Performance-Based Funding: A Helping Hand for Higher Education Institutions

29 Oct

So far in my blog, I have discussed the rising cost of obtaining a post-secondary education and its’ impact on the United States people and economy.  In this post, I would like to turn your attention to the colleges and universities themselves and how they can be helped by their state governments through an alternative form of funding.  Since the beginning of the recession in 2007, the federal and state governments of the United States have all had to make numerous budget cuts.  As a result of these budget cuts, funding for higher education institutions suffered as government officials chose to spend their state’s limited amount of money in other areas.  I pointed out an example of higher education being negatively impacted by budget cuts by discussing the federal government’s decision to no longer provide subsidized loans to graduate students in my last post. It is because of the budget cuts by both the federal and state governments that institutions have had to hike up their tuition costs.  With the amount of student debt in the United States rapidly rising and accessibility of higher education being a hot topic in this year’s election, performance-based funding by state governments for higher education institutions is now being discussed as a solution for the lack of funding put towards colleges and universities. Performance-based funding is provided to colleges and institutions not on the basis of enrollment, as is typical, but on the basis of course completion, credit attainment, and degree completion.  Performance-based funding was experimented with by 26 states from 1979 until 2007, at which point 14 states had stopped using this funding system because of design flaws.  These early performance-based funding systems failed due to the state governments’ inability to recognize the differences between performance and completion standards for community colleges and large universities.  Today, what is being called “performance-based funding 2.0” is being adopted by states such as Ohio, Pennsylvania, Tennessee, Washington state, Louisiana, and Indiana.  The systems of performance-based funding provided by these states are avoiding the mistakes of the past by taking into account the differences in standards between community colleges and universities, rewarding institutions for not only degree completion but also progress, and providing incentives to institutions for different behaviors.  Performance-based funding 2.0 is still very new and a work in progress but has shown success in the state of Pennsylvania where the government set aside $36 million to reward schools for meeting certain targets.  In my opinion, performance-based funding is something that all states should consider implementing as more money put towards higher education will lead to lower tuition costs, greater degree completion, and more skilled workers for the US economy.  While this type of funding cannot solve all of the problems surrounding higher education costs right now, it is a possible solution that should be considered extensively by the federal and state governments of America.

Graduate Students: Getting the Short End of the Stick

25 Oct

While my previous posts have largely focused on higher education in terms of undergraduate programs, I’d like to turn your attention now to the situation for graduate students in the United States today.  With the issues concerning education in the current election mainly concerning K-12 education and the accessibility of an undergraduate education, the financial conditions for graduate students seem to have fallen away from the limelight.  That is until Congress voted this summer to now make graduate students responsible for paying the interest that accumulates on their loans while in school.  This elimination of subsidized loans for graduate students was part of the debt ceiling compromise decided on by President Obama and Congress.  The reasoning behind this budget cut is that out of all the cuts possible, this one would pose the least problems.  I understand that the taking away of subsidized loans from graduate students allows funding for the Pell Grant program to remain the same, and I strongly support the Pell Grant program, but I do not support eliminating help for some students to provide more help to others.  I oppose the government on this decision because the burden of attracting more students has now increased for graduate schools.  This budget cut moved $125 billion from subsidized to unsubsidized loans for graduate students.  With graduate students now having to pay back not only their loans but the interest that comes along with them, the amount of debt they could face after graduation has influenced many in whether or not they even pursue a graduate degree.  This is another reason I do not support this financial decision; making graduate school more difficult to pay for negatively impacts the amount of graduate degrees achieved by U.S. citizens.  People with graduate degrees are important to American society not only because of the advanced talent and knowledge they provide but also the competitive edge they give America in the world economy.  I realize that this budget cut will save the government $18  billion over 10 years, but I believe officials can work to find a better way to save this money than taking away from graduate students and hurting the competitiveness of the United States.  I am no financial or political expert so I’m not sure what a “better way” would be, but I believe the next leader of the United States should strongly consider the importance of graduate students and their degrees before taking away their subsidized loans.

To see how rising costs for graduate students is impacting one North Carolina university already, click here.

Dear colleges, we need your help too! Sincerely, Students of America.

23 Oct

In a previous post, I focused on the role of the federal government in higher education and supported my position approving more regulation of educational institutions.  While I support greater involvement on the federal government’s part in making higher education more accessible, I also believe it is the job of colleges and universities to make paying for college a simpler process. Paying for college has become a rather confusing process for college students and their families as the difference between loans and grants is often not understood.  A grant, such as one from the Pell Grant Program, is funding for college given to a student that does not have to be repaid. A loan, provided by the government or banks, must be repaid by the student. With about 60% of the 20 million students attending college in America borrowing each year to pay for college, I feel that colleges and universities should provide a way for students to be as informed as possible about their payment options when choosing an institution. Therefore, I support the creation and distribution of the Financial Aid Shopping Sheet by all higher education institutions in America. In July of this year the U.S. Secretary of Education, Arne Duncan, sent a letter to college presidents nationwide asking them to adopt the shopping sheet. The shopping sheet for each college will provide students with a better understanding of the total cost of college, costs covered by loans and grants, and financial aid the student may be eligible for.  Currently, 478 institutions have adopted the use of the shopping sheet, serving 12.6% of the total undergraduate population.  With the number of institutions using the shopping sheet continuing to grow, students “shopping” for college will have a wide variety of sheets to compare.  The adoption of the shopping sheet is a step in the right direction for college involvement in making higher education more accessible.

An Analysis of Higher Education in the World of Politics

22 Oct

The origin of higher education dates back all the way to 1088 in Bologna, Italy with the act of those who were well learned in grammar and logic beginning to study law.  Shortly after in 1096, the first lectures were held at Oxford University in England.  The idea of higher education in Europe and Asia eventually spread to the United States with the creation of Harvard University in 1636. By 1776, eight other universities had been created in America.  During this age, access to higher education was rather limited with only the elite attending.  The goal of these early educational institutions was to create either scholars or clergymen.  However, Benjamin Franklin who founded what is now the University of Pennsylvania wondered whether or not the importance of higher education is to increase general knowledge or to provide skills used towards earning a living in a specific field. This is a debate that still exists in higher education today.  Following the founding of the first eight universities in America, the 20th century saw the opening of public research universities in America and all across the world.  The opening of these public institutions provided not only the elite but also the “common man” with access to higher education.  The 20th century also saw the beginning of government involvement in higher education.  During the Great Depression, the National Youth Administration spent $93 million to help 620,000 students attend college.  Government involvement increased also during the years of the Cold War with America spending almost $1 billion each year on  scientific research done by colleges and universities across the country. Currently, the US government devotes 3% of the federal budget to education.  A portion of this 3% is devoted specifically to higher education.  This money devoted to higher education is divided among research, general funding, financial aid, and student loans. In today’s political world, there are several questions involving higher education; Why is it important? How involved should the federal government be in higher education? and the hot topic of this year’s presidential election, How can higher education be made affordable for all?

One of the arguments surrounding higher education in politics is why it is important or necessary for United States citizens to have some kind of degree or certification from a college, university, or trade school following their high school education.  Dr. John Ebersole, President of Excelsior College, sums up this argument well in his blog post about whether or not higher education should even be considered a political issue.  Dr. Ebersole sees the issue of higher education not as a political issue by itself but as a concept related to the growth of the American economy.  While I am analyzing all arguments surrounding higher education, I support Dr. Ebersole’s position.  Dr. Ebersole not only supports higher education because he is the President of a college but also because he believes it is beneficial to the economy for more Americans to earn a college degree.  “Those nations with a highly educated workforce are more competitive in a global economy,” writes Dr. Ebersole.  Dr. Ebersole supports this statement by presenting the fact that higher education leads to greater employment opportunities.  He reports that the current unemployment rate for someone with a bachelor’s degree is only 4% compared to the national rate of 8.1%. This statistic clearly shows that a college degree is undeniably beneficial to both the individual citizen and the economy as that citizen’s skills will contribute to economic development.  In 2011 the Brookings Institution, a nonprofit public policy organization that conducts research and acts as a think tank for American democracy, conducted the Hamilton Project to calculate the value of a college education.  The goal of the project was to calculate what the best investment of $102,000, the cost of obtaining a 4-year college degree, would be.  Researchers analyzed if it would be more beneficial for an 18 year-old to invest $102,000 in obtaining a college degree or to invest it in stocks and bonds  and take his or her chances in the limited job market of someone with only a high school degree.  The results of the project found that the investment in a college degree yielded a 15.2% return per year which is more than double the average return of the stock market over the past 60 years, only a 6.8% return.  According to this project, it is clear that the value of a college degree is worth the cost.  Another report from the Brookings Institution done in August of 2012 analyzed the gap between job openings in urban areas and levels of education of residents in those areas. Overall, the report discovered that those with higher education provided numerous benefits to the economy.  These benefits included a specialized workforce, job creation, and higher spending power that boosts demand for local services. Aside from the evidence presented by Dr. Ebersole and the Brookings Institution, other statistical info available from numerous sources shows that higher education is necessary and should be of political concern through unbiased FACTS. For example, the Minnesota Office of Higher Education presented that the average income for someone with a high school degree in 2011 was $23,504 per year as compared to someone with a Bachelor’s degree earning $54,756 per year. The Huffington Post presented the finding from a study that discovered college graduates earn 84% more over a lifetime than those with only a high school degree. The Bureau of Labor Statistics shows the comparisons in unemployment rates and weekly earnings of those with only a high school degree and those with the different levels of college degrees in this table titled “Education Pays. “ The undisputed answer to the question of the importance of higher education in politics is YES, it is necessary. Now the question is, how should the government be involved and how can higher education be made affordable to all?

Student loan debt began to exceed credit card debt in the United States for the first time in June of 2010. The total debt was $830 billion with $665 billion of that being federal education loans and $168 being private student loans. In 2011, a college graduate owed an average of $26,600 in student loans. Financial aid and student loans provided either federally or privately are the means by which families and students in the United States have begun to increasingly rely on to pay for college.  The main issue of higher education in politics today is how the federal government should make education more accessible through the use of student loans and federal aid while also decreasing the amount of student loan debt in the nation today. Currently, student loan debt in the United States exceeds $1 trillion and is continuing to increase. One of the ways in which the federal government has provided access to higher education is through the Pell Grant program. The Pell Grant program originated in 1972 as an amendment to the Higher Education Act of 1965. The Federal Pell Grant Program provides loans to students that do not have to be repaid.  These loans are given to students, mainly undergraduate but some graduate students as well, who have a low-income. These grants are a part of the government’s effort of encouraging interest in and access to higher education.  About 5,400 colleges and universities participate in the Pell Grant Program and the maximum grant awarded for the 2011-2012 year is $5,550. Student loan programs like the Pell Grant program are at the heart of the issue of student debt reduction.  The current situation of student loan programs is being largely impacted by the Budget Control Act of 2011 which raised the debt ceiling for the federal government.  This act allowed congressmen to approve a $17 billion increase in funds for the Pell Grant program in 2012 and 2013.  The con to this increase though is that in order to provide these funds the government must cut spending in other areas and limit eligibility for the Pell Grant.  The Budget Control Act also led to other student loan programs being cut such as those offering interest reductions to students who pay loans on time.  Taxpayer funding, a way in which public universities are funded, is also being impacted by the economic downturn as this type of funding is beginning to decrease.  With less tax payer dollars, colleges and universities will increase tuition which will in turn increase students’ dependence on the government and student loan debt.  With the process of paying for higher education becoming a vicious cycle of debt and despair, those currently in office and running for office in Washington and across the country have been called to turn their attention to the issue.  Steve Goodman, an education consultant and college-admissions strategist, presents the argument that government should increase their regulation of colleges and universities in order to prevent “runaway tuition.” Goodman believes that while it is necessary for colleges to increase costs at times because of requests for better facilities, research and development, and new laboratories, the government needs to step in and force institutions to contain their costs. Goodman also points out that colleges are exempt from paying taxes and that “self-policing” by these institutions has not worked as shown by the increases in tuition.  For example, Stanford University’s tuition grew from $6,285 in 1980 to $40,050 currently. Goodman believes the solution to this problem is for the government to require institutions whose tuition is above the Consumer Price Index to take money from their endowment funds to create grants for students.  Another part of his solution is to create a committee to enforce these regulations that would be composed of university representatives, economists, Fortune 500 employers, and consumer advocates.  The committee would oversee that those universities who do not follow the regulations provided by the government would lose their eligibility to be exempt for taxes.  This consequence would act as an incentive to force institutions to follow the guidelines as they would most likely rather lower tuition costs than pay taxes.  However, Goodman also presents the reasoning behind why increased government regulation of colleges and universities is not wanted as their freedom to research and expand should not be limited.  Goodman presents a rather radical point of view on government involvement.  The position of conservatives when it comes to higher education and the role of the federal government is that most decision-making concerning costs and how money is spent should be left up to local and state governments based on their policies that may not be nationwide. Gail Sunderman, a senior research associate in K-12 education for the Civil Rights Project at UCLA, details the changing role of the federal government in education and the different viewpoints in her writing of The Federal Role in Education: From the Reagan to the Obama Administration. (This link will connect you to the webpage containing the PDF file of Sunderman’s writing).  While countless Americans have varying opinions on the issue of higher education, how it should be made more affordable, and how the government should be involved, the two positions most significant to American society are those of President Barack Obama and Mitt Romney.

President Barack Obama, a democrat, has shown strong support for higher education throughout his time in office and current campaigning through his emphasis on the importance of obtaining a college degree. After the United States was ranked 16th in the world in the number of citizens with college degrees, President Obama encouraged every American to attend at least one year of education beyond high school in order to increase the United States ranking in number of college graduates by the year 2020. President Obama believes it is the job of the federal government, state governments, and post-secondary education institutions themselves to work together in cutting tuition costs and making college more accessible.  The President has already made efforts towards increasing accessibility by doubling government investment in Pell Grants.  He has also vowed to support students struggling to repay their debt with the enactment of his student loan reform if he is re-elected.  His policy would become active in 2014 and would require that borrowers will pay no more than 10 percent of their disposable income when paying back their loans. To further promote higher education, Obama’s platform involves expanding education tax credits, reforming student aid, and strengthening community colleges to produce a greater amount of trained workers for the workforce.

Governor Mitt Romney of Massachusetts, a member Republican party and opponent of President Obama in this year’s Presidential election, also wants to encourage access to higher education but using different methods.  Contrary to Obama, Romney believes that increased federal spending on education has contributed to increasing costs of education. The reasoning behind this is that much of the money given to educational institutions through Pell Grants and loans is borrowed by the federal government and only increasing debt for colleges, universities, and students.  Romney supports the Radical Republican budget which would cut Pell Grants for one million students, greatly decreasing the amount of federal dollars spent on higher education. Romney’s approach to higher education is conservative in that he supports the replacement of federal regulation in colleges and universities with innovation and competition.  If elected, Romney plans to strengthen the financial aid system and encourage private sector participation. Higher education is included in part three of Romney’s 5-point plan.  The goal of Romney’s 5-point plan is to turn around the economy and create a better job market in America.  Part three of his plan concerns the process of preparing people for the workforce by teaching them the skills they need through greater access to higher education. The overall goal of the Romney administration is to promote access to higher education while decreasing the amount of federal dollars put towards higher education in order to lower tuition costs.

The questions concerning education in the political world (Why is higher education important?, How should the federal government be involved? How can accessibility to higher education be improved?) will continue to be answered in varying ways as long as higher education institutions are functioning.  When analyzed from different angles, the conclusion can be made that higher education is becoming a necessity in American society but the way in which a degree may be obtained is a method that will continue to change as political leaders and policies change.  The concern of politicians currently is how to expand post-secondary education to create a more knowledgeable workforce and keep the cost of a college degree at an affordable price.  This dilemma is not something that can be solved in the short-term but will take negotiating between government officials and representatives of higher education institutions over a number of years.

To learn more about President Obama’s background and his empathy for college students in debt check out this video .

For more on Governor Romney’s support of competition among higher education institutions and less federal funding for colleges, watch this.

The Federal Government and Higher Education: Who, What, and Why?

15 Oct

With the 2012 Presidential Election just weeks away now, the topic of the federal government and how it may or may not change after the election results are in is all anyone can talk about when it comes to politics.  As I am learning more and more about the higher education system in America and how it is regulated, I have noticed the clashing opinions on whether or not the government should be involved in higher education and education as whole. Overall, Democrats tend to support more involvement by the federal government in education while republicans support less government involvement.  In a survey performed from August 5 to August 8, 2010, 1,013 Americans ages 18 or older were asked if they believed the government should be more involved, less involved, or their involvement should remain the same in education.  Of those 1,013 people, 43% wanted more involvement, 35% wanted less involvement, and 20% wanted the level of involvement to remain the same.  Due to the rising amount of student loan debt and increasingly limited accessibility of college for many families, it is my opinion that the federal government should be more involved in the functioning of higher education systems.  I must state though that just because I support this position I do not define myself as a Democrat.

So you’re probably wondering, what exactly does the federal government do for higher education?  The job of the federal government is to provide FUNDING and SUPPORT for higher education.  The federal government invests in higher education for two reasons; responsibility and federal interest. The federal government sees it as their responsibility to invest in higher education to ensure equal access and to encourage continued research at universities across the country.  It is also in the interest of the government to be involved in higher education since the research and graduates that result from higher education institutions are beneficial to the United States’ economy and job market.  These investments into higher education are given through funding, regulation of federally funded activities, and mandates to the states and institutions to pursue areas of federal interest. For example, each year the government has provided $15 billion to research universities to encourage further exploration. While it may not be obvious when simply looking at college campuses, the government plays a crucial role in the functioning of higher education in America and without the government’s support, the system could fall apart.  The next President, whether it be Romney or Obama, should keep this in mind as he decides on student loan reforms, financial aid regulations, and level of government involvement in higher education after he is sworn into office.

For more on the relationship between the federal government and higher education, check out this book by an Assistant Professor of Public Policy and Higher Education from Vanderbilt.

The Position of Education in the 2012 Election

12 Oct

As I post to this blog, I want to know how each candidate’s education policies are impacting the voters choices this year, please take a moment to answer this poll!

Education, why does it matter?

11 Oct

To ensure that this blog is not seen as a page only discussing Obama, I have included in this post Mitt Romney’s plan for handling the issue of the high cost of college tuition.  While I support President Obama’s plan at this time, I will also share Romney’s plan as my goal is to educate you, the readers, on every aspect of what is being done by the “possible” leaders of our nation.  Mitt Romney, like Obama, plans to make higher education available to all but using different methods such as restructuring the financial aid system and removing regulation from educational institutions.  I support President Obama’s plan instead of Romney’s because it is my belief that regulation by the federal government is needed to keep opportunities equal for students attending colleges across the country.  However, I am learning as I go and reserve the right to change my position on this issue at any time.

Now that both candidate’s policies are known, I’d like to answer the question, why does higher education matter? It is no secret that jobs are scarce in today’s economy.  For this reason, it makes sense to want to be as competitive as possible in the dwindling job market.  The way to do this is through specialized training or  a two or four-year college degree.  The experience of college itself provides those that attend it with countless opportunities before and after graduation.  Having a college degree increases your chances of employment by 50%! Also, it is predicted that by 2014, 90% of the fastest- growing careers will require post-secondary education. The importance of education is also shown by the fact that those with college degrees most often obtain jobs offering health benefits and retirement plans. The significance of obtaining a college education cannot be denied.  With the Presidential election rapidly approaching, the chosen leader must keep this in mind when determining policies regarding financial aid and student loans.

To see the differences in income for those with a college degree vs. those without, check out this table showing salaries from 1995 to 2010.

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