Monday, June 04, 2012

Student Loans Held by the U.S. Federal Government

The current bubble in the number of people attending college is mostly the result of government-backed student loans. In an effort to make college education more affordable, Congress passed a bill in 2007 to temporarily reduce the interest rate for federally subsidized loans to 3.4 percent. This law is set to expire at the end of June, but the Obama administration now wants to extend the cut in interest rates. In addition, the administration effectively federalized student loans in March 2010 when President Obama signed legislation to expand college access. Under the measure, private banks would no longer receive fees for acting as intermediaries in federal student loans. The government would use these savings to increase Pell Grants to make it easier for students to pay back their loans.

Using data from the Federal Reserve, this week’s chart shows a dramatic three-fold increase in the number of student loans held by the federal government in the past four years alone. When the law was passed in 2007, student loans held by the government totaled about $100 billion. The loans increased to $111 billion in 2008; $186 billion in 2009; $316 billion in 2010; and $425 billion in 2011.

In 2008 the interest rate was 6.8 percent and was reduced in stages over the next four years to 3.4 percent. The data show a notable rise in the number of loans taken out between July 2009 and July 2010, when the interest rate was reduced to 5.6 percent. A similar spike is apparent in the July months of the following years. We also see a noticeable change shortly after the adoption in March 2010 of a law to overhaul student loan programs, which has effectively run private banks out of the student-loan business.

Historically, federal loan programs have been the main source of federal credit assistance for higher education. Since the recession hit, private lending has remained stagnant, growing at a much slower pace. According to the Congressional Budget Office, the size of the private student loan market was about $22 billion in the 2007-2008 academic year, implying that the private market was about one-quarter the size (by dollar value) of the market for federal student lending. According to the Wall Street Journal, non-revolving consumer lending by commercial banks (privately held) — a measure tracked by the Federal Reserve that includes student loans as well as auto and other personal credit — is up less than 11 percent since December 2007. Over the same period, total consumer loans owned by the federal government — a measure that includes loans originated by the Department of Education under the Federal Direct Loan Program — has more than quadrupled.


Education the Finnish way

With some comparisons to Australia

Finland — with 5.4 million people, a population similar in size to Victoria's — is a superstar in school education. It consistently ranks among the world's top countries in international tests of student capabilities in reading, maths and science, known as the Program for International Student Assessment (PISA).

The group of 22 Victorian primary and secondary school leaders went to Finland to investigate what they could learn from the Nordic nation's successful track record in education.

The international testing program of 15-year-olds and national studies show Australia's student literacy and numeracy results have slipped in recent years and fallen behind the world's best performers, according to the Productivity Commission's report on schools.

The study group of representatives from the Victorian Principals Association and the Victorian Association of State Secondary Principals found striking structural differences between Australia's schooling system and Finland's, especially when 15-year-olds in year 9 sit the international PISA test.

In Australia, research shows year 9 has become a danger zone for student boredom. Many schools have introduced specialist camps and programs designed to reduce the risk of student disengagement.

Year 9 in Finland is a much more competitive year. It marks the end of junior secondary school when the school assesses the grade point average achieved by every student to determine which upper secondary school they can go to in years 10 to 12.

"While students are working hard to get a good grade point average to get into their preferred upper secondary college, the PISA test comes along at the same time," Mr Blunt says.

Students enter either vocational upper secondary schools, academic upper secondaries or others specialising in music, language or sport. More than 50 per cent of students choose vocational senior secondary schools, according to Mr Blunt.

All upper secondaries are well resourced and lead on to university or polytechnic colleges, with students able to switch between the two streams if they want to change course. In some municipalities, vocational colleges are harder to get into than the more mainstream academic schools.

"If you have agreement that there needs to be courses for kids' individual talents then you can't neglect the talents of kids who want to be tradespeople," Mr Blunt says. "It's unfortunate that Victoria doesn't have the same sort of support for kids who want to follow that path.

"We want to get to the level that we witnessed in Finland where year 10 students are aspirational about going into trades and it's not just seen as somewhere to end up because you're not good at school."

Mr Blunt has set up a similar pathway for year 10 students at Sunshine College. Four years ago, in partnership with Victoria University, the school established Harvester Technical College on one of its campuses.

The arrangement allows more than 150 students to stay at the school and study TAFE courses delivered by the university as they progress through years 10, 11 and 12.

"Some young kids find it too hard to go directly to TAFE and start a course on their own," Mr Blunt says. "They end up dropping out. So we're trying to do this on campus with the security of the school environment to support them."

Unlike Australia, Finland does not have a national student testing system. However the study group found all schools had more frequent classroom testing than found in Victorian schools.

"Kids were tested a lot more than they are here," says Frank Sal, president of the Victorian Association of State Secondary Principals.

"At the end of each unit of work they're given tests devised by their teacher or school."

In Finnish secondary schools, teachers give students grade points based on the tests, which they record on a national computer database. The education authority reviews each school's grade points assessment system every four years to ensure teacher judgments on the gradings are nationally consistent.

Mr Sal says Finland's student assessment system is backed by a strong, ongoing intervention program for all students found to be struggling either academically or behaviourally. All schools have teams of special education teachers who usually work in pairs with a maximum of 12 students in a group.

About 50 per cent of all Finish students use the special needs teachers to get extra tuition.

Schools also have a nurse who works with students and their families on health problems. National principal organisations in Australia have been campaigning for a similar approach to early intervention and welfare services in their schools.

"Almost from birth the Finnish school system ensures there are constant supports in place for students as they go through primary and secondary school," Mr Sal says. "It's very much part of their beliefs and policies. Seven per cent of their education budget goes into special needs support, compared with 1 per cent of our education budget."

Finland's national curriculum is reviewed every 10 years. Mr Sal says the 10-year cycle gives teachers and schools the autonomy to implement the curriculum and add to it without bureaucratic interference or interruptions from policy changes.

"It means education doesn't become a political football . . . All political parties support the country's education system and the processes that are in place."

In November, a group of Finnish school principals will visit Victorian primary and secondary schools to investigate the use of information technology in classrooms and ways to cater for students from diverse cultural backgrounds.

Australian students have the world's second-highest levels of digital reading literacy, according to the latest PISA results released last month in a report by the Australian Council for Educational Research.

They ranked second behind Korea in the international test, which assessed the ability of 15-year-olds to read, understand and apply digital texts. All other industrialised countries, apart from New Zealand, performed on average at a much lower level than Australia.

Finland's homogenous culture — where most citizens come from Nordic Lutheran backgrounds — is cited by educators as one of the reasons for the nation's outstanding results in student achievement.

Mr Sal says he and his colleagues saw how Finland's predominant Lutheran culture, which emphasises a strong work ethic, has shaped attitudes to learning and helped schools deliver good results.

But the nation's school principals are facing challenges in catering for a more multicultural student intake, as rising numbers of migrants and asylum seekers from Europe and Africa settle in Finland.

"Our Finnish counterparts want to see how we deal with multicultural school populations because they're starting to get worried about how to deal with cultural differences," says Mr Sal, whose organisation will host the visit with the Victorian Principals Association. "They're concerned about some of the changing attitudes in children in years 8 and 9 to schooling, particularly in boys.

"About 6000 children seem to disappear from their schooling system at the end of year 9. Many of them are boys. They lose track of them and they're putting a lot of effort into getting these disengaged youth back into the school system."


British Primary school pupils who can't even catch a ball because schools and parents are neglecting physical skills

Thousands of children are unable to throw and catch a ball because schools and parents are neglecting basic physical skills, an expert warned yesterday.

Poorly trained primary school teachers are failing to give effective physical education lessons, according to Dr Jeanne Keay, of Roehampton University.

They allow pupils to play ‘adult games’ such as football without first helping them to build movement skills, such as throwing, catching, jumping, hopping and even walking in a straight line.

Dr Keay, a former PE teacher, said parents also often failed to encourage children. She is demanding changes to the curriculum for PE to give a better grounding in key skills. She said: ‘We’ve seen that some young people are incapable of even the most basic of movement skills, like throwing or catching a ball and walking in a straight line. This is a huge concern.’

Research among more than 500 teachers by Dr Jon Spence, also of Roehampton, found that 47 per cent had been given ten hours or less of training in teaching PE. Dr Keay added: ‘The quality of training for teachers in primary schools is not even close to where it needs to be if we’re to ensure our children learn and develop well and so enjoy physical activity.’


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