states would be required to show that they have been raising standards. 

Perhaps not surprisingly, President Obama tied the imperative of improving educational standards in the United States to the current economic situation.  He stated to an audience of education leaders attending a meeting on the topic at the White House that, “’We are in the midst of an enormous economic challenge…the most important thing we can do is make sure that our kids are prepared for this new economy.’”  This sentiment aligns with the President’s consistently-stated goal of increasing the nation’s college graduation rates so that America is once again the preeminent nation in that ranking. 

President Obama’s announcement about his waiver program coincides with Congress’ reconsideration of the Elementary and Secondary Education Act (ESEA).  Passed in the mid-1960s as part of President Lyndon B. Johnson’s “War on Poverty,” the ESEA has been the overarching policy guiding elementary and secondary education in the United States since its passage.  President Bush’s No Child Left Behind Act was the reauthorization of the ESEA in 2001.  By mid-October Congress is expected to begin an intense review of ESEA.  Given the current political situation, it will be interesting to see if any significant changes are proposed and, if so, how closely the final ESEA reauthorization bill lines up with President Obama’s latest initiative offering NCLB waivers for individual states. 
 

A 2006 report from the Commission of the European Communities titled “Delivering on the Modernisation Agenda for Universities: Education, Research, and Innovation,” noted that the “modernization of Europe’s universities, involving their interlinked roles of education, research and innovation” is a “core condition” for the success of the Lisbon Agenda.  In that same year, the Spring European Council agreed upon the establishment of the European Institute of Innovation & Technology (EIT) which would “contribute to improving Europe’s capacity for scientific education, research and innovation, while providing an innovative model to inspire and drive change in existing universities, in particular by encouraging multi-disciplinarity and developing the strong partnerships with business that will ensure its relevance.”  Additionally, the Commission called on member nations to create national systems that allowed for geographic mobility of degrees between various EU member states, greater autonomy with strengthened accountability for universities, incentives for partnerships between universities and the business community, and an increased “employability” of graduates. 

To this end, EU member nations set forth their own individual agendas geared to meet the goals of the Lisbon Agenda, although few developed comprehensive national strategies in a timely manner.  In 2005, for example, Ireland introduced its “National Reform Programme” which called on the government to double R&D investments, increase participation in higher education by currently underrepresented groups, and decrease the number of students who prematurely leave their educations.  Spain committed significant funding to “growth and employment priorities” including building up access to higher education as a means to fulfilling the goals associated with the Lisbon Agenda.  In France, the government used the Lisbon Agenda as justification for educational reforms that increased spending on science and research and development by 3 percent.  After joining the EU in 2004, Slovenia attempted to catch up with its colleagues in regards to the Lisbon Agenda.  By June 2005, the government of Slovenia published its “Development Strategy” which included some “interventions in the field of higher education and research.” 

Today, more than 11 years since the signing of the Lisbon Agenda, it is clear that these efforts were not enough.  Many heads of state of EU nations have admitted the failure of the Lisbon Agenda.  In the summer of 2009, Swedish Prime Minister Frederik Reinfeldt wrote in an article published in the Swedish daily paper, Dagens Nyheter, that “even if progress has been made it must be said that the Lisbon Agenda, with only a year remaining before it is to be evaluated, has been a failure.”  Many decry the nonbinding nature of the Lisbon Agenda as one of its greatest failures.  Despite its shortcomings, many EU heads of state have called for the program to be re-launched.  Spanish Prime Minister, Jose Luis Rodriguez Zapatero, has encouraged member states to analyze and understand the failures of the Lisbon Agenda when moving forward with another ten-year program with similar goals.

Recent news stories from around EU member nations, however, leave many questioning how much attention heads of state will give to Prime Minister Zapatero’s advice.  Nearly every EU nation is facing a financial crisis similar to that of the United States and like their counterparts in the US, publicly funded European universities are suffering.  In Latvia, for example, significant cuts to the nation’s education budgets have left many students uncertain about their academic futures.  Each of the nation’s 34 universities is facing deep budget cuts with one estimate noting a “threatened 50 percent cutback to the planned higher education budget…”  Universities in Italy, Ireland, Iceland, Estonia, Romania, Lithuania, the Czech Republic, Croatia, Serbia, and the Former Yugoslav Republic of Macedonia are also experiencing significant higher education budget cuts. Germany is a notable exception.  Most German universities are fully state-funded and require little to no tuition for attendance and the federal government continues to make significant investments in German higher education.

While the Germans continue to make significant investments in their higher education system, other EU member states are struggling with how to actualize the recommendations of the Lisbon Agenda.  As early as 2005, many were already realizing that the Lisbon Agenda was doomed.  European Commission President Jose Manuel Barroso of Portugal told a gathering in Brussels in early 2005 that “’The overall Lisbon goals were right, but the implementation was poor.  The lesson from the last five years is that we must refocus this agenda to deliver results.’”  Since its expiration in 2010, many have called for the revitalization of the agreement, either in its original form or in a somewhat altered form.  In the face of the “Great Recession” of 2009, very few European economies were left unscathed leading many to reiterate the importance of the ideals of the Lisbon Agenda.  As a result, the Europe 2020 Strategy has been put forth as the “new and improved” Lisbon Agenda.  With so many heads of state acknowledging the importance of education and innovation as a driver of economic development and experiencing the failures of the Lisbon Agenda, it will be interesting to see what alterations are made to the new Europe 2020 Strategy and how that program will impact the higher education systems and ultimately the economies of the EU member states.  The European higher education model is not significantly different than the U.S. higher education model.  Given the significant cuts to higher education support that we’ve seen in states like California and the resulting increases in tuition costs to students, a similar outcome of limiting access to higher education is likely at a time when neither states (U.S.) nor countries (Europe) can afford to decrease the number of their college graduates.

To see headlines regarding the financial state of international higher education, see the “International” section of the “Impact of the Economy on Higher Education” portion of my blog. 

Within only a couple months of taking office, President Obama announced his goal to increase the national college graduation rate which is woefully low (40.4 percent, according to statistics from the College Board) compared to those of other nations including Japan (53.7 percent), Russia (55.5 percent), and Canada (55.8 percent).  One of the main initiatives associated with President Obama’s plan to boost college graduation rates included a proposal to provide $12 billion in funding to US community colleges over a ten year period.  Per the President’s plan, however, these funds would be for use in improving programs, courses, and facilities; not, in other words, to assist students in paying for their degrees at these schools.  Obama also told community colleges that he would like to see them play a more active role in creating jobs while simultaneously graduating five million more students than current rates by the year 2020. 

Two years after tasking community colleges with such an ambitious goal, the unemployment rate lingers around nine percent nationwide, down slightly from when President Obama took office but still painfully high for many college graduates.  Whenever the economy tanks, college enrollments tend to rise as people return to school in hopes of earning a degree that will help them stand out in a highly competitive job market.  With state funding dwindling and colleges and universities forced to make hard economic decisions, many students are finding it difficult to even get into a classroom thanks to faculty layoffs, program cuts, and other actions taken by many schools in an attempt to balance their budgets.  Without question, so many cuts are leading to fewer scholarship opportunities across the board. Combining scholarship cuts with tuition and fee increases, the dollar amount of educational loans has grown dramatically even as other forms of consumer debt have remained static or even decreased.  According to an article in Texas’ Star-Telegram, “Total student debt was $550 billion at the end of the second quarter [of 2011]…up 25 percent from $440 billion in the third quarter of 2008…”  The Project on Student Debt reports that some two-thirds of students graduate from college with educational loans and the average amount of these loans is up substantially.

All of these factors are compelling many to question whether the cost of college is worth the value of a degree.  On the one hand, some claim that college degrees are overrated, not nearly as imperative as students are led to believe.  Richard K. Vedder, Ohio University professor of economics and founder of the Center for College Affordability and Productivity, notes that “eight of the ten job categories that will add the most employees during the next decade – including home-health aide, customer service representative, and store clerk – can be performed by someone without a college degree.”  Vedder recommends that rather than encouraging high schools across the country to prepare every student for college, they work to prepare every student for the workplace instead.

For me, the more compelling evidence is found on the side of the argument reinforcing the importance of higher education in America.  Aside from the fact that if we devalue college educations in this country, we are sure to continue to outsource our highest paying jobs to other nations, the value for the individual consumer is also consistent.  According to the Lumina Foundation’s September 2010 report titled, “A Stronger Nation through Higher Education,” “It appears that increasing attainment can actually drive economic growth – and therefore job creation.”  The US Department of Education’s National Center for Education Statistics notes that in 2009, students with only a high school diploma or equivalent could expect to make a median salary of around $33,000 while those with a bachelor’s degree could expect upwards of $51,000.  It is important, however, that colleges and universities examine their fixed cost models and evaluate alternative delivery methods capable of decreasing the costs from the current levels that are increasingly unaffordable.

As the debate continues, it is important to qualify my assertion that college is worth its cost by saying that it is equally as important that students make informed and educated decisions about which college or university they attend.  Comparing institutions can assist potential students in determining which schools offer the best values, most well-rounded programs, most successful advising services, etc.  In the long term, an individual with a college education is more likely to earn more over the course of his or her lifetime than someone with only a high school diploma or equivalent.  The nation as a whole benefits from having a highly educated citizenry.  If we discourage our young people from attending college, we will undo generations of hard work toward demonstrating that education is important while simultaneously falling behind our international competitors. 

When I completed my MBA from Tulane’s Freeman School of Business in 1978, I thought I had completed all of my formal academic studies.  After graduation from Tulane, I sat for and passed the CPA (Certified Public Accountant) exam, the CMA (Certified Management Accountant), and the Fellow exam for the Healthcare Financial Management Association.  Maintaining those certifications required annual continuing education hours, but not academic credits.  Usually, I could earn 40 hours of credit per year by attending a couple of two day seminars along with a single day seminar.

Enrolling in Penn’s doctoral program in Higher Education Management put me in a position not too dissimilar from many of the students we serve at the American Public University System (APUS).  I was working full-time, married, raising two children, and trying to balance those responsibilities with my class assignments.  I couldn’t put class first by any means, but I also couldn’t neglect it unless I wanted to fail or drop out.   I developed a system whereby I allocated time on weekends and evenings for completing assignments.  This worked great as long as I didn’t have to change my work schedule or my class assignments.  Whether it was a special project at work that caused me to work evenings and weekends to complete or a team assignment at school that couldn’t be completed during the times that I had open, those adjustments to my schedule created a temporary crisis in my patterns for completing my studies on time.  Generally, the professors in the program at Penn were accommodating and I was able to stay on track.  My wife was also understanding and allowed me to miss some of our family events in order to meet academic deadlines.

When I reflect on the circumstances that allowed me to complete my degree on time, I think of the wonderful support that I received from my professors, my wife, and my coworkers.  Not all adult students are that fortunate.  Some may be single parents and cannot ask a spouse to review the children’s homework while they’re in another room completing a paper or reading an assignment.  Others may have a boss who is not supportive of them leaving work early to attend class or finish a paper that must be submitted at midnight.  Students serving in the military may have to deploy or while deployed, leave on a several week mission that provides no down time for communicating with family much less working on college homework.  Completing a degree at any level while you are working full time and raising a family is a major accomplishment; unfortunately, many of our nation’s policy makers completed their degrees as full time students and can’t appreciate the difficulties and the sacrifices that working adults who are part-time students have to make in order to progress toward graduation.

President Obama has stated that America needs to increase its percentage of college graduates.  His initial focus has been to increase funding to community colleges.  Those efforts won’t be enough.  The federal student aid system has been designed primarily for full-time students.  Better funding mechanisms for part-time students should be provided as well.  The primary tracking system for federal student aid tracks the institutional graduation rates of first time, full-time students within a regular period of time (typically four years) and within 150 percent of that time and 200 percent of that time.  Transfer students are not tracked at all.  Part-time students carrying a course load of four courses per year will take 10 years to earn a baccalaureate degree if they never take a break from attending school.  Very few people can go through a decade of life without some major event occurring that could interrupt their studies.  Moreover, many people complete a couple years of college, drop out for various reasons, and then pick it back up again years later when they realize the importance of the degree for promotions and/or job opportunities.  As a country, we are not tracking the successes of our part time, working adult students nor are we finding ways to improve those successes.  Given the shrinking numbers of high school graduates who graduate from college in six years, I think it’s time that we examine ways in which we can enhance the educational success of our working adults.

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.

Lewin points out in her article that “over all, for all kinds of degrees and settings, the median student loan debt of borrowers in 2007-08 was $15,123, up 11 percent from…2003-04.”  There are many who argue that even this amount of student debt is too much.  It seems ironic that today’s students seem to realize the importance of a college education as evidenced by increasing enrollments nationwide yet are often hindered in their efforts by the daunting costs.  A later article in the September 4th issue of The Wall Street Journal cites evidence of the government’s National Postsecondary Student Aid Study (NPSAS) that two-thirds of college students borrow money for college while only 12 years ago, just over half of all college students borrowed money to fund their educations with the average amount borrowed significantly less ($13,172) than it is today ($23,186 according to the article).

An article published in The Chronicle of Higher Education on the same day the New York Times article appeared takes a different view on the data presented in the report.  The author, Beckie Supiano, writes of the increasing level of student debt over the last five years rather than focusing on the 41 percent who manage to graduate with no student debt.  Supiano also points out in her article that the data does not account for PLUS parent loans, loans to students from family members or friends, or credit card debt accumulated from paying college tuition.  College students and recent graduates are carrying more credit card debt than their counterparts who graduated only four years ago.  According to a recent study conducted by Sallie Mae, today’s graduates leave college with 41 percent more credit card debt than those who graduated only four years ago with one in five owing at least $7,000 in credit card debt upon graduation.  Only 20 percent of students with credit card debt reported paying off their balances every month.  Considering the increasing levels of credit card debt among today’s college students and recent graduates, taking such debt into consideration may dramatically change the report’s conclusions. 

While the College Board appears to find these results reassuring, there are several elements of the big picture that should be given consideration.  First, “manageable” is a relative term.  What may be “manageable” for one individual may not be for another.  While there is obvious value in identifying trends in the higher education industry, we must be careful to realize that individual cases matter.  As the report states, there are still at least ten percent of the 2008 graduating class who are carrying $40,000 or more in student debt.  When the National Center for Public Policy in Higher Education issues its annual Measuring Up report, it reports college affordability data by income quintile since earnings above or below these thresholds can be quite influential over the ability of a student to attend college.  Given the fact that students from the higher income quintile groups have a higher college completion rate, the College Board’s usage of data from graduates only doesn’t reflect the overall picture.

Additionally, in today’s turbulent economic conditions, job prospects for recent college graduates are limited.  Factor in jobs that pay a “good” salary and the options shrink that much more.  As I discussed in an article earlier this summer, recent college graduates are struggling to find relevant jobs, much less one that pays them a salary high enough to live and pay off their student loans in a timely manner.  A May 9 article in The Wall Street Journal predicted that “even those who land jobs will likely suffer lower wages for a decade or more compared to those lucky enough to graduate in better times.”  As The Wall Street Journal article of September 4th points out, many recent college graduates are so economically strapped by student debt upon graduation that they are beginning to delay significant milestones in their lives including getting married, buying houses, and having children.  The article notes that a 2006 survey conducted by Mathew Greenwald & Associates, Inc. found that of 1,508 college graduates under the age of 35, 39 percent believe that it will take them more than ten years to pay off their household’s education-related debt. 

Lastly, the College Board  analysis  does not differentiate between full-time students and part-time students.  Attending part-time not only allows a student to maintain some form of employment while in school, it also may be a method used to avoid incurring significant student debt.  The Associated Press (AP) published an article on August 28th that outlines President Obama’s plan to boost Pell Grants in an attempt to not only increase access to college opportunities but to provide greater affordability for low-income students.  The plan would “ensure lower interest rates for need-based college loans” and “provide more college aid to veterans.”  Pell Grants are funds that a recipient is not required to pay back.  Even with President Obama’s stated goals for the Pell Grant system, however, many question whether the initiative goes far enough in addressing the economic burdens of attending college.  For example, as the AP article describes, “the maximum Pell Grant last year was $4,731” while “public college tuition and fees were $6,585.”  It is important to note that not every Pell Grant recipient receives the maximum amount and even if he or she is so lucky, there remains a shortfall of nearly $2,000 still needed to attend even a public college.  Additionally, there are no caps on tuition increases in the Federal Financial Aid system similar to the Medicare and Medicaid systems in healthcare.  Increasing Pell Grants may not make any headway if colleges continue to increase tuitions at rates higher than the earnings of the average family.

 The College Board data does not reassure me that today’s students are not carrying as much debt as many previously thought. There are conflicting sources of data that make it appear that the College Board’s policy piece is not representative of the entire college continuum.  I think the nation’s policymakers would be better off commissioning a consumer survey to see what the debt expectations are of our graduating high school seniors and their families and then comparing that data to the various sectors (fulltime, part-time, etc.).  The enrollment shift that appears to be occurring this fall and may well continue into the spring semester and next year may prove that the student consumers have become more educated than the organizations who study them.

Brooks notes that behavioral differences are starting to surface between the groups.  According to Brooks, divorce rates are twice as high for high school grads as college grads, high school grads are twice as likely to smoke, high school grads are much less likely to exercise, college grads are twice as likely to vote, college grads are twice as likely to volunteer, and college grads are twice as likely to donate blood.

Brooks maintains that today’s information society has increased the gap between high school and college graduates.  In an information society, a college degree is a must.  Students need to recognize the importance of that as early as ninth grade in order to prepare for college.  Students from families with parents who have attended college have a greater chance of going to college than students from families that don’t have a parent who attended college.  Furthermore, Brooks states that students in the lowest per capita income quartile of the population have an 8.6 percent chance of graduating from college versus students in the top income quartile who have a 74.9 percent chance of graduating from college.

Brooks indicates that poorer kids are graduating from high school in increasing numbers but it is when they get to college that they drop out.  Brooks quotes Thomas Mortenson of the Pell Institute for the Study of Opportunity in Higher Education who says that colleges have done a great job of educating the affluent since 1980 but have done a terrible job of educating the bottom half of the family income distribution.

Brooks states that given the rising flow of aid money, financial barriers are not the main issue.  I am not sure that his assumption is correct.  If Brooks were to write about the practice of tuition discounting and its usage in college enrollment management, I think he would change his comment about the rising flow of aid money.  According to the National Association of College and University Business Officers’ (NACUBO) Tuition Discounting Survey released in May, approximately 81 percent of full-time freshmen received institutional grants (also known as tuition discounts) in the fall of 2007.  The overall tuition discount rate for 2007 was approximately 40 percent.

One of the best quick-read articles about the practice of tuition discounting and its impact on the poor is by Matthew Quirk and was published in the November 2005 issue of The Atlantic.  Quirk mentions the many consultants who assist colleges in managing their enrollment management and tuition discounting programs.  Noel-Levitz is one of the largest and better known enrollment management consulting companies, but there are many former college admissions officers who offer their expertise to schools desiring to use enrollment management techniques.  Simply put, an example of tuition discounting might be when an institution decides to redistribute $20,000 of institutional grant money by splitting it in $5,000 grants to four students who can afford to pay the difference between the published tuition rate and the net tuition after the institutional grant than if the institution provided the grant to one student who needs all of the money.  Institutional grants are also used to attract students who have good SAT scores who might go elsewhere.  Students are put on a grid with financial need on one axis and academic ability on the other.  The institutional grants are adjusted to increase the yield rate on students with the most desired characteristics being academic superstar and ability to pay full tuition.  Increasing the numbers of full-pay students increases net revenues to the institution and increasing academic superstars helps increase an institution’s academic ranking in the U.S. News & World Report annual college survey.  One of the quotes in the article that I find notable is from Gordon Winston, an economist at Williams College, who stated about enrollment management, “it’s a brilliantly analytical process of screwing the poor kids.”  Not all colleges who practice enrollment management intend to hurt the poor, but it is difficult to deny that merit aid often benefits the more affluent.

While both of these articles are from 2005, the facts have not changed that much.  Tuition discounting is still a major practice at many colleges and universities, including public institutions.  The prospects for the poor to attend college are still low.  Data in the Measuring Up 2008 report, published by the National Center for Public Policy and Higher Education, will demonstrate the severity of the issue.  Figure 5 in that report shows the growth rate of college tuition from 1982 to 2006 as 439 percent.  In the same chart, median family income has grown over the same period by 147 percent.  Table 1 illustrates Net College Costs as a percent of median family income.  Net College Costs are the cost of tuition, room and board less financial aid.  Since 1999, those costs have increased from 7 percent to 9 percent for the upper income quintile and from 39 percent to 55 percent for the lowest quintile.  Most first-year economics students learn that the lower a family’s income, the lower its disposable income.  I don’t see how 20 percent of a poor family’s income would be an acceptable choice for a prospective college student much less 55 percent.  Clearly, the financial aid system does not provide adequate funding for the poor.  Table 2 in the report demonstrates the impact of tuition discounting strategies by showing that upper quintile families receive more money in average institutional aid than students in the lowest quintile.

While this writing describes the dichotomies created by institutional grants and tuition discounting, the financial aid system also includes Federal Student Aid or FSA.  FSA has been in the news lately because of President Obama’s intent to increase the maximum award to students under the Pell Grant program.  This year’s maximum award per student is $5,350.  The size of the award is based upon the student’s Expected Family Contribution (EFC) and the enrollment status of the student (you must attend at least half time to receive an award, but only full-time students are eligible for the maximum award).  Ironically, attending a lower cost institution like a community college may decrease the student’s cost of attendance which means that they’ll be eligible for less financial aid.  Additionally, many lower income students have to work in order to pay for costs of living that many affluent families provide to their children.  Work can decrease the time that a student has to attend school, thus reducing his ability to be determined a full-time student and receive the maximum Pell award.  Income from a job can also decrease the dollar amount of an aid reward.  A low income student working to make ends meet can end up with little aid awarded to assist them with their educational costs.

Organizations like the National Center for Public Policy and Higher Education produce data like the Measuring Up report regularly.  It appears, however, that advocacy for the poor as it relates to the affordability of college for their children has not generated a substantive change in financial aid.  Increasing the maximum Pell Grant by only 225 percent while college tuition grew at 439 percent from 1982 to 2006 is probably the most visible evidence.  The fact that lower income families participate in higher education at a much lower enrollment rate than upper income families is not strictly due to aid issues, but money is the biggest issue and the gap is not closing.

According to a May 2009 report published by the Brookings Institute, enrollments in community colleges increased between 2000-2001 and 2005-2006 by 2.3 million students.  In total, community colleges enroll approximately 45 percent of the nation’s college students.  Community college populations represent far greater diversity than is found on traditional four-year campuses.  According to the Brookings Institute, in 2004, 67 percent of Latino and 47 percent of African-American students entering college were enrolling in community colleges.  Given the large volume of community colleges in the nation, they provide affordable and convenient options for many groups otherwise underrepresented in other higher education institutions.  Community colleges are also appealing for non-traditional-aged college students, many of whom are juggling families and full time jobs. 

Federal, state, and local funding for community colleges has been abysmal when compared to funding for public four-year colleges and universities.  By one estimate, four-year public colleges receive greater than three times the amount provided to community colleges per full time student.  According to the Brookings Institute report cited above, “from 2003 to 2008, state budgets for all public services – Medicaid, transportation, corrections, public assistance, and other expenditures – grew at an average rate of nearly 6 percent, but growth in state support for higher education lagged 1.5 percentage points behind.”  This translated into substantially less funding for community colleges leading to additional problems including significant cuts in amount spent per student at these schools, lack of resources for effective faculty training, and neglected maintenance projects on community college campuses. 

A recent article from Time Magazine noted that “these institutions are our nation’s trade schools, training 59% of our new nurses as well as cranking out wind-farm technicians and video-game designers – jobs that, despite the ballooning unemployment overall, abound for adequately skilled workers.”  An article on CNN.com quoted the President as saying, “’jobs requiring at least an associate degree are projected to grow twice as fast as jobs requiring no college experience.’”  Community colleges are quite appealing to many students who seek associates degrees.  The Chronicle of Higher Education reports that many community colleges are facing such overwhelming enrollment increases that some students are being turned away, unable to enroll at all. 

While visiting Macomb Community College in Warren, Michigan, President Obama outlined the specific elements that would come with the American Graduation Initiative.  Telling the crowd that “Time and again, when we placed our bet for the future on education, we have prospered as a result,” he likened the significance of the program to that of President Lincoln’s innovative land-grant program that established numerous colleges around the country and President Roosevelt’s signing of the GI Bill.  According to the president, the American Graduation Initiative “will reform and strengthen community colleges…so they get the resources that students and schools need – and the results workers and businesses demand.  Through this plan, we seek to help an additional 5 million Americans earn degrees and certificates in the next decade.”  For those perhaps concerned about the program’s impact on an already unprecedented federal deficit, President Obama added, “And let me be clear: We pay for this plan – this isn’t adding to the deficit; we’re paying for this plan – by ending the wasteful subsidies we currently provide to banks and private lenders for student loans.” 

A White House “fact sheet” on the program outlines several specific actions to be taken under the American Graduation Initiative.  To address the low completion rates found in many community colleges (the Brookings Institute notes that only one-third of community college students obtain a degree of any kind within six years of enrollment), President Obama’s plan will provide funds for community colleges that develop innovative strategies for addressing low completion rates among their students.  Additionally, funds will be earmarked for maintenance and renovation of out-dated buildings as well as for updating equipment and resources in labs and other “hands on” disciplines. 

Interesting for those in the online education community is President Obama’s plan to establish an “Online Skills Laboratory.”  “Teams of experts in content knowledge, pedagogy, and technology” will develop the courses and the Departments of Defense, Education, and Labor will work together to provide the courses online for free through one or more community colleges as well as the Defense Department’s learning network.  There has been little doubt that the Obama Administration understands the benefits of online learning; the Department of Education recently released a report that highlighted the effective and beneficial nature of online education (see my recent blog article on this topic). 

Many are touting the significance of the American Graduation Initiative.  A recent article in The Chronicle of Higher Education quotes David S. Baime, vice president for government relations at the American Association of Community Colleges (AACC), as saying, “’There’s never been a federal program anywhere close to this size targeted specifically at community colleges.’”  In an email to member presidents, Molly Corbett Broad, President of the American Council on Education (ACE), wrote, “The president should be applauded for his effort to enhance the good work being done at our nation’s community colleges.  This investment will go a long way toward meeting our nation’s work force needs at this critical time when the economy is struggling to rebound.” 

There is no doubt that America’s community colleges provide access to higher education for millions of American students and they will play an integral part in the president’s overall higher education agenda.  I have one concern regarding this program.  To the best of my knowledge, there is nothing that prohibits states from shifting money away from two year colleges to four year colleges.  If other initiatives relating to the Stimulus Act are any indication, I am concerned that this money will not prove to be incremental funding to community colleges, but instead will be a back-end subsidy of other programs inside the states most strapped for money.