The nation faces a $1.7 trillion student debt crisis. That is bigger than the gross domestic product of Canada, the world’s 10^th largest economy. This sword of Damocles hangs over millions of young Americans who are postponing marriage, buying a home, and starting a family as they confront an average student loan debt of $40,000. This is not only a heavy burden for those in debt, but also a serious drag on the nation’s economy. 

The blame for this situation lies squarely at the feet of the higher education establishment. For decades, runaway spending on administration and student services, plus profligate spending on frivolous projects like rock climbing walls and lazy rivers, have been paid for by continuously raising tuition. Since 1990, the average in-state tuition and fees at a four-year institution nearly tripled on an inflation-adjusted basis—snowballing faster than the cost of health care.

That results in the sticker price at four-year institutions increasing by 178% since 1990.

The Biden administration is today poised to forgive billions of dollars in student debt with the stroke of a pen and will enact no meaningful changes to the broken system currently in place. This action will only serve to deepen the crisis and permit the dysfunction in higher education to continue. The American Council of Trustees and Alumni’s (ACTA) report, The Cost of Excess: Why Colleges and Universities Must Control Runaway Spending, found that in the years following the Great Recession, as state and philanthropic revenue suffered, rather than cut costs, colleges and universities increased spending across the board. They left students holding the bag in the form of higher tuition bills, with no meaningful benefit to graduation rates. As we wrote in our 2021 report:

“The solution cannot be debt forgiveness, which is merely a way of shifting the burden to the American taxpayer. More importantly, debt cancellation is but a temporary solution that treats the symptom and not the disease.”

Are we surprised that the higher education industry stands quietly by? Decades and political administrations from both parties have come and gone, and all turned a blind eye to this unfolding catastrophe.

Today, the higher education establishment will once again dodge accountability and critically important reform, and will continue raising tuition, bloating their administrative budgets, and spending more money on ancillary items that do little to improve student outcomes. Four-year graduation rates remain abysmal, under 40%, and the college diploma has become a devalued commodity. Our political and higher education elites have failed us. The consequences of that failure will haunt taxpayers, students, and their families for decades to come.

ACTA will continue to be the leading voice in calling for accountability in higher education spending. Thank you for your support.

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The future of the economy, the health of our civic institutions, and the integrity of our national workforce depends on the strength of our colleges and universities and their commitment to excellent student outcomes and financial stewardship. Policymakers cannot assume that higher education institutions properly serve taxpayers and students without careful oversight.

IN ranks 44th in the nation for administrator to professor ratios

IN ranks 9th in the nation for speech code policies

IN ranks 6th in the nation for student to faculty ratios

IN ranks 47th in the nation for Pell Grant student graduation rate gap

“Students, families, and taxpayers deserve a public higher education system that prepares graduates for career and citizenship and that stewards state funds appropriately. Lawmakers must ensure that colleges and universities meet these goals,” says Armand Alacbay, ACTA’s vice president of trustee & government affairs. “ACTA’s new tool provides policymakers with the information they need to make sound, data-driven decisions.”

Use our interactive education tool to see if institutions in Indiana are providing taxpayers with a significant return on their investment in higher education. #eduimpactIN.

ACTA is a nonprofit, nonpartisan organization dedicated to academic freedom, academic excellence, and accountability in higher education. We receive no government funding and are supported through the generosity of individuals and foundations.

This article originally appeared here.

The post INDIANA RANKS 47TH IN THE NATION FOR PELL GRANT STUDENT GRADUATION RATE GAP appeared first on American Council of Trustees and Alumni.

Enter the Pell Grant Preservation and Expansion Act of 2021, which would increase the maximum Pell Grant to $13,000 over the next six years, with inflation-indexed increases subsequently. It would also expand eligibility to 18 semesters, that is, nine academic years, an increase from the current 12 semester limit.

At first glance, the case for doubling the size of the maximum grant appears overwhelming. As Hawaii senator Mazie K. Hirono stated, “Over the last decade, the value of the Pell Grant has steadily declined — from covering nearly fourth-fifths of the cost of attendance at a public, four-year institution at its height, to less than one-third.”. Robert Jones, Chancellor of the University of Illinois Urbana-Champaign ended his testimony before Congress with the exhortation: “Double the Pell. Triple it even.” 

A long view of the impact of federal student aid on higher education cost and outcomes, however, should encourage caution before allocating more funding.  Senator Hirono is absolutely correct when she observes that the purchasing value of the Pell Grant has not kept pace with the increase in cost of attendance. But the question left unasked is, “why not?”

And therein hangs a tale of increases in tuition that are the direct result of increased spending, and spending that is too often directed to things that have little do to with teaching and learning.

During the Great Recession the Recovery Act increased the maximum Pell Grant and expanded eligibility. From 2007 to 2010, Pell Grant expenditures rose from nearly $16 billion to $37 billion and student loans grew from almost $75 billion to over $110 billion. As revenue from donors and state legislatures inevitably decreased, there were no commensurate cuts in spending. Growth in the price of tuition outpaced both aid and institution’s tuition discounting. Student loan debt held by the average borrower escalated. After adjusting for inflation, tuition at four-year public institutions rose 19% between 2006 and 2012, in other words right through the Great Recession.

The takeaway lesson is that the student debt crisis has been fueled by spending at least as much as limitations on state and federal funding.

That leads us to the question of what an infusion of new dollars would purchase. According to a report from the New York Federal Reserve Bank using a fixed effects regression, for each dollar increase in the Pell Grant maximum, the sticker price increased by $0.37. Researchers also found that for every $1 increase in the Pell Grant maximum, institutions decreased institutional grants by $0.30. That is not good news for anyone, especially students from middle income families, who typically receive more limited institutional financial aid. Added to that is the grim truth that tuition discounting or “net price” is quite sensitive to “sticker price” tuition increases: new research on spending found that at public institutions, on average, net price increases 84 cents for every dollar of sticker price increase at public institutions and 42 cents at private institutions. 

Going further, there is the question of how the infusion of more Pell Grant money might affect the institution. Between 2010 and 2018, federal data shows that spending on student services increased 29% and spending on administration grew 19%, with both categories outstripping growth in instructional spending at 17% growth. This is a particular problem for the success of Pell Grant students.

That issue led North Carolina Congressman Greg Murphy at a meeting of the House Committee on Education and Labor concerning Pell Grants to ask, “Is there any hope for universities and colleges to actually take it seriously to cut cost, to actually help our students in the long term, rather than bloating budgets from administrators and all these extra programs?”

The education policy think tank Third Way strongly endorses doubling the Pell Grant, but it is also scathing in its critique of schools that receive Pell Grant students and do a miserable job of bringing them to degree completion: “We know that a college degree is a worthwhile investment and a ticket to economic mobility. But this investment will only pay off if we make sure that students who receive Pell dollars attend institutions that prioritize their success and get them to graduation.” On average, schools show an 18% gap in the graduation of Pell and non-Pell students. Third Way’s recommendation for “skin in the game” is compelling: “schools should be required to pay back some fraction of the Pell Grants they receive if they fail to get good outcomes for their Pell Grant students.”

For very creditable reasons, doubling the Pell Grant will be attractive to the public and Congress. But if the increased funds largely contribute to the cycle of spending and rising tuition with ultimately little to show in student success, everyone loses. It would be prudent first to consider accountability measures and metrics and find ways to reward the institutions that lower their spending and put a cap on the unconscionable escalation of the price of attending college.

This article was originally featured here.

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Though Democratic lawmakers and higher education advocates have been pushing for Congress to double the maximum Pell Grant in recent months, Republicans on the House Education and Labor Committee didn’t seem as enthusiastic about the idea during a subcommittee hearing on the program held Thursday.

Most members of the GOP agreed that Pell Grants — which provide need-based aid that doesn’t need to be repaid to low- and moderate-income students pursuing two- or four-year postsecondary degrees — are a necessary part of the federal student aid system. And though the grant doesn’t cover as much of the cost of college as it used to, Republicans were skeptical that doubling the award, as Democrats have proposed, would help make postsecondary education more affordable.

“Additional dollars allocated to poor students will wind up captured by these institutions,” said Representative Greg Murphy, a North Carolina Republican and ranking member of the Higher Education and Workforce Investment subcommittee. “Congress wanted to subsidize students but wound up subsidizing institutions. Throwing more money at them is literally the opposite of what we should be doing.”

Murphy referenced the Bennett hypothesis — named for President Reagan’s secretary of education William Bennett — that suggests increasing financial aid leads to higher tuition costs, though research on whether that’s true has been inconclusive. Michael Poliakoff, president of the American Council of Trustees and Alumni, testified that when Pell Grant and student loan access expanded during the Great Recession, tuition at four-year public universities increased.

“Simply increasing federal funding will not solve this issue,” Poliakoff said.

Poliakoff encouraged the committee to look carefully at any proposed policy that doesn’t examine how colleges are spending federal funding. Representative Diana Harshbarger, a Republican from Tennessee, didn’t explicitly state whether she supported or opposed doubling the Pell Grant but said that some sort of accountability measure for colleges and universities needs to be put into place.

“If I was a business owner, and I had some type of money coming from the federal government, and I knew it was coming and that they’re going to give me more, do you think I would lower the price?” Harshbarger said. “More than likely not. As far as I’m concerned, there needs to be accountability.”

But for some members of the committee, that accountability shouldn’t just be for institutions but for students as well. Representative Julia Letlow, a Republican from Louisiana, said while serving as a college administrator she saw students using federal financial aid for non-school-related expenses instead of only on tuition, room and board, and textbooks.

“There should be better oversight on how these funds are spent,” Letlow said. “While I’m glad we’re discussing how Pell Grants can benefit our students, I have reservations about the policy idea of doubling the maximum Pell Grant award and expanding semester eligibility for another six semesters, especially when I’ve seen firsthand misuse of financial aid funds.”

Committee chair Bobby Scott, a Democrat from Virginia, recognized that Congress must address the root causes behind the barriers to higher education, naming state disinvestment in higher education as one. Still, he championed the Pell Grant Preservation and Expansion Act of 2021 — which he introduced in June with Representative Mark Pocan, a Democrat from Wisconsin — as one step Congress could take to bolster resources for students by doubling the Pell Grant and extending eligibility for it to undocumented students.

“Over the years, the purchasing power of Pell Grants has dramatically declined, covering the smallest share of college costs in four decades,” Scott said. “By passing this long-standing higher education priority, we would not only boost Pell Grant awards but also expand eligibility for these critical resources.”

Though he acknowledged he wouldn’t have been able to attend college without a Pell Grant, Representative Bob Good, a Republican from Virginia, disagreed that doubling the award would be the right move.

“We continue to see the same Democrat playbook — throw more money at a problem and hope that’ll fix it,” Good said.

This article originally appeared in Inside Higher Ed.

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Washington DC, July 28, 2021 – American Council of Trustees and Alumni (ACTA) President Michael Poliakoff is scheduled to testify before the House Higher Education and Workforce Investment Subcommittee on Thursday, July 29, 2021, at 10:15 a.m. on supporting the success of Pell Grant students. The following is a synopsis of President Poliakoff’s testimony:

“The Pell Grant has been the cornerstone of America’s investment in college financial aid for nearly 50 years. But for Pell Grants to fulfill their promise going forward, additional layers of accountability must be applied. There is little evidence to suggest that increasing the amount of federal funds available to students will solve problems plaguing higher education. Attempts to tackle college affordability must first recognize that the student debt crisis is fundamentally a spending crisis. A significant portion of this spending goes to non-instructional sources at universities and colleges, such as student services, administration, and construction. Growth in tuition has outpaced aid, forced families to pay more to send their children to college, and increased student loan debt held by the average borrower. The absence of Pell Grant Program oversight at the institutional level has been shocking. ACTA recommends increased oversight and particular scrutiny of the completion rates at institutions that receive Pell Grant students.”

Who: ACTA President Michael Poliakoff
What: House Subcommittee Hearing on the Pell Grant Program
When: Thursday, July 29, 2021, at 10:15 a.m.
Where: via Zoom
https://edlabor.house.gov/hearings/keeping-the-pell-grant-promise-increasing-enrollment-supporting-success

ACTA is a nonprofit, nonpartisan organization dedicated to academic freedom, academic excellence, and accountability in higher education. We receive no government funding and are supported through the generosity of individuals and foundations

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