Education

Senate Interest Rate Compromise on the Way – and it Saves Students Money

June 24, 2013

A bipartisan group of senators (King, Manchin, Burr, and Coburn) is reportedly drafting a bill that would prevent interest rates on Subsidized Stafford loans from doubling on July 1. Their proposal would set market-based interest rates on all newly issued federal student loans. It looks similar to proposals from Senators Coburn (R-OK) and Burr (R-NC), President Obama, and the New America Foundation. How does the proposal compare to other options for setting rates? We decided to run the numbers.

The interest rates would be set at the 10-year Treasury yield plus a 1.9 percent markup for undergraduate loans; a 3.4 percent markup for graduate Stafford loans; and a 4.4 percent markup for Grad and Parent PLUS loans. Media reports indicate that the plan produces budgetary savings over 10 years with a 2.0 percent markup on undergraduate loans, and the bill’s sponsors are likely to further reduce the rates to ensure the compromise proposal is budget neutral. That puts the markup for undergraduate Stafford loans in the 1.9 percentage point range.

Using this information, we ran scenarios comparing the bipartisan Senate bill with an extension of current policy (3.4 percent Subsidized Stafford, 6.8 percent Unsubsidized), current law (both loan types at 6.8 percent), and the president’s proposal, which also pegs fixed-rate loans to the 10-year Treasury note but adds a different markup to that rate.

Our calculations are a bit more complicated than others so as to be more accurate. We account for the fact that undergraduate borrowers typically borrow both Subsidized and Unsubsidized Stafford loans. Our calculations are based on an undergraduate who borrows the maximum in both loan types.

And we account for the fact that lower interest rates on Unsubsidized Stafford loans reduce the amount of debt borrowers have when they leave school (interest accrues on these loans while borrowers are enrolled, so a lower rate means less interest added to the total loan balance while in school). That effect lowers a borrower’s monthly and total payments. We also hold the 2013-14 interest rate constant for four years of borrowing. We don’t profess to know where interest rates are headed; instead, we assume today’s rates are constant.

The tables below show the average interest rate at repayment, the debt at repayment, and the monthly payment under a 10-year fixed repayment plan under each interest rate scenario outlined above for an undergraduate who borrows the maximum. The bipartisan Senate plan provides nearly identical terms as the president’s plan when translated into monthly payments, though the Senate plan has simplicity going for it—both loan types have the same interest rate. More importantly, both plans would be better for students this year than letting the 3.4 percent rate expire, or even extending it.

06242013 Weighted Interest Rate Comparis

The bipartisan Senate proposal could increase the budget deficit by $30 billion in the next five years, a cost that some Senate Republicans are willing to swallow in exchange for a market-based rate. That sure looks like the bipartisan compromise that everyone says they want to see more of in Washington. Amazingly, other Democratic lawmakers cannot decide if a $30 billion rate cut is enough, because interest rates might, sometime in the future, on average, end up higher under the proposal than under current law, negating that new spending. They are, in other words, holding out for a sure thing and more money to boot. But what if rates stay lower for longer? By holding out for more, Democratic lawmakers will have torpedoed their only chance at providing students and parents a shot at those lower rates.

Student advocates and Democratic lawmakers may be looking a gift horse in the mouth. 

What Obama's Pre-K Proposal Could Mean for Head Start

June 24, 2013

This guest post was written by J.M. Holland, a Head Start teacher in Richmond, Va., and adjunct faculty in the school of education at Virginia Commonwealth University. He writes about education at The Collaborateurs,  formerly The Future of Teaching

To be honest, President Obama’s recent re-commitment to improving quality and increasing access to early childhood education was a surprise to me. I knew that he had an interest in early childhood, because as a Head Start educator I have experienced first hand his interest in early childhood through the Designation Renewal of Early Head Start and Head Start grantees.  And when the Obama administration set accountability as a priority in its efforts to strengthen Head Start it made sense to me. There have been calls for revisions of Head Start funding for years. I am not sure if there will be unintentional negative consequences down the line but any effort toward change takes that risk.

Storify: House Ed & Workforce Committee ESEA Markup

June 19, 2013

On Wednesday, the House Education & Workforce Committee convened to debate Chairman John Kline's (R-MN) proposed Elementary and Secondary Education Act reauthorization. Ranking Member George Miller (D-CA) also proposed his own version of the bill. ICYMI, here's the play-by-play.

Click here for the Storify of last week's Senate HELP Committee markup.

Storify: House Ed & Workforce Committee ESEA Markup

June 19, 2013

Click here for the Storify of last week's Senate HELP Committee markup.

Update: A New NCLB Reauthorization Cheat Sheet

June 19, 2013

After the partisan markup in the Senate Health, Education, Labor, and Pensions Committee, it is the House of Representatives' turn to debate reauthorization of No Child Left Behind. The Student Success Act, offered by Rep. John Kline (R-MN), is set for a markup Wednesday morning in the House Education and Workforce Committee. Accordingly, we’ve updated our Senate markup cheat sheet to provide a comprehensive, side-by-side comparison of current law, the Obama administration’s waiver policy, and the current legislative proposals in the Senate and House. You can download the new cheat sheet here.

Here are a few of the highlights from the Kline proposal:

  • The Student Success Act would eliminate over 70 programs and consolidate many stand-alone programs (for instance, Title III for English Language Learners) into Title I, with flexibility for states and districts to shift money between them. The bill would also eliminate maintenance of effort requirements, meaning states and local school districts would not be penalized for spending less on required education programs.
  • Kline would not require states to adopt college- and career-ready standards, but they would have to maintain academic content standards – and aligned assessments – in reading, math, and science. And the bill includes really specific language, over and above the Alexander proposal, to prohibit the federal government from promoting participation in the Common Core State Standards initiative in any way.
  • The bill, similar to the Alexander proposal, would allow states to design whatever school accountability and improvement systems they want, including setting performance targets (if any). Kline would also clamp down on the Secretary of Education’s authority to offer waivers to states and districts in exchange for external conditions.
  • Kline, however, would be more prescriptive than either Harkin or Alexander in one area: teacher evaluations, with states required not only to develop them, but also to use the results to make personnel decisions.
  • Kline would not allow Title I funding to follow the child to other public or private schools, but there is speculation that a backpack funding provision could be added to the Student Success Act at a later point. House Majority Leader Eric Cantor (R-VA), for example, has expressed an interest in some sort of portability provision.

Stay tuned to Ed Money Watch and Early Ed Watch for continuing coverage of these bills and the markup, as well as any alternative proposal from Rep. George Miller (D-CA), the Ranking Member on the House committee. And be sure to follow the markup on Twitter with me, @afhyslop, and my colleagues @LauraBornfreund and @ConorPWilliams

Waivers (of Waivers) Watch: If It Looks Like a Pause, and It Sounds Like a Pause…

June 18, 2013
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Earlier today, U.S. Secretary of Education Arne Duncan weighed in on the question of whether states can delay their timeline for using Common Core assessments in accountability systems for schools and teachers. The tests are set to be fully deployed during the 2014-15 school year, and according to the original policy for offering No Child Left Behind waivers, the results from the assessments would also be used for school accountability and educator evaluations that year (except in states that applied for waivers after August 2012 – see this nifty chart for a full breakdown). Under the new policy, however, states would be able to apply to hold off using the evaluation results for personnel decisions for an extra year – meaning that, in some states, the results from the 2014-15 year would be used to provide feedback and inform professional development only.

The question of whether to “pause” or place a “moratorium” on Common Core implementation has divided education stakeholders. Fifteen organizations, including the American Federation of Teachers and National Education Association, support a moratorium on high-stakes accountability (including student promotion and graduation policies, personnel decisions, and school improvement designations) associated with the Common Core. Instead, these groups - the Learning First Alliance - would like to focus all immediate efforts on improving the supports teachers have to adopt the Common Core, including professional development, curriculum, technology infrastructure, and other resources. On the other hand, Chiefs for Change – a group of eleven reform-minded chief state school officers – urged Secretary Duncan to maintain the Common Core implementation timeline, even for high-stakes decisions, noting that states made these commitments years ago and should not backtrack on accountability.

Others took a slightly more measured approach, but still supported a pause on some components of implementation. The Council of Chief State School Officers asked for state flexibility in three areas: school ratings, teacher evaluations, and which assessments to use for accountability during 2013-14. Some states could maintain the rigorous timelines laid out in their waiver plans, while others could choose to slow down on one or all of these components.

And it appears that Secretary Duncan chose to take the CCSSO route, more or less. States could apply – if they want – to delay the most serious consequences for teachers, like decisions to award tenure or dismiss staff, for one year. Additionally, states would have new flexibility for implementing assessments and school accountability systems. They could apply to use either existing state assessments or Common Core field test results for accountability in the 2013-14 school year (to avoid the so-called “double testing” problem).

While Secretary Duncan insisted the new policy is not a “pause” or a “moratorium” on Common Core, it’s hard to distinguish between an “extension” – the language used by the Department – and a “pause.” No matter what you call it, the requirement for waiver states to use evaluations for personnel decisions can be shelved for a year. And there is no question that states have had a lot of time to fully transition to the Common Core – in most cases, over four years, longer than they had to implement all of the components of No Child Left Behind. In the words of Chad Aldeman, “If this isn’t enough time, what would be?” Will opposition to using teacher evaluations for personnel decisions really die down by the time 2016 rolls around? Further, the new policy could create additional confusion in an already confusing waiver process. It says something that the Department has to release a four-page, state-by-state chart just to explain the timeline for implementing the waiver components (still waiting for a state-by-state chart explaining what they’re actually doing – a far more complicated question).

Still, the Secretary’s decision is a fair compromise between the competing advocacy groups’ positions. And I give credit to the Department for one thing: holding firm on the most critical component of accountability, continuous improvement. More so than the punitive consequences, like school closures and teacher dismissals, accountability really serves to provide meaningful and transparent feedback to schools and educators and give them a roadmap to improve. During the transition to college- and career-ready standards, it is imperative for both schools and teachers to be evaluated on their progress and to use information from evaluations to improve the implementation process. If accountability and other incentives for educators are not aligned to the standards, what kind of signal does that send about the value of implementing them well?

So yes, there will be a pause. And members of Congress can now wave binders full of waivers, and then waivers of waivers, during hearings. But at least the Department is not pressing pause on what’s most important: its expectations for higher standards, better assessments, and continuous improvement.

English Language Learners in Rep. Kline's Student Success Act

June 18, 2013

The parade of bills that could replace No Child Left Behind continues this week with Wednesday’s markup of Rep. John Kline’s (R-MN) version. All signals suggest that this won’t be the year Congress finally updates the nation’s most comprehensive education law—and the substantial differences between Kline’s and Sen. Tom Harkin’s bills have a lot to do with these dim prospects. We’ve already seen what Harkin’s Strengthening America’s Schools Act would mean for English Language Learners (ELLs). Today we’ll take a similar look at Kline’s bill, the Student Success Act (SSA).

Student Stories from Gainful Employment Programs UPDATED

June 17, 2013

Last week, Higher Ed Watch took a look at some of the gainful employment policy questions raised in the over 900 public comments submitted to the Department of Education. While policy discussions will ultimately be the most important considerations as the regulatory process moves forward, it's also important to remember that these issues do affect real people. So today we're looking at what some current and former students at these programs had to say in their comments.

Ambition and hope do not pan out in Wisconsin

For many low-income and non-traditional students, going to college can be a source of hope and a chance for a better life, even in spite of fears about not having succeeded academically in the past. That sense of opportunity is prevalent in a combined set of 13 comments from students who now appear to be enrolled in courses at Milwaukee Area Technical College. These comments almost all start on a hopeful note with a sense of excitement for a better life. Many detail previously unachieved academic successes in these programs--high grade point averages, scholarship-winning essays--the type of accomplishment that shows they are college-caliber material. But then the reversal--a degree with no return, a dispute over further debts, no change in status--that leaves them arguably worse off and in debt. (The original comments have been temporarily taken down from Regulations.gov with a request to remove personally identifiable information, so I created a redacted version here.) 

A story from one woman who enrolled at Sanford Brown to become a probation officer encapsulates this emotional roller coaster:

I was so excited about going to Sanford Brown College. I was sold because I was told I could get small class sizes and get extra help if I needed and graduate faster because the courses were 5 weeks long and you went to school year round until you graduated. 
...
I went ahead and took the admissions test and paid $50.00 for it. I was told by the financial aid personnel that I could also write a 500 word paper on why higher education was important and win a $1,500 scholarship. I won the scholarship because of the paper I wrote. I was so excited and proud of myself. I was looking forward to the wonderful future my 3 kids and I were going to have. I was going to finish college and finally have a career which I loved which was helping people. I was assured by all the admissions people at Sanford Brown College that I had made the right choice to attend that college. They all were so friendly and seemed to want this as much as I did.
 
But it was not to be. After attending from August 2006 to September 2008, the woman believed she had graduated but ended up not being able to do so after a dispute with the institution over whether she still had an outstanding balance on her account. She never ended up finding a job in the criminal justice field and owes $25,000 in student loans and cannot transfer her credits. Now the campus she attended, which had a 27.5 percent student loan default rate in the last year and charged the lowest income students a net price of nearly $18,000, is shutting down. 
 
Those who went from the highs of success to the disappointing workforce reality pulled no punches on their sentiments. For example, one student in the Milwaukee area who graduated from a dental assisting program at Everest College in 2011 wrote: "My intentions were to give my children a better future by bettering myself through education. Everest ripped that dream away from me and is the reason I am struggling today with a $12,000 loan." A student who finished at Everest with a 4.0 grade point average in the same program had the same reaction, calling her experience the "beginning of a long unfinished nightmare."
 
[UPDATE: On Twitter, Robert Kelchen notes that the Milwaukee branch of Everest College closed after placing only 95 out of its 1,585 students in jobs since opening in October 2010. An Inside Higher Ed article from February also notes that Milwaukee is increasing scrutiny of for-profit colleges.]

Confusion rules the day

Given all the work that's been done to raise questions about some gainful employment programs, it's fair to ask why students are still choosing to enroll in certain ones that already have bad outcomes (see 27 percent default rate at Sanford Brown). The answer, at least partially, appears to be confusion. Lack of clarity around costs, expected return, likelihood of finishing, transfer opportunities, and ability to pass licensing tests whether credits would transfer, and whether they will even be able to sit for the necessary licensing tests pop up again and again in a host of comments. (See for example, this comment about trying to get an animation degree or page 4 of the document labeled "student complaints.")

Confusion can be one way to shift personal responsibility away from the individual and to the program, but it also seems to be a symptom of our opaque higher education system and false quality assurance provided by accreditation. In a working transparent market, concerns about cost, transfer, etc. should not be happening. The fact that they are again reiterates the importance of efforts like the College Scorecard and Financial Aid Shopping Sheet, which try to standardize information to help with comparisons may be some assistance, but are struggling to get widespread adoption.

But better information is not enough unless either: 1) consumers change their behavior and take a more skeptical and less trusting approach to choosing colleges or 2) they have a better quality assurance that the institutions where they can take their aid have been sufficiently vetted to merit a more trusting relationship. Right now, students face the worst of both worlds thanks to accreditation. With the imprimatur of accrediting agencies (and thus by implication the Department of Education), accreditation provides a false sense of security for students that breeds an implicit level of trust toward the institution that may not be warranted. Unlike a mechanic you've never used before, a student trusts her accredited college will charge her a reasonable price and give her a service that works. And she does that because some other group of people have reviewed the college to check its quality. Experts in higher education have signed off on it, so why shouldn't she trust that seal? And so students trust that their accredited institution will offer accredited law degrees in their state--but that's not always true, as a student from Iowa found out when he tried to get a law degree from a program whose lack of recognition from the American Bar Association meant California was the only state in which he could become a lawyer. Or they might assume that their credits could be used at colleges beyond the one they are currently attending., which was not the case for many students who tried to take their coursework from proprietary institutions to Milwaukee Area Technical College.

Solving this issue of trust can be done one of two ways. First, Congress could change the requirements around accreditation to compel these agencies to actually set clear standards for outcomes and results--including things like having necessary programmatic accreditation--which would likely result in closing some institutions and accreditors for poor performance. Or, we could go the opposite way and acknowledge that accreditation is not a meaningful indicator of anything and students should not assume that just because a college gets federal student aid that means they should assume it's any good. The former is extremely difficult politically. The latter is not only hard to accomplish but would make the path into college even more confusing for low-income students that currently have to trust and rely on their financial aid office for help navigating Federal grants and loans. Either way this issue indicates more must be done to think about not just what information consumers use for their decisions, but also how they interact with the colleges they are considering attending.

Does this really require a college credential?

Also implicit in the trusting attitude of students is the assurance that program will be what it says it is--training that will provide them access to a job. Now in any system, some programs will be better than others and there will always be a few duds.  And commenters did identify some that appeared to be not very good--students discussed outdated or insufficient equipment (imagine learning how to work with braces on half a mouth) or instructors without sufficient content knowledge. But assumed in all of those comments is the idea that the program would have been better had those deficiencies just been corrected. Never would a student assume that the degree itself is fundamentally not reflective of how the fields they are preparing for actually operate. Yes one student who attended  Sanford Brown in the Milwaukee area found out that misalignment problem was exactly what her program suffered from:
 
The majority of companies hiring for Billing have on the job training for people who have been hired by the company including Aurora Healthcare. ... The HIPPAA, JCAHO and Medical Terminology courses are being given as on the job training as free computer based learning courses. Positions in Coding for hospitals are impossible to get into without years of experience. The Certificate I received has not been useful to me and is not worth the $17,000 I now owe. 
 
The commenter raises a point that goes beyond the idea of whether a program merits the price charged and debt incurred to instead ask is it even aligned with fields or occupations where postsecondary education really provides an advantage for entry and advancement? In the case of the coding program, she suggests that even an extremely good program would not have been worth it because that is not how the coding industry works. This isn't a derivative of the "bachelor's degree holders working in restaurants" argument, but rather the idea  that even someone who gets employment in the relevant field may not actually need that credential. It's a challenge to the idea that if a college or university offers a program it is by definition "postsecondary." 
 

Signs some schools are taking steps to improve--is it enough?

To be sure, there's a lot of comments that do no paint a flattering light of the programs and the institutions that offer them. But there are some rays of light suggested in the comments. Some institutions have shut down poor-performing programs, while others have closed entire branches that did not appear to be succeeding. Outside the comments, the University of Phoenix and Kaplan University have been among the large institutions to get noticed for offering trial periods and experimenting with new curricula to boost quality. In these cases, schools do appear to be responding to market forces in positive ways. The task ahead then is to figure out how to keep driving those kinds of changes so that stories of future students can focus only on the hope and not the disappointment and regret that followed. 

Hillary Clinton, the 'Accelerator' and More

June 17, 2013
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Early childhood advocates received some big shots of energy last week. First,  former Secretary of State Hillary Clinton declared her dedication to early childhood, including her participation in a national initiative cleverly titled “Too Small to Fail.”  Second, the J.B. and M.K. Pritzker Family Foundation, announced social impact bonds and $20 million in investments in the first phase of its public-private partnerships projects known as the  “Early Childhood Innovation Accelerator” project.

Storify: Senate HELP Committee ESEA Markup

June 13, 2013

Tuesday and Wednesday, the Senate HELP Committee convened to mark up Chairman Tom Harkin's (D-IA) bill to reauthorize the Elementary and Secondary Education Act. @NewAmericaEd's Anne Hyslop and Conor Williams live-Tweeted, and we've collected some of the main takeaways here, ICYMI.

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