The Importance of College Affordability in P-20 Education

W O R K I N G G R O U P T A B L E A N N U A L H I G H E R E D U C A T I O N S Y M P O S I U M 2 0 1 3 T H E U N I V E R S I T Y O F T E X A S A T S A N A N T O N I O P R E S E N T E R S : D R . L A U R A R E N D O N , D R . A M A U R Y N O R A , A L V I N C U R E T T E , E L I Z A B E T H C O O K , A N D K A S E Y N E E C E - F I E L D E R

Wealth Inequality in America

African Americans and College Student Debt

A L V I N C U R E T T E , E L P S D O C T O R A L F E L L O W A N D E L I Z A B E T H C O O K , E L P S D O C T O R A L F E L L O W C O L L E G E O F E D U C A T I O N A N D H U M A N D E V E L O P M E N T T H E U N I V E R S I T Y O F T E X A S A T S A N A N T O N I O

Student Loan Debt Crisis



Student-loan debt surpassed credit card debt and exceeds one trillion dollars (Lindsay, 2012)



Burden is greater for low-income households and students of color (Gross, 2012)



Students of color took out more loans, had higher unemployment rates, and had lower graduation rates when compared to White students (Gross, 2012)

Student Loan Debt Crisis (cont.)

 Using a 2007-08 data set, the National Center for Educational Statistics (2010) reported that African Americans received more grants (79.5%) and loans (70.1%) than students from other racial/ethnic groups  African Americans college graduates had more college debt than Caucasians (Roska & Arum, 2012)

How did we get here?

Credit Card Debt Economic Challenges Financial Literacy Financial Aid

Parental Assistance Options…

Financial Experts Suggest

• • • • • Tap Home Equity Take out a parent PLUS loan Draw on your ROTH IRA Borrow from your 401(K) Just say no, for your child’s expensive college choice

African American Reality

     What if you don’t have a home to ‘tap’?

May not qualify for loans or are averse to borrowing ROTH IRA?

Employment may not provide 401K Community College

The Parent PLUS Loan Trap

      Entitlement Aid is uncapped and has less stringent borrowing requirements Many campus Financial Aid offices rely on them to “fill the gap” As the cost of tuition rises – loans are offered in larger amounts Over-borrowing is unchecked Allows Financial Aid to “opt out” of alternative resources for funding Readily available and often one of the first solutions to the “payment” problem that is suggested by many financial aid officers

Federal Work Study (FWS)

     Originally designed to create opportunities for employment for low-income/needy students Students attending MSIs are more likely to not expect help from their parents to pay for tuition and fees (Fletcher, 2010) Financial Aid packages are no longer sufficient for students to enroll in college w/o seeking part time employment (JBHE, 2003) Too many positions are labor intensive and “do not promote engagement w/ the institution (Merisotis, 2011) Who is actually benefitting from FWS?

Who really knows about Financial Aid?

 High schools can do more to educate students about financial aid, credit cards, and educational and personal loans (Center for Studies in Higher Education at Berkeley, as cited in Burdman, 2005)  Predominantly African American, Hispanic, and low-income high schools are usually underequipped (Rosenbaum, 2001, as cited in Perna, 2006)  Inconsistent information about repayment and reluctance by financial aid counselors to answer students’ questions (Stratford, 2012)  College Board Committee and House of Representatives and Senate brainstormed ways to simplify the financial aid process, which involves accurate and clear communication (Lederman, 2008; Nelson, 2013)

Student Loan Debt Burden

    African American and Hispanic borrowers felt more burdened by student loans (Baum & Sanders, 1998) An additional $1,000 in loan amount negatively impacted African American and low-income students’ chances of completing their bachelor’s degree (Kim, 2007) In 1997, the percentage of African American and low- income students with monthly debt-burden greater than 8% was greater than national average (Price, 2004) African Americans reported that benefits of college were not worth the educational debt (Baum & O’Malley, 2003)

Financial Literacy

 African Americans lack basic financial literacy (Chen & Volpe, 1998; Lusardi, Olivia, & Curto, 2010)  Financial Counseling Center on campus (Goetz, Cude, Nielsen, Chatterjee, & Mimura, 2011)  Face-to-face financial workshops (Goetz et al., 2011)

Our Recommendations

F A C E T O F A C E C O U N S E L I N G F I N A N C I A L L I T E R A C Y A C C E S S / I M P R O V E M E N T S / E N G A G E M E N T

Online Services are NOT sufficient!

   Online counseling tool designed to help students better understand their online options regarding financial aid (FACT) Needs to be supplemented! There is an ethical obligation to educate students and their families about college costs, payment options, and financial management/literacy skills Financial counseling enhanced financial management skills, linked to debt reduction, and greatest gains appeared to be for most severe borrowers (Elliehausen, Lundquist, & Staten, 2007)

And the Students said…

F I N A N C I A L A I D D O E S M A T T E R & F I N A N C I A L L I T E R A C Y I S I M P O R T A N T … B E L I E V E I T O R N O T , T H E Y A R E L I S T E N I N G …

Performing Higher Education

P E R F O R M A N C E - B A S E D F U N D I N G I N T E X A S

K A S E Y N E E C E - F I E L D E R , M . E D .

D I R E C T O R O F S T R A T E G I C P L A N N I N G & A S S E S S M E N T T H E U N I V E R S I T Y O F T E X A S A T S A N A N T O N I O

Recent Texas Legislation

  82 nd Session: Passing of HB 9 allowing for up to 10% of funding to be performance-based.

83 rd  Session: HB 25 proposed that up to 25% of funding be performance based. Did not pass.

 Texas Higher Education Coordinating Board’s funding recommendation for community colleges approved for 2014 2015 biennium.

At-Risk Populations: US

 These states currently link at-risk student completion, underprivileged student access, or minority student enrollment and success to funding (Rabovsky, 2012):  Colorado, Indiana, Kansas, Louisiana, Ohio, Tennessee, and Virginia.

At-Risk Populations: Texas

 Texas Higher Education Coordinating Board formula funding recommendations (2012):  Community colleges: Points awarded for completion of developmental education in math, reading, and writing.

 Universities: Points awarded for degrees awarded to Pell Grant recipients, part-time students, GED recipients, and students entering college at age 20 or older.

Support

• • • Zhang (2008) found that a 10% percent in state appropriations per full-time student equivalent (FTE) at four-year institutions was correlated with a 0.64 percentage point increase in graduation rates. Ohio cut their median time to degree by 0.4 years over a four-year period (AASCU, 2011).

In Tennessee, performance-based funding was credited as positively impacting learning outcomes (AASCU, 2011).

Criticism

• • Performance-based funding could penalize institutions serving disadvantaged populations, and a lack of funds could negatively impact outcomes, regardless of an institution’s best efforts (AASCU, 2011).

In interviews with college and university presidents in Texas, Fryar (2012) notes that these leaders “expressed concern that the inclusion of funding would result in an undifferentiated redistribution of money from disadvantaged institutions to more advantaged institutions” (p. 10).

Forward Thinking

 Performance-based funding is a model supported in Texas.

 Texas Higher Education Coordinating Board’s funding recommendation for universities to be considered for next biennium.

 How can we best serve at-risk students regardless of funding incentives or discrepancies?

References

American Association of State Colleges and Universities. (2011, June). Policy

matters. Performance-based funding: A re-emerging strategy in public

higher education financing (Issue Brief). Washington, DC: Author. Retrieved from http://aascu.org/uploadedFiles/AASCU/Content/Root/PolicyAndAdvocac y/PolicyPublications/Performance_Funding_AASCU_June2011.pdf

Fryar, A. H., Rabovsky, T., & Moynihan, D. P. (2012). Examining perceptions of accountability policies. Paper presented at the Annual Political Science Association Conference, New Orleans, Louisiana.

Rabovsky, T. M. (2012). Accountability in higher education: Exploring impacts on state budgets and institutional spending patterns. Journal of Public Administration Research & Theory, 22(4), 675-700. Texas Higher Education Coordinating Board. (2012). Formula funding recommendations 2012. Retrieved from http://www.thecb.state.tx.us/reports/PDF/2591.PDF?CFID=27217123&CF TOKEN=94770069 Zhang, L. (2008). Does state funding affect graduation rates at public four year colleges and universities. Educational Policy, (23)5, 714-731.

Differential Impacts of Financial Assistance on Student Outcomes: An Overview of Research and Policy

Amaury Nora Professor & Associate Dean for Research Co-Director, Center for Research and Policy in Education UTSA College of Education and Human Development

Financial Aid and Student Persistence

• ▫ ▫ ▫ ▫ ▫ ▫ ▫ ▫ ▫ Research evidence substantiates the importance of financial aid within the student persistence process.

▫ Cabrera, Nora, & Castaneda, 1993 Chen & DesJardins, 2007 Crisp & Nora, 2010 Curs & Singell, 2002 DesJardins, Ahlburg, & McCall, 2002 Gross, 2011 Nora, 1990 Nora, Barlow, & Crisp, 2006 Olivas, 1985 Singell, 2004).

Financial Aid and Student Persistence (cont.)

• These findings address the direct, indirect, and total effects of financial aid on student re-enrollment: 

Tangible

component of receiving financial aid ▫ Receipt of aid to offset college costs ▫ Amount of financial aid received ▫ Different sources of financial assistance 

Intangible

benefits associated with receiving financial aid  Reduction in stress  Development of positive academic and social attitudes  Money for books, housing, tuition, entertainment

Positive Impact on Different Student Outcomes

• Academic performance:

cumulative grade point average

▫ Cabrera, Castaneda, Nora & Hengstler, 1992 ▫ Woo & Choy, 2011 • Transfer from two- to four-year institutions ▫ Crisp & Nora, 2010 ▫ Woo & Choy, 2011 and • Undergraduate degree attainment: BAs ▫ Dynarski, 2003, 2005

Positive Impact on Student Outcomes

•

Finally

, federal work study benefits students by enabling them to

work on campus

, where they can

remain engaged in the campus community

rather than experiencing an environmental

pull

towards the world of work (Crisp & Nora, 2010).

• The most beneficial contribution made by the Federal Work Study (FWS) program is providing students the opportunities to earn money to pay for college expenses while remaining engaged,

academically

and

socially

, on their campuses.

The Importance of Research: Funding an Integrated Program of Federal Research Examining the Relationship of Financial Aid and Student Outcomes .

• To inform and drive future practice and policy, the empirical knowledge base connecting financial aid and student outcomes must be kept up to date.

• It is important that current and future research studies not ignore the interactions among multiple

financial

,

academic

and

psychosocial factors

that influence student outcomes such as persistence, student engagement, transfer and degree attainment.

• In other words, receipt of aid, in and of itself, is not the silver bullet that will solely drive student outcomes.

Methodological Considerations in Studying Financial Aid

• Simply matching students on a limited or inappropriate number of covariates or ignoring the influence of extraneous factors is presenting an unrealistic and isolated view of the influence of financial aid.

• The notion that behaviors, attitudes and perceptions and financial aid are not intertwined to produce different student outcomes and lifelong decisions is shortsighted.

• Rather, financial aid, in connection with the positive or negative psychosocial and academic experiences students have on campus, will together drive students to persist or not.

• Clinical randomized experimental designs are inappropriate for educational settings.

• Quantitative and qualitative studies are necessary to fully capture a holistic view on the impact of financial aid on college students.

Research Oriented Policy Recommendations

• To improve the empirical knowledge base on which to draw information that can inform policy and practice, the following suggestions are made: ▫ Assess the impact of diverse forms of financial aid on student outcomes.

▫ Fund conceptually and empirically-based research through the National Academy of Sciences, the Department of Education, the National Science Foundation and other federal STEM agencies.

▫ These studies should employ rigorous methodological designs and account for the multiple factors that influence student outcomes.

Policy Recommendations: Research Oriented (cont.)

• Expand Federally-funded research on the connection between financial literacy and college success for Latinos and other low income populations.

▫ To what extent does financial illiteracy influence college choice and ultimate degree completion?

▫ To what extent are state supported financial literacy programs having an impact on Latino low-income communities?

▫ What are examples of rigorously evaluated financial literacy programs for Latino communities that can be replicated elsewhere?

▫ The Department of Education should establish a funding priority for this type of research to be conducted in schools, colleges and universities.

Policy Recommendations: Research Oriented (cont.)

• Expand federal collection of student debt data. Much of the indecision by policymakers rests on the fact that good, solid empirical data and findings are difficult to find.

• Funding should be provided to collect more informative data that can be shared across different local, state, and federal offices and organizations.

Policy Recommendations: Research Oriented (cont.)

• Oversample students of Hispanic ethnicity in the postsecondary sectors where they are underrepresented or over-represented.

• Create and charge an Advisory Committee on Student Financial Aid (ACSFA) to report on financial aid issues with added attention to race and ethnicity.