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Student Debt, and the Virginia Plan for Higher Ed

by Tod Massa 31. July 2015 10:03

There is a new report on student debt out from the Pew Charitable Trust.  BloombergBusiness reports on it a couple of different ways.

Debt article 1: About 51 percent of black and 52 percent of Hispanic millennial and Generation X student-loan borrowers would find a different way to pay for school so that they'd owe less, the survey found, compared to just a third of white students. While 10 percent of black debt holders said that they wouldn't go to school if they could do it over, just 7 percent of their white counterparts felt that way.

 

Debt article 2:  Americans’ love/hate relationship with debt is on full display in a new report by the Pew Charitable Trusts. Almost everyone uses debt, the study finds, but we also judge each other harshly for overusing it. Perhaps surprisingly, the Americans most enthusiastic about debt are older

It is the first article that is of most interest to me, but the context provided by the second is necessary. Unfortunately, the first article has to be read carefully since the language is pretty sloppy.

The findings shouldn't be totally surprising: Minority graduates, particularly those who are black, are far less likely to have completed the degrees they took out loans for, dramatically reducing their return on investment. Most of the wage premium Americans gain by attending college comes only with degree completion, Labor Department data show.

For example,  this statement “Minority graduates…are far less likely to have completed the degrees they took out loans for” is very imprecise. It seems to suggest that minority students who borrowed start out in programs that are more likely to have greater financial returns but end up in programs at the other end of financial spectrum.  Fortunately, the next paragraph clears this up:

"They're more likely than white student loan borrowers to have not completed their degree, and they're more likely to not yet have a bachelor's degree," said Diana Elliott, the lead researcher for Pew’s study of American families’ financial security and mobility. "These factors are really important when you think about labor market outcomes and the return on investment."

Bingo!

Students who complete a degree, even with debt, are better off than students who don’t complete (save for the well-known anomalies), especially those with student debt. Sara Goldrick-Rab makes this point nicely in this interview

Despite all the criticism of high student loan balances, you think part of the problem is that students aren’t allowed to borrow enough. Why?

One of our biggest issues is the many students who start school but don’t finish. There are people so constrained by lack of credit that they aren’t finishing school. For them, I’m worried about an under-borrowing problem, not an over-borrowing problem. 

It is concerns such as these that have lead the State Council at its meeting on July 21, 2015, to approve six measures and targets that will be used to monitor progress in achieving the goals of The Virginia Plan for Higher Education.  In particular, measures M2 & M3 have the potential to accomplish much: making student debt meaningful to under-represented populations by ensuring they have same likelihood of success as traditional student populations, and working to significantly reduce the need for high levels of student debt.

 

 

SUMMARY

By 2030, more Virginians will graduate with high quality credentials without excessive debt.

The Commonwealth, through its public and private colleges and universities, will award 1.5 million degrees and workforce credentials, improve student success, and increase by 30 percent Virginia’s share of research expenditures.

THE COMMONWEALTH’S TARGETS FOR THE YEAR 2030

M1

Awards

Measure:

Undergraduate degrees and workforce credentials awarded to students

   Target:

1.5 million total awards, including those that close the gap in unfilled jobs in high-demand occupations

M2

Student Success

Measure:

Completion rates of students

    Target:

Annual improvement in completion rates of students that closes the success gap between underrepresented populations (URP) and non-URP students by 2030

(Note:  URP students meet one or more of:  non-white, Pell grant recipient, age 25 or older, from a Virginia locality with low undergraduate attainment rates.)

M3

Afforda-bility

Measure:

Financial resources available to a student as a percentage of the cost of attendance

    Target:

50 percent for a student from a low- or middle-income family

(Note:  Financial resources represent expected family contribution, federal and state grants and exclude loans, scholarships, work, and institutional aid. The cost of attendance includes transportation, room and board, tuition and fees, supplies, books and other expenses.)

M4

Research Activity

Measure:

Virginia academic-research expenditures as a percentage (share) of the US total

Target:

A share 30 percent larger than in federal FY2013

THE COMMONWEALTH’S ANNUAL COMMITMENTS

M5

Price

Measure:

Tuition and fees of in-state undergraduates as a percentage of family income

   Target:

Lower than the national average; less than 10 percent of income for low- and middle-income students

M6

Economic Prosperity

Measure:

Wages of graduates in the workforce

   Target:

75 percent of graduates earn sustainable wages three years after graduation

(Note:  The definition of sustainable wages is consistent with the lower end of the range for middle income, as recommended by the Higher Education Advisory Committee and approved by Council in 2011.)

  

The Council also endorsed an initial set of 15 indicators to help meet the goals of the Virginia Plan for Higher Education. Many of these indicators serve as “building blocks” for the measures.  The set of indicators is intended to be dynamic, thus creating opportunities to add new and revise existing ones during the years of plan implementation as appropriate.

 

INDICATORS IN SUPPORT OF GOALS, MEASURES AND TARGETS

I1  Enrollment

Description:

Fall headcount undergraduate enrollments

Purpose:

Tracks student enrollments as a primary driver of award attainment

I2  Remediation

Description:

Number and percentage of first-time students in developmental courses

Purpose:

Provides college readiness information on students entering college for student success and award attainment

I3  Persistence and Retention

Description:

Number and percentage of students who maintain enrollment

Purpose:

Reflects enrollments needed for student success and award attainment

I4  Average Time-to-Degree

Description:

Mean undergraduate time-to-degree of graduates and percentage of those completing within the normal time for each degree

Purpose:

Measures the effectiveness of students moving from matriculation to completion

I5  State Funding

Description:

Percentage of cost of education provided by the state

Purpose:

Contributes to affordable access and student success

I6  Student Debt

Description:

Number and percentage of undergraduate students with debt; average debt for enrolled students and graduates

Purpose:

Tracks college affordability and students’ ability to pay

I7  Default Rates

Description:

Overall cohort default rate on federal student loans compared with other states

Purpose:

Reflects students’ ability to pay upon leaving an institution

I8  Institutions’ Internal Reviews of Policies and Processes

Description:

Number of institutions conducting reviews of their academic, administrative, or organizational policies and processes

Purpose:

Indicates institutional action leading to quality and improvement

I9  Institutional Performance Standards

Description:

Number of public institutions meeting institutional performance standards

Purpose:

Defines the effectiveness of institutions at achieving state policy goals

I10  Accreditation Status

Description:

Number of institutions meeting accreditation requirements

Purpose:

Gives external assessment of quality and improvement

I11  Research Expenditures

Description:

Annual academic-research expenditures

Purpose:

Indicates how research expenditures impact Virginia’s share of expenditures compared to other states

I12  Regional Impact

Description:

Regional performance on various economic development and PK-12 school success measures established by Virginia Performs

Purpose:

Provides leading and lagging indicators for PK-12 and higher education’s impact on a region

I13  Cultural Prosperity (“best state” rankings and well-being)

Description:

Virginia’s rankings on various state rankings/lists

Purpose:

Gives Virginia’s standings as compared with the other 49 states

I14  Credentials To Close the Gap of Unfilled Jobs inIn-Demand Occupations

Description:

Number of degrees, certificates, and related workforce credentials to close the gap of unfilled jobs in identified high-demand occupations

Purpose:

Reflects alignment of higher education to workforce needs of the Commonwealth

I15  Economic Mobility of Graduates

Description:

Percentage of graduates moving from lower income to middle or upper income within 10 years of completion

Purpose:

Measures economic prosperity and credential value

 

 

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