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Increasing College Access and Success: Investing in Human Capital

Increasing College Access and Success: Investing in Human Capital. MAP Capital Investment Bonds Presentation to Higher Education Finance Commission September 23, 2010. Students-in-Need Do Not Complete College.

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Increasing College Access and Success: Investing in Human Capital

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  1. Increasing College Access and Success: Investing in Human Capital MAP Capital Investment Bonds Presentation to Higher Education Finance Commission September 23, 2010

  2. Students-in-Need Do Not Complete College Source: Goldberger, Susan, “Doing the Math: What It Means to Double the Number of Low-Income College Graduates,” Minding the Gap: Why Integrating High School with College Makes Sense and How to Do It, 2007.

  3. Current Illinois Need-Based Grant Program Helps Low-Income Students Attend School • Since 1967, Illinois has provided grant assistance for low-income students through the Monetary Award Program (MAP) • In FY 2009, 144,230 students received MAP grants totaling $384 million • 56,326 MAP grants totaling $57 million went to students attending community colleges, with an average award of $1,008 per student • Critical factor in aligning workforce of the future to changing economic opportunities Source: ISAC Databook, 2009

  4. MAP Funding FY2011 • FY2011 MAP appropriation is $404 M (plus S/LEAP) • Additional MAP funds in FY2011 come primarily from IIA - $4.5 million. • MAP not impacted by 2% reserve requirement • MAP remains the 4th largest state need-based aid program in the country

  5. Distribution of MAP Dollars

  6. Applications and Number of Eligible Students Continue to Rise while Funding is Level

  7. Good Investments Shouldn’t Lack for Capital • MAP successful in helping students afford college • Opportunity for state-funded expansion limited; need greatest in challenging economy • Evaluate how much MAP recipients pay in state income tax revenue v. other low income taxpayers • Findings: College has a good return on investment from individual and state tax perspective • Good investments should not lack for capital • ISAC Challenge: How to get capital for education • ISAC Solution: Use capital markets to invest in people

  8. Individual Return to Education: Lifetime Earnings Are Greater for Those with More Education Source: Georgetown University Center on Education and the Workforce, Help Wanted: Projections of Jobs and Education Requirements through 2018, June 2010, Figure 5.6

  9. State Return to Education: Income Taxes Increase Source: ISAC Analysis of Illinois Dept. of Revenue data

  10. Maintaining or Even Sustaining Illinois’ Need-Based Program Is At Risk • 42,000 students eligible for MAP and who wanted to attend community college did not receive grants due to lack of funds in FY 09; only 28% actually enrolled without the MAP support • Each year, more students apply for these limited dollars. So far in 2010, over 70,000 eligible community college students have been denied MAP since funds ran out • Unlikely State will have resources in short- and long-term necessitating new, innovative approach Source: ISAC data collection and analysis

  11. MAP Human Capital Investment BondsA New Paradigm in Funding • $550 million in bonds over 5 years • 10-year bonds • 100,000 low-income community college students per year funded; up to 50,000 additional students per year • $1,000 average MAP award • More funds, available to more students

  12. MAP Cap Bonds Are a Sound Investment • Expands the number of low-income community college students receiving MAP by nearly 50,000 • Repays bonds with Illinois Income Tax revenue received from these MAP recipients • Income Tax revenue exceeds debt service each year, with a minimum debt service coverage ratio of 1.85

  13. Source: Loop Capital Markets analysis for ISAC

  14. Appendix I Other studies find similar returns to higher education investment as ISAC/DOR Analysis

  15. 2007 NIU Study Finds Comparable Pattern of Earning Increases from Community College Completion

  16. NIU and ISAC Analysis Find Similar Impact from Community College

  17. Displaced Workers’ Earnings Increase After Attending Community College Percentage of Earnings Increase by Age and Gender Source: “Do Displaced Workers Benefit from Community College Courses? Findings from Administrative Data and Directions for Future Research, Louis Jacobson, Robert LaLonde, Daniel Sullivan, Hudson Institute Center for Employment Policy, October, 2005 http://ssrn.com/abstract=1020996

  18. Analysis of Census Data Finds Positive Federal Income Tax Return to College Completion “[I]t is worthwhile for the federal government to invest in federal student aid if the per-student cost is less than about $57,000.” Source: Mark Kantrowitz, “The Financial Value of a Higher Education, NASFAA Journal of Student Financial Aid, Vol 37, No1, 2007 Net Present Value of College Degree and Federal Income Tax, 2005

  19. Appendix II Details on MAP Program

  20. MAP Eligible Awards

  21. MAP Eligibles by Region

  22. MAP Recipients by Region

  23. MAP Coverage of Tuition and Fees at Public Universities has Decreased Since 2002

  24. MAP Coverage of Tuition and Fees at Community Colleges has Decreased Since 2004

  25. Effective Maximum MAP Award and Tuition and Fees, 1980-Present

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