University of California – Page 8 – Public Policy Institute of California

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.

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Read Higher Education in California: Making College Affordable
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How the New FAFSA Can Help Californians

Last month the Obama administration unveiled a revamped Free Application for Federal Financial Student Aid (FAFSA). The new FAFSA is available in October rather than January, so high school seniors won’t have to wait until their spring semester to apply for aid. This means that students can factor their federal grant and loan eligibility into their college application process, instead of getting information about aid after they apply or even after they are admitted. The FAFSA will also be easier to fill out. In the past, students had to wait until their parents filed taxes in January (or later) and then fill out the FAFSA, but the updated form allows families to electronically transfer their tax data from the previous year’s IRS returns, which means that many income-related questions can be filled in automatically. This will drastically reduce the amount of time it takes to fill out the FAFSA.

These changes can benefit Californians in multiple ways. A streamlined FAFSA that families can fill out earlier may induce more students to complete the application, which is likely to lead to an increase in Pell Grants. According to nationwide estimates, 6 to 10 percent of college students from families with incomes under $48,000 fail to fill out the FAFSA; this suggests that many students in California and elsewhere are currently missing out on Pell Grants.

For Californians, the FAFSA is not just a federal aid application; it is also a prerequisite for participating in many state and institutional aid programs for students from low-income families. Cal Grants, the largest source of state aid, can cover up to the full tuition at a UC or CSU for students who qualify. UC’s Blue and Gold Opportunity Program combines federal, state, and local aid to ensure that students from families making less than $80,000 per year do not pay any tuition. But students who do not fill out the FAFSA are not eligible for any of these programs. National data show that about 20 percent of families who make from $48,000 to $75,000 do not fill out the form and therefore are potentially paying more than necessary for college.

Increased FAFSA completion rates may also benefit students from higher-income families. As PPIC has noted, the increases in tuition between 2007 and 2011 primarily raised the cost of attending a UC or CSU for many students from middle- and upper-income families. Filling out the FAFSA can help these students qualify for California’s Middle Class Scholarship, which covers a portion of the tuition and fees at UC and CSU for students with family incomes of up to $150,000 per year. In addition, FAFSA completion can help students qualify for federal loans and decrease their reliance on private loans, which can be more expensive and potentially riskier than federal loans.

Lastly, students who get financial aid—and who find out about it earlier in the application process—are better able to assess their college options. For instance, a student who knows that financial aid is available might apply to a four-year university instead of a two-year college. While the four-year school may be more expensive, research suggests that students who begin at a four-year institution are more likely to get a bachelor’s degree than if they begin at a community college with the intention to transfer to a four-year school. In other words, making the FAFSA process easier may not only help students afford college and take on less debt; it may also lead to higher baccalaureate degree completion rates.

Video: Higher Education & Our Economic Future

“The world is radically changed,” Gavin Newsom, California’s lieutenant governor, told a Sacramento audience this week.

“We’re competing against billions and billions of people, not just competing against cheap labor now, but against cheap genius,” he continued.

Newsom—who is also a University of California regent and California State University trustee—spoke in a conversation with Mark Baldassare, PPIC president and CEO. PPIC’s new report Will California Run Out of College Graduates? provided the context for the discussion. The report concludes that California will fall 1.1 million college graduates short of economic demand by 2030, if current trends persist.

Newsom said that “there is not a major industrialized nation in the world that is not focusing with intention on radically transforming their education system. One of the remarkable things about California is that we do not have a plan.”

He summed up: “We need goals. And we need to be able to measure those goals. And those goals must emanate from the state itself.”

Newsom was not the only speaker at the PPIC event to use words like “radical” and “revolution” to describe changes needed in higher education.

At a subsequent panel discussion, state assemblymember Catharine Baker said she is concerned that the state is falling short of the workforce needed even now. She noted that there is bipartisan agreement in the legislature that higher education is important but not about the need for major change. “There is a lot more focus on issues around the margins, that is, on how many students are we admitting, what few changes we can make in the community college system.”

Eloy Ortiz Oakley, superintendent-president of the Long Beach Community College District, said, “We almost need a revolution in our system. We started to get there when we were in crisis mode.”

“During the recession, we saw more creativity than ever before in the community college system and we began to focus,” he said. “I fear that post-recession that focus will start to dissipate.”

Hans Johnson, coauthor of the PPIC report and PPIC senior fellow, said the big challenge for the state is replacing the retiring baby boom generation with young, well-educated workers.

“I think there is a very clear path to closing that skills gap,” he said. “We need to have more students going to colleges—especially four-year colleges. We need improve completion rates—that opens up room for more students. We need to improve transfer rates from community colleges to the four-year colleges. And if we do all of those things—and these are all decisions we can make, as policymakers and higher education officials—we can actually close that skills gap.”

Timothy White, California State University chancellor, said CSU can do its part to fill the workforce skills gap—with the help of its educational and funding partners. He called the PPIC report “a very sobering clarion call that is of crisis proportion— not for the CSU or for the University of California, or the community colleges, but rather for California. And I hope we take it with the seriousness that it deserves.”

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.

Video: Mark Baldassare & John Myers Discuss the PPIC Survey

For the first time since the start of the PPIC Statewide Survey, Californians ranked the drought as the most important issue facing the state. And that was not the only “first” for this survey. PPIC presented it in Sacramento Thursday in a new format. Mark Baldassare—PPIC’s president, CEO, and survey director—was interviewed onstage about the findings by John Myers, senior editor of KQED’s California politics and government desk.

In addition to the drought, Baldassare and Myers covered a long list of topics that were raised in the survey, including taxes, vaccinations, marijuana, University of California tuition, distrust in government, and voter turnout. Myers also raised a theme he explored in his report on the survey for KQED: Despite an improving economy and Californians’ support for the governor’s ideas about the budget, their outlook on the direction of the state remains gloomy.

Are Enough Californians Attending UC?

At the recent UC Board of Regents meeting, the regents approved a plan by Governor Brown and UC President Janet Napolitano—among other things, it freezes in-state tuition, reforms the pension system, and increases transfer student enrollment in exchange for extra funding from the state. However, it does not fund any additional California resident enrollment, suggesting that without legislative action for more funding, campuses may not increase enrollment for in-state students.

Enrollment growth for California residents at UC has slowed since the recession, while at the same time the proportion of out-of-state students has grown to an all-time high. UC officials acknowledge that out-of-state enrollment has grown as a result of statewide budget cuts. They contend that the extra tuition paid by out-of-state students enables UC to admit more California residents than it could otherwise. And even with the fast growth of out-of-state students in the UC system, California residents still make up over 80% of UC freshmen. But are enough Californians attending the UCs?

One way to answer that question is to see if UC is meeting the requirements of California’s Master Plan for Higher Education. The plan indicates that the UCs should choose from among the top 12.5% of students in the state. If we examine the proportion of California high school graduates admitted to the UC system, we find that UC admits more than 12.5% of California high school graduates. This percentage declined between 2007 and 2010 during the recession (also during the increase in out-of-state students), but it never dipped below 13%.

Let’s also consider the number of students receiving a UC education. Only 7.4 % of California’s high school graduates enroll at a UC as freshmen—far short of the 13.7 % admitted. Some students choose to attend other competitive schools, others decline to enroll at UC after being rejected from their first-choice campus, and still others may prefer a cheaper or closer-to-home option such as starting at a community college or attending a CSU. Lastly, let’s look at the number of students who are ready and eligible for UC. As the percentage of high school graduates admitted to a UC has declined, the percentage of public high school students who complete the UC eligibility requirements has grown. This comes at a time when the state needs to be producing more college graduates to meet the demands of the state’s future economy.

So, are there enough Californians in the UC system? Even with the influx of out-of-state students, the UC system is currently meeting the expectations of the Master Plan for admission. However, the combination of a growing number of UC-ready students and a low yield rate for admits suggests that a shrinking share of students who could benefit from a UC education are getting a UC education—especially if California resident enrollment does not continue to grow.

PPIC and others have suggested that the state review and revise the Master Plan. In the context of today’s debates over enrollment at the state’s universities and colleges, California’s leaders should update the goals of California’s higher education systems and work out how to meet and appropriately fund them.

Notes: (TOP CHART) University of California Office of the President. (BOTTOM FIGURE): Author’s calculations from data from the California Department of Education and University of California Office of the President.

Testimony: Improving the Cal Grant Program

PPIC researchers Hans Johnson and Kevin Cook testified before the California Student Aid Commission last week at a hearing to provide information about improving the Cal Grant program. The program provides about $1.5 billion in grants to college students in California each year and is administered by the commission. The program provides grants to state residents attending approved institutions and is the largest source of state aid to California students. Here is a summary of the testimony.

Rapidly increasing costs to students, low completion rates, and lack of access to four-year colleges are key challenges facing the state and the Cal Grant program. Given relatively high rates of poverty among high school graduates, grant and scholarship aid is more important than ever in making college possible for many Californians. Currently, California ranks 47th among all states in the share of high school graduates that go to four-year colleges. Only about half of California State University (CSU) students earn a bachelor’s degree within six years, and less than half of community college students earn an associate degree or vocational certificate or transfer to a four-year college.

To improve outcomes, the California Student Aid Commission should invest in what works, taking into account both efficiency and equity. One possibility would be to provide incentives for completion by providing more funding for students taking a full course load of 15 units. Students who take only 12 units per semester are currently considered full-time students but will not acquire enough units to graduate in four years. Of course, making this change might require increasing the size of grants so that students would be able to cut back on the number of hours they work at jobs.

Student outcomes might also be improved by using Cal Grants to encourage enrollment at four-year colleges. One way to achieve this would be to provide tuition, as well as a living stipend, for students eligible for the University of California and CSU. Currently, some awards for the students with the lowest incomes provide a living stipend for four years but tuition support for only three years.

More and better data is necessary to properly evaluate these and other proposals for improving student outcomes. The best way to identify effective and equitable delivery of Cal Grant aid would be to develop a statewide longitudinal data base that follows students from high school through college and into the workforce. Such a database, already developed in many other states, would allow the commission to answer additional questions that would help them understand what works—and doesn’t—to effectively target grant aid in California.

View the presentation slides

Locking Students Out of Our Colleges a Losing Strategy

This commentary was published on Sunday, April 12, 2015, in the San Francisco Chronicle.

High school seniors across the state are just now hearing if they will be accepted into the college of their choice. Most of those students have applied to one or more of the state’s public four-year universities and, despite meeting eligibility criteria, many will be disappointed. While this is certainly distressing for individual students and their families, this problem points to larger, troubling issues of access to and student success in California’s higher education system. The state’s public universities are not able to accommodate all of the qualified students who apply.

(Continue reading on sfchronicle.com)