Wednesday, December 06, 2017

New Higher Education Reform Bill Will Help Low-Income Americans Go To College

Today, Rep. Virginia Foxx (R., N.C.), chairwoman of the House Education and Workforce Committee, will introduce a landmark proposal to overhaul the way the federal government funds and oversees higher education. Based on a draft summary of the legislation that I’ve had a chance to review, one thing stands out about the bill: its focus on helping low-income Americans gain a college education.

The economic value of reforming the Pell Grant program

One of the most important economic divisions in America is between those who have a college degree, and those who do not. According to the Bureau of Labor Statistics’ Current Population Survey, the median income of Americans who haven’t gone to college is $36,000, while that of those with a college degree is approximately $60,000: 67% higher.

While a four-year college degree isn’t for everyone, and isn’t needed for every job, college will always be a de facto requirement for higher-level professional work. And so it’s important to make sure that every American who wants to go to college can afford to do so.

The average cost of attending a public four-year college is $65,000, and $150,000 at a private one, according to the Department of Education. On average, tuition has grown 5% a year for the past ten years. That’s a rate far faster than that of consumer inflation.

There are three basic problems that lower- and middle-income Americans face when confronting the U.S. higher education system.

The first is the one noted above: that the underlying cost of a four-year college degree is too expensive. The second is that federal student aid programs are badly structured, making it harder for aid recipients to complete their college coursework in a reasonable timeframe. The third is that we don’t create enough policy room for alternatives to a four-year brick-and-mortar college degree: low-cost vocational schools and online degrees.

The new Foxx bill—called The Promoting Real Opportunity, Success and Prosperity Through Education Reform (PROSPER) Act—proposes dozens of reforms, many of which would make significant progress toward these policy goals.

PROSPER simplifies the Free Application for Federal Student Aid (the FAFSA). It eliminates the requirement for online colleges to register in any state except those where they have physical locations. It invests in apprenticeship programs at community colleges. It provides prospective students with information on the average debt, average salaries and completion rates of colleges students and alumni. And it consolidates and reforms student loans, grants and tax credits.

Helping needy students complete their degrees on time

In this article, I’ll focus one key area of the PROSPER Act: reforming federal student aid for low-income Americans, which is largely run through the Pell Grant program.

The Pell Grant comprises around 55% of all need-based federal student aid in the U.S. During the 2016-17 academic year, 7.1 million students received a total of $26.6 billion in Pell Grants.

Pell Grants are intended to help lower-income people go to college. But in many ways the Pell Grant system leaves the poor behind.

The Grant's formula takes the Department of Education 38 single-spaced pages to explain. But despite all of that complexity—or, perhaps, because of it—the Pell formula actually makes it harder for low-income students to graduate on time, and harder to graduate in good financial health.

The Pell Grant formula only funds a students' course load up to what the Department of Education defines as full-time enrollment: 12 credits per semester.

But for a college student to graduate on-time, he or she typically needs to take 15 credits per semester. As a result, students in need who wish to graduate on time must forgo need-based aid.

Students who want to graduate on time shouldn’t be hindered by Pell Grant rules. Some students might even wish to accelerate their studies and enter the workforce sooner. But this 12-credit per semester limit applies to all Pell recipients.

There are numerous other major drawbacks to the Pell Grant program, some of which I have written about previously:

Bias against needier students. The Pell Grant formula is not restricted to students below specified income limits, but is instead restricted to students with income below a multiple of the current maximum grant amount per student. The effect of this is that when funding for the grant is increased by lawmakers, an increasing amount of need-based Pell funds are sent to wealthier and wealthier students.

Bias toward costlier colleges. Many Pell Grant recipients are required to attend a sufficiently expensive collage to be eligible for a grant. The Pell Formula reduces many student's grant amount to zero if they spend below a certain amount on college.

Disincentive to complete college on time. The Pell formula creates an incentive for not completing a degree on-time, because it only funds up to 12 credits.

Bias against families with multiple children in college. The Pell formula does not account for when multiple family members are enrolled in college at the same time. The ability of a given family to pay for college is estimated as equal whether they have one or three children in college.

Complexity. The Pell formula is overly complex, taking 38-pages of small type to explain. This makes it hard for students and parents to understand the basis for their grant amounts.

Helping students who are working their way through college

The kid who works his way through college carries on a classic, all-American tradition. But there is a growing amount of evidence that college students who spend significant amounts of time working on jobs unrelated to their schoolwork fail to ever graduate. A 2014 study by Richard Medellin at the University of Maryland using Department of Education data found that students were half as likely to ever complete their degrees if they were working more than 30 hours per week.

The Higher Education Act proposes additional Pell funding for students who take enough credits to "put them on track to graduate on time," thereby reducing the financial pressure on low-income students who are working their way through college. (The legislative summary I reviewed did not provide details of how this would work, but 15 credits per semester is commonly considered "on track.") The extra Pell funds may permit these students to work fewer hours at part-time jobs, or it may afford them extra hours of child-care, or additional gas money so they can complete assignments, or only take the part-time work they want.

Consolidating federal student aid programs

The PROSPER Act proposes to consolidate all federal college grant programs, including the Pell Grants, into one grant program. Because modifications to the Pell were discussed in the legislation summary I reviewed, I expect that other federal college grants will be incorporated in to the Pell.

The PROSPER Act's expansion of the Pell Grant program to support lower-income students who want to finish their degrees on-time is consistent with other major proposals in the Act that focus on creating a faster, less-costly means of obtaining postsecondary education and entering the workforce.

The Act allocates $183 million to community colleges to create apprenticeship programs of two years or less to prepare students for jobs in specific industries.

The Act makes it easier for students to study affordably, on their own time, in their own way, by removing regulatory obstacles to competency-based colleges, where students simply take one comprehensive course examination to earn a course credit. These test-based based colleges, such as Western Governors University, have comparably low prices and generally don't require books, homework, or attendance of classes.

The Act makes it cheaper and easier for online innovators in education to serve students wherever they are, for less money, by eliminating the requirement for online educators to register in states, except those where they have physical locations.

The PROSPER Act represents substantial reform and promise

Rep. Foxx’s will likely encounter criticism from those who support “free college” reforms, such as Bernie Sanders’ proposal to fully subsidize community college for students of all income levels. The PROSPER Act differs from such far-reaching subsidy proposals in two major ways: it focuses resources and programs on helping Americans with the greatest financial need; and it expands the choices for students who need financial aid, rather than steering them overwhelmingly towards community colleges.

Most importantly, the PROSPER Act takes steps to tackle the high underlying cost of higher education: the most important challenge for those who want to level the playing field between those with economic opportunity and those without.


Tax Bills Could Expand Private School Benefits and Hurt Public Education

Which may be no bad thing. All education should be private.  A view from the NYT below

WASHINGTON — As Friday night turned into Saturday morning, Vice President Mike Pence cast a tiebreaking vote in the Senate to extend a tax benefit available for higher education to families paying tuition for private elementary and secondary education — or even homeschooling their children.

The vote on the amendment by Senator Ted Cruz, Republican of Texas, was emblematic of the sweeping tax bills entering final negotiations between House and Senate Republicans. Provisions in both measures could change families’ approach to elementary and secondary education, and every type of school stands to benefit except those attended by 90 percent of the nation’s students — public schools.

Under the House and Senate bills, families who can afford to put money away for private or sectarian schools each month would be able to watch their savings earn interest and capital gains free of taxation. In the Senate bill, even home schoolers could withdraw up to $10,000 a year for school expenses in their own living room — from tax-favored savings accounts.

By contrast, the drastic curtailing of state and local tax deductions in both bills could hamstring local governments’ efforts to finance their public schools. State, county and city governments have always struggled to raise taxes or pass bond measures for schools, but were able to argue that increases in sales or income tax rates could be deducted from federal income taxes. In the House and Senate bills, the state and local tax deduction would be reduced to a deduction of up to $10,000 of property taxes each year and nothing else.

The National Education Association released a state-by-state analysis of how the tax bill would affect public schools, concluding that in the next decade, $370 billion worth of state and local revenue and 370,000 education jobs are at risk.

“We have provisions that are incentivizing parents to keep students in private schools or send them to private schools,” said Sasha Pudelski, assistant director for policy and advocacy at the American Association of School Administrators. “If there’s going to be tax breaks in the bill, giving it to the parents in the private education system over the public education system doesn’t make any sense.”

How generous the new tax preference for private education would be is subject to debate. As with current 529 plans, contributions would not be tax deductible, but interest and capital gains would not be taxed. Withdrawing funds for elementary school would not give families much time to see their investments grow tax-free. That alone has divided advocates of school choice.

“As currently structured, 529 plans are not designed to deliver significant benefits to poor families in college,” wrote Nat Malkus of the conservative American Enterprise Institute. “Giving families flexibility to spend those funds sooner does nothing to address their capacity to save; it only minimizes the potential benefits.”

In urging his colleagues to vote for the amendment, Mr. Cruz said the expansion “ensures that each child receives an education that meets their individual needs, instead of being forced into a one-size-fits-all approach to education, or limited to their ZIP code.” He said the provision would “help working class and middle-income families save and prepare for their children’s educational expenses.”

But that assumes that those working-class families have money to save, and many do not.

“The opinion ranges from being marginally helpful, to a nothingburger, to being harmful because it plays into the narrative that school choice is about helping rich people,” said Michael J. Petrilli, president of the Thomas B. Fordham Institute, which favors government-funded vouchers for private school tuition. “Are there people out there who cannot afford school choice and will now be able to? No.”

Some conservatives say the amendment falls well short of the president’s request for Congress to “pass an education bill that funds school choice for disadvantaged youth.” Instead, they say, it benefits wealthy families who already have thousands of dollars at their disposal to pay for their children to attend nonpublic schools.

But other conservative groups, like the Heritage Foundation, which began advocating the expansion of 529 plans in 2012, praised the amendment. Lindsey M. Burke, director of the foundation’s Center for Education Policy, said that when more families learned that anyone could contribute to the savings plans, they would become more popular at all income levels.

Ms. Burke disagreed with public school advocates that the 529 expansions would hurt public schools by incentivizing families to leave them.

“If their district-assigned school is a good fit, they have nothing to worry about,” she said.

For homeschoolers, the Cruz amendment was a cause for celebration. For years, homeschool advocates have denounced what they called a “discriminatory” tax code. Not only were 529s limited to just college costs, but existing K-12 expense accounts, called Coverdell Education Savings Accounts, are recognized for homeschools only in a handful of states where they can win designations as private schools. Coverdell contributions are limited to $2,000 a year, while contributions to 529 accounts can reach $14,000 a year without incurring gift taxes.

Will Estrada, a lawyer for the Home School Legal Defense Association, called the Cruz amendment a “massive win” for homeschooling families.

Mr. Estrada said that since the Trump administration took office, the organization had been working behind the scenes with the education secretary, Betsy DeVos, and Ivanka Trump’s staff to have the nearly two million students in home schools recognized. Homeschooling families spend about $500 to $600 a year on average on instructional materials like books, Mr. Estrada said.

“We want to be treated fairly,” he said.

For public school advocates, the 529 expansion was just the latest in a series of decisions they said illustrated the Trump administration’s disinvestment in public education.

“It’s just icing on the cake,” Ms. Pudelski said. “It seems they’re just asking how many different ways can we not support public schools.”


University of Ottawa Students Reject Israel Boycotts, Marking Ninth Consecutive BDS Defeat in Canada

Student leaders at the University of Ottawa rejected a motion to support boycotts of Israel on Sunday, marking the ninth consecutive defeat for the boycott, divestment, and sanctions (BDS) campaign on Canadian campuses over the past two years.

The measure, brought before the Board of Administration of the Student Federation of the University of Ottawa (SFUO), sought to include an item backing BDS to the body’s policy handbook.

The Board rejected the motion, opting instead to require the SFUO “to do all in its power to peacefully resolve the Israeli-Palestinian conflict.”

Student were only notified of the upcoming vote on Friday — hours before the onset of Shabbat — prompting the Jewish human rights group B’nai Brith Canada to notify SFUO directors that an endorsement of BDS could invite legal action.

“The SFUO’s proposed BDS vote would have violated the notice requirements guaranteed by its own constitution, as well as the student union’s policy on discrimination, which prohibits the SFUO from discriminating on the basis of nationality or religion,” B’nai Brith Canada explained in a statement.

The vote comes weeks after an unsuccessful effort to withdraw the club status of Hillel Ottawa and its Israel Awareness Committee.

“We commend the SFUO for removing the reference to BDS from this resolution,” Dovi Chein, director of Hillel Ottawa, said on Sunday. “We are incredibly proud of the students who made a powerful case today for the SFUO to reject the destructive and divisive path of BDS.”

B’nai Brith pointed out that Sunday’s vote was ninth time in a row that BDS was defeated on a Canadian campus. “Over the past two years, BDS votes have failed at the University of Toronto (twice), the University of Waterloo, McGill University, the University of British Columbia, Simon Fraser University, the University of Winnipeg — and now the University of Ottawa as well,” the group noted.

Robert Walker, national director of Hasbara Fellowships Canada, cautioned that “the pro-Israel community certainly should be pleased when BDS motions fail to pass on campus, but we can never forget the bigger picture.”

He pointed to a recent controversy at McGill University, where a student claimed he was removed from a leadership role on campus “because of my Jewish identity and my affiliations with Jewish organizations.”

“BDS votes,” Walker said, “are merely a sideshow of the far wider anti-Israel movement on campus.”


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