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Let me end with a closing note to our audience and my fellow panelists. California has often led the nation when it comes to important issues of the day.
Just consider where we are today in terms of climate change and emissions standards. For California to be the global leader in providing not just broad but equitable access to quality public higher education, we must recommit and reinvest in a system that expands access, ensures a sustainable financial model that is also affordable for families, and, most importantly, ensures student success to and throughout college.
Can we challenge ourselves and others to take a systems-wide approach to thinking about this as a pre-through continuum with shared responsibility for student success among all educational institutions? Robert J. So, just a little background about The Lincoln Project. In the early s, the state of California provided the University of California with about 52 percent of its budget. In , that number dropped to 10 percent. When I was recruited to be the Chancellor of Berkeley, Bob Dynes, the President of the UC system at that time, had made a compact with Governor Schwarzenegger that funding from the state would increase at a rate of about 4.
I was told that there was every expectation that this would hold true. But even given my wariness, I could not have anticipated that state funding would fall so dramatically. Everybody in this audience knows the sorts of challenges that we faced in this time period as a result of this budget shortfall. One of the most dramatic aspects of this massive state disinvestment was that we had a complete inversion in the sources of our funding. In , the year before I came to Berkeley, student tuition was a relatively small part of our total budget while state support had by far the largest share.
In , Berkeley was truly a state-funded institution. However, as a result of the disinvestment by the state, our budget simply inverted itself so that we found ourselves in the situation in which state support now constituted only a minor share 10 percent of our total budget. This meant that faculty and staff salaries were basically paid for by student tuition.
We were no longer employees of the state. In essence, we became employees of the students. Approximately two-thirds of faculty and administrative staff salaries are now paid by the students. The project produced five publications, and in our fifth and final publication, we proposed various strategies for moving forward. These strategies implicitly assumed a different outcome in the November election, and so unfortunately our efforts to implement the recommendations of the Lincoln Project have been curtailed for now.
However, I am an eternal optimist so I believe that we will be able to return to those strategies once we have leadership at the federal level that is more committed to higher education and a business community that understands fully the necessity of having a robust system of public higher education in the United States. One of our conclusions, which I initially was very reluctant to accept, is that the state disinvestment in higher education is irreversible. This disinvestment did not just happen in California.
It happened in Tennessee; it happened in Michigan; it happened in Virginia. It happened because the forces that operate on state governments from a variety of directions will not reverse themselves. This means that the challenges currently facing public higher education will not be reversed simply by having students protest at our state capitols or having the business community lobby state legislators on behalf of higher education. So what are the major components of the discretionary part of state budgets?
The largest amount is spent on K education.
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Next, there is Medicaid, then higher education, and finally corrections. One of the most dramatic changes in state-government funding concerns corrections. Over the last three decades, funding for higher education with all the ups and downs has remained relatively constant not including the recent draconian cuts , but spending on corrections has increased by percent.
In many states we spend more money on incarcerating people than we do on giving them a higher education and unfortunately this trend does not appear to be reversible. In California, over the last several years, the prison population has decreased by 30 percent, but the costs have barely moved. It turns out that the marginal costs are such that even decreasing significantly the prison population by letting people with low-level drug offenses out does not solve the problem.
An inevitable consequence of the fact that state funding of public higher education is not going to return to the halcyon days of yore is that our country must have a new compact to support public higher education. That compact must involve the federal government, state and local governments, the business community, foundations, philanthropists, the colleges and universities, students and their parents.
There is no silver bullet. This is discussed in detail in the final publication of The Lincoln Project. After completing The Lincoln Project, we realized that we needed more information on need-based financial aid at the national level. Such aid is critical to both accessibility and to college completion rates. Accordingly, Henry Brady, Mary Sue Coleman who directed The Lincoln Project with me , Mike Hout, and I decided that we needed to initiate a project on need-based financial aid across all public universities — not just research universities, which is what The Lincoln Project focused on.
We did not include community colleges that have their own unique challenges, and so the data that I will share with you include all four-year public institutions, but not community colleges. Our first report appeared on the website of the Center for Studies in Higher Education this past February.
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It turns out that obtaining reliable and consistent data on low-income students and their financial support over all four-year public colleges and universities is extremely difficult. Every state has its own conventions for collecting and reporting the relevant data. Thus, comparing apples to apples is quite challenging. As a surrogate for the numbers of low-income students we use the number of federal Pell Grant recipients at an institution. The first question that we asked is what colleges and universities do low-income students typically attend. The data show that they are mostly not at research intensive public universities.
Across the country, approximately 20 percent of the students at high research universities are on federal Pell grants. This contrasts with universities that have little or no research or only a small amount, where typically 50 percent of their students come from low-income families. Thus, the reality is that low-income students state-by-state are underrepresented at the flagships and are much more likely to be attending four-year colleges that do not have Ph.
What about need-based financial aid across the country? In my opinion, it is a national disgrace that the absolute majority of states have little or no need-based financial aid. This is the reason for the very low graduation rates and the high dropout of low-income students from universities in these states.
By contrast, three states stand out — California, Wyoming, and New Jersey — in providing funding for low-income students that matches that from federal Pell grants. What about student debt? We often hear numbers that have no basis in reality. They may make good press, but they are gross misrepresentations. If we ask how much debt do students have, we find out that the amount of debt varies inversely with how much financial aid they get.
The more financial aid they get, the lower the debt at graduation. This is not surprising. Now if we look at students defaulting on their student loans, at non-research universities we find that 35 percent of students default on their student loans.
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Many of these defaulters are students who failed to graduate so they do not benefit from the increased income that comes from graduation. At research universities like Berkeley with very high graduation rates and high incomes of its graduates, the default rate is 10 percent.
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Thus, based on these data our conclusions are as follows: 1 We have a dire need for increased state-funded, need-based financial aid because that controls both graduation rates and student debt. This is where we stand right now with this project on low-income students at public universities and need-based financial aid.
We are currently refining these data to obtain as complete and reliable information as possible. We will not solve the problem of income inequality in the United States if we do not simultaneously reduce the education gap between the privileged and the underprivileged; need-based financial aid is a critical component of this reduction. M y role here is to comment as a practitioner and to give you an on-the-job view from Berkeley.
Let me stress that these are my own thoughts, and I suspect the higher up you go in the hierarchy, the more the perspective might differ. I think we all agree on the need for more support for public education and for our flagship institutions. I think we all agree on the mission to grow at each generation the leaders, achievers, and creators that society needs, and to provide access and opportunity across all of society. To continue to engage those thousands of students, we have to figure out a way to actually resource that activity.
We all know that the last ten years have been incredibly hard, but we have managed to succeed with a high-tuition, high-aid approach to what we do. But it is high for a lot of the families that are sending their children to our schools. So although this model has succeeded in allowing us to bring in tens of thousands of students who have no financial resources at all and are able to study at a great place like Berkeley, this is not the time to be at all complacent about the model because it is already starting to show significant cracks.
I believe it is time for us to find another approach because what we have is not going to work in another five or ten years. Let me share a story to help you see why. Last weekend was Parents Weekend, which is an opportunity for alumni parents to come back to campus and complain about how the old days are gone.
They have earned that right. I am perfectly okay with it because I have a strategy for dealing with it. But how did you pay for your rent? If you are a first-generation student from Compton, none of those options are available to you. We have deliberately set out to do this. You have to know a little bit about how the financial aid system works.
And as an aside, actually understanding financial aid should be an academic discipline. It is that complicated. I have helped multiple foster children navigate the system. I have studied the system. I have worked in the system, and I still do not understand it well enough to help a student fill out the forms. Let me also mention that Professor Judith Scott-Clayton of Columbia University wrote an excellent paper for the Academy that provides a rough overview of financial aid in only 14 pages with 42 explanatory footnotes.
The basic calculation that you need to understand goes like this. Some of the questions, such as their name, are relatively simple; others are very esoteric. There are also other forms that parents have to fill out, which can be difficult to do in complicated, modern families. Then there is a federal government calculation that determines the maximum that the family can be reasonably expected to contribute, which in most cases becomes what the family must contribute.
Each school determines how much students need to come up with on their own via work-study, or a summer job, or loans. A summer job can help to generate a few thousand dollars so the system can work. The difference is the need that is met by various kinds of financial aid. For low-income students that source will be Pell Grants and state grants, and it works.
For middle-income students, it is also something like that.
We have already assessed everything that these families can give and we have taken it from them. And it is only when you reach the income that gives you something left over after this calculation that you could possibly send money to the student. Another way to say it is that without state support, we have to extract every dollar we can from middle-class parents. Since the campus needs to raise more funds, the stress gets more intense. We end up with our students feeling like they are living on a knife edge, which is very far from the s experience of show up, learn something cool, maybe get a job, ask Mom and Dad for enough money to pay for the rent, and it is going to be okay.
Yesterday, I spent some time with a student who has not received her financial aid check for this semester because she was selected for an audit by the IRS two years ago. The paperwork got lost somewhere, and that has now delayed her financial aid for this semester. We will fix this problem, but it is an extremely stressful thing to get her temporary money to tide her over.
Thousands of our students are having this problem on any given day. Out of the 18, students that I am responsible for, somewhere between 1, and 2, are having a problem with their financial aid. This is not a criticism of our financial aid office. They are skilled people who work extremely hard. They are very committed to making this work, but they have to administer an extraordinary number of different forms of aid and scholarship. I absolutely agree with the number that 80 percent of our students do quite well with respect to loans. It is actually a little bit better than that at Berkeley.
Now, no system can work perfectly and I understand that, but that 4 percent represents quite a few people. And they tend to come from places that fall through the cracks in the system. An acrimonious divorce, for example, can lead to paperwork not being submitted for financial aid.
It happens a lot. Legal troubles are another issue. We have a student who received an award for being the best student in her department and she had to drop out for a semester because she had used all of her financial aid to pay the legal fees to keep herself from being deported. And now she is in trouble because those legal fees were not part of her budget.
It is a very hard thing to think about how Berkeley works as a social agency to deal with the problems of its students. We have to think about that and consider how far our commitment goes. This particular student went on to excel in her studies, and we are going to be very proud of her at some point. We just have to figure out how to make this work. I mean from commitments outside of your classes. Thirteen percent of our students filed paperwork to say that they were working more than 15 hours a week last semester.
I would rather have them working in your labs, working with you in your offices, working in your libraries. Nevertheless, we are succeeding in some ways, and so the question is what is the new model going to be? We cannot keep going this way. We will not be able to serve all of these people who come from the various parts of our community. But somehow we have to find a way to make this work, and I am actually pretty optimistic that there is such a way to do it.
Michael S. I would like to make a few broad points that emerged from the deliberations of our Commission on the Future of Undergraduate Education. We are building on success in this country when we think about the future of higher education. It is easy to worry and there are plenty of reasons to worry, but we are at a place that very few countries have ever reached. The fraction of our overall population that has a college degree is, I believe, the highest in the world. Ninety percent of our high school graduates have some experience of college before they are thirty years old.