Higher Ed Roundup: Week of November 10 – November 14

Paulson Says Student Loans to Benefit from Bailout

New York Governor Announces Spending Cuts for Higher Ed

Bush Administration Unveils Blueprint for Revised Financial Aid System

Transfer Students are Disengaged, Survey Finds

Paulson Says Student Loans to Benefit from Bailout

Treasury Secretary Henry Paulson announced this week that he is expanding the administration’s $700 billion bailout plan to aid consumer lenders, including student loan providers. “The illiquidity in this sector is raising the cost and reducing the availability of car loans, student loans and credit cards,” Paulson said in a statement on Wednesday. “This is creating a heavy burden on the American people and reducing the number of jobs in our economy.” While Treasury has thus far declined to give details about the proposal, industry observers expect that it will be focused on expanding the availability of high-cost private student loans. The bailout package that Congress approved in October gave the Treasury Secretary the authority to purchase “troubled assets,” including private loans. At Higher Ed Watch, we are extremely wary of the government extending help to private student loan providers, many of whom engaged in predatory practices by pushing high-cost private loans on high-risk borrowers. We’ll keep you updated when we learn more about the plan.

New York Governor Announces Spending Cuts for Higher Ed

Public colleges and universities in New York are the latest to be told to brace for midyear reductions in state funding. Gov. David Paterson’s deficit reduction proposal, which he unveiled on Wednesday, calls for reducing state appropriations for the State University of New York (SUNY) and the City University of New York (CUNY) by $115 million this year and $238-million next year. If enacted, the plan would require tuition hikes for students from both systems, of $300 this spring and an additional $600 next fall. With the announcement, New York joins a growing list of states that have moved to cut funding for higher education to cope with growing revenue shortfalls and a sagging economy, including states that have already endured budget cuts earlier this year. Last week, for example, California governor Arnold Schwarzenegger proposed an across-the-board cut of 10 percent for the state’s public colleges and universities, after asking California State University to give back $31.3 million earlier this year. Meanwhile, Pennsylvania Gov. Ed Rendell has asked the state’s public colleges to give up 4.25 percent of their current year appropriations as part of a broader effort to prevent a budget shortfall.

Bush Administration Unveils Blueprint for Revised Financial Aid System

As promised earlier this year, the Bush administration has unveiled a sweeping plan to overhaul the federal financial aid programs. The proposal, which Undersecretary of Education Sara Martinez Tucker submitted to Congress this week and shared with Inside Higher Ed, calls for:

• Replacing the current Free Application for Federal Student Aid (FAFSA) with a shorter, two-page form requiring easily obtainable information, mostly from IRS tax returns.
• Consolidating programs, including eliminating the Supplemental Educational Opportunity Grant program and Perkin’s Loans.
• Decoupling aid awards from the cost of attendance at an individual school – making it easier for the Department to send aid reports to students before they apply to college, and targeting federal aid to the students who need it the most.
• Calculating aid awards based on the relationship between the average cost of attendance (tuition, room and board, and fees) at a public two-year college and the student’s Adjusted Gross Income.

Tucker said that her plan provided “a rational approach to federal student aid” that would benefit students and taxpayers alike. The plan, which is expected to be met with stiff opposition from lobbyists for higher-priced colleges, will probably have a short shelf life, as the incoming administration is likely to have different priorities.

Transfer Students are Disengaged, Survey Finds

While many popular college rankings compare schools with each other, this year’s National Survey of Student Engagement (NSSE or “Nessie), a survey of quality of the student learning experience, finds significant variation among student groups within individual schools. For example, aggregate results of the survey, which was conducted at 722 four-year colleges nationwide, finds that transfer students lagged “native” students on most indicators of student engagement, including interaction with faculty outside of class, class preparation, and participation in extracurricular activities. Higher education experts say the finding is particularly significant, as increasing numbers of students are starting out at community colleges and then transferring to four-year institutions to reduce their costs. “Institutions of all types need to consider early and ongoing programs to engage their transfer students,” the report states.