U.S. Department of Education

Texas has joined Pennsylvania, Wyoming, and 46 other states (including Washington, D.C.) in seeking waivers from No Child Left Behind (NCLB). With Nebraska and Montana sitting out, Vermont and North Dakota withdrawing, and California flat-out rejected, the pool of non-waiver states continues to shrink. But despite jumping on the waiver bandwagon, Texas breaks the mold in many respects.

Although the Lone Star State’s refusal to adopt the Common Core is one important distinction from other waiver winners, this wasn’t the detail I was most keen to uncover in their formal request. Texas’ plan to implement their own college- and career-ready standards and assessments actually stood out as one of the stronger points of their waiver, and other non-Common Core states, like Virginia and Minnesota, have successfully applied. Rather, Texas had originally considered asking the Department of Education for leeway to redesign the federal Title I funding formula – a provision that would have gone well beyond the flexibility granted to other states and a demand that would have undoubtedly made Texas’ waiver dead on arrival. To their credit, Texas officials removed this request, bringing their final proposal much closer to what the Department is offering.

But does this mean Texas’ waiver will be a hit with the U.S. Department of Education? Not so fast. While the proposal has strong points – like working with higher education to gain buy-in for college- and career-ready standards and articulating a plan to pilot teacher evaluations and scale them statewide – Texas’ proposed system of school accountability and improvement is not among them. In fact, Texas’ waiver could significantly undermine efforts to hold schools accountable for the performance of individual student subgroups.

Texas’ request is complicated by the fact that its state accountability system, which has operated in parallel to NCLB, is undergoing a significant overhaul, with many provisions yet to be finalized. Because Texas would like to fit its existing system into the waiver requirements, the state simply excluded these half-baked provisions from its request. Therefore, Texas’ waiver omits critical details, including how student progress will be measured, what annual performance targets will be, how each component within accountability will be weighted, and how focus and priority schools will be selected. Further, the application doesn’t even include Texas’ proposed framework, burying the information in attachments and hyperlinks.

For those that do seek out the information, Texas’ new performance index leaves a lot to be desired. Similar to other states, Texas plans to use a combination of four indices for accountability: student achievement, student progress, achievement gap closure, and postsecondary readiness. But the state does not specify how the index would translate into specific interventions, i.e. focus and priority schools.

Even more worrisome is how student subgroups and academic subjects will be treated across the four indices. While some states created “super-subgroups,” Texas took a different approach: ignore subgroups altogether.  Within the student achievement index, only the all students group is considered, with proficiency rates combined further across all subject areas. Yet for measuring student progress, subjects are considered separately and all traditional subgroups count– with the exception of low-income students, who are only considered within the performance gap closure index. But the gap closure measures do not consider English Language Learners or special education students. Finally, within the postsecondary readiness index, only racial subgroups are considered on one measure (advanced proficiency rates), while all subgroups (except low-income students) are considered for graduation rates. Texas does not provide a rationale for picking and choosing which indices apply to which subgroups.

Texas could also be plagued by an issue that cropped up in other waivers: annual performance targets. Texas’ targets would be based on the goal of cracking the top ten states nationally on college and career readiness by 2020 – a novel approach worth considering. But it’s unclear how the state could judge itself against others to define the annual targets. Texas is not a Common Core state, and existing national measures, like the SAT or ACT, would only apply to high schools. If the proposed readiness index were used instead, the ranking would be based on Texas assessments, students graduating with advanced Texas diplomas, and graduation rates. Using these measures, Texas would be number one by default – no other state has similar data.

Given these issues, I am doubtful that the Department could approve Texas’ request in its current form. There are simply too many unanswered questions and missing details. That said, Texas’ request is strong enough in other areas to allow for productive negotiations with the Department. With additional assurances and information from the Lone Star State, along with some give and take, NCLB flexibility could reach deep in the heart of Texas by the 2013-2014 school year.

The House of Representatives voted on Wednesday to approve a stopgap appropriations bill that will fund federal programs for the remainder of fiscal year 2013, once the current continuing resolution (CR) expires on March 27. The big news from the bill, though, is that the House Republicans who wrote the bill missed an opportunity to effectively blunt or cancel the effects of the sequester on education programs.

The House-passed bill provides funding for education programs at the same levels signed into law at the start of fiscal year 2013, minus the March 1 across-the-board cuts that occurred under sequestration, which totaled about 5.1 percent for most education programs. In other words, the proposed bill codifies the $85 billion in spending cuts left in the wake of the sequester.  

It does not need to be that way. House lawmakers could have upheld the post-sequester spending limits trigged by the 2011 budget deal without making across-the-board, universally applied cuts to education programs. Of course, they’d have to make bigger cuts elsewhere to do so – but that is what courageous budgeting is all about.

As we wrote earlier this year, education stakeholders should focus their attention on the March 27 deadline at which appropriations funding for all government agencies expires. That deadline gives Congress a built-in opportunity to rewrite the post-sequester funding levels for every federal program, just as they would through the regular annual appropriations process, while keeping within the overall spending limit that is now in place.

Based on the bill that the House passed yesterday, it looks like lawmakers took a pass on that built-in opportunity. They could have moved funding around between agencies – or even within the appropriation to the U.S. Department of Education – to reduce the impact of the funding cuts on the most critical federal education programs.

There is nothing radical in that proposal. It is what the appropriations process is supposed to be about each year. In fact, the House-passed bill does rearrange the post-sequestration funding levels for the Departments of Defense and Veterans Affairs. Why not U.S. Department of Education and Head Start programs, too?

Fortunately, education stakeholders can ask senators that question before it’s too late. Senate lawmakers have yet to vote on the temporary funding measure, and reports suggest that Democratic leadership plans to introduce a spending bill with more changes to the post-sequester funding levels for more agencies than the House-passed version.

Time is running out, however. Congress has only three weeks – until March 27 – to reach an agreement before they risk a government shutdown. In the interim, all eyes will be on the Senate.

Way back on August 1^st, 2011, Ed Money Watch told readers that the debt ceiling agreement Congress and the President had just passed could affect federal student loans. The post explained the changes that the sequestration process set up:

Such across-the-board cuts [sequestration] would also affect student loans. The law [Budget Control Act of 2011 referencing the Deficit Control Act of 1985] requires that the federal government increase origination fees on all student loans to reduce the costs of the programs under a sequester, should Congress and the president fail to enact legislation to reduce federal spending by $1.5 trillion over 10 years.

As everyone knows, Congress and the President did fail, and the sequester was triggered on March 1^st, 2013. But until a few days ago it was unclear how big the origination fee increases would be. A notice posted March 1^st on a Department of Education website that serves financial aid administrators details the following:

For Direct Subsidized and Direct Unsubsidized Loans where the first disbursement of the loan is after the sequester takes effect, the current loan fee of 1 percent of the principal amount of a loan will increase. We presently anticipate that the rate will increase to approximately 1.05 percent. With such an increase, for example, the fee on a loan for $5,500 would increase from $55.00 to $57.75, an increase of $2.75. We will provide the actual increased percentage when it becomes available.

For Direct PLUS Loans for both parent and graduate and professional student borrowers where the first disbursement of the loan is after the sequester takes effect, the current loan fee of 4 percent will increase. We presently anticipate that the rate will increase to approximately 4.20 percent. With such an increase, for example, the fee on a $10,000 Direct PLUS loan would increase from $400.00 to $420.00, an increase of $20.00. We will provide the actual increased percentage when it becomes available.

The fees will affect any loans issued on or after March 1^st, 2013. Since most borrowers have received their loans for the 2012-13 school year already, they will avoid the higher fees. But all loans issued in the future will come with higher fees.

[The Department of Education] plans to send email (and where necessary, paper) notifications to student and parent borrowers who have a Direct Loan where the first disbursement occurs during the period of the sequestration [March 1^st or later]. The notification will advise borrowers of the increased loan fee percentage and advise them that if they wish to cancel or reduce the amount of the loan they should contact the financial aid office at their school.

Therefore the sequester does indeed cut the costs of entitlement programs – federal student loans are entitlements – just not the entitlement programs that actually contribute most to the federal debt and budget deficit. In case you missed the point here, Congress and the president have just reduced the cost of an entitlement program that has relatively few cost problems, to help address the massive cost problems in other entitlement programs (Medicare, Social Security, and Medicaid). Nice work.

Everyone wants to know the latest news on sequestration, the spending cuts slated for Friday, March 1. Back in January, we ran a post that explained the unknowns and the knowns about sequestration; the latest news is that there is nothing new to report in either camp. We also explained that March 27, with the expiration of all appropriations funding, is where all the action will be – not at the March 1 sequestration deadline.

It seems the White House didn’t read our post, because the Obama administration this week released a series of fact sheets detailing by state the jobs that will be lost and anticipated funding cuts as a result of the across-the-board cuts set to take effect on March 1.

According to the White House documents, California could lose as many as 1,210 teachers and teaching aides. Some 2,300 Pennsylvania children could be dropped from Head Start. Over a thousand low-income parents could lose access to child care in Illinois. And that’s just the start of the pain.

The across-the-board cuts were triggered when the Congressional supercommittee created by Congress and the White House in the summer of 2011 failed to reach an agreement on deficit reduction measures. Congress delayed the cuts from January 2 to March 1, 2013. Now, non-defense discretionary spending, including most federal education spending, faces a 5.1 percent cut beginning Friday.

In citing such precise numbers, the White House is pretending to know the 2013 funding levels that exist nowhere in federal law. Federal programs are currently operating under a “continuing resolution” (CR) – a temporary funding measure that maintains spending at the previous year’s levels – set to expire on March 27. That means there is no funding appropriated yet for the remainder of the 2013 fiscal year, which ends on September 30, 2013.

Once the CR expires, education funding drops to zero, at least until Congress passes a budget or a continuing resolution. When they do finally appropriate funds, contrary to the sequester’s blunt across-the-board cuts, lawmakers must set the specific funding levels for each program. And those funding levels need not match the post-sequester figures for any specific program that the White House is citing. In short, the sequester is in place for less than a month before the funding it cuts expires completely.

So, really, this isn’t any different than the routine expiration of CR, except for one caveat. Congress can’t pass a funding bill that exceeds post-sequester funding levels in aggregate for non-defense discretionary programs without it being enforced by – yes – another sequester. But it can allocate that lower funding amount (roughly equivalent to fiscal year 2008 levels) to whichever programs lawmakers choose and the president is willing to sign into law. That is what makes the White House’s precise numbers on the sequester cuts – down to the numbers of students – so absurd.

Moreover, members of Congress could pass an appropriations bill on or before March 27 that “busts the caps” by spending more than the aggregate limit, but in the very same bill turn off the resulting sequester. As an additional note, those spending caps are laid out in law through fiscal year 2021, a mechanism that will force lawmakers to return to the issue and make difficult spending decisions year after year if they don’t cancel the caps.

Republicans in the House, however, have adopted the continuing resolution as one of their latest strategies and look set to draft a CR right at those limits, even while the president shows every intention of demanding that they send him a bill that busts the caps and turns off the sequester. According to an article in National Journal, House Republicans will refuse to take up funding plans for 2013 until after the sequester hits and funding levels drop rather than before the sequester, just in case efforts to cancel the sequester are successful.

For their part, Democratic lawmakers have already successfully won at least one triumph. In a deal passed by Congress to delay the sequester at the eleventh hour (the so-called fiscal cliff deal reached January 1), Democrats in Congress successfully included new revenue increases. Republicans had considered tax hikes off-limits, but Democrats managed to pass the deal even without any spending cuts. Now Republicans have an opportunity to inflict spending cuts; whether or not revenue increases will be included remains to be seen.

Readers could be forgiven if they fail to notice the sky falling on Friday as the nation officially reaches the sequestration deadline – few of the education cuts, at least, will be felt immediately and nowhere near as precisely as the White House says. But they should continue to keep their eyes on the politics of the March 27 continuing resolution deadline.

For more on how this might affect early education, check out this post from our sister blog, Early Ed Watch.

Welcome to the Syllabus, a weekly guide that provides insight into what’s happening in higher education.

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Obama, Rubio Put Higher Education on Notice, David Wessel
The Wall Street Journal

Senator Marco Rubio and President Barack Obama may not agree on much these days, but they do agree that the way the federal government spends money on student aid needs to change. In this year’s State of the Union, President Obama called for incorporating measures of value and affordability into higher education’s accreditation system or establishing a path to alternative accreditation for nontraditional providers. Senator Rubio, in his response to the State of the Union, said, “We need student aid that does not discriminate against programs that nontraditional students rely on—like online courses or degree programs that give you credit for work experience.” While it is unclear how and when accreditation could be changed, something needs to update the archaic 19^th century practice and bring it to the 21^st century. “The focus by Mr. Obama and Mr. Rubio on accreditation suggests a worry that the old system could stifle innovation,” writes Wessel, “And prevent competition from new, perhaps more efficient forms of teaching.”

Last year, we demonstrated in painstaking detail that the Obama administration’s new Income-Based Repayment (new IBR) program for federal student loans, known as Pay-As-You-Earn, will be a boon to graduate students and the schools that enroll them. Because graduate students can take out federal student loans to pay for the full costs of their educations (including living expenses) using the Grad PLUS program, even students who go on to earn six-figure incomes will qualify for low payments under IBR and have substantial debt forgiven after 20 years.

Some observers might dismiss those warnings, arguing that such outcomes are outliers, something that will happen very rarely. But there are plenty of reasons why the new IBR’s graduate school benefits won’t go unnoticed or unused.

In fact, the evidence suggests that high-debt graduate students have already discovered the old IBR that has been available since 2009. According to data from the National Student Loan Data System, 10 percent of all borrowers enrolled in old IBR as of late 2012 have Grad PLUS loans. Yet Grad PLUS loans account for only about 2.5% of loans issued each year. (We excluded Parent PLUS loans from that count and used the number of loans issued as a conservative proxy for the share of all borrowers with Grad PLUS loans. However, the total universe of borrowers with Grad PLUS loans is likely an even smaller percentage of outstanding federal loans given that Grad PLUS is a newer program.) Thus, it appears that high-debt graduate students are significantly overrepresented among borrowers repaying through IBR.

What will those figures look like after the new IBR has been available for a few years and borrowers have had the chance to enroll, say in 2015 or 2016?  If borrowers with lots of graduate school debt find the program beneficial now, imagine how they will respond when they learn that, compared with the old IBR, the new IBR would cut their monthly payments by a third and would most likely cut their total payments by half once they receive loan forgiveness.

Undergraduates, on the other hand, are unlikely to receive a big increase in benefits compared with the old IBR. Undergraduate students qualify for the new IBR, but they are limited in how much they can borrow in federal student loans annually and in aggregate. While the program will lower their monthly payments by the same 33 percent, their lower debt levels mean that they will likely fully repay their loans before they reach 20 years of payments and qualify for loan forgiveness. The new IBR simply allows them to make lower payments but for longer.

Graduate students, on the other hand, will have their outstanding debt forgiven under the new IBR before the delayed effect of making low monthly payments ever catches up with them. Mathematically speaking, 20 years of payments at 10 percent of income (minus IBR’s cost-of-living exemption) won’t repay a $100,000 loan at current interest rates, even for someone who earns a six-figure income for the majority of those 20 years.

And here is another reason for policymakers and student aid advocates to heed our warnings about the new IBR: The average size of a Grad PLUS loan is growing, much faster even than undergraduate Unsubsidized Stafford loans (which are capped) or Parent PLUS loans (which have no cap, but also are not eligible for IBR). That means even larger amounts of Grad PLUS loans forgiven.

The Congressional Budget Office estimated in February that the average size of a Grad PLUS loan taken out in 2014 will be $16,578. Added to a borrower’s $20,500 Stafford loan for that year, the average Grad PLUS borrower is expected to take out $37,000 per year in federal loans. By 2020, the number will hit $40,500. Given that most graduate and professional programs are two years or longer, the average debt (after in-school interest accrues) for a Grad PLUS borrow easily tops $70,000, even before factoring in any debt from undergraduate studies.

Using the New America Foundation’s IBR calculator, we found that once a borrower takes on $65,000 in debt, he bears none of the incremental cost of borrowing an additional dollar under the new IBR, even if he goes on to earn over $100,000 for most of his repayment term.* The extra debt will be forgiven. Pair that with the average borrowing figures released by the Congressional Budget Office, and throw in the overrepresentation of Grad PLUS borrowers in the old IBR, and our warnings hardly look like an exaggeration.

Lastly, the Department of Education offers this nugget, buried among hundreds of pages of regulations it released last year. The agency expects that 24 percent of borrowers who enroll in the new IBR will not fully repay their loans and have an average of $41,000 forgiven.

Working together, Grad PLUS and the new IBR are set to provide massive subsidies to graduate students, graduate schools, and employers who no longer need to pay salaries that justify the debt incurred to obtain a graduate or professional education. Should the Grad PLUS windfall under new IBR go unnoticed and unused as some skeptics claim, it will be the first time in history that the federal government offers $41,000 or $100,000 checks to the most educated segment of society and nobody shows up to claim them.

*This statement is true for a borrower who earns a starting salary of $65,000 (or less), plus a 3.5 percent (or less) annual raise for eight years; in year nine of repayment he earns $101,000 and a subsequent annual raise of 3.0 percent (or less); and, he has one child to claim as a dependent by year six of repayment. The borrower has $44,000 in Unsubsidized Stafford loans and $21,000 in Grad PLUS loans.

The Equity and Excellence Commission, a board established by Congress in 2010 to study school finance issues, released its final report this week, For Each and Every Child.

Welcome to the Syllabus, a weekly guide that provides insight into what’s happening in higher education.

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President Obama gave his State of the Union address on Tuesday and higher education played a feature role. “Tonight, I ask Congress to change the Higher Education Act, so that affordability and value are included in determining which colleges receive certain types of federal aid,” President Obama said, “And tomorrow, my administration will release a new ‘College Scorecard’ that parents and students can use to compare schools based on simple criteria: Where you can get the most bang for your educational buck.”

But what does this mean for higher education?

Yesterday, President Barack Obama reiterated his call from the State of the Union to provide universal pre-K to all children in America. But tucked in with his remarks was a pitch for another proposal from Tuesday's speech: to reward high schools that are preparing their students to be not only college-ready, but also career-ready. The competition would be aimed at high schools that have reimagined how they operate: partnering with colleges and businesses, focusing on emerging fields in science, technology, and engineering, and even offering students valuable industry credentials or an associate degree while they complete high school. The administration hopes this would challenge schools to provide real-world learning experiences in their curriculum, so that students attain the “skills today's employers are looking for to fill the jobs that are there right now and will be there in the future."

Unfortunately, the administration has offered no further details on the plan. Do they envision a Race to the Top-style competition? As Alyson Klein noted on PoliticsK-12, a competitive grant aimed at high school curriculum – not just the standards high schools teach, but also how they are taught – could meet stiff opposition from conservative lawmakers. And how much money is the Department seeking for this competition? Would funding be distributed directly to high schools and their higher education and industry partners, or through states?

To complicate the matter further, it is unclear if the president is even proposing anything new at all. Last April, the Department of Education released A Blueprint for Transforming Career and Technical Education, its plan for reauthorization of the Carl D. Perkins Career and Technical Education Act. The Blueprint included “within-state competitions” to distribute Perkins funds to consortia of secondary and postsecondary institutions, with a matching contribution from employers, rather than through the formula used today. The goal of these consortia competitions would be to encourage programs that are meeting regional labor-market needs. Sounds like a “challenge to redesign America's high schools,” right?

The related initiatives President Obama proposed in the State of the Union to promote skills leading to high-quality, high-wage jobs are all ideas he has introduced (with little success) before: a STEM Master Teacher Corps of 10,000 of America’s best teachers and an $8 billion Community College to Career Fund to bolster and improve job training in two-year higher education institutions. Maybe the competition to redesign high schools is old news too.

While it is promising that the administration is focusing on the oft-neglected “career” component of college and career readiness and looking to innovative models like early college high schools, it is hard to say how effective these proposals could be without more details. Unfortunately, the answers likely won’t be provided until the president releases his budget in March. Stay tuned to Ed Money Watch for the all the specifics then. 

In President Obama’s State of the Union address Tuesday, he called on Congress to expand high-quality early learning opportunities to low- and moderate-income children. Today, with the release of a White House document and a speech at a Decatur, Ga. pre-K center, Obama sketched more of the plan’s details.