Category: Workforce Needs

What the New College Scorecard Can—and Can’t—Tell You

Last month, as high school seniors were beginning to apply for college, the US Department of Education released its yearly scorecard to help students and their parents make informed choices. In addition to information on graduation rates, access, net price, this year’s scorecard includes earnings data for former students. The earnings profiles will be especially helpful—until now, students, parents, and the public lacked access to official information about earnings nationwide. They may also help hold colleges accountable for student outcomes.

The new earnings data is exciting—but not perfect—so it is important to determine what it actually tells us. The US Department of Education—which administers financial aid, mostly in the form of Pell Grants and federal student loans—generates the earnings profiles by linking its data on college students who get federal aid with earnings data from the US Department of the Treasury. This covers about 70 percent of students nationwide. Of course, the shares of students receiving federal aid vary across colleges—at some postsecondary institutions, fewer than half receive it. But the scorecard’s explanation of its methodology suggests that, aside from family income, college students who receive federal aid are similar to those who do not.

Another caveat is that the earnings measure for each institution represents all students receiving federal aid who started there—including those who didn’t graduate and those who transferred to other schools or pursued post-graduate degrees.

Still, it is instructive to compare the earnings of former students across institutional sectors. The table shows what you would see if you looked up earnings profiles for different types of California colleges. We chose colleges with median earnings that were closest to the median of each sector.

The median student who started at UC Davis earns about $8,000 more than a student from Azusa Pacific University, about $10,000 more than a student from Sacramento State. The differences among the sectors align with what we know from prior research: earnings of former students of colleges that grant bachelor’s degrees are, on average, higher than those of former students of colleges that grant only associate degrees or certificates. Moreover, research has found that students at private for-profit institutions end up with lower earnings than those of comparable students from public or private non-profit four-year universities.

What the scorecards don’t show is that the difference between colleges is far smaller than the difference within colleges. The figure shows the variation in earnings at the same campuses included in the table above. First, note the tremendous overlap: many students who start at community college end up earning more than some students who started at UC and CSU. The difference in median earnings between the typical CSU and the typical UC is approximately $10,000. But the difference between the 25th percentiles and the 75th percentile of UC Davis student earnings is almost $50,000.

Looking at these differences alone is not enough to judge the quality of an institution. The differences that we observe across colleges might reflect differences in the type of students who enroll in different institutions, or variations in completion rates. They may also have to do with differences in the fields of study that attract large numbers of students. For example, some colleges have high concentrations of students enrolled in STEM (science, technology, engineering, and math) fields—these students traditionally go into higher-paying jobs. Other colleges may have a high concentration in less remunerative majors. Similarly, the dispersion that we observe in student earnings within institutions is likely tied to a number of factors, including fields of study and rates of completion.

PPIC research has found that a worker’s wages vary tremendously depending on his or her college major. At the high end, those with engineering degrees earn a median annual wage of $96,000. At the low end, those with degrees in education administration and teaching have a median annual wage of $57,000. The Department of Education plans to include earnings by area of study in future versions of the scorecard, and we think this will make the scorecards much more valuable to students and families.

Californians will find the federal scorecard particularly useful, since the state currently lacks a student tracking system. Many other states have maintained more robust and inclusive student tracking systems for years. These systems allow calculation of more precise earnings information by major and degree for all graduates in a state—and some states are collaborating to track outcomes and earnings of former students who move from one state to another.

In California, only the community college system provides salary information for its graduates. At a time when state and national leaders are urging that colleges and universities be held accountable, the state’s parents, students, and taxpayers would benefit from more and better information about student outcomes.

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.

 

Increasing Transfer Students at UC

The University of California has agreed to bring in more transfer students as part of its budget agreement with the governor. Specifically, UC has committed to enrolling one new transfer student for every two new freshman. This means that one third (33%) of entering students will be transfers system-wide and at each campus (except Merced) by 2017. It also means that unless there is funding to increase enrollment, there may be fewer places for entering freshman.

Three campuses—Davis, Los Angeles, and San Diego—met the transfer enrollment goal in the fall of 2014. The other five campuses have a long way to go: they would have needed to enroll between 500 and 950 more transfer students each to reach the 33% target last fall, given their freshmen enrollment levels.

In total, the five campuses would have had to enroll 3,776 more transfer students to meet the ratio last year. Are there enough qualified transfers to make up that ground? Some campuses have plenty of applicants. Berkeley, Irvine, and Santa Barbara admit fewer than half of their transfer applicants, and each campus denied more than 7,000 applicants in 2014. Riverside and Santa Cruz, however, could have more trouble finding students to fill the spots. Those campuses already admit almost 60% of their transfer applicants, and though they denied enrollment to about 3,600 students in 2014, many of these students could be ineligible for transfer to the university or specific major to which they are applying.

UC hopes to increase the size and strength of the pool of transfer applicants, as the UC President’s Transfer Action Team suggests in a recent report. The report recommends actions to increase outreach at the community colleges, streamline some of the transfer processes, and support transfer students once they arrive at a UC.

There is evidence that transfer students are successful at UC. Transfer students and students who enroll as freshmen have similar graduation rates. About 60% of freshmen graduate in four years and 83% graduate by their sixth year; 53% of transfer students graduate two years after transferring to a UC and 86% graduate by their fourth year after transferring.

UC’s recent budget agreement with the governor did not allocate any state funds for enrollment increases. That can change, depending on action taken by the legislature and governor.

Placing more community college transfers in UCs could help California close the gap between the number of college graduates the public higher education system is producing and the projected demand for college graduates by 2025. But at a time when UC is already turning away qualified high school graduates, the tradeoff between admitting transfer students and freshmen could be painful. Finding space for more eligible students in both categories would most benefit the state in the long run.

Chart source: Author calculations from University of California Office of the President Data.
Note: “Additional transfers needed” assumes a desired 2 to 1 freshmen to transfer ratio and that the enrollment of freshmen does not change. *Merced is not required to maintain a 2 to 1 ratio of freshmen to transfers.

What the Unemployment Rate Doesn’t Show Us

California’s unemployment rate is 7.2%, down from 8.4% one year ago and from California’s peak of 12.4% in 2010. California is adding jobs faster than the nation as a whole and now has more jobs than before the recession. Also, the ratio of employment to population is slowly increasing, a sign that more people are reentering the labor force. However, behind these oft-cited statistics, the picture is more complicated.

While California’s economy is improving, the recovery has not been strong or fast enough to keep up with the growth in California’s working-age population. Additionally, the recovery has been uneven across sectors and metro areas, and the unemployment rate is still higher than it was before the recession began. According to the Bureau of Labor Statistics, California has the third-highest unemployment rate in the nation—only Mississippi and the District of Columbia have higher rates. In numerical terms, 1.35 million Californians are looking for work—and more than 35% of them have been looking for at least six months.

High as it is, the unemployment rate does not account for the 7% of California adults who are underemployed—working part-time when they’d rather work full-time. Nor does it count “discouraged and marginally attached” workers—those who have stopped looking for work because, for example, they think there are no jobs available or they don’t have the skills for available jobs. When discouraged and underemployed workers are added to the ranks of unemployed, California’s rate of un- and underemployment (or labor underutilization,” the term used by the Bureau of Labor Statistics) comes to 15.4%—8.2 points higher than the official unemployment rate. In fact, California’s underutilization rate is the second highest in the country (only Nevada’s is higher). Based on underemployment rates, we know that growth is needed not just in the number of jobs but also the number of full-time jobs.

Education is the most important factor in determining who is employed—and fully employed. Workers with college degrees are less likely to be unemployed, underemployed, or to have stopped looking for work. These workers fared better during the recession, an indication that education can be a buffer against the bust cycles of our economy. And education is likely to be increasingly relevant in our future economy: more than two-thirds of new jobs over the next 10 years or so will require at least some college training.

State and federal policymakers are making some investments in training resources for California’s workforce—the California Career Pathways Trust and the federal Workforce Innovation and Opportunity Act are two good examples. The challenge is to do more to ensure that current and future workers are trained for the jobs of both today and tomorrow.

California’s Future Challenges and Opportunities

PPIC hosted a day-long series of conversations this week about creating a better future for our state and highlighting the choices we need to make today to do so. After a keynote address by Nancy McFadden from the governor’s office, panelists from government, business, and philanthropy discussed California’s challenges and opportunities before a large audience in Sacramento and online. They tackled difficult topics, such as improving economic opportunity and increasing citizen engagement in government. And they discussed ways the state can build on its strengths—an improving economy, a diverse population, and a history of reform and innovation.

We will post videos of all of the sessions soon. In the meantime, we want to share the opening remarks prepared by PPIC researchers. They set the context each session:

We hope their insights will pique your interest and inspire you to watch the conference videos when they become available.

Video: Making College Possible

At a time when California’s economy needs more college graduates, a new PPIC report examines the role of grants and scholarships in making higher education both accessible and helping students graduate. Hans Johnson, the report’s author and PPIC Bren Fellow, talked about his findings at a briefing last week in Sacramento.

He found that although total financial assistance available through federal grants, Cal Grants, institutional aid, and private scholarships has increased, it has not kept pace with the actual cost of attending California State University and community colleges. These are the California colleges that enroll most low-income students in California—a state in which nearly 60 percent of K–12 students qualify for free and reduced price lunch programs.

“If we want the economic ladder to success to work in California, we need more students to go to and complete college,” he said. “And given our student population, a lot of those students will be from very low-income families.”

He recommended strategies to make college more affordable and accessible. They include directing any additional aid to low-income students and helping more students complete financial aid forms.

Now Hiring: Skilled Health Workers

Changing medical technology, an aging population, and new health care policies have raised important questions about the workforce that will be needed to care for patients in the future. These issues were featured in a new report from PPIC—California’s Healthcare Workforce Needs: Training Allied Workers—and discussed at a luncheon in Sacramento on Friday that included a briefing by coauthor Shannon McConville, PPIC research associate.

The report notes that California will have to add 450,000 jobs to its health workforce over the next decade. With nearly 40 percent of these additional health jobs expected to require some college training below a bachelor’s degree, training programs at California’s community colleges and private two-year institutions will play an important role.

Participating in the panel discussion were Dr. Jocelyn Freeman Garrick, director of the Alameda County Health Pipeline Partnership; Catherine Martin, vice president of the California Hospital Association; and PPIC research fellow Sarah Bohn, a report coauthor. The panel, which was moderated by PPIC research director Patrick Murphy, explored the challenges faced by both public and private higher education institutions in keeping up with rapidly advancing skills requirements in the health care industry. Topics included differences between public and private schools and programs and partnerships that can train Californians for health workforce needs.

Is College the Answer to Income Inequality?

In both California and the nation, income inequality is at or near record levels. Educational attainment is by far the single most important determinant of an individual’s income. A key question, then, is whether improvements in educational outcomes can reduce inequality. In a recent commentary for EdSource, we conclude that increases in college completion will increase wages, but will not significantly narrow the income gap. Here’s why:

College graduates earn a lot more than workers with less education. For example, workers with a bachelor’s degree earn 57 percent more on average than similar workers with only a high school diploma. But the range in wages for college graduates is much greater than the range for less educated workers. For example, among workers with a graduate degree, the top wage earners (those in the 75th percentile) earn $33 more per hour than those at the bottom of the wage distribution (25th percentile). Wage gaps are much lower among less educated workers – only $11 among workers with a high school diploma. Moreover, during the past three decades wage gaps have increased dramatically among college graduates. The large and growing variation in wages among college graduates leads to higher inequality.

This does not mean we should abandon policies to increase college enrollment and completion. Inequality at relatively high wages is better than low wages for everyone, and improvements in educational attainment will lead to higher incomes on average. But don’t expect to substantially reduce income inequality simply by increasing the rate of college graduation.

UC President Napolitano on Tuition, Online Learning, and the Role of the University

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Janet Napolitano, the new president of the University of California and the former U.S. secretary for Homeland Security, said Monday that she told President Obama that the United States cannot thrive unless California thrives—and California cannot thrive unless the University of California thrives. Napolitano was responding to a question about why Californians should care about the public university system. Her comments were part of PPIC’s 2014 Speaker Series on California’s Future, which drew an online and in-person audience of nearly 500 to a conversation with PPIC President Mark Baldassare at the Sheraton Hotel in Sacramento. The wide-ranging discussion opened with a presentation from Hans Johnson, PPIC senior and Bren fellow, who provided context about the state’s need for educated workers.

The UC president, who also served as governor of Arizona, talked about tuition and budget issues, as well as online education, access for low-income students, and the lessons she’s learned since starting this job about six months ago. Napolitano said there was much the university is doing well: 42 percent of UC students are eligible for grants to low income students, 46 percent are the first generation in their families to go to college, and more than one-third are from families where English is not the primary language. She also said no public research university in the country is more efficient at helping students graduate within four years.

Still, she talked at length about the changes underway in funding for higher education and the need for new models. She emphasized that tuition will not increase for the 2014-15 school year and said that the university is dedicated to a tuition rate that is “as low and predictable as possible.” She also said she hoped to increase the university’s financial connection to philanthropy and the private sector. She said the state could do more and it should do more to support higher education.

Speaking about the future of higher education, Napolitano said online learning “is a tool in the tool box,” not a silver bullet. She said it is not necessarily cheaper than traditional classroom instruction and—despite some claims—no more effective at remedial education. She said, however, that it could get students access to classes not available on their campus.

Ready for College?

California needs more college graduates than it is currently producing. Part of the problem has been a lack of college readiness among the state’s high school graduates. Fortunately, recent trends in college preparation provide some good news. By several measures, a large and growing share of the state’s high school graduates are ready for college-level work. Indeed, many of them have successfully completed college-level courses even while still enrolled in high school.

New data on Advanced Placement (AP) exams are especially encouraging. AP courses are college-level courses in more than 30 subjects offered in high schools throughout the country. AP exams determine whether a student has attained college-level proficiency in the course, and AP exam passage rates are a meaningful measure of college preparation. Many colleges accept AP exams for college credit, and research shows that AP students outperform other students in college. Indeed, students who earn AP credits graduate at higher rates overall and often perform better in subsequent courses in the same field.

California’s high school graduates outperform their peers in the rest of the country on AP exams. In 2013, more than one in four California high school graduates (26.9%) passed at least one AP exam sometime during high school, compared to one in five in the nation as a whole. Among the 50 states and the District of Columbia, California high school graduates ranked sixth highest. Moreover, the share of graduates successfully completing an AP exam is going up fast in California—higher than in the rest of the nation. Between 2003 and 2013, the share of high school graduates passing at least one AP exam increased 9.6 percentage points in California, compared to 7.9 percentage points for the entire nation. California has a higher share of graduates taking AP exams than does the nation as a whole (45.6% versus 35.0%), with passage rates among AP exam takers slightly higher in California (59.0% versus 57.4%).

Other measures of college readiness also show progress. More students are taking the college preparatory courses (known as the “a–g” courses) required for admission to the University of California (UC) and the California State University (CSU). The latest data from the California Department of Education show that 38.3 percent of public high school graduates in California took the a–g courses in 2011–12, up from 34.6 percent in 2001–02 and from 32.3 percent in 1993–94. Gains in college prep work have been especially impressive among the state’s Latino high school graduates, who now make up almost half of all high school graduates. Among Latino graduates, the share taking a–g courses increased from 21.8 percent in 2001–02 to 28.0 percent in 2011–12. Increases in college readiness would be even better news if our state was responding with policies to meet the growing demand for college. But it’s not. Only the top eighth of high school graduates are eligible for UC and only the top third are eligible for CSU—according to eligibility thresholds that were set more than 50 years ago. Given the increasing shares of high school students who are well prepared for college, some reconsideration of those thresholds is long overdue.

If California is to meet the demand for educated workers, it needs to produce more college graduates. Making room for these highly capable students—by increasing the share of high school graduates eligible for the University of California and the California State University systems—would improve the well-being of our state and the lives of these young Californians.

Chart sources: PPIC calculations based on College Board data.