investing in minnesota's future
TRANSCRIPT
-
7/29/2019 Investing in Minnesota's Future
1/18
State Grant Program: MinnesotasInvestment in the Future
-
7/29/2019 Investing in Minnesota's Future
2/18
Agenda
1. Pressing Issues in Higher Education
2. Federal Developments
3. Californias Approach
4. Possible Minnesota Approaches
5. Conclusion/Questions
2
-
7/29/2019 Investing in Minnesota's Future
3/18
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)
3
Source: Brown Center on
Education Policy, Brookings
InstitutionSource: Institute for College Access and Success
-
7/29/2019 Investing in Minnesota's Future
4/18
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
4
Sources: Georgetown Center for Educationand the Workforce; MN Office of Higher
Education
-
7/29/2019 Investing in Minnesota's Future
5/18
The Problem: Big Questions
1. How do wereduce student
debt?2. How do we
increase collegegraduationrates?
5
-
7/29/2019 Investing in Minnesota's Future
6/18
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?
6
-
7/29/2019 Investing in Minnesota's Future
7/18
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
7
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:
-
7/29/2019 Investing in Minnesota's Future
8/18
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
-
7/29/2019 Investing in Minnesota's Future
9/18
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
9
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
-
7/29/2019 Investing in Minnesota's Future
10/18
Californias Approach: The New Requirements
10
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
-
7/29/2019 Investing in Minnesota's Future
11/18
Californias Approach: The Results
11
-
7/29/2019 Investing in Minnesota's Future
12/18
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
12
-
7/29/2019 Investing in Minnesota's Future
13/18
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
13
-
7/29/2019 Investing in Minnesota's Future
14/18
Possible Minnesota Approaches: Data
14
Three-Year Default Rate Percentages, 2009:
-
7/29/2019 Investing in Minnesota's Future
15/18
Gainful Employment: Medical Assistant Associate Degree
15
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
-
7/29/2019 Investing in Minnesota's Future
16/18
California Model
16
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
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
-
7/29/2019 Investing in Minnesota's Future
17/18
Minnesota: A Possible Option
17
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
-
7/29/2019 Investing in Minnesota's Future
18/18
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?
18