Conference on Higher Education Access

On Friday, September 7, 2000, the National Bureau of Economic Research (NBER) gathered researchers, practitioners and policymakers together to discuss current important issues in both the financial and non-financial aspects of access to higher education. This conference was a first step toward a publication of an NBER volume on higher education finance and access. The project is supported by the TIAA-CREF Institute. As reflected on the conference agenda, the presentations were wide-ranging; ensuing discussions were creative, enthusiastic and comprehensive. Highlights of each discussion, written by Jennifer Ma, Research Economist at TIAA-CREF Institute, are also reflected on the agenda.

The project organizer, Caroline Hoxby, Faculty Research Fellow, NBER, will be prioritizing the potential research projects discussed at the conference and identifying the research scholars to pursue them. In about 18 months, a research conference will be convened by the NBER for purposes of presenting and discussing the research findings.

Agenda

Improving Access to Postsecondary Education
Dan Madzelan, US Department of Education

Topics discussed included the following:

Academic Preparation

• How does academic preparation affect access to postsecondary education?
• How effective are the various programs that prepare individuals for postsecondary education? How do these programs interact?
• How do these issues vary for different groups (e.g. different income groups, racial groups, etc.)? What drives low- and middle-income students' enrollment decisions?

Paying for College - Price and Cost and Financial Aid

• Why do the price and cost of college continue to rise?
• What role does financial aid play? Will financial aid cause institutions to raise tuition?
• How do the new tax benefits affect access and choice?
• What role does infrastructure play? For example, how will renovations of buildings funded by past loan guarantee programs affect college price?

Student Loan Debt Burden

• How do loans affect access and choice?
• How does student loan debt impact borrowers' life and career choices?
• How effective are the alternative repayment plans?
• Do loan forgiveness programs encourage certain career choices?

Needs Analysis

• How well does the "ability to pay" model determine financial need today?
• Does the complex federal aid application process adversely affect postsecondary access? Can it be simplified?
• Does a family's saving for college affect access?
• What is the impact of special tax treatments of certain savings plans?
• What role should saving/assets play in needs analysis in "earlier/easier" aid application?

Federal Support for Higher Education and Its Impact on Students
Terry Hartle, American Council on Education

Trends of Higher Education in 1990s

• The rapid development of distance learning
• College prices increased in 1990s. The way families pay for college has changed - more debt financing - students work too much.
• New federal programs - for example, tuition savings, prepaid plans, tax credits, etc.
• Regulatory requirements facing colleges and universities are more complex than ever.
• Increasing access for low-income students continues to be an issue.

2000 Presidential Candidates' Proposals on Higher Education

• Bush - front load Pell Grant and increase first year Pell Grant, pair Pell Grant with bonus.
• Gore - College Opportunity Tax Credit (same as Clinton's 2000 budget proposal).
• How will the different proposals affect college enrollment rates?
• Low enrollment rates for low-income students. Is it because of their lack of information? Interest? Or preparation?
• How do government regulations affect college price and cost?

Student Financing

• Too much borrowing from subsidized Stafford loans? Too much credit card borrowing?
• What is the link between post-baccalaureate income and amount borrowed?
• Does deductibility of interest on loans affect repayment ability?
• Does affirmative action in admissions lead to short-term enrollment gain and long-term retention problem?

Patrick Callan, National Center for Higher Education Policy

Callan's presentation raised the following access issues facing the states:

• There has been explosive growth in demand for higher education in many states; growth most pronounced in states with the greatest ethnic diversity.
• Forty states will face structural and fiscal deficit in 2008. Most of these states have a high percentage of students in poverty and many face forecasts of a big increase in demand for colleges and universities.
• 80 percent of existing state aid is still needs-based. But, fastest growing aid is merit-based.
• Impact of federal policy on states' behavior. Do federal tax credits lead colleges to raise tuition?
• Should states shift their support for higher education from state appropriation to institutional aid to students?

QSTP - Section 529 College Savings Programs
Tim Lane, TIAA-CREF

Lane's presentation focused on the recently introduced Section 529 college savings programs. The highlights of his presentation were:

• Tuition has been rising at a rate two to three times that of general inflation in the past 15 years.
• Traditional college savings/investment vehicles include mutual funds, education IRAs, government EE savings bonds, etc.
• Section 529 programs were introduced to help families save for college education.
• Section 529 QSTP requirements - maximum contribution limit, penalty on non-qualified withdrawals, etc.
• QSTP tax advantages - tax on earnings is deferred at the federal and state levels.
• Current marketplace - 41 states will have a savings program by 2001.
• QSTP savings programs' investment trends - investors may choose from several investment options when opening an account.
• Other issues -- how will funds in 529 programs affect financial aid? How will we measure the success of these programs?

Very few of the participants in focus groups were aware of 529 programs. Participants were very interested in the topic and asked many questions which included:

• Why do states sponsor these programs? Do these programs mostly benefit middle- and upper- income families? How likely are low-income families to take advantage of these programs?
• How will funds in these savings programs affect students' financial aid eligibility?
• What is the estate and gift tax treatment for these programs?

Preparing, Inspiring, and Connecting
Gretchen Rigol, the College Board

Preparing

• Student preparation for higher education while in K-12.
• SAT - who are the test takers? Demographics?

Inspiring

• What does education mean to students? What are their sources of information? Guidance counselors? Media?
• What is the economic value of a college education? Economic value of different kinds of college education?
• What are the impacts of different outreach programs? For example, the head start program. What is the long-term impact? What are the impacts of some smaller scale programs?

Connection

• What other criteria can we use to help higher education measure success? Traditionally, we use graduation rates. Can we use "impact on community" measure?

Access issues

• How do we measure the value of diversity on campus?
• What is diversity? Race? Ethnicity? Other legitimate proxies?
• Financing part-time and non-degree students.
• What drives students' decision to go to college?

Impact of Advanced Placement program on

• Time to college graduation.
• Funding shift (allocation) between K-12 and higher education.
• High school curriculum.
• Quality of K-12 education.
• International education.

Recent Initiatives Designed to Promote College Access in North Carolina
Gary Barnes, University of North Carolina

The recent initiatives designed to promote college access in North Carolina include:

• Needs-based aid programs for each sector of higher education (independent, community colleges, UNC system);
• Tax-qualified college savings plan - The College Vision Fund;
• Various programs to strengthen academic preparation for college;
• Various diversity outreach programs to recruit and retain minority students.

Barnes mentioned that the UNC system maintains a rich data set which gathers a wide variety of information on students' demographics, family background, high school achievement, financial aid, and so on.

Access to Higher Education
Rae Lee Siporin, UCLA

Siporin presented the following statistics from UCLA:

• Low-fees does not necessarily mean more low-income students.
• In the past ten years, the proportion of UCLA applicants with income less than $50k has decreased.
• The average GPA gap between majority (white and Asian) and underrepresented (other racial groups) applicants has shrunk in the past ten years.
• UCLA admit rates have decreased for all income groups, more so for low income groups.

Research Topics Related to Financial and Non-Financial Access Issues

The following is a summary of the research issues that came out of the discussion:

Financial Access Issues

• What is the differential impact of grants, loans, and work-study?
• Does Georgia's Hope Scholarship change the ratio of college completion to enrollment because it is front-loaded?
• How will technology/distance learning affect the financial aid pattern?
• Do 529 plans increase college savings and enrollment?
• The price competition that colleges and universities use to attract high-quality students makes students' academic preparation more important, especially for minority/disadvantaged students.
• Do people react more to sticker price than to net price?
• How much of the effect of tax credits, college savings programs is inframarginal?
• Is the complexity of financing alternatives a deterrent to parents?
• What is the effect of informing students/parents more and earlier about college opportunities and financial aid?
• Are merit-based aid policies substituting for need-based aid, or are they additional?

Non-financial Access Issues

• How will an expansion in access to higher education affect student quality?
• Education attainment seems to be more important than access in predicting future earnings.
• College enrollment has not been growing fast enough in response to the increase in the rate of return to college education, why? Is it because financial aid application is too complicated? Or is it because minority students do not have the necessary preparation? Or is it because students are simply not aware of the increase in the rate of return to college education?
• How does change in standards in K-12 affect college enrollment?
• What is the basic division of explanatory power between financial and non-financial factors in explaining access?
• How much have changes in affirmative action in admissions affected minority enrollment?
• What is the long term impact of attending different types of colleges?
• How will public higher education deal with the increase in demand for higher education? Will distance learning be a solution? Will "exporting" states (states with excess demand for higher education) build connections to other states' public institutions to save money on building new campuses?
• Are non-traditional/older students more responsive to the increase in the rate of return to college education?