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Increasing College Access and Success: Investing in Human Capital. MAP Capital Investment Bonds Presentation to Higher Education Finance Commission September 23, 2010. Students-in-Need Do Not Complete College.

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Increasing College Access and Success: Investing in Human Capital

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Increasing College Access and Success: Investing in Human Capital

MAP Capital Investment Bonds

Presentation to Higher Education Finance Commission

September 23, 2010

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Students-in-Need Do Not Complete College

Source: Goldberger, Susan, “Doing the Math: What It Means to Double the Number of Low-Income College Graduates,” Minding the Gap: Why Integrating High School with College Makes Sense and How to Do It, 2007.

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Current Illinois Need-Based Grant Program Helps Low-Income Students Attend School

  • Since 1967, Illinois has provided grant assistance for low-income students through the Monetary Award Program (MAP)

  • In FY 2009, 144,230 students received MAP grants totaling $384 million

    • 56,326 MAP grants totaling $57 million went to students attending community colleges, with an average award of $1,008 per student

  • Critical factor in aligning workforce of the future to changing economic opportunities

Source: ISAC Databook, 2009

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MAP Funding FY2011

  • FY2011 MAP appropriation is $404 M (plus S/LEAP)

  • Additional MAP funds in FY2011 come primarily from IIA - $4.5 million.

  • MAP not impacted by 2% reserve requirement

  • MAP remains the 4th largest state need-based aid program in the country

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Distribution of MAP Dollars

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Applications and Number of Eligible Students Continue to Rise while Funding is Level

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Good Investments Shouldn’t Lack for Capital

  • MAP successful in helping students afford college

  • Opportunity for state-funded expansion limited; need greatest in challenging economy

  • Evaluate how much MAP recipients pay in state income tax revenue v. other low income taxpayers

  • Findings: College has a good return on investment from individual and state tax perspective

  • Good investments should not lack for capital

  • ISAC Challenge: How to get capital for education

  • ISAC Solution: Use capital markets to invest in people

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Individual Return to Education: Lifetime Earnings Are Greater for Those with More Education

Source: Georgetown University Center on Education and the Workforce, Help Wanted: Projections of Jobs and Education Requirements through 2018, June 2010, Figure 5.6

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State Return to Education: Income Taxes Increase

Source: ISAC Analysis of Illinois Dept. of Revenue data

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Maintaining or Even Sustaining Illinois’ Need-Based Program Is At Risk

  • 42,000 students eligible for MAP and who wanted to attend community college did not receive grants due to lack of funds in FY 09; only 28% actually enrolled without the MAP support

  • Each year, more students apply for these limited dollars. So far in 2010, over 70,000 eligible community college students have been denied MAP since funds ran out

  • Unlikely State will have resources in short- and long-term necessitating new, innovative approach

Source: ISAC data collection and analysis

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MAP Human Capital Investment BondsA New Paradigm in Funding

  • $550 million in bonds over 5 years

  • 10-year bonds

  • 100,000 low-income community college students per year funded; up to 50,000 additional students per year

  • $1,000 average MAP award

  • More funds, available to more students

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MAP Cap Bonds Are a Sound Investment

  • Expands the number of low-income community college students receiving MAP by nearly 50,000

  • Repays bonds with Illinois Income Tax revenue received from these MAP recipients

  • Income Tax revenue exceeds debt service each year, with a minimum debt service coverage ratio of 1.85

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Source: Loop Capital Markets analysis for ISAC

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Appendix I

Other studies find similar returns to higher education investment as ISAC/DOR Analysis

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2007 NIU Study Finds Comparable Pattern of Earning Increases from Community College Completion

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NIU and ISAC Analysis Find Similar Impact from Community College

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Displaced Workers’ Earnings Increase After Attending Community College

Percentage of Earnings Increase by Age and Gender

Source: “Do Displaced Workers Benefit from Community College Courses? Findings from Administrative Data and Directions for Future Research, Louis Jacobson, Robert LaLonde, Daniel Sullivan, Hudson Institute Center for Employment Policy, October, 2005

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Analysis of Census Data Finds Positive Federal Income Tax Return to College Completion

“[I]t is worthwhile for the federal government to invest in federal student aid if the per-student cost is less than about $57,000.”

Source: Mark Kantrowitz, “The Financial Value of a Higher Education, NASFAA Journal of Student Financial Aid, Vol 37, No1, 2007

Net Present Value of College Degree and Federal Income Tax, 2005

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Appendix II

Details on MAP Program

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MAP Eligible Awards

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MAP Eligibles by Region

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MAP Recipients by Region

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MAP Coverage of Tuition and Fees at Public Universities has Decreased Since 2002

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MAP Coverage of Tuition and Fees at Community Colleges has Decreased Since 2004

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Effective Maximum MAP Award and Tuition and Fees, 1980-Present

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