Aid and Access: How Federal, State, and Private Policies Matter USW 31,November 26, 2012 Theda Skocpol

Source: Michael Hout, Berkeley. US COLLEGE GRADUATION TREND

Source: OECD Education at a Glance, 2009.

Source: Mortensen, New England Regional Assembly of the College Board, 2005, p. 61.

Source: Tom Mortensen, Postsecondary Educational Opportunity.

U.S. Higher Ed Policies: From Opportunity to Elite Subsidies  19 th -early 20 th c.: Morrill Land Grant college system established; federal subsidies to agricultural colleges  WWII and after: federal research programs spread capacities to many universities and fund faculty projects  1944: GI Bill offers tuition and subsistence allowances  1958: National Defense Education Act establishes low-interest student loans  1965, 1972: Higher Ed Act and its reauthorization create need- based grants, Work-Study Program, Pell Grants, and matching grants for states that offered need-based student grants  After mid-1970s: value of Pell Grants declines then stabilizes, as college tuitions skyrocket  1990sff: federal legislation subsidizes/guarantees bank-offered student loans regardless of need and offers tax credits/ incentives to middle-class borrowers  1990s: Justice Dept outlaws agreements to prevent escalating “merit” offers – unless institutions offer purely need-blind aid (which only the richest can do)

U.S. Higher Education Act of 1965/1972 through 2008: Intended and Unintended Consequences for Student Aid  HEA (‘65, ’72) emphasis on need-based student aid via Pell Grants; allows subsidized loans for some in middle class, but not tax credits  Equal Opportunity Era,  Liberal Dems and bipartisan consensus  Sallie Mae created in 1978 to enlarge private loan pool; middle class access to grants and loans broadened  Pell Grants boosted in this period, retaining the emphasis on broader opportunity  Divisions and Contradictory Directions,  GOP gains power via Reagan, eventually Congress  Student aid trimmed, Pell Grants underfunded and not regularly increased, even as college tuition rises 145% from 1980 to 2002 (with median family income increasing only 23%)  Republicans still stress fiscal responsibility and limit subsidies to lenders  Private lending with federal guarantees becomes profitable, and private interests organize to lobby for better opportunities  By early 1990s, loans for the middle class are emphasized more than aid to needy

Aid to the Privileged Comes to the Fore,  Supported by more right-wing Republicans, subsidies and guarantees to private lenders become more lucrative  Supported by President Clinton, tax credits greatly benefitting the middle class and privileged are added to federal college aid.  Grants to needy continue to erode in value, while loans and tax credits allow more privileged students to afford the rising tuitions, especially at selective colleges  Students end up with high debt burdens when (if) they graduate

Undergraduate Student Aid by Source (in Billions), SOURCE: The College Board, Trends in Student Aid 2010, Figure 2A.

Source: College Board.

Percentage Distribution of Education Tax Credits, 2008 by Adjusted Gross Income (AGI) (and Average Tax Savings per Recipient) SOURCE: The College Board, Trends in Student Aid 2010, Figure 12A.

Percentage Distribution of Savings from Tuition Tax Deduction, 2008 by Adjusted Gross Income (AGI), (and Average Tax Savings per Recipient) SOURCE: The College Board, Trends in Student Aid 2010, Figure 12B.

Ten-Year Trend in Student Aid and Nonfederal Loans per FTE Used to Finance Postsecondary Education Expenses in Constant 2009 Dollars, to SOURCE: The College Board, Trends in Student Aid 2010, Figure 1.

Percentage Distribution of Pell Grant Recipients by Family Income and Dependency Status, SOURCE: The College Board, Trends in Student Aid 2010, Figure 14A.

Total Pell Expenditures (in Billions), M a x i m u m a n d A v e r a g e P e l l G r a n t ( C o n s t a n t D o l l a r s, i n T h o u s a n d s ), a n d N u m b e r o f R e c i p i e n t s ( i n M i l l i o n s ), t o SOURCE: The College Board, Trends in Student Aid 2010, Figure 13A.

Maximum Pell Grant as a Percentage of Tuition and Fees and Room and Board (TFRB), to SOURCE: The College Board, Trends in Student Aid 2010, Figure 13B.

Median Debt Levels of Bachelor’s Degree Recipients B o r r o w e d a n d P e r c e n t a g e w i t h D e b t b y D e p e n d e n c y S t a t u s, F a m i l y I n c o m e, a n d T y p e o f I n s t i t u t i o n SOURCE: The College Board, Trends in Student Aid 2010, Figure 9.

Need-Based and Non-Need-Based State Aid Grants p e r F u l l - T i m e E q u i v a l e n t ( F T E ) U n d e r g r a d u a t e S t u d e n t i n C o n s t a n t D o l l a r s, t o SOURCE: The College Board, Trends in Student Aid 2010, Figure 15.

Source: College Board.

State Grant Dollars per Full-Time In-State Undergraduate Student and Percentage Receiving State Grants, by Dependency Status and Income, Selected States, 2007 ‑ 08 SOURCE: The College Board, Trends in Student Aid 2010, Figure 16.

Obama Administration Higher Ed Policies Remove banks as middlemen with guaranteed profits from student loan programs, and use some of the savings to increase Pell Grants and improve loan terms. Expand and improve levels of Pell Grants. (Should we also make sure students know they have them?) Give more aid to community colleges – and strengthen their ties to area employers. Simplify information about college funding and make it available earlier in high school. Push colleges to limit tuition hikes, improve graduation rates, and make more information available.

Relevant SSN Briefs Available at Suzanne Mettler,”How the GI Bill Built the Middle Class and Enhanced Democracy.” John Dorrer, “Why America Needs to Regulate Career Programs that Burden Taxpayers and Break Promises to Students.” Sara Goldrick-Rab, “Pell Grants are America’s Investment in Needy Yet Promising College Students – Why Not Tell Them?” John D. Skrentny, “Affirmative Action and Its Future.”