Category: Finance

Testimony: Ensuring That More Students Succeed in College

Hans Johnson, director of the PPIC Higher Education Center and PPIC senior fellow, testified before the Assembly Budget Subcommittee Number 2 on Education Finance in Sacramento today (March 9, 2017). Here are his prepared remarks.

Thank you for the opportunity to testify this morning. My name is Hans Johnson and I am the director of the Higher Education Center at the Public Policy Institute of California. PPIC is a nonpartisan policy research organization and does not take positions on legislation. My comments are based on research we have conducted at PPIC on California’s higher education system.

Providing affordable higher education opportunities for all Californians, especially those with limited resources, is essential if we are to realize the benefits of higher education for our state and its residents. Higher education is not only the single best predictor of an individual’s wages and income, but also the strongest determinant of a society’s economic well-being. PPIC has estimated that California’s colleges and universities are not producing enough bachelor’s degrees and will fall 1.1 million degrees short of economic demand by 2030 unless we improve access to and completion in our higher education systems. While economic gains are strongest for workers with at least a bachelor’s degree, recent PPIC research has also shown strong gains for many—but not all—students who complete vocational programs in the state’s community colleges.

One of the central challenges facing higher education today is ensuring that college serves as a ladder for economic and social mobility. This challenge is especially acute in California, where 60% of high school students are identified by the California Department of Education as socioeconomically disadvantaged (meaning they are eligible for free or reduced-price lunch or come from a family in which neither parent has graduated high school). To close the workforce skills gap, California needs to find ways to improve college completion among students from underrepresented groups, including Latino, African American, low-income, and first-generation students.

The good news is that, compared to other states, California’s public colleges and universities enroll a diverse population. Recent research by the Equality of Opportunity Project shows that California’s public universities enroll more low-income students than comparable colleges in the rest of the country. For example, among elite colleges, UCLA ranks first in the nation in the share of students from low- and middle-income backgrounds. Among all large public universities, Cal State Los Angeles ranks 2nd (after City College of New York) in economic mobility, propelling students from lower-income families into middle- and upper-income groups.

The challenge is ensuring that even more students succeed in our higher education systems. The University of California has an excellent track record of graduating low-income and underrepresented students, and California State University has made significant progress in improving graduation rates for all groups. But graduation gaps remain at both institutions. CSU has developed a new and ambitious graduation initiative that would substantially increase graduation rates and completely close graduation gaps by 2025. However, neither institution has been able to fully enroll all qualified applicants. In recent years, thousands of qualified Californians—both freshmen and transfer applicants—have been turned away from UC and CSU due to a lack of funding.

Of the state’s three systems of public education, our community colleges best represent the diversity of young Californians. The state’s community colleges provide higher education opportunities for almost two million students, a majority of whom are from low-income families or other underrepresented groups. However, far too many students who enter community colleges do not succeed: most never transfer to a four-year college or earn a degree or certificate. Hundreds of millions of dollars have recently been invested in efforts like the Basic Skills Initiative (BSI) and the Student Success and Support Program (SSSP) to improve student outcomes at California’s community colleges. These and other efforts—such as Guided Pathways, a new initiative to help students establish clear objectives and provide support to achieve their goals—hold a great deal of promise for improving student outcomes.

Expanding access to our public universities and improving outcomes throughout our higher education system will almost certainly take more resources. But using current and new funding to improve student outcomes in the most efficacious manner possible must be a high priority. Better coordination between UC, CSU, the community colleges, and our K–12 system can be a cost-effective way of providing students with a seamless pathway from high school to a higher education degree or certificate. Improving access and programs, including financial aid and student support services, to students with the most need can also help reduce gaps in educational attainment and economic success. The role of higher education officials and state legislators is to ensure that resources are spent on programs that really work for students. PPIC is already working on a number of projects that focus on improving student success, and we look forward to continuing to contribute to such efforts.

Californians Favor Higher Taxes over Higher Tuition

After six years without tuition increases, California’s public universities are considering proposals to modestly raise tuition for California residents. The University of California (UC) has proposed increasing systemwide tuition and fees for undergraduates by $336 to a total of $12,630 for the academic year. The California State University (CSU) has proposed increasing in-state student undergraduate tuition by $270 to a total of $5,742 for full-time students. Campuses at each system charge additional fees, which currently average about $1,200 at UC and $1,400 at CSU.

A recent PPIC Statewide Survey on Californians and higher education indicates that these proposals are likely to be unpopular with the public. The survey found that Californians are concerned about the cost of college: 57% said that the overall affordability of California’s public colleges and universities is a big problem. Only 23% of Californians would be willing to increase student fees in order to increase funding for California’s public higher education system.

This is not the first time Californians have voiced disapproval of tuition increases. Before UC and CSU raised tuition in 2011, PPIC’s 2010 higher education survey found that only 35% of Californians favored increasing student fees as a way to maintain higher education funding levels in the face of state budget cuts. In 2011, our survey found that 65% of Californians were very concerned about increasing student tuition and fees as a way to deal with decreased funding.

Today, when many policy preferences are often divided along party lines, there is partisan consensus on this issue: at least 70% of Californians across parties say they would be unwilling to increase student fees to fund higher education. Indeed, less than a third of Californians across all regions and demographic groups say they would be willing to increase student fees.

At the same time, a majority of Californians (67%) believe that the current level of state funding for public colleges and universities is inadequate. So what are Californians willing to do to increase funding for public higher education? Overall, they are twice as likely to say they are willing to pay higher taxes as to say they are willing to increase student fees (48% to 23%). However, and perhaps unsurprisingly, we see notable partisan differences when it comes to willingness to pay higher taxes. While 68% of Democrats say they would be willing to pay higher taxes to increase funding for public colleges and universities, only 20% of Republicans say the same.

Another way to increase funding for California’s public colleges and universities would be to admit more out-of-state students, who pay higher tuition. Californians are somewhat divided on this issue, with half saying they would not be willing to admit more out-of-state students, while 46% say they would be willing to do so. However, only 21% of Californians support admitting more out-of-state students if this would mean admitting fewer in-state students. This view holds across party lines: only one in four Republicans (25%), and even fewer independents (21%) and Democrats (16%), are willing to admit more out-of-state students if this would mean admitting fewer in-state students. UC has proposed increasing systemwide out-of-state tuition and fees by over $1,600 to almost $40,000.

Our survey findings suggest that the proposed UC and CSU tuition and fee increases may be unpopular among Californians of all political persuasions—and that Californians’ reluctance to increase the financial burden on the state’s students may be driven by concerns about access and affordability.

Learn more

Read the PPIC Statewide Survey: Californians and Higher Education
Find out more about the PPIC Statewide Survey
Visit the PPIC Higher Education Center

Video: Grading the Higher Education System

Californians give positive grades to the three branches of the state’s public higher education system—the community colleges, California State University, and the University of California. But the PPIC Statewide Survey on higher education shows that they have big concerns about affordability. Most California adults—regardless of political party, income, or age—see it as a big problem. And when Californians are asked to name the most important issue facing the state’s public colleges and universities, affordability leads the list.

“This is really the issue that’s at the forefront of people’s minds when you’re talking about higher education,” said PPIC researcher Lunna Lopes, who presented the findings at a Sacramento briefing last week.

Two out of three Californians say state funding of public colleges and universities is inadequate. While most would support a state construction bond to fund higher education projects, there is much less consensus on other ideas to increase revenue.

Learn more

Read the December PPIC Statewide Survey: Californians and Higher Education
Find out more about the PPIC Statewide Survey

CSU and UC Are a Better Value Than Universities Nationwide

With college application season underway, the US Department of Education’s yearly scorecard helps prospective students and their parents by providing information on the costs, graduation rates, and student debt associated with individual colleges. Since last year, the scorecard has also included wages for former students based on federal tax data. We reported on how to interpret the earnings measure in an earlier blog post.

The scorecard also highlights 26 affordable universities with good outcomes in the form of relatively high earnings. California’s public universities do quite well: eight California State University (CSU) and University of California (UC) campuses make the list. This list uses a school’s average net price (its tuition, fees, room, board, and other expenses minus the average amount of grants and scholarships) and the typical student’s earnings 10 years after enrolling to estimate how much “bang for their buck” students get in terms of future income.

In fact, almost all CSU and UC campuses provide higher-than-average incomes given their net price when compared to four-year colleges nationwide. California’s private four-year colleges show mixed results, as they generally have higher net costs; about half have below-average earnings for their price.

These results speak to the relative success of CSU and UC compared to other universities in the nation. However, it is important to note that this isn’t the whole story: the net price and income data are only collected for students who received some form of federal aid. While this represents a majority of students in public universities, it can represent a smaller fraction of students from private universities in the state.

California’s public universities have a couple built-in advantages. The state’s generous financial aid program provides grants that cover tuition for qualifying low-income students and, in some cases, help pay for living expenses and books—substantially reducing the net price for those students. Also, workers in California earn more than those in other parts of the country, and the concentration of higher-paying jobs in California (such as in the tech industry) may contribute to the relative success of the state’s students. However, many private colleges in the state are associated with low median salaries, suggesting it’s not just location that matters.

California also likely benefits from high-quality institutions. Most UCs are highly ranked nationally, and as PPIC has shown in other research, CSUs have relatively good six-year graduation rates when compared to similar institutions. This is important, as the scorecard reports the incomes of students who attended a university, regardless of whether they graduated. College graduates tend to make more than non-graduates, so institutions with better graduation rates are more likely to produce workers with higher incomes.

While the scorecard can help students decide which college is right for them, it also shows students that the economic returns to a college degree can be had for a reasonable price in California.

For those interested in diving deeper into this finding, this chart illustrates the relationship between net price and the yearly income of students after 10 years. Each dot is a university. The CSUs (orange), UCs (dark teal), and in-state private universities (light teal) are marked alongside other universities in the nation (light grey). Nationwide, higher net prices are associated with higher earnings. This isn’t shocking, as we generally associate higher prices with higher-quality universities, which may net students a higher future income. The diagonal line shows typical earnings for a given net price. Universities above the diagonal line have higher-than-average earnings given their net price, and universities below the line have lower-than-average earnings.

Learn more

Read “What the New College Scorecard Can—and Can’t Tell You”
Visit the PPIC Higher Education Center

Reducing Tuition Volatility at California’s Universities

After sharp increases in tuition during the recent recession, the California State University (CSU) and University of California (UC) systems made an agreement with the state to freeze tuition in exchange for increases in state funding starting in 2012. However, state support has not returned to pre-recession levels and the agreement runs out after this school year. It’s clear that the universities will raise tuition, but it’s not clear when or by how much.

The history of tuition increases at UC and CSU shows that periods of low or no tuition growth are often followed by large spikes in growth, most recently in response to declines in state support. California’s universities are not guaranteed a part of the budget (as K–12 and the community colleges are), so declines in state revenue (such as during a recession) often result in declines in state allocations for higher education. Universities raise tuition to make up the lost revenue, leading to volatility in tuition increases from year to year.

Instead of instating abrupt tuition increases, universities could rely on gradual, scripted changes, which would benefit students who are planning their finances around spending the next four (or more) years at a university. What kind of gradual change have we seen historically? Since 1979, tuition and fees have risen considerably at both UC and CSU—on average, about 8.6% annually at UC and about 11.3% at CSU. Some have suggested tying tuition increases to inflation, which over the same period, rose only about 3.1% yearly. In 2014, UC considered a plan to increase tuition at 5% each year for five years in an effort to make tuition increases transparent and steady—rather than unpredictably sudden and large. This plan was highly controversial at the time, but it would have resulted in yearly tuition increases that were lower than the average yearly increase across the last 35 years.

It is impossible to predict when the next recession will hit or what it will do to state revenues and higher education support. Steady increases could provide a cushion for universities if a drop in state funding occurs, and may allow them to keep to their planned tuition increases—but that depends on how the legislature responds to increases in tuition and the next recession.

When tuition does rise, the state and university systems should work together to make sure college is affordable for low-income students, especially considering PPIC projections that show a need for more college educated workers by 2030. The state’s generous financial aid programs mostly kept up with the sharp tuition increases from 2007 to 2011, but some low-income families had to pay more than they did before those increases.

The state could take steps of its own to make funding for the university systems less volatile. For example, some have suggested a dedicated funding stream, such as Proposition 98’s provision for community colleges and K-12, could limit cuts in state support for the university systems during recessions and improve their ability to plan for the future.

Chart source (TOP): University of California, California State University, Bureau of Labor Statistics. Chart source (BOTTOM): University of California, California State University.

Learn more

Read Higher Education in California: Making College Affordable
Visit the PPIC Higher Education Center

Video: Challenges and Opportunities for Higher Education

This is a critical time for higher education in California. Higher education matters to Californians, who are applying to the University of California (UC) and California State University (CSU) in record numbers. It also matters to the state, whose future prosperity depends on an educated workforce. And California can—indeed, must—do more to increase the number of college graduates. That was the message at the launch of the PPIC Higher Education Center presented by Hans Johnson, center director and PPIC senior fellow.

There is much to be done in the three areas the PPIC Higher Education Center will focus on, Johnson said, providing examples in each one:

  • Access: California ranks 47th in the nation in the proportion of high school graduates who go directly to a four-year college.
  • Outcomes: Fewer than half of community college students ever earn certificates or degrees—or transfer to a four-year institution. Fewer than 60% of CSU students earn bachelor’s degrees.
  • Finance: Tuition at CSU and UC is at an all-time high. California faces the ongoing challenge of figuring out how to fund the higher education system.

But Johnson said he is optimistic. The public systems are adopting innovative strategies, and there is increased interest—on the part of the public and the legislature—in higher education.

Following Johnson’s presentation, Kevin de León, the state senate’s president pro tem, and Janet Napolitano, University of California president, discussed a range of issues in a conversation with Mark Baldassare, PPIC president and CEO. The speakers sounded similar themes.

Both de León and Napolitano emphasized the need to better fund public higher education and expand access at a time when a diverse group of Californians is coming of age. The leaders were asked about their reactions to a highly critical state audit of UC, which concluded that the university hurt California high school graduates by admitting too many out-of-state applicants.

De León said the findings were not surprising, given funding cuts by the state: “When you make deep cuts and when you shortchange California students, in particular, these are the consequences.”

Napolitano said that after the state made deep cuts in UC’s budget, the university had no good options: it could have reduced enrollment slots for California students, raised tuition even more than it did, or brought in more out-of-state and international students. UC chose the latter. She urged Californians—particularly in the legislature and the executive branch—to take a step back.

“Those decisions were made, they had to be made,” she said. “You have to make the best of a bad situation. Now, what do we do together moving forward and what is our collective vision?”

Commentary: State Universities Are in a Budgetary Bind

This commentary was published in the New York Times on Monday, April 11, as a response to the question, “Are Public Universities Neglecting In-State Students?”

Many people don’t realize that the states—not the federal government—are the primary funders of public higher education in the United States. Faced with periodic budget crises, competing priorities and difficulty in raising additional revenue, almost all the states have reduced their funding for higher education over the past couple decades.

Continue reading this commentary and the full discussion on nytimes.com.

Introducing the PPIC Higher Education Center

California’s higher education system is not keeping up with the state’s changing economy. Population and education trends suggest that California will face a shortfall of 1.1 million college graduates by 2030. To close this gap and meet future workforce demand, the state needs to act now.

The good news is that higher education policy has gained new prominence in Sacramento. Concerns about affordability and efficiency have opened the way for wide-ranging change in higher education. Identifying policies and resources that improve both student success and institutional effectiveness are essential.

And that is where PPIC comes in.

Today, we are pleased to announce the establishment of the PPIC Higher Education Center. It is dedicated to advancing practical, evidence-based solutions that enhance educational opportunities for all of California’s students—improving lives and expanding economic growth across the state. The center expands on the model of independent, nonpartisan research and constructive engagement that defines all of PPIC’s work.

PPIC laid the groundwork for the center over the past decade with high-quality research on major higher education issues and productive conversations about solutions. The PPIC Higher Education Center represents a significant ramping up of investment in this critical area, and we thank the Sutton Family Fund for its core support of this effort.

The center will focus on three critical issues:

  • Expanding access. Identifying policies that increase and strengthen pathways to higher education, ensuring that all Californians have the opportunity to earn a college degree.
  • Managing finances. Helping to determine the most effective funding approaches, to keep college affordable and broaden the impact of the state’s higher education investments.
  • Improving outcomes. Promoting strategies that produce more college graduates and prepare Californians—and the state’s economy—to be successful in a changing world.

In conjunction with the launch of center, PPIC is releasing Higher Education in California, a set of seven policy briefs on the state’s most critical challenges in higher education. This briefing kit is designed to inform state leaders and to raise awareness more broadly about the important higher education issues facing California.

We invite you to read Higher Education in California and visit our new PPIC Higher Education Center online. We also invite you to stay up to date with PPIC Higher Education Center activities: ·

Photo courtesy of Public Affairs/Sacramento State.

A College Degree in Three Years?

During the recent state budget negotiations, the University of California promised to develop three-year degree programs on each campus for 10 of its top 15 majors by March 1, 2016. In addition, UC committed to enrolling 5 percent of students system-wide in an accelerated degree program by the summer of 2017. This is an intriguing goal that could benefit students and the state as a whole. Reaching it, however, would require overcoming significant obstacles.

The idea of accelerating the traditional four-year bachelor’s degree is not a new one. The three-year degree is especially likely to be touted as a way to boost the efficiency of public higher education during periods of declining state funding, growing enrollment, and rising tuition. It has been discussed in California and proposed in other states. Over the past two decades, Indiana, Ohio, Arizona, Illinois, and Florida have all directed their public four-year institutions to develop three-year degree programs. But the idea has not been widely adopted.

The vast majority of three-year degree programs attempt to attract high-achieving recent high school graduates who have already earned some college credit—either through advanced placement exams or by taking classes at a community college while still in high school. In exchange for a commitment to attend school year-round, students are promised priority course enrollment, a structured degree path, and high-intensity advising. Condensing the bachelor’s degree allows a student to reduce costs while burnishing a resume and possibly getting a jump-start on graduate school. Florida State University has had some success with its Degree in Three program, which began in 2000. Enrollment has been limited, though it increased from 71 students to 123 out of a total of about 6,500 freshmen between 2007 and 2008. And 40 percent of students who initially enrolled in the program ended up staying for four years–after switching majors, studying abroad, or participating in student government.

It is easy to see the appeal of completing a bachelor’s degree in three years. For students it has the potential to produce net financial benefits. Three-year graduates are likely to reduce the overall cost of their education despite the additional costs of attending summer sessions and forgoing summer employment. And newly minted graduates can enter the job market one year earlier, presumably with greater earning potential. For schools, reducing the amount of time students take to get degrees allows them to enroll more students. As PPIC research has shown, California needs to produce more college graduates to meet the state’s future workforce demand.

But the challenges are greater than they appear at first glance. For one thing, not all students complete their degrees in four years. As of 2013, only 60 percent of first-time, full-time UC freshmen graduated in four years; nearly one in five took between four and five years to graduate. In other words, for a significant number of students, participation in a three-year program would mean shortening their time at UC by more than a year. Campuses would need to re-examine their course offerings to make sure there are enough seats in required classes to meet student demand. Equally important would be to ensure that the sequence of offerings allows students to take all of their classes in three years. These changes would involve shifting teaching assignments and/or adding new instructors.

Even if the institutional challenges can be met, a larger question looms: What is the demand for a three-year degree? The students most able to attend classes year-round are those with more resources and/or fewer work or family obligations. The most motivated may be out-of-state students, who pay the steepest tuition. But we know that many UC freshmen today who have sophomore standing, and could finish in three years, choose not to.

A successfully implemented three-year degree program is likely to have a small impact on capacity. But if UC were to pursue this effort more broadly, and if the time to degree could be shortened to four years for students who now need five years to complete their degrees, the impact on capacity would be greater.

 

Online Learning and College Costs

As the price of attending college has risen and access to higher education has declined, policymakers are looking to online learning as a way to better serve student needs, increase access—and lower the costs of higher education. In California, the state’s community colleges have taken the lead in online learning, with total course enrollment reaching about one million. We have been able to study the impact of online education on hundreds of thousands of students at the state’s community colleges. What we found points to important issues in the discussion of higher education access and costs.

It is easy to understand why online education is being championed as a cost-saver. Online courses do not require classroom space, and the cost of developing courses can be amortized over time. Savings could come through economies of scale, including centralization of online student services. If faculty members do not have to invest as much time designing, facilitating, and seeking approval for individual online courses, the colleges’ overall labor costs could drop.

But at this point, these savings are theoretical. So far, there is no empirical evidence that online learning is less expensive than face-to-face learning. In fact, research shows that preparing an online course is usually more time consuming—and therefore expensive—than preparing a traditional class.

And there are other drawbacks to online education as it’s currently practiced. In California’s community colleges, online student success rates are lower than success rates in traditional courses. Success rates for African American and Hispanic students are significantly worse. If these gaps persist and online enrollment continues to increase, then community colleges will be less equitable. The result will be increased costs to students and the state—and a failure to realize the promise of online education.

Despite these drawbacks, certain online courses are highly successful. Our analysis of these courses led us to recommend that the colleges move away from the current model, which relies on an individual faculty member to design and deliver an online course, and adopt a more systematic approach to creating online courses. A team that supports faculty members—including administrators, media developers, and information technology experts—would be better able to maximize the potential of the online learning environment.

However, it is unclear how moving to a team model would affect costs. Incorporating specialists in course design would raise upfront costs. Regularly updating software and updating course material could quickly exceed any savings from economies of scale. Providing essential student support services, such as technical support, online tutoring, and counseling, might also significantly raise costs.

But online learning is an important tool for improving access to higher education in California, even if it does not cost less. Online classes are increasingly popular in the community colleges—which are the higher education institutions most likely to serve nontraditional students. Incorporating best practices into these courses would improve the colleges’ ability to serve the state’s diverse students.

The community college system’s Online Education Initiative is an important step in the effort to accommodate demand for online learning and improve student outcomes. If it is successful, it can serve as a model for other online learning programs in higher education.