Impact of Program Integrity Regulatory Rules On VolEd Institutions

1. Impact of Program Integrity Regulatory Rules On VolEd Institutions Michael Heberling, Ph.D. Lieutenant Colonel, USAF (Ret) CCME Immediate Past President Baker College Center for Graduate Studies

2. US Post Secondary Education • Best in the World? • 2011 Study by Institute of Higher Education (IIE): • Overwhelming most popular education destination for International Students • Over ¾ perceived US to have high quality education system. • Why viewed in such a positive light? • Academic Freedom • Diversity • Vast array with varied missions

3. US Post Secondary Education • Researched-Focused • Religious • Professional • Liberal Arts • Technical/Career • Private – For Profit & Not for Profit • Public – Four Year & Community Colleges • Open Enrollment to Highly Selective

4. US Post Secondary Education • America’s rich academic environment collectively serves a very diverse student body • Since World War II, America’s colleges and universities have been an important vehicle for facilitating equal opportunity & social mobility – impacting generations • This is especially true for those schools that specifically serve the military community. • One military family’s story:

5. Earl J Heberling Dropped out of high school After 10th grade. His father dropped out after 8th grade. Served in Pacific in WWII Used GI Bill to get a college degree, first in his family.

6. Two of his children have PhDs & one has a Mas EE

7. Department of Education initiates series of rules with major implications

8. Unintended Consequences • Department of Education: For–Profits with 10% of students account for: • 26% of all federal student loans • 46% of all student loans in default, & • 25% of all Pell Grants • To fix a government perceived 10% problem, regulations apply to all schools including the private not-for-profit, and publics alike who make up 90% of all student enrollments. Like Obamacare?

9. Unintended Consequences • The collective impact of the original program integrity rules coupled with other reporting requirements is making higher education far more complex and costly. • A case can be made that these rules are hurting the students they were intended to benefit.

10. Unintended Consequences • While there are many rules and regulations that fall under the broad umbrella of “Program Integrity Rules,” we will look at the following: • State Authorization • Graduation Rates • Default Rates • Report Cards

11. State Authorization • All institutions offering postsecondary education through “distance or correspondence education” in states in which the institution is NOT physically located provide evidence that they can meet those states’ authorization requirements. • CHEA represents 3000 schools. • If each school were to have an online program with one student in each state, we are talking about potentially having 150,000 state authorization agreements.

12. State Authorization • State Authorization becomes even more complicated. • Type of School • “Presence” of marketing office in another state • What about faculty teaching for your school but located in another state? • County/Local Requirements

13. State Authorization • Objections from multitude of education organizations. • Substantially complicates process for private non-profit institutions. • Religious Schools: Could lead to requirements inconsistent with or contrary to mission. • Concern that SA will force schools to pull back on legitimate and creative distance education programs.

14. Impact on Military • “… these changes could have a particularly negative impact on members of the military and their families.” Open Letter to DOE from ACE & 59 higher education & accrediting organizations • Why? Function of the transient nature of serving in the armed forces. • Starts school in one state and transfers to another state without SA.

15. Education NAFTA? • In 1994, NAFTA removed most of the trade barriers between the US Canada & Mexico. • Today we need an NAFTA-like agreement to break down the regulatory barriers to free-trade in post-secondary education among all the 50 states and the Federal Government • Current Best Workaround: “Reciprocity agreements” between states

16. Alternative Solutions • Have each state automatically authorize schools that have regional or other accreditation. • Have Congress intervene and work to completely repeal. • Exempt all military students and their dependents. Military students are hassled enough as it is. They don’t need to be a pawn in the bureaucratic struggle between the schools, the states, and Dept of Education

17. Six-Year Graduation Rate One Size Does NOT fit all • All schools with Title IV programs required to report graduation rate for first-time, full-time degree seeking students with in 6 years of starting. • “Morphed” into a de facto one-size-fits-all measure of how good or bad a school is academically. • Politicians & media laud schools with high graduation rates & pummel those with low graduation rates.

18. Six-Year Graduation Rate A De Facto Measure of Academic Quality Detroit Free Press April 17, 2006 “Baker’s graduation rate — 19.2% — lags behind all but one of the state’s 27 other private colleges that reported the figures to the government. That means about one in five of the full-time students enrolled in 1998 completed an associate’s degree within three years or a bachelor’s degree in six years.”

19. Six-Year Graduation Rate • Major Flaws in Calculations: • Transfer students were NOT INCLUDED even though 60% of all graduates attend 2 or more schools • Part-time students, who make up 50% of the student body NOT INCLUDED. • Students who drop out but later return to graduate are NOT INCLUDED. • Students who enroll in the Spring or Summer Semesters are NOT INCLUDED.

20. Six-Year Graduation Rate • Nationally only 56% of all students graduate within six years. • Among Traditional/Dependent students the rate is 63% • Among Non-Traditional/ Independent students (over 24, married, with dependents, on active duty/veteran) the rate is 22% Source: College Board for the 2003-2009 timeframe

21. Six-Year Graduation Rate • Schools that actively or historically seek out Traditional Students will receive high marks from the Department of Education. • Schools that seek out Non-Traditional students because of their mission will receive low marks. • Schools with a high levels of military/veteran students will receive low marks as well.

22. Outstanding Six Year Graduation Rates

23. Outstanding Six Year Graduation Rates

24. How to Improve Your Six-Year Graduation Rate • Strong correlation between graduation rates and freshman acceptance rates. • Schools with low acceptance rates will have very high six-year graduation rates. • There are signs that the Six-Year Graduation Rate Reporting policy is beginning to have some unintended and negative consequences.

25. How to Improve Your Six-Year Graduation Rate Detroit News: “Wayne State University is Michigan’s only urban university and serves a unique constituency. A large number of its students are commuters who work, many in full-time jobs. A significant percentage is older than the typical college student, having gone back to school after a career or taking a more prolonged approach to completing school.”

26. How to Improve Your Six-Year Graduation Rate Detroit News: With the lowest graduation rate among Michigan’s public universities, Wayne State University’s incoming president said that “a change in admissions can be expected.”

27. How to Improve Your Six-Year Graduation Rate Washington Monthly December 16, 2011 Improving Graduation Rates: The Wrong Solution Michigan’s Wayne State University has a very low completion rate. The latest figures indicate that an abysmal 32 percent of students graduate from the school. But with new reform efforts targeting college graduation, Wayne State has decided to make some changes. A new, tougher admissions policy proposed by Wayne State President Allan Gilmour would deny admission to the type of academic low-achiever who is currently accepted. Wayne State hasn’t had a lot of success graduating students in recent years; it has the lowest graduation rate in the state. That’s something Gilmour said he became committed to increasing. Critics worry that Gilmour’s new, more selective admissions policy would mostly exclude low-income, minority Detroit residents.

28. A Travesty in America’s Post-Secondary Education • Schools like Wayne State University that provide educational opportunities for America’s non-traditional students should be praised – not castigated. • The Six-Year Graduation Rate Policy is forcing many schools to re-visit, or to jettison, their once praiseworthy missions. • One would think the that federal government would champion the efforts of schools to facilitate social mobility.

29. Why is the Six-Year Graduation Rate the “Gold Standard” for Success? • An auto worker with two young children is laid off from his job. • He wants to “re-tool” himself by going to school at a local career college. • He enrolls in an IT program. • After taking just five technical courses, he lands a good paying job (and drops out). • He and his family are ecstatic. • He profusely thanks the school. • Is this a success story?

30. Cohort Default Rates • If a school has a 30% or higher cohort default rate for three consecutive years, it could lose its eligibility to participate in the Federal Direct Loan and Pell Grant programs. • Other sanctions come into play if the default rate exceeds 40% in a single year.

31. National Three-Year Cohort Default Rate ~ 489,000 Borrowers Defaulted* between Oct. 1, 2008 & Sept. 30, 2011 (3 Years) ________________ ~ 3.6 Million Borrowers Entered Repayment between Oct. 1, 2008 & Sept. 30, 2009 13.4 %= x 100 *A borrower is considered in default after missing payments for 270 consecutive days.

32. Cohort Default Rate By Type of School

33. So Who Defaults? • As age increases so does the likelihood • The more dependents in a family, the greater the likelihood • Students who dropped out or earned a GED were more likely to default than students who earned a regular diploma. • The more a student borrows, the greater the chance of default. • The longer it takes to complete, the greater the odds of defaulting.

34. So Who Does NOT Default? • Students whose parents had higher levels of formal education • The higher the family income • As class rank, standardized tests scores, and GPA increase, the likelihood of default decreases. Source: Gross, et al (2009).“What Matters in Student Loan Default.” Journal of Student Financial Aid.

35. Default Rates & Type of Student • The student who is most likely to default on their schools loans is the Non-traditional Student. • Therefore, it should come as no surprise that those schools with a large preponderance of Non-traditional students will be more likely to have a high CDR. • These schools include urban (like Wayne State), for-profit, private non-profit career, and historically black colleges and universities.

36. College Rating System White House Press Release August 22, 2013 Today, President Obama outlined an ambitious new agenda to combat rising college costs and make college affordable for American families. His plan will measure college performance through a new ratings system so students and families have the information to select schools that provide the best value. And after this ratings system is well established, Congress can tie federal student aid to college performance so that students maximize their federal aid at institutions providing the best value.

37. College Rating System • A logical follow-on to the many Program Integrity Rules is one that seeks to incorporate many of them. • The Federal Government has major concerns over the price tag, quality, graduation rates and default rates of our colleges and universities. • Solution: The Ultimate One-Size-Fits-All College Rating System.

38. College Rating System • DOE is proposing a rating system that would measure access, affordability and student achievement (graduation rates) • Those schools receiving a higher score will receive more financial aid. • Major Problems exist when you combine multiple metrics.

39. College Rating System • Access and student achievement are mutually exclusive. • Schools that are highly selective (low access) will have a high graduation rate (high student achievement). • Schools that are open enrollment (high access) will have a low graduation rate (low student achievement). Student Achievement = A measure of how selective the school is in their admissions.

40. College Rating System • Affordability is a slippery slope. • How does a private school compete with a public school that is subsidized by the taxpayer? • Even among public schools, funding varies significantly from state to state. Affordability = The level to which a school’s tuition is subsidized by the taxpayer (state funding, millages, etc.)

41. College Rating System • 2014 AEI study to plot a three dimension rating system of 1,716 four-year schools. • Access = 25% or higher Pell enrollment. • Affordability = Net Price of $10,000 or lower. • Achievement = Six-Year Graduation Rate of 50% or higher. • How many schools of the 1,716 will meet all three criteria?

42. Graduation Rates: Red = Low Green = High Y-Axis Access Only 19 of the 1,716 schools (or 1%) met all three criteria --- X-Axis Affordability !

43. Summary of Results • Few colleges perform poorly on all three measures • Very few perform well on all three • Schools with the highest graduation rates are expensive & have very few low income students • Schools with lots of low-income students and low prices tend to have low graduation rates. • Takeaway: It is easier to change who you admit than to change graduation rates

44. Summary of Results “Measuring the level of success could reward colleges more for whom they enroll than for the quality of the education they provide.” Andrew Kelly & Awilda Rodriguez (2014) How would colleges fare under the president's ratings system?

45. DOE information on your school at: http://www.whitehouse.gov/issues/education/higher-education/college-score-card Includes: Median Barrowing, Loan Default Rate, Graduation Rate, & Costs (Average Net Price)

48. Current Status • On Dec 19, the Education Department released a “draft” of its long awaited ratings plan. • Besides the expected metrics on cost, graduation rates and access, there was a “gainful employment” piece. • Tying high income as a “success” measure is troubling for many. • Schools with social work, teaching and public service programs will be at a disadvantage to business & engineering programs.

49. Parting Thoughts • Viewing all the program integrity rules collectively, schools that place a premium on enrolling only the most affluent & academically promising students are rewarded. • Integrity Rules seek to “homogenize” our colleges and universities at the expense of low income and non-traditional students • This negatively impacts our role in facilitating equal opportunity and social mobility.

50. Questions? Michael Heberling, Ph.D. Lieutenant Colonel, USAF (Ret) CCME Immediate Past President Chair, Leadership Studies Baker College Center for Graduate Studies Flint, Michigan 810-766-4374 heberling@baker.edu