A Sharper Focus on Cost and Whether Students Graduate

By Sara Lipka

Randy Lyhus for The Chronicle

Efforts to keep higher education affordable for all students and to promote not only access, but success—all in a climate of dwindling state appropriations and lean budgets—made the past year one of reckoning for colleges.

Total outstanding student-loan debt hit the $1-trillion mark as federal officials scrambled to ease the burden on borrowers, partly by requiring colleges to disclose more about students’ cost of attendance and financial-aid awards. A campaign-season debate arose in Congress over a scheduled interest-rate increase on some student loans. And the national college-completion agenda prompted both attention to underrepresented students and scrutiny of graduation rates.

The Obama administration’s goal, that by 2020 the United States will once again lead the world in the proportion of adults with a college degree, appeared in numerous reports, rife with recommendations on how to achieve that aim. But progress was slow. The Lumina Foundation, with its similar “big goal,” that 60 percent of adults nationwide will have a college credential by 2025, has bad news: In 2010, only 38.3 percent of adults ages 25 to 64 had a degree, up less than half of a percentage point since 2008.

Seeing students through to graduation remained a challenge for colleges. By the Education Department’s count, the national graduation rate hovered around 60 percent at four-year institutions (for completion of a bachelor’s degree in six years) and half that at two-year colleges (for completion of a certificate or associate degree in three years), although those figures included only first-time, full-time students, a declining share of the college-going population. Rather than publishing institutions’ retention, the National Student Clearinghouse Research Center released students’ “persistence,” reporting that from the fall to spring of 2010, 85 percent stayed enrolled somewhere.

Community colleges got due attention this past year for serving underrepresented students, including nearly half of all minority undergraduates. The sector also faced heightened expectations, some self-imposed. Calling the American dream imperiled, the American Association of Community Colleges issued a report in April that acknowledged the sector’s historic growth but unacceptable graduation rates. “It takes courage,” said Walter G. Bumphus, the association’s president, “to say we can do better.”

But money to support students toward graduation was in short supply, especially at community colleges. By a 2-to-1 ratio, members of the National Council of State Directors of Community Colleges were pessimistic about the prospect of raising overall graduation rates as state budgets are reduced, a survey by the Education Policy Center at the University of Alabama found.

More Aid, More Debt

Across higher education, the share of students receiving some type of financial aid continued to rise: More than four out of five full-time freshmen in college for the first time in the 2009-10 academic year had grants or loans, according to the U.S. Department of Education. Despite sticker prices rising faster than inflation, students’ average net tuition dropped slightly in 2010 across sectors, except at for-profit colleges, the department reported.

Grant aid became more common, going to roughly two out of three full-time undergraduates in the 2010-11 academic year, according to the College Board. And more of that aid—almost three-quarters—was federal, given rapid growth in the Pell Grant program, education benefits for military veterans, and tuition tax credits. The first two generated much discussion, including calls to tighten eligibility to save the Pell program, which is projected to cost $5-billion next year, as well as restrictions on colleges’ marketing to veterans, whom lawmakers worried the for-profit sector was especially after for their federal dollars. What the College Board called the biggest change in student aid in 2010-11, the American Opportunity Tax Credit, an expansion of tuition tax breaks introduced in the 2009 economic-stimulus bill, prompted criticism that such a subsidy may not benefit the neediest students.

Grants were only part of the story. Among bachelor’s-degree recipients, a greater percentage—about two-thirds—took out loans, and the average amount of debt per borrower rose to more than $25,000 for the Class of 2010, according to the Project on Student Debt. That burden has generated public outrage, and federal officials have responded.

Beginning last October, all colleges were required to post net-price calculators on their Web sites, to provide early estimates of what students would pay to attend. And federal officials urged colleges to adopt a standard form for displaying cost and aid information to students. Financial-aid administrators opposed that move, arguing that they should decide the best way to communicate that information.

The new Consumer Financial Protection Bureau took on college affordability, collecting complaints about private lenders. And Republicans and Democrats, neither wanting to make enemies of students this year, grandstanded their way to a last-minute compromise to postpone an interest-rate increase on student loans that would have cost individual borrowers on average about $8 a month, over a 10-year or 20-year period.

Many colleges continued offering generous financial aid, but some seemed to have overextended themselves. Cornell University pulled back from its “no loans” policy this year, lowering families’ income eligibility, and Wesleyan University curtailed its need-blind admissions. Still, colleges announced generous new policies, like one at the University of California at Berkeley to cap parental contributions for middle-income families.

Majors and Employment

The economy showed some signs of recovery for new graduates entering the job market: Employers planned to hire them at a rate slightly higher than last year’s, according to the Collegiate Employment Research Institute at Michigan State University.

But although employment rates were higher for recent college graduates than for people with less education, job prospects varied by major. Architecture majors were the worst off, reported Georgetown University’s Center on Education and the Workforce. In general, arts and humanities majors had higher unemployment rates than did their classmates in health and education.

“If your major sounds like a job—engineering, for instance, sounds like you’re going to be an engineer—you’re going to be in better shape,” said Anthony P. Carnevale, director of the center.

But employers weren’t necessarily satisfied with their new hires. Less than 10 percent of employers thought colleges did an “excellent” job of preparing students for work, according to a survey by the Accrediting Council for Independent Colleges and Schools. On all hiring criteria included in the survey, such as adaptability and critical thinking, applicants were performing below employers’ expectations.