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Higher Education Cost and Financial Aid: Unraveling the Pieces Larry Warder Acting Chief Operating Officer Federal Student Aid Lagging performance internationally The United States ranks 18 th among OECD nations in college graduation rates, a drop from 12 th

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Higher education cost and financial aid unraveling the pieces l.jpg

Higher Education Cost and Financial Aid: Unraveling the Pieces

Larry Warder

Acting Chief Operating Officer

Federal Student Aid


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Lagging performance internationally

  • The United States ranks 18th among OECD nations in college graduation rates, a drop from 12th

  • The U.S. ranks 1st among OECD nations in college dropout rates

  • The U.S. ranks 21st among OECD nations in high school graduations rates

  • While the U.S. leads the world in the percentage of its population aged 55 to 64 with college degrees, we drop to 10th among those aged 25 to 34

  • The U.S. ranks first among OECD nations in total expenditure on higher education as a percentage of GDP


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Tuition and fees

% of students that benefit from public aid

Source: OECD, Education at a Glance 2007


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$27,317

Private 4-Yr

$21,170

Private 2-Yr

$12,108

Public 4-Yr

Public 2-Yr

$6,492

Rising Higher ED Costs in Every Sector

Cost of attendance in constant (2005) dollars


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53.28% Priv. 2-Yr

48.33% Pub. 4-Yr

33.61% Priv. 4-Yr

24.96% Pub. 2-Yr

9.04% Med Inc.

Growth of Cost Outpaces Family IncomePercent increase (constant dollars)


Triple the investment but enrollment and attainment are virtually flat constant 2005 dollars l.jpg

60%

55%

50%

% pop age 20-21 Enrolled in College

45%

Non-Federal Aid

40%

35%

Federal Loans

30%

% of pop age 25-34 with B.A. or Higher

25%

Federal Grants

20%

Triple the Investment, but Enrollment and Attainment are Virtually Flat Constant 2005 dollars


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2005-06

1992-93

Everyone is Doing More…Estimated student aid by source for 1992-93 and 2005-06 in current dollars (in billions)


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…Burden is Shifting Percentage of student aid by source for 1992-93 and 2005-06 in current dollars (in billions)

1992-1993

2005-2006

4%

9%

16%

6%

41%

5%

10%

51%

5%

19%

20%

7%

7%

Pell Grants

Other Federal Programs

State Grants

Private & Employer Grants

Federal Loans

Institutional Grants

Education Tax Benefits


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$30

$25

$20

$15

$10

$5

$0

Utah

Ohio

Iowa

Maine

Idaho

Texas

Hawaii

Illinois

Florida

Alaska

Kansas

Virginia

Indiana

Nevada

Arizona

Oregon

Missouri

Georgia

Montana

Michigan

Alabama

Vermont

Wyoming

Louisiana

Kentucky

Maryland

Arkansas

Nebraska

New York

Wisconsin

Delaware

Colorado

Minnesota

California

Oklahoma

Mississippi

New Hamp

Tennessee

Puerto Rico

New Jersey

New Mexico

Washington

Connecticut

West Virginia

Pennsylvania

Rhode Island

North Dakota

South Dakota

Massachusetts

North Carolina

South Carolina

District of Columbia

Average Pell Grant

Average Cost of Education

Buying Power of Pell VariesLeast power in states with fastest growing youth population

In thousands

Source: Award Year 2005-06 Pell Grant Sample File. Unmet need is average cost of attendance, as defined in statute and reported by institutions, minus the average Pell Grant.


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Income Quintile KeyCurrent Dollars (2005)


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Full Aid Covers Cost of Attendance for Increasing Number of Students

16.3%

1%

Income Quintiles 1993

Income Quintiles 2004

Full-Time, Full-Year Dependent Undergraduates at Public 4-Year Institutions


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Aid Plus EFC StudentsDoes Not Cover Tuition for Increasing Number of Students

16.3%

1%

Income Quintiles 1993

Income Quintiles 2004

Full-Time, Full-Year Dependent Undergraduates at Public 4-Year Institutions


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Tax Benefits Students

Non-Fed Loans

Federal Parent

Loans (PLUS)

Non-Fed Non-Need-

Based Aid

Non-Fed Need-Based

Aid

Fed Student Loans

Aid Amounts per Student

Work Study

Other Fed Grants

Pell Grants

Income Quintiles 2004

Aid Available from Multiple Programs…


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EFC Students

Additional Family

Contribution

Unmet Need, an Undue Burden on Low and Moderate-Income Families

COA minus Aid per Student

Income Quintiles 2004

Full-Time, Full-Year Dependent Undergraduates at Public 4-Year Institutions


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Among Traditional Students at 4-Year Public Schools, About 40% Need a Quarter to a Third of Income to Complement AID Package

Unmet need as % of family income

36%

22%

17%

13%

10%

33%

18%

15%

14%

10%

Income Quintiles 1993

Income Quintiles 2004


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Under Secretary’s 40% Need a Quarter to a Third of Income to Complement AID PackageListening Tours

Real stories from students


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What is needed 40% Need a Quarter to a Third of Income to Complement AID Package

  • Access to student financial aid needs to be simplified

  • Student financial aid needs fewer programs better targeting recipients

  • Student financial aid should facilitate attainment of a postsecondary credential


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The Department of Education’s Focus Areas: 40% Need a Quarter to a Third of Income to Complement AID Package

  • Refocus the Federal investment toward simplified access and increased attainment

  • Enable more student access to a rigorous and aligned curriculum

  • Help more adults attain their first postsecondary credential

  • Engage families and students before high school to prepare for postsecondary education

  • Increase transparency and information available to students and families


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Enable more student access to a rigorous and aligned curriculum

  • Almost half of 17-year-olds are not proficient enough in math for factory floor jobs

  • Two-thirds of college-bound high school graduates are not ready for college-level math and one-third for college-level English

  • Only 4% of low-income high school students complete a rigorous college preparatory curriculum


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Help more adults attain their first postsecondary credential curriculum

  • Greater numbers of adults are looking for ways to upgrade or expand their skills

  • Nearly 40% of today's postsecondary students are self-supporting adults age 24 and up, almost half attend part-time, more than 1/3 work full-time and 27% have children

  • 44% of Americans don’t believe they have the education they need for the jobs they want

  • 32 states do not have enough young adults in the pipeline to replace college-educated, retiring Baby Boomers

  • There are 32 million adults who started, but did not complete, a college education


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Engage families and students before high school to prepare for and participate in postsecondary education

  • Research shows that most students have some post-high school educational or job plans by the ninth grade

  • Nearly 2 million low and moderate-income students a year do not apply for federal financial aid

  • Financial obstacles will prevent over 400,000 college-qualified students from attending a four-year college and nearly 170,000 will attend no college at all

  • By age 24, 75% of students from the top-income bracket have earned a degree, while less than 9% of low-income students have earned one


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What has to happen outside the Federal government? for and participate in postsecondary education

  • Aligning high school, college, and work expectations

  • Serving adults and other nontraditional students

  • Increasing need-based aid

  • Improving affordability, reducing costs, and increasing productivity

  • Supporting and emphasizing student learning outcomes


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TO DO: Institutional Leadership for and participate in postsecondary education

  • Access

    • Redesign services to improve pathways to and within postsecondary education for all students

  • Affordability

    • Increase need-based aid

    • Develop strategies that reduce overall institutional cost


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TO DO: Institutional Leadership for and participate in postsecondary education

  • Accountability

    • Create ownership at the institutional level for designing measures of student learning and achievement that are linked to mission and publicly communicate the results


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Conclusion for and participate in postsecondary education

  • We've spent a year ensuring "buy-in" for the problem

  • We've identified the areas that can have the greatest impacts

  • We know what has to be done – by the Federal government and others

  • We're turning the spotlight towards solutions

  • And we're holding ourselves and the others who must act accountable


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