Higher Education

Update: New America has released Saftey Net or Windfall? Examining Changes to Income-Based Repayment for Federal Student Loans. The paper can be accessed here.

Next week, the New America Foundation will release a paper examining pending changes to the Income-Based Repayment (IBR) program for federal student loans. Today, we are releasing the calculator we used to develop our findings.

The pending changes to IBR are the result of an Obama administration proposal to change the federal student loan program’s existing Income-Based Repayment (IBR) plan—which caps borrowers’ payments at 15 percent of their incomes and forgives any remaining debt after 25 years of payments—by reducing payments to 10 percent of a borrower’s income and providing loan forgiveness after 20 years of payments. Congress enacted this proposal two months after the President proposed it in his 2010 State of the Union address, but limited it to students who take out their first loans on July 1, 2014 or later. Anxious to deliver those benefits sooner, the Obama administration announced last year that it would instead make the plan available as early as this year—to borrowers who took out their first student loans in 2008 or later and borrowed at least one loan in 2012 or later. The final regulations are still pending.

To date, policymakers and advocates have provided little information about the benefits that the impending changes to IBR will provide to borrowers with different income and debt profiles over their entire repayment terms...

Read the full post on Ed Money Watch.

 

In his 2010 State of the Union address, President Obama urged Congress to change the federal student loan program’s existing Income-Based Repayment (IBR) plan, which caps borrowers’ payments at 15 percent of their incomes and forgives any remaining debt after 25 years of payments. He argued that high college tuition was an untenable burden for the middle class, and that by reducing payments to 10 percent of a borrower’s income and providing loan forgiveness after 20 years of payments, lawmakers could provide borrowers with relief.

Update: New America has released Safety Net or Windfall? Examining Changes to Income-Based Repayment for Federal Student Loans. The paper can be accessed here.

Next week, the New America Foundation will release a paper examining pending changes to the Income-Based Repayment (IBR) program for federal student loans. Today, we are releasing the calculator we used to develop our findings.

The pending changes to IBR are the result of an Obama administration proposal to change the federal student loan program’s existing Income-Based Repayment (IBR) plan—which caps borrowers’ payments at 15 percent of their incomes and forgives any remaining debt after 25 years of payments—by reducing payments to 10 percent of a borrower’s income and providing loan forgiveness after 20 years of payments. Congress enacted this proposal two months after the President proposed it in his 2010 State of the Union address, but limited it to students who take out their first loans on July 1, 2014 or later. Anxious to deliver those benefits sooner, the Obama administration announced last year that it would instead make the plan available as early as this year—to borrowers who took out their first student loans in 2008 or later and borrowed at least one loan in 2012 or later. The final regulations are still pending.

To date, policymakers and advocates have provided little information about the benefits that the impending changes to IBR will provide to borrowers with different income and debt profiles over their entire repayment terms. Instead, they illustrate what a borrower with a certain income and debt load would pay for one month under IBR. (The Obama-Biden 2012 campaign website’s “Student loan reform: The facts” is just one example of the short-term illustrations.) Unfortunately, that sort of snapshot view leaves a lot of important questions unanswered:

• How do the pending changes to IBR affect borrowers over time, as their incomes change?
• How much can a borrower earn and still receive loan forgiveness?
• How much will he have forgiven if his income follows a certain path over his career?
• How does the program compare to other repayment options offered on federal student loans, like consolidation, over the long term and in terms of monthly payments?
• Can a borrower end up paying more overall under IBR than other plans?
• Will the pending changes provide windfall benefits to higher-income borrowers?

We searched for answers to these questions, but thus far, no one seems to have asked them—even though the new IBR program will enroll its first beneficiaries by the end of this year. So we developed our own IBR calculator to examine how borrowers fare under the old (2009) IBR and the new (2012) IBR and other repayment options.

Our findings will be published in the forthcoming paper, Safety Net or Windfall?: Examining Changes to Income-Based Repayment for Federal Student Loans, next week. In the meantime, we are making available here for download the New America Foundation IBR calculator. We encourage readers to use it to see for themselves what the pending changes to IBR will mean for borrowers. (The calculator allows users to enter in a borrower’s initial loan balance and income over 25 years to display monthly and total payments as well as loan forgiveness under the old and new IBR.)

North Carolina state board of education may not comply with state officials' budget request

Texas Governor Rick Perry pushing tuition freeze, $10,000 degrees

Kansas Democrats foresee $900 million in education cuts

Idaho suit takes on school fees

North Carolina state board of education may not comply with state officials' budget request
The North Carolina State Board of Education plans to ignore a request from state budget officials that the agency design a series of budget proposals that both increase and decrease spending by 2 percent in the 2013-2014 biennium from fiscal years 2011 and 2012. A two percent change in the state’s education spending would total about $150 million. In opposition to the state budget office’s request, however, the state board of education instead plans to deliver a third option. According to education officials in the state, the past several years of cuts have made further budget cuts untenable, so the education budget the board passes this fall will instead represent a third option. Still, the chairman of the state board of education said it may submit all three options to the state office in the interest of fulfilling its legal obligations. More here...

Texas Governor Rick Perry pushing tuition freeze, $10,000 degrees
Governor Rick Perry of Texas repeated his call for a four-year tuition freeze for incoming freshman at the state’s colleges and universities. He is also pushing for a higher education financing reform that would link 10 percent of a school’s state funding to measures of student outcomes like graduation rates, as well as an effort to persuade schools to offer $10,000 degrees for students. Two University of Texas campuses, Dallas and El Paso, already offer a four-year tuition freeze to freshmen, and nine schools already offer or are planning to provide a $10,000 degree option. The higher education measures come amid a national push to lower college costs and decrease the growing debt burden students take on. However, the state legislature cut almost $1 billion from state postsecondary institutions in fiscal year 2011, a challenge to colleges that want to cut costs for students despite the state budget cuts. More here…

Kansas Democrats foresee $900 million in education cuts
Leading Democrats in Kansas say that Kansas Governor Sam Brownback’s tax cuts passed last session will lead to nearly $900 million in cuts to state K-12 and higher education spending over the next five years if the cuts are distributed across the budget proportionally. Governor Brownback says that the projections, which were prepared by the nonpartisan Legislative Research Department, are wrong. Instead, he says that the tax cuts will spur economic growth that will lead to a higher tax revenue. Democrats are also criticizing the governor for stacking a “School Efficiency Task Force” with accountants and business leaders but no educators, saying it’s designed to provide cover for cutting education spending. More here…

Idaho suit takes on school fees
A class-action lawsuit filed this week in an Idaho District Court charges that the state’s public K-12 schools are in violation of the Idaho constitution because they are charging registration fees to enroll in the school. The suit was filed by Russ Joki, a former school district superintendent, whose granddaughters were charged $45 each for kindergarten registration and whose grandson was charged $85 to enroll in a public high school. The suit rests on a 1970 Idaho Supreme Court case in which a $12.50 textbook fee and a $25 fee to receive transcripts were deemed unconstitutional. According to the attorney who filed the lawsuit, the court is being asked to refund one year of fees to parents in the state – a cost of more than $2 million to the state. The lawsuit is being filed during an ongoing debate over education reforms that Idaho voters will approve or reject in the November elections, as well as three consecutive years of budget cuts. More here…

Will Romney and Obama discuss education during Wednesday's domestic policy debate?

On this week's podcast, Education Policy Program Director Kevin Carey and Education Week reporter Alyson Klein explain what they’ll be watching for during the debates and what questions they’d like to hear the candidates answer. Also on this podcast, Clare McCann, program associate for the Education Policy Program, breaks down the education issues driving the New Hampshire gubernatorial race. This is the first of three installments about key state and Congressional elections.

To understand how public universities reached their present state of decline and near-crisis, you might look back a century and a half to July of 1862, when Abraham Lincoln signed the Morrill Land Grant Act into law. The act, to which we can credit many of the higher-education triumphs of the United States, did not, as is sometimes believed, give states acreage upon which to build huge public universities. Instead, each state was granted rights to federal land in the western territories, the income from which would be used to create:

Michael Waltz explores the controversy surrounding the recently published ex-Navy SEAL book about the Osama Bin Laden raid, and Amy Laitinen explains how the credit hour – a ubiquitous metric never meant to measure learning – is threatening America's educational standing in the world. Elizabeth Weingarten hosts.

The basic currency of higher education — the credit hour — represents the root of many problems plaguing America's higher education system: the practice of measuring time rather than learning. Cracking the Credit Hour traces the history of this time-based unit, from the days of Andrew Carnegie to recent federal efforts to define a credit hour.

Over the past few years, every new day has seemed to bring news of another higher education technology startup company promising to change the world. According to the National Venture Capital Association, investment in education technology jumped from $100 million in 2007 to nearly $400 million last year. Clearly, something is going on. So, on Easter weekend earlier this year, I flew to Silicon Valley to find out what, and why. The result was a long article in Washington Monthly, called “The Siege of Academe.” It was published earlier this week and you can read it here.

Some of the reasons I knew, or had guessed, beforehand. The world has changed since the first wave of ed tech startups went belly-up after the late-‘90s / early 00’s dot-com boom and bust. Educational tools have become more sophisticated and computing power cheaper as broadband access and mobile technology have spread. What I didn’t really understand until I got there was how the economics of technology startups have changed, too.

Washington, DC — The basic currency of higher education — the credit hour — represents the root of many problems plaguing America's higher education system: the practice of measuring time rather than learning, according to a report co-released today by the New America Foundation’s Education Policy Program and Education Sector.