July 24, 2014

Loans overtook grants as the main source of college financial aid in 1982

by Grace

In the early 1980s loans begin to exceed grants as the primary form of college financial aid.

20140720.COCLoansHistory2

Figure 3 shows the amount of financial aid provided in each major category since 1980, in constant dollars (institutional grants are excluded, as they are treated as a discount off of tuition). In the early 1980s, federal, state, and private grants were the largest form of financial aid. But beginning in 1982, loans began to outpace grants, and since then they have remained the largest form of aid available to students to help them pay their costs of attending higher education.

The federal government had first stepped up its role in college financial aid in the 1960s.*

… The United States has long had financial aid for students, awarded in different forms (loans, grants or scholarships, government-subsidized jobs on college campuses, and tax benefits) and from different sources (federal government, state governments, higher education institutions, and private entities). The federal government first began provision of broad-based financial aid in the forms of grants and loans to students with the passage of the Higher Education Act of 1965. This Act also had a provision, the State Student Incentive Grant program, which encouraged states to create their own grant programs. These programs, along with the continued expansion of institutionally-funded scholarships, have helped to subsidize the price paid by students for attending college and have also served to lessen the impact of rising “sticker” prices, or the amount charged by universities before any discount is provided.

*The G.I. Bill first began offering federal education benefits to veterans in 1944.

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Geiger, Roger & Heller, Donald. “Financial Trends in Higher Education: The United States” (Working Paper), Peking University Education Review, January 2011.

July 23, 2014

Sarah Lawrence College will rate itself on the value it provides students

by Grace

Sarah Lawrence College has developed a way to assess the value it offers its students.

… The faculty came up with six abilities they think every Sarah Lawrence graduate should have….

  1. Ability to think analytically about the material.
  2. Ability to express ideas effectively through written communication.
  3. Ability to exchange ideas effectively through oral communication.
  4. Ability to bring innovation to the work.
  5. Ability to envisage and carry through a project independently, with appropriate guidance.
  6. Ability to accept and act on critique to improve work.

These measures serve as an antidote to the Obama administration’s upcoming rating system, which will measure things like cost, graduation rates, and salaries of graduates.  Obama’s new system has generated controversy, particularly since poor scores could mean the loss of federal financial aid.

Sarah Lawrence developed a “web-based assessment platform, designed to measure student performance against these critical abilities”.  Advisors meet regularly with students to evaluate their progress.

20140718.COCSarahLawrenceCriticalAbilities
Students can learn if they’re getting “their money’s worth”.

That’s a different measure of the value of an education than, say, student loan debt or earnings after graduation — the sorts of things the Obama administration is considering as part of its ratings plan. Students and parents are right to ask if they’re getting their money’s worth, says the college’s president, Karen Lawrence. After financial aid, the average cost of a Sarah Lawrence education is almost $43,000 a year.

“People are worried about cost,” Lawrence says. “We understand that.”

And they’re worried about getting jobs after graduation. But she says the abilities that the new assessment measures—critical thinking and innovation and collaboration—are the same ones employers say they’re looking for.

I have a feeling every Sarah Lawrence graduate will be rated highly.

The idea behind Sarah Lawrence’s assessment is laudable, but I must say I’m a bit skeptical about the way they measure student performance.  Shouldn’t they have an objective third party doing the assessment?

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Amy Scott, “What do students actually learn in college?”, Marketplace, April 22, 2014.

July 22, 2014

Ten career paths you may want to avoid

by Grace

A new study released Tuesday by job-search site CareerCast.com, lists the 10 top endangered jobs in the U.S. Using data on 200 jobs from the Bureau of Labor Statistics, CareerCast projected the least promising career paths in terms of future employment growth, income potential and existing unemployment in the job field.

  1. Mail carrier
  2. Farmer
  3. Meter reader
  4. Newspaper reporter
  5. Travel agent
  6. Lumberjack
  7. Flight Attendant
  8. Drill-Press Operator
  9. Printing Worker
  10. Tax Examiner and Collector

“The common theme in these jobs is paper,” says Tony Lee, publisher of CareerCast.

There is simply less demand for the type of work represented by these jobs, in most cases due to technological advances.

Since I have recently been spending many frustrating hours planning my summer vacation, I wish travel agents would make a comeback.  Apparently there is a trend toward a fee-for-service model among travel agents, particularly in the FIT (Flexible Independent Travel) market.  Maybe next time I’m planning a family vacation I’ll seek out a travel agent to make my life easier.

I’m particularly concerned to see that newspaper reporter jobs made this list since I have a son who is an aspiring journalist.  Perhaps the growing proliferation of online news sources will boost job growth in that area.  That may be optimistic thinking, but you can’t blame a mom for hoping.

———

Kathleen Madigan, The 10 Most Endangered Jobs (Or, Why You Are Reading This Online), Wall Street Journal, July 15, 2014.

July 21, 2014

Trends in public school funding

by Grace

After decades of increased public school funding, 2010 saw the beginning of a slight downward trend in per-pupil spending.

20140715.COCPerStudentFunding1

… Adjusting for inflation and growth in student enrollment, spending fell every year from 2010 to 2012, even as costs for health care, pension plans and special education programs continued to rise faster than inflation.1 Urban districts have been particularly hard-hit by the cuts in federal education spending: Nearly 90 percent of big-city school districts spent less per student in 2012 than when the recession ended in 2009.

The recent cuts represent a sharp reversal after decades of rising U.S. education spending. In 1950, American school districts spent, on average, roughly $1,800 per student. Spending has risen nearly every year since then; by 2006-07, the last full school year before the recession, per-student spending was nearly $11,000. (Both figures have been adjusted for inflation.) The long increase reflected a range of factors, among them higher teacher salaries, broader curricular and extracurricular offerings, and, especially in recent years, increased spending on students with disabilities. Another major factor: smaller class sizes. In the 1950s, there were roughly 25 students for every teacher; by 2007, the ratio had fallen to 15.5-to-one.

The latest numbers show that the average student-teacher ratio in public schools is 16-to-one.

20140716.COCStudentTeacherRatios1


Sources of public education funding   —   State: 45%    Local: 45%    Federal: 10%

More details about trends in public school spending can be found in Public Education Finances: 2012, published earlier this year by the U.S. Census Bureau.

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Ben Casselman, “Public Schools Are Hurting More in the Recovery Than in the Recession”, FiveThirtyEight, June 10, 2014.

July 18, 2014

New York railroad workers will finally contribute to their health insurance

by Grace

At the last minute a strike by Long Island Rail Road workers was averted when they agreed to begin contributing to their health insurance and pensions.

Travelers on the Long Island Rail Road were spared a debilitating midsummer strike on Thursday, when the railroad and its unions reached an agreement three days before a planned walkout….

The unions received raises of 17 percent over six and a half years. But following a national trend in which workers shoulder an increasing share of their health costs, the railroad employees will, for the first time, contribute a portion of their pay, 2 percent, toward their health coverage.

The union had earlier rejected a proposal requiring “employees to contribute 2 percent of regular pay toward health care costs and pensions”.  This seemed out of touch with the reality of what most of their riders have to deal with.

In the private sector, the average percent of health premium paid by employees is 16% for individual coverage and 27% for family coverage. 

A talk show host who is usually on the side of unions had scornfully remarked that replacement workers could easily be found for these plum jobs that consisted mainly of “punching tickets”.

The New York Post wrote that the average LIRR worker makes $87,182 annually. Moreover, a third of the unionized workers make over $100,000. They get free health care and two pensions, but still, they want more.

Related:  “Quick Links – Public pension problems round-up” (Cost of College)

———

Matt Flegenheimer, “L.I.R.R. Strike Is Averted After Cuomo Intervenes in Labor Talks”, New York Times, July 17, 2014.

Maria Vultaggio, “LIRR Strike 2014: Long Island Commuters And Conductors React To Possible Walkout”, International Business Times, July 14 2014.

July 17, 2014

Neurotics are seen as more valuable in the workplace

by Grace

This seems like another case where low expectations could work in your favor.  Sometimes it makes sense to demonstrate less confidence in the workplace.

Research suggests that the more anxious and withdrawn among us tend to gain respect over time at work, while more outwardly confident extroverts lose some of their initial esteem.

To some degree, the research shows the value of creating low expectations, said the study’s lead author, Corinne Bendersky, an associate professor at the Anderson School of Management of the University of California, Los Angeles.

“To the extent that people can channel their inner Woody Allen — and act more neurotic — they will lower peer expectations,” Dr. Bendersky said. The research defined neurotics as people who express anxiety, are withdrawn or appear emotionally volatile.

The research, published in April 2013 in the Academy of Management Journal, shows that, on the whole, neurotics are seen as working harder while some extroverts appear to their peers to coast; that is the case even if the neurotics and extroverts make similar work contributions.

I’ve seen this happen, although sometimes it seems to be because the extroverts are viewed as a bit obnoxious.

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Matt Richtelfeb, “That Neurotic on the Team? Give Him Time”, New York Times, February 1, 2014.

July 16, 2014

Don’t fall in love with a college you can’t afford

by Grace

Should I apply to colleges I don’t think I can afford?

Michelle Kretzschmar of Do It Yourself College Rankings answers that question.

No–with a big assumption. The assumption is that you already know approximately how much you can afford and how much financial aid a college is likely to give you. That means that you have already used a calculator such as the FAFS4caster to estimate your expected family contribution (EFC) and the college’s net price calculator.

Searching for merit money could be a reason to apply to colleges that are otherwise unaffordable.

There is a situation where you might apply to colleges that you don’t think you can afford. These are lessor known colleges where your test scores put you in the top 25% of applicants and makes you a candidate for substantial merit money.

But you have to stand firm.  Don’t fall in love with a school you can’t afford.

However, this still requires that you have firmly established what you can afford and be willing to turn down those schools that don’t become affordable even after merit money is awarded. Definitely, do not fall in love with a school you if you don’t know you can afford it.

———

Michelle Kretzschmar, “Should I apply to colleges I don’t think I can afford?”, Do It Yourself College Rankings, October 22, 2012.

July 15, 2014

Charging $240,000 for a college degree is becoming more common

by Grace

The number of American colleges that charge more than $60,000 per year increased from nine last year to at least 50 this year.

The most expensive school in the country for the upcoming school year is Harvey Mudd College, charging $64,527 — $48,694 in tuition and fees, and $15,833 for room and board.

But very few people pay the full price.

That’s a total of over $258,000 for a four-year degree.  But keep in mind that about “88.9 percent of first-time, full-year freshmen received some kind of discount in 2013-2014″, so very few families are paying those exorbitant amounts.

Here are 50 colleges that charge more than $60,000/year.

20140712.COCExpensiveCollegesList1

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Peter Jacobs, “There Are Now 50 Colleges That Charge More Than $60,000 Per Year”, Business Insider, July10, 2014.

July 14, 2014

College tuition discounts continue to climb

by Grace

The college tuition discount rate – the amount of financial aid as a percentage of tuition and fees – is “again at an all-time high”.

20140710.COCTuitionDiscountRate2

College continue their “high tuition, high discount” policy.

Private colleges are continuing unabated their strategy of setting high sticker prices while giving most of their students steep discounts, according to the latest survey of private colleges by the National Association of College and University Business Officers.

The colleges, many of which are struggling to meet enrollment goals, are taking in only 54 cents for every $1 they claim to charge in tuition.

The “high tuition, high discount” business model is often confusing to students and parents, but it’s how things are done at most private colleges: the colleges charge high prices and then offer students they want huge discounts. The discount comes in the form of need-based aid for low-income students and “merit” aid for students with characteristics that make them desirable to a college. At wealthy colleges, endowments may have actual funds to replace lost tuition revenue, but most colleges are just waiving the chance of getting more.

Is steep discounting a desperate, short-term strategy?

“If you do too high a discount, then perceptions of desperation creep in,” says Rao. People start to ask: “Are they going out of business? Is this product a dud?”

Mitchell Hamilton is an assistant professor of marketing at Loyola Marymount University. He says deep discounts are a short-term strategy at best. “When you’re looking at discounts of half off or more, or buy one get one free, those are for businesses that need immediate results,” he says. “Private universities are hoping that this is just a strategy to stay afloat until the economic situation gets better.”

Most observers seem to agree that if this trend becomes a race to the bottom, the losers will be ‘”smaller-sized, ‘no-name,’ tuition-driven schools.”‘  Top ranked colleges will continue to thrive.

———

Ry Rivard, “Discount Escalation”, Inside Higher Ed, July 2, 2014.

Anya Kamenetz, “How Private Colleges Are Like Cheap Sushi”, NPR Ed, July 12, 2014.

July 11, 2014

Parents help sustain their adult children’s extended financial adolescence

by Grace

Most parents are providing some financial support to their children even after they graduate from college, thereby promoting a period of sustained adolescence among 20-somethings.

… nearly 85% of parents plan to offer their children monetary aid after graduation, according to a survey Tuesday from Upromise by Sallie Mae. Almost one-in-three parents plan to provide their grad with financial assistance for up to six months, and around 50% plan to foot bills anywhere from six months to more than five years.

The new normal means that adult children continue to rely on mom and dad.

So, what has changed since my son graduated a few decades ago? Sure, new graduates are entering a much more difficult job market than he did, and even those who do secure jobs are unlikely to have the job stability he’s enjoyed. But a difficult job market is only part of the story. Social norms have shifted so that accepting help from Mom and Dad well into your 20s is “OK.”

Psychologists call this trend “emerging adulthood.” As Eileen Gallo and Jon Gallo note in their paper “How 18 Became 26: The Changing Concept of Adulthood,” for a certain socioeconomic set, growing up and moving out—permanently—means downgrading your lifestyle. The authors quote sociologists Allan Schnaiberg and Sheldon Goldenberg as stating:

“The supportive environment of a middle-class professional family makes movement toward independent adulthood relatively less attractive than maintenance of the [extended adolescence] status quo. Many of the social gains of adult roles can be achieved with higher benefits and generally lower costs by sharing parental resources rather than by moving out on one’s own!”

Keeping their 20-something children on the family cell phone plan is one common example of how “sharing parental resources” makes it easier on young adults as they transition to financial independence.  Another example is health insurance, where Obamacare now requires family policies to continue coverage for children up to age 26.  Individually these are small examples, but in total many parents are heavily subsidizing their adult children’s lifestyle.

Retirement expert Dennis Miller says parents should consider tough love instead of risking their own future financial security.

Retiring rich is hard enough without paying for your child’s extended adolescence. The job market may be tough for new graduates, but forcing your child to navigate it anyway might just be the best way to help.

Miller believes it’s possible to be supportive without hindering a young adult’s financial and emotional independence, and has some tips that can be read at the link above.

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Kathryn Buschman, “The New Normal? Some Parents Plan to Aid Children 5 Years after Graduation”, FOXBusiness, May 27, 2014.

Dennis Miller, Paying bills for adult children? Try tough love instead, MarketWatch, July 8, 2014.

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