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Rethinking College Affordability

Professor Sara Goldrick-Rab's talk at the 2014 American Sociological Association
by

Minh Mai

on 16 August 2014

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Transcript of Rethinking College Affordability

SARA GOLDRICK-RAB
Prof. of Educational Policy Studies & Sociology
University of Wisconsin-Madison

American Sociological Association Annual Meeting
San Francisco, CA
August 15th, 2014

Rethinking College Affordability
Future students concerned with sticker price may be less – or more- concerned with later repayments/ debt
Participation is almost certainly optional
Wealthy will opt out - thus not class-inclusive


Implications of PIF for Equity

Move the timing of payments for tuition & fees until after college
“No money down,” repay flat % of income for 20+ years after college
Variation on income-based loan repayment but does not vary by income level, technically not a loan
In theory/framing, payments are to help future students rather than repay one’s own education

One Option: Pay It Forward

Address economic disparities in college attainment with a “cross-class” policy financing policy that is inclusive
Proportionally higher benefits go to people with lower incomes
Provide at least “debt free” pathway to reduce the significant risk of trying college

Goals of Targeting Within Universalism

Targeting is more efficient than universal designs since fewer people are served
But targeting may result in smaller impacts, leading to a reduction in cost-effectiveness

What is the goal– achieving equity & efficiency, or achieving equity & cost-effectiveness?

Efficiency vs.
Cost-Effectiveness

Aid policy has impacts on future students as well as current and former students
The indirect impacts of financial aid on the likelihood that people will even consider college have not been estimated
Sticker shock= price looks too high

Equity Implications of Sticker Shock

Affordability of annual college enrollment by family income and institution type: dependents

More academically-talented moderate and middle-income students are forgoing college and/or not graduating
Net price of college is at an all-time high
Real family income & wealth are declining
Students are supporting their families while attending college
These things are relatively new

What Do the Data Say?

Significant fractions of academically – talented low-income students do not attend college
Odds of college completion vary strongly with family income

These things have been true for decades

What Do the Data Say?

www.wihopelab.com


For More Information

Quality and cost-controls are addressed directly in the funding model – allowable expenses, some performance funding, “certificates of need”
Some reduction in % going on to BA might occur; depends on state/institutional responses
Current funding model ends Title IV for private schools other than loans

F2CO Implications

Genuinely cross-class policy
All but the wealthiest participate in public sector
“Opting out” simply means paying twice- doesn’t harm program model
Addresses sticker shock
Positive impacts on college attendance likely
Fully covers costs
Positive impacts on persistence & time to degree likely

F2CO Implications

Two years of college in public sector at no charge
2 yr or 4-yr public institutions
All costs of attendance covered in exchange for modest work at living wage
Funded through redirection of existing federal, state, local resources, or additional resources

Another Approach:
“Free 2 Year College Option”

Entire burden of paying for college is shifted to individuals
States read public response as willingness to pay
Corresponding disinvestment occurs
Despite demands for increased appropriations
State has little incentive to do cost containment either
But outcry over debt/ activism will be subdued

Political Economy of PIF

Will there be positive impacts on who attends college? Unclear
Will there be positive impacts on who finishes college? Unlikely, given need to cover COA


Implications of PIF for Cost-Effectiveness

Tuition students will still need to finance the rest
Loans will continue
Estimated flat % of income needed to repay is low only if future high earners participate
Only public sector can be required to do so
Method of collecting payments tricky


Practical Concerns

Max Pell as % of Total COA in Public Sector

Purchasing Power of the Pell Grant Declined As Need Grew &
Student Body Diversified

Programs serving poor people are relatively poor programs
Social programs are often “re-cast” as welfare, with undeserving, cheating recipients, in order to cut them
Austerity is commonly used to focus attention on efficiency rather than cost-effectiveness

Political Economy of College Affordability

Target the subsidy (aid) to needy students?
Give the neediest students the most financial aid?
Unequal inputs, differential impacts
OR
Provide the subsidy universally to increase “takeup” rate of the neediest?
Equal inputs, differential impacts
Also known as “targeting within universalism” (Skocpol)

How Can We Achieve Equity?

Affordability of annual college enrollment by family income and institution type: independents

Longstanding approach
Often accepted without question
Reflects a conclusion reached through analysis of data and a set of assumptions


Starting Point:
Affordability = Financial Aid

Sara Goldrick-Rab, Prof. of Educational Policy Studies & Sociology
University of Wisconsin-Madison
American Sociological Association Annual Meetings
San Francisco, CA
August 9, 2014


Rethinking College Affordability


Entire burden of paying for college is shifted to individuals

States read public response as willingness to pay

Corresponding disinvestment occurs

Despite demands for increased appropriations

State has little incentive to do cost containment either

But outcry over debt/ activism will be subdued

Political Economy of PIF

Will there be positive impacts on who attends college? Unclear

Will there be positive impacts on who finishes college? Unlikely, given need to cover COA


Implications of PIF for Cost-Effectiveness

Tuition ONLY- students need to finance the rest

Loans will continue

Estimated flat % of income needed to repay is low
only if future high earners participate

Only public sector can be required to join

Method of collecting payments tricky


Practical Concerns

Aid policy has impacts on future students as well as current and former students

The indirect impacts of financial aid on the likelihood that people will even consider college have not been estimated

Sticker shock= price looks too high

Equity Implications of Sticker Shock

Net Price: Independent Students

More academically-talented moderate and middle-income students are forgoing college and/or not graduating

Net price of college is at an all-time high

Real family income & wealth are declining

Students are supporting their families while attending college

RISK of college attendance is high, thanks to debt
1/3 students with debt didn't finish college

These things are relatively new

What Do the Data Say?

Longstanding approach

Often accepted without question

Developed after analysis of data
and
assertion of several assumptions


Starting Point:
Affordability = Financial Aid

www.wihopelab.com


For More Information

Quality and cost-controls are addressed directly in the funding model – allowable expenses, some performance funding, “certificates of need”

Some reduction in % going on to BA might occur; depends on state/institutional responses

Current funding model ends Title IV for private schools other than loans

See Goldrick-Rab & Kendall 2014

F2CO Implications

Genuinely cross-class policy

All but the wealthiest participate in public sector

“Opting out” simply means paying twice- doesn’t harm program model

Addresses sticker shock

Positive impacts on college attendance likely

Fully covers costs

Positive impacts on persistence & time to degree likely

F2CO Implications

Two years of college in public sector at no charge

2 yr or 4-yr public institutions

All costs of attendance covered in exchange for modest work at living wage

Funded through redirection of existing federal, state, local resources, or additional resources

Another Approach:
“Free 2 Year College Option”

Future students concerned with sticker price may be less – or more- concerned with later repayments/ debt

Participation is almost certainly optional

Wealthy will opt out - thus not class-inclusive


Implications of PIF for Equity

Move the timing of payments for tuition & fees until after college

“No money down,” repay flat % of income for 20+ years after college

Variation on income-based loan repayment,
but does not vary by income level, technically not a loan

In theory/framing, payments are to help future students
rather than repay one’s own education

One Option:
Pay It Forward

Address economic disparities in college attainment with a “cross-class” policy financing policy that is inclusive

Proportionally higher benefits go to people with lower incomes

Provide at least “debt free” pathway to reduce the significant risk of trying college

Goals of Targeting Within Universalism

Programs serving poor people are tend to be poor programs (e.g. Soss, Schram)

Social programs are often “re-cast” as welfare, with undeserving, cheating recipients, in order to cut them (e.g. Soss, Fox-Piven)

Austerity is commonly used to focus attention on efficiency rather than cost-effectiveness

Political Economy of College Affordability

Targeting is more efficient than universal designs since fewer people are served

But targeting may result in smaller impacts, leading to a reduction in cost-effectiveness

What is the goal– achieving equity & efficiency, or achieving equity & cost-effectiveness?

Efficiency &
Cost-Effectiveness

Target the subsidy (aid) to needy students?

Give the neediest students the most financial aid?


AKA: Unequal inputs, differential impacts

OR
Provide the subsidy universally to increase “takeup”
rate of the neediest?


AKA: Equal inputs, differential impacts

Also known as “targeting within universalism” (Skocpol)

How Can We Achieve Equity?

Net Price: Dependent Students

Significant fractions of academically – talented low-income students do not attend college

Odds of college completion vary strongly with family income

These things have been true for decades

What Do the Data Say?

@minhtuyen
@saragoldrickrab
Prezi by:
@wihopelab
facebook.com/wihopelab
To Wit:
Purchasing Power of the Pell Grant Declined
While Need Grew & Student Body Diversified

ASSUMPTIONS....
ASSUMPTIONS....
ASSUMPTIONS....
Full transcript