News You Need to Know: Daily Roundup, Wed., Nov. 1st

Rep. Petri Criticizes Student Loan Program Inefficiencies

Congressman Tom Petri writes in The Washington Times that fiscal conservatives could reduce the deficit by $3 billion and increase financial aid by $13.4 billion if they embrace a bipartisan plan that encourages colleges and universities to use the student loan program that Bush Treasury Secretary Henry Paulson has identified as less costly for taxpayers. Petris piece comes on top of another fiscal conservative criticizing student loan costs in The Washington Times. Former Family Research Council senior staffer Leslie Carbone singles out the Sallie Mae corporation in "Student Loan Mayhem" for generating big profits due to large taxpayer subsidies and a government guarantee against risk. Worth watching if these two pieces generate interest from other fiscal conservatives.

Battle over Proposed Affirmative Action Ban in Michigan Continues

A Tuesday ballot initiative in Michigan, Proposition 2, would ban public institutions from considering race or sex in education, employment, or contracting. Current polls indicate that voters are split on the issue, despite broad opposition from Michigans civic establishment, including Democratic and Republican gubernatorial candidates. A similar proposition was passed in California in 1996, and the number of black students at public universities has since sharply declined. If Proposition 2 passes in Michigan, it could revive and strengthen affirmative action challenges in other states. Supporters of the proposition are framing it as a race issue, while opponents are emphasizing the far-reaching effects it could have on employment and college admissions for women and the harm it could cause the states economy.

State Funding for Higher Education Rebounds Slowly After Recessions

A report released Monday by the Illinois State University Center for the Study of Education Policy found that state support for higher education does not rebound as quickly after an economic recession as the states economy as a whole. Using data from the four recessions that occurred between 1979 and 2004, the study documents how states cut higher education appropriations during recessions, leading to higher tuition growth rates. According to the new report, the 2001 recession hit higher education the hardest, and the recovery of state support has been slower than in previous recessions. The authors argue that financial aid is no longer sufficiently based on student need: the national financial aid-to-tuition ratio declined from 13.1 in 1979 to 9.2 in 2004.

Sale of Illinois Student Loan Agency to Fund Grant Programs

Like Missouri, Illinois is planning to sell part of the states student loan agencys portfolio and allocate the funds to higher education. Unlike Missouri, Illinois will direct a portion of the money$68.4 millionto two grant programs for middle and low-income families. While Illinois has yet to determine how much money a partial sale will generate, the remaining funds would be required to go to back into accounts related to student loans. By contrast, Missouris plan does not dedicate generated funds to student financial aid, but instead allocates the funds for construction projects at state colleges and universities.