Embed Size (px)
Citation preview
Funding Low-Income Workers’ Education
How Well do Financial Aid & Tuition Assistance Programs Support Low-Income
Workers?
Prepared by Kira DahlkLukeWorks, LLC
August 2008
2
Postsecondary Ed Critical to Workers
Source: U.S. Census Bureau, 2005 American Community Survey
Median Earnings by Education, MN & US, 2005
Minnesota U.S.
No High School Degree $19,797 $18,435
High School $27,330 $25,829
Some College, Assoc. Degree $32,462 $31,566
Bachelor’s Degree $44,010 $43,954
Graduate/Prof. Degree $57,196 $57,585
3
Minnesotans Lack Postsecondary Credentials
70% of Minnesotans 25 & older do not possess a postsecondary degree or diploma
Just 3.8% of Minnesotans 25-49 yrs were enrolled part-time in college-level education and training in 2006 - 10% less than a decade ago
Source: U.S. Census Bureau, 2005 American Community Survey & the National Center for Higher Education and Public Policy, Measuring Up, The National Report Card on Higher Education, 2006.
4
Need for Workers w/College Ed. Will GrowDemographic Shifts Affect MN Economy
Aging population: boomers retiring, taking skills w/ them By 2015: retirements of those with BA will grow from 9,000 to
25,000 per yr The number of new jobs requiring at least a BA will increase by
an avg. of 10,500 per year between 2000-2010 Diversifying population: minority population growing
Fastest growing populations in Minnesota (Blacks & Hispanics) have traditionally been among the most underrepresented in higher education
Source: Trouble on the Horizon, 2004 Citizens League Report on Higher Education in Minnesota
5
Educational Attainment by Race, MN, 2005
WhiteAfrican-
AmericanLatino
Some College,
Associate Degree33% 32% 19%
Bachelor’s Degree 22% 12% 9%
Graduate, Prof. Degree
10% 8% 5%
Source: U.S. Census Bureau, 2005 American Community SurveyPopulation 25 years and over
6
Rising College Costs in Minnesota
From 1995-2005, average tuition and fees at:
U of M, Twin Cities, grew 130% to $8,263 Community & tech colleges grew 93% to $4,086 State universities grew 98% to $5,242 Private colleges & universities grew 72% to $21,467
Source: Minnesota Office of Higher Education, Highlights of Financial Aid Awarded 2005.
7
The Affordability Gap
Tuition & fees alone at the LOWEST priced colleges in the state = about 25% of income among the poorest Minnesota families.
Source: The National Center for Higher Education and Public Policy, Measuring Up, The National Report Card on Higher Education, 2006.
8
Living Expenses Push College Costs Up
Estimate of Costs for a Full-Time Student at Lake Superior College, 2008-09
Direct Costs
Tuition & Fees $4,261
Books & Supplies $1,500
Indirect Costs
Living Expenses $9,385
Transportation $2,200
Total $17,346
9
Types of Financial Aid Grants
Need-based Federal Pell Grant MN State Grant
Merit-based
Work study
Tax credits Lifetime Learning Credit Hope Credit
Loans Need-Based
Federal Perkins Loans Federal Subsidized Loans
Non-Need-Based Federal Unsubsidized Loans Private Loans
10
Minnesota State Grant Program (FY 2006)
71,108 recipients 75% from families earning less than $40,000 38% attended MnSCU 2-year colleges 38% were independent (self-supporting), with a median
income of $14,390 $124 million in total grants awarded
$1,696 average award $6,567 maximum 2-year program award $9,208 maximum 4-year program award
11
Trends in Financial Aid Burden Low-Income Students
Falling
Need-based grant aid
Rising
Merit-based grant aidEducation tax creditsStudent borrowing
12
Value & Share of Need-Based Aid Has Fallen Grants not kept pace with rising costs
Pell Grants covered 84% of cost of attendance in 1975; today, they cover just 32% of costs
Value of MN State Grant has fallen 14% since 2000, when adjusting for inflation
Grants’ share of financial aid pie has declined MN State Grant was 13% of financial aid pie in 1991, 8% in 2005 Federal grants share has fallen from 23% to 11%
Source: Minnesota Private Colleges, 2006, www.mnprivatecolleges.org
13
Shift from Need-Based to Merit-Based Aid At the state level
From 1985 to 2005, the states’ non-need based grant aid to undergrads grew from 9% to 28%
Just 44% of merit-based aid goes to low-income families At the institutional level
Since 1995, merit aid grew 212%, compared to 47% growth for need-based aid.
Almost 60% of merit grants went to students from families above the median income; 13% went to students from families making above $125,000
Portion of institutional aid awarded to low-income students fell from 55% to 35% between 1995-2003
Source: Heller, Donald, Merit Aid and College Access, March 2006.
14
Growth in federal investments in tax credits Education tax credits and deductions are available only to
students or families who earn enough to owe taxes
Nearly half of the benefits of federal tax credits went to students with incomes above $50,000 in 2005
Source: The College Board, Trends in Student Aid 2007
15
Swell in Borrowing Loans are the fastest growing form of financial aid in MN;
loans’ share of financial aid pie grew from 44% to 54% over 1991-2005
In 2005, MN undergraduates borrowed more than $1 billion; the avg. debt for new college graduates totaled $20,300
Especially from Private Lenders U.S. students borrowed $1.3 million from private lenders in
1995-96, and $10.6 billion by 2003-04 In MN, borrowing from private lenders increased 83% from
2003-05
Source: The National Association of State Student Grant and Aid Programs, 37th Annual Survey Report on State-Sponsored Student Financial Aid, 2005-2006 Academic Year & The Minnesota Office of Higher Education
16
Market Crisis Tightens Borrowing Options Since early 2008, dozens of lenders have suspended their
federal student lending programs
Two-year institutions especially hard hit
Congressional response: new law raises amount in unsubsidized federal loans students can borrow by $2,000
17
Low-Income Students Shut Out In MN, 29% of students from low-income families go to
college today compared to 48% in 1993
From 1995-2003, students from families earning under $40,000 fell from 38% to 28% of all undergrads at 4-yr public colleges in the U.S.
By age 24, 75% of students from top income quartile have a bachelor’s degree; less than 9% of students from low-income families earn a B.A. by age 24
Source: Haycock, Katy, Promise Abandoned: How Policy Choices and Institutional Practices Restrict College Opportunities, The Education Trust, August 2006 and Minnesota Private Colleges, 2006.
18
Financial Aid Favors “Traditional” Students Traditional students: recent HS grads, w/out significant work
or family responsibilities, attend full-time w/out interruption Non-traditional students: self-supporting working adults, often
parents, taking one or two classes at a time as job, family obligations, and costs allow
Non-traditional students comprise the majority of undergrads in U.S.
19
“Non-Traditional” Students in MNOf all undergrads in 2004-05:
41% self-supporting 21% 30 or older 21% had children 28% worked full-time 53% enrolled part-time
At public 2-yr colleges:
57% self-supporting 32% 30 or older 34% had children 38% worked full-time 57% enrolled part-time
Source: Minnesota Office of Higher Education, 2006
20
Eligibility Rules DisadvantageLow-Income Working Adults Contingent on half-time enrollment or more If less than half-time (LTHT) students are eligible, living
expense allowances are reduced Restricted to students enrolled in degree, diploma, or
certificate programs; short-term occupational training NOT eligible
Contingent on minimum course hours/weeks per semester, but capped at maximum number of credits/semesters
21
MN State Grant Disadvantages Low-Income Workers1. Lifetime eligibility limited to 8 semesters (120 credits)
Applies to developmental courses Applies to all prior college credits
2. Eligibility restricted to students in degree, diploma, or certificate programs
3. No specific features to support student success
22
State Grant Disadvantages Low-Income Workers4. Independent students must pay twice
The student (ASR) & family (AFR)
5. Living & misc. expense (LME) allowance prorated for part-time students
23
Recognized Tuition & Fees Living & Miscellaneous Expense (LME) Allowance
Recognized Price of Attendance
Family & Taxpayer Share
Assigned Family Responsibility
Assigned Student Responsibility
Assigned Taxpayer Responsibility
Pell Grant MN State Grant
Design for Shared Responsibility
Source: Minnesota Office of Higher Education
24
Washington Opportunity Grants
Need-based awards cover tuition and fees + $1,000/yr. for educational supplies
State allocated $10.6 million in 2007 to expand the program to all community and tech colleges in WA
Public colleges receive $1,500 per FTE enrollment in program for success services - advising, tutoring, transportation, childcare
Workforce Development Councils linking students with business and labor mentors for career exploration, job shadowing, internships
25
Illinois Monetary Award Program (MAP) & Student Success Grants In 2006, IL spent $350 million on MAP to serve 128,000
students, including those enrolled less than half-time, with awards up to $4,968. In 2007, funding increased by $34.4 million with an infusion of dollars originally slated for merit-based tax credits.
Student Success Grants, financed through the IL Higher Education Board budget, go to community colleges for retention and completion services. In 2002, $13.3 million in grants supported 305,000 students.
26
Kentucky Go Higher Grants & the Ready to Work Initiative (RTW) Go Higher Grants provide adults up to $1,000/yr when they
enroll in college less than half-time RTW Coordinators at each tech college provide TANF
students w/skills assessment, tutoring, peer support groups; help with career counseling, financial aid, job development, placement, and retention services
RTW participants have access to support services offered under TANF including childcare, transportation aid
27
Vermont’s Part-Time & Non-Degree Grant Programs
The Part-time Grant Program awards up to $8,650/yr. State appropriates $1.3 million & serves approx. 5,000 students/yr.
The Non-Degree Grant Program serves about 2,000 students/yr, with max grants of $840 per term. In determining need, the living expenses of working adults and their children are taken into account.
28
West Virginia Higher Education Adult Part-Time Student (HEAPS) Grant Program
Covers tuition and fees for students enrolled LTHT; average grant was $4,900 in 2006-07
Beginning in 2002, the legislature set aside 25% of program funding ($5 million in 2006-07) for students in shorter-term, technical certificate programs in high-demand occupations
29
Financial Aid Outreach The likelihood of knowing about financial aid drops
with family income About half of all undergraduates fail to apply for
financial aid; adults attending community colleges are the least likely to apply
Less than a third of adult students receive federal, state or institutional grant aid
Source: Christopher Mazzeo, Brandon Roberts, Christopher Spence and Julie Strawn, Working Together: Aligning State Systems and Policies for Individual and Regional Prosperity. Workforce Strategy
Center, December, 2006.
30
State Financial Aid Outreach Efforts Kentucky’s Go Higher media campaign specifically
targets adults, encouraging them to return to school & offering assistance applying for and obtaining financial aid
California has spent about $34 million/yr since 2003-04 to expand community college financial aid outreach and administrative capacity; $3 million/yr supports a statewide media campaign to promote financial aid availability
North Carolina spent $3.6 million in 2006 to hire additional financial aid officers at each of the state’s community colleges
31
Minnesota’s Admission PossibleProgram expands access to higher education for students
from Minneapolis and Saint Paul by pairing high school students with Americorp volunteers to walk them through the college application process.
32
The Minnesota College Access Network MCAN promotes access to higher education
Provide trainings Host networking events Serve as a conduit for information for best practices and
innovative strategies Provide technical assistance for communities wishing to start
college access centers
http://www.mncollegeaccess.org/MCAN.html
33
Other Sources of Funding for Low-Income Worker Education TANF and WIA funds Targeted grants supported by general purpose revenue
MJSP Low-Income Worker Training Grants Programs financed by state lottery or Unemployment
Insurance (UI) dollars Employer or industry-specific workforce development
initiatives (e.g., skills sector strategies, industry partnerships, career pathways, etc.)
34
Employer Provided Tuition Assistance
Employers can provide up to $5,250 a year in tax-free educational benefits like tuition, fees, books, supplies, and equipment
35
Employer Practices Limit Tuition Assistance for Low-Income Workers
1. Reimburse tuition expenses after coursework is completed, so worker must pay tuition up front
2. Make reimbursement contingent on the receipt of a certain grade
3. Grant reimbursement on the condition that workers remain with the firm for a certain period of time
4. Only offer tuition assistance to full-time employees
36
Employer Practices Limit Tuition Assistance for Low-Income Workers
5. Fail to offer tuition assistance if they employ mainly low-income workers strongest predictors of whether a worker will receive
employer support for training are: 1) having a higher level of education to begin with and 2) having an income of at least $50,000
Strawn, Julie, Policies to Promote Adult Education and Postsecondary Alignment, prepared for the National Commission on Adult Literacy, August 20, 2007.
37
Use of Tuition Assistance in MinnesotaOf 3,374 private-sector employers in MN in 2005:
19% offered tuition assistance benefits to full-time workers; just 10% did so for part-time workers
Big firms were more likely to offer tuition assistance than small; but low-wage workers are more likely to work for small firms Among firms offering it to full-time workers, 79% were large firms (250+ employees),
while 25% (10-49 employees) were small firms Among firms offering it to part-time workers, 40% were large firms while just 11%
were small firms
Source: Minnesota Department of Employment and Economic Development, 2005 Employee Benefits Survey, Spring 2005 and Strawn, Julie, Policies to Promote Adult Education and Postsecondary Alignment ,
prepared for the National Commission on Adult Literacy, August 20, 2007.
