Showing posts with label American Council on Education. Show all posts
Showing posts with label American Council on Education. Show all posts

Saturday, August 15, 2020

70 college groups ask Congress for more coronavirus money: Feed me, Seymour!

Writing on behalf of more than 70 college lobbying groups, Ted Mitchell, President of the American Council on Education, wrote a letter to Congressional leaders earlier this month asking for federal money to help colleges cope with the coronavirus pandemic.

Congress had already sent relief money to American colleges and universities through the CARES Act, but Mitchell asked for more--a lot more!

Mitchell said colleges need a total of $46.6 billion to cover increased student aid and lost revenues, and they need another $73.8 billion to pay the costs associated with the COVID 19 pandemic.

One congressional bill (the Corona Virus Child Care & Education Relief Act) calls for sending the colleges $132 billion, and Mitchell says that will do nicely, thank you very much.  Other legislation falls short of what Mitchell says the college industry needs.

Mitchell also asked for some other stuff:

  • Colleges want flexibility in how they spend the federal money they want Congress to give them.
  • Colleges want more cash even if they don't fully reopen. Or, as Mitchell put it, none of the money should be based on "an institution's reopening status."
  • Universities with fat endowments (Harvard's endowment fund is $37 billion) should not be penalized just because they're rich.
Mitchell's letter contained some more requests, but the bottom line is this: American colleges and universities want more federal money. Feed Me, Seymour!

When Mitchell was asking for a federal handout, did he urge Congress to provide some relief for college students? College borrowers, after all, collectively owe $1.7 trillion in student debt.

Oh yes. Mitchell asked Congress to extend the moratorium on monthly student-loan payments and accruing interest for an additional six months.  Thanks for thinking about the students, Ted. So thoughtful!

Mitchell did not mention bankruptcy relief for distressed student-loan debtors or the tax status of forgiven student debt.  He did not mention the millions of parents who took out PLUS loans to get their kids through crumby colleges--loans that sabotaged their retirement plans.

No, Ted Mitchell's letter was all about sucking up more federal money so the college racket can maintain the status quo--which includes robber-baron salaries for college presidents, coaches, and administrators.

Of course, the higher education industry won't admit that it brought its financial woes on itself or that many colleges were sinking even before the coronavirus showed up and crapped in their mess kits. (See Jon Marcus's recent essay in the Hechinger Report.)

Public institutions refused to consolidate their regional campuses even as college enrollments dropped precipitously.  Private colleges continued to insist that the liberal arts degrees they cranked out were valuable, even though they had forgotten what a liberal arts education is all about.

Law schools and business schools refused to cut their tuition or shrink the size of their entering classes even though there was a glut of JDs and MBAs on the market.

And now the reckoning day approaches, and all the college and universities can think of to do as a group is to have their 70 lobbying organizations ask Congress for more money.

Thursday, December 3, 2015

The percentage of low-income students going to college went down while Pell Grant spending went up: What's going on?

According to the American Council on Education, the percentage of low-income students enrolling in college has gone down. What's going on?

ACE reports that the percentage of recently-graduated low-income students who enrolled in college dropped from 55.9% in 2008 to 45.5% in 2013.  College enrollments also dropped for other income groups, but not by nearly as much.

Can the drop be attributed to insufficient federal student aid? Probably not. The Department of Education reported that federal student aid increased by 29% from 2009 to 2012--rising from $129 billion in FY 2009 to $166.9 billion in FY 2012.

And Pell Grant funding (grants to low-income college students) actually tripled from 2007 to 2011, going from $13.6 billion in FY 2007 to  $41.6 billion.

Perceived cost of higher education. ACE speculated that the perceived cost of higher education may have discourage low-income students from going to college, and this makes sense. Low-income young people may not be aware that many private colleges actually discount their tuition by more than 40 percent for incoming freshmen. In other words, potential students from poor families may not know that the sticker price is only the sucker price and that most first-year students get the benefit of deep discounts.

Going to work rather than going to college. ACE suggested another explanation for the percentage drop in low-income college students: many low-income students are simply skipping the college experience and going to work. This explanation also makes senses.

In my own family, I have a nephew who dropped out of college and got a job as a pipe fitter working in the shipbuilding industry. He's making good money and he found a girl friend who is also making good money as a pipe fitter. In fact, my nephew is making more money in his present job than he would make if he got a college degree and got a job as a school teacher. Is he likely to go back to college? I don't think so.

Low-income families have gotten wise to the for-profit college industry. I think there is a third possible explanation for the drop in low-income students going to college: low-income families may have gotten wise to the for-profit college industry.

All over the country, state attorney generals are investigating the for-profit colleges based on allegations that these colleges have engaged in misrepresentations and fraud.  Some for-profits have been fined. Corinthian Colleges filed for bankruptcy and several for-profits have closed.

It could be that low-income and minority students--who have been the target of the for-profit colleges--have figured out that many of these joints charge too much and don't deliver on their promises.


Low-income individuals are going to college in smaller numbers, and this may not be bad. If they can get good jobs without going to college then they can avoid the huge opportunity costs of being a college student--forgone wages and student loans.

And if young people from low-income families are becoming more appreciative of the risk of borrowing money to attend a for-profit college, that is certainly good news. Although the Obama administration hasn't been as aggressive as I think it should be toward the for-profit college industry, it has taken some steps to rein in abuses.  And state officials have taken action against abusive for-profits colleges as well. This is good news.


American Council on Education. ACE Fact Sheet on Higher Education. Pell Grant Funding History (1976 to 2010). Accessible at:

Misty Baily. Attorney Generals Expand Probe into For Profit Colleges. Education News, January 14, 2014. Accessible at:  /

Kelly Field. Attorneys General Take Aim at For-Profit Colleges Institutional Loan Programs, Chronicle of Higher Education, March 20, 2012. Accessible at:

Scott Jaschik. The Missing Low Income Students: Study finds drop in percentage of low-income students enrolling in college. Inside Higher Education, November 25, 2015. Accessible at:

U.S. Department of Education. Fiscal Year 2012 Budget Summary--February 14, 2011.  Accessible at:

U.S. Department of Education. Pell Grant Funding Status. Accessible at:

Tuesday, May 22, 2012

Higher Education Industry to Students: If You Are Crushed by Student Loans, It's Your Own Damn Fault

As Jimmy Buffet reminded us in Wasting Away in Margaritaville, some things are our own damn fault.  Apparently, this is the position of the higher education industry regarding the student loan crisis. 

Jimmy Buffett
When the New York Times published a front page story about students who have been crushed by the burden of their student loans, two higher education industry spokespeople wrote letters to the Times, basically saying everything is fine--thank you.  
Molly Corbett Broad, president of the American Council on Education, suggested that some students need to make better decisions when they take out student loans. “The reality is that every student and family must carefully weigh what they believe a degree is worth against the price of a particular institution.”  And, Broad acknowledged, “If students and their families borrow not with their heads but over them, dire consequences can easily follow.” Yuh think?
And David L. Warren, president of the National Association of Independent Colleges and Universities, pointed out that the default rate for borrowers at private colleges is only 4.6 percent. Both Warren and Broad acknowledged that students might need better counseling regarding their borrowing decisions, but other than that, Warren and Broad had no suggestions for solving the student loan crisis.
What I took away from these letters by the presidents of two high-profile higher-education industry groups is this: We are doing a fine job, higher education is worth the cost, and students who are swamped by their college loans made bad decisions. Or, to paraphrase Jimmy Buffett, if students are overwhelmed by their student loans, it’s their own damn fault.
But let’s look closely at what Broad and Warren said. Warren stated that the default rate at private colleges is only 4.6 percent.  Warren was citing the Department of Education’s figures, which only measures defaulters in the first two years of the loan repayment period. A study that examined the loan default rate for college graduates over a ten year period concluded that the default rate is about 10 percent. I think it is indisputable that the loan default rate for students who attended private colleges is nearly double the rate that Warren cited, when defaults are measured over the life of loan repayment period. And the default rate for students who attended for-profit institutions is absolutely unacceptable—probably at least 30 percent when measured over the entire life of the loan repayment period.
And Broad said that the average student debt load is only $23,000, which Broad seems to think is not particularly onerous. But even $23,000 in student-loan debt is a crushing burden for students who don’t have jobs, students who received no worthwhile skills from their educational experiences, or students who never completed their degrees.
As far as I know, the professional organizations for the higher education industry have not endorsed serious proposals to ease the burden on students who cannot pay back their loans. At a minimum, the National Association of Independent Colleges and Universities and the Council on Education should actively promote these reforms:
·         Legislation that will give insolvent students reasonable access to the bankruptcy courts. 
·         Legal prohibitions against the garnishment of student-loan debtors’ Social Security checks. 
·         More accurate reports from the Department of Education regarding student-loan default rates.
For two top spokespeople for the higher education industry to simply say a college education is a good value and students need to make better decisions about borrowing money is pretty lame. The nation’s colleges and universities need to accept some responsibility for the student-loan mess, and they need to support effective solutions.  
Broad, M. C. (2012, May 190. Letter to the Editor. New York Times, p. 18.
Choy, S. B, & Li, X. (2006). Dealing with debt: Bachelor’s degree recipients 10 years later.  Washington, DC: National Center for Education Statistics.
Fossey, R., & Cloud, R. C. (2011, November 24). From the cone of uncertainty to the dirty side of the storm:  A proposal  to provide student-loan debtors who attended for-profit colleges with reasonable access to bankruptcy court. West’s Education Law Reporter, 272, 1-18.

Martin, A., & Lehren, A. W. (2012, May 12). A generation hobbled by the soaring cost of college. New York Times, p. 1.
Warren, D. L. (2012, May 19). Letter to the Editor. New York Times, p. A18.