Investing in Minnesota's Future

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  • 7/29/2019 Investing in Minnesota's Future

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    State Grant Program: MinnesotasInvestment in the Future

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    Agenda

    1. Pressing Issues in Higher Education

    2. Federal Developments

    3. Californias Approach

    4. Possible Minnesota Approaches

    5. Conclusion/Questions

    2

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    The Problem: Rising Costs to Students

    Rising tuition costs haveincreasingly forcedstudents to rely on stateand federal funding

    sources $29,793 average student

    debt for a 4-year program(2011)

    3rd out of 48 for highestaverage student debt in a4-year program (2011)

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    Source: Brown Center on

    Education Policy, Brookings

    InstitutionSource: Institute for College Access and Success

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    The Problem: Graduation Rates

    By 2018, 70% of jobs inMinnesota will requiresome postsecondaryeducation

    By 2018, 620,000 jobvacancies will requireemployees with post-secondary credentials

    For the class of 2005,62% of Minnesotansenrolled in abaccalaureate programgraduated in 6 years

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    Sources: Georgetown Center for Educationand the Workforce; MN Office of Higher

    Education

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    The Problem: Big Questions

    1. How do wereduce student

    debt?2. How do we

    increase collegegraduationrates?

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    State Grant Program As A Behavioral Tool

    State Grant Program is a proven tool toencourage students to attend and complete

    college on time

    We have higher college access rates relative toneighboring states for lower income students

    and students of color

    Effective behavior tool for students, what if itwas expanded to include behavior in the

    marketplace?

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    Harkin Report on For-Profit Colleges

    Last year, the U.S. SenateHELP Committee releaseda report on for-profitcolleges

    Found a pattern of inferioreducation, high dropoutrates, high debt rates, andsome loan manipulation

    Roughly 80% of all for-profit funding comes fromstate and federal taxpayermoney

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    Public

    (US)

    For-Profit

    (US)

    Graduation

    Rate(bachelor,

    6 years)

    55% 22%

    2-year

    tuition

    $8,313 $34,988

    4-yeartuition

    $52,222 $62,702

    Source: Harkin Report

    2010:

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    Harkin Report on For-Profit Colleges

    The University of Minnesota spends an average offive to six times on instruction as does majorMinnesota for-profit institutions.

    Capella and Walden are online-only universities 8

    U of M Capella Rasmussen Walden

    Instruction $13,247 $1,650 $4,801 $1,574

    Profit - $2,912 $9,017 $1,915

    Advertising - $4,538 $6,261 $2,230

    Total Federal

    Funds

    80.8% 80.6% 77.8%

    Per-Student Spending, 2010:

    Source: IPEDS Data and Harkin Report

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    Californias Approach: Overview

    California has thesame concerns: Toomany students paying

    too much, for toolittle

    Have a similar grantprogram, Cal Grants

    Cal Grant spendingdoubled from 2006-2007 to 2011-2012

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    MN (2012) CA (2011)

    Recipients 95,510 340,000

    Total gift

    aid

    $143

    million

    $1.5

    billionAid to for-

    profit

    colleges (%

    of total)

    $15.8

    million

    (11%)

    $94

    million

    (6%)

    Quick facts:

    Source: MN Office of Higher Education and California Student Aid Commission

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    Californias Approach: The New Requirements

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    30% minimum graduation rate; and

    15.5% maximum 3-year default rate on federal loans

    Two Performance Requirements

    40% or more students with federal loans

    De facto exempted California Community Colleges

    College Applicability

    Started with 30% year default rate, moved to 15.5%

    Added comprehensive reporting requirements

    Additional Components

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    Californias Approach: The Results

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    Californias Approach: The Results

    154, or 35%, of Cal Grant colleges failed tomeet the standards and were declaredineligible for Cal Grants

    137, or 80%, were for-profit colleges Only 6 colleges failed because of a low graduation

    rate, most failed because of the default rate

    14,500 students impacted

    Initial taxpayer savings of $10.4 million due totransfers to less-expensive public andnonprofit schools

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    Californias Approach: Their Reflection

    Consider using other ways to calculate eligibility:1. Repayment rate

    2. Debt-to earnings ratio

    Both data are harder for colleges to manipulate

    Remove the 40% federal loan requirement; apply

    the maximum loan default rate to all colleges

    Take into consideration student populationserved:

    For-profits serve a higher percentage of nontraditional

    and disadvantaged students

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    Possible Minnesota Approaches: Data

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    Three-Year Default Rate Percentages, 2009:

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    Gainful Employment: Medical Assistant Associate Degree

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    College Repayment

    Rate

    Debt-to-

    Earnings

    Annual

    Earnings

    Debt-to-

    Earnings

    Discretionary

    Median

    Title IV

    Loans

    Program

    Cost

    Globe

    University

    35% 12% 29% $9,333 $39,100

    Minneapolis

    Business

    College

    55% 6% 19% $12,000 $30,080

    Rasmussen

    College

    33% 0% 0% $9,778 $27,209

    Century

    College41% 1% 3% $0 $8,570

    Ridgewater

    College

    52% 5% 18% $3,228 $11,466

    For-Profit:

    MnSCU:

    Source: 2011 Gainful Employment Data, USDOE

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    California Model

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    60

    70

    80

    90

    100

    0.00 5.00 10.00 15.00 20.00 25.00 30.00 35.00

    %o

    fStudentswithFederalLoans

    3-Year Default Rate (2009)

    15.5% Default Rate and 40% Student Loans:

    Community Colleges

    Private For-Profit

    Private Nonprofit

    MNScu Universities

    University of Minnesota

    Source: MN Office of Higher Education, USDOE

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    Minnesota: A Possible Option

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    0

    10

    20

    30

    40

    50

    60

    70

    80

    90

    100

    0.00 5.00 10.00 15.00 20.00 25.00 30.00 35.00

    %o

    fStudentswithFederal

    Loans

    3-Year Default Rate (2009)

    10% Default Rate and 60% Federal Loans:

    Community Colleges

    Private For-Profit

    Private Nonprofit

    MNScu Universities

    University of Minnesota

    Source: MN Office of Higher Education, USDOE

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    Conclusion

    Presentation is meant to be a

    conversation starter

    Can we prioritize state funding to reducedebt rates and increase graduation rates?

    How do we insure taxpayer dollars are

    going to good investments? Questions?

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