Opinion: Can 'Risk-Share' Financial Aid Models Reverse Some 'Alarming Data' on Student Completion Rates?

"The Hechinger Report recently wrote about some alarming data from the U.S. Department of Education's College Scorecard that shows 3.9 million students dropped out of college with debt in 2015 and 2016. As Jill Barshay reported in Hechinger's 'Proof Points' column, a disproportionate share of these students attended for-profit institutions," Brian Jones, president of Strayer University, writes for The Hechinger Report. "As a result, these students are saddled with debt without the degree, or the career lift, that they sought. The results are quite sobering, and it compels all of us across higher education, including for-profit institutions like Strayer University, to be a part of the solution. At the federal level, some members of Congress, as part of the next reauthorization of the half-century old Higher Education Act, are advocating a 'risk-share' financial aid model."

"The new model would ensure that institutions have ‘skin in the game’ to increase student completion rates by shifting some of the costs to the institution when a student defaults on a loan.

Such an approach aligns the success of an institution with the success of its students. If a completion incentive model works for students, we see similar value in incentivizing institutions in ways that promote graduation and attainment.

In addition, state lawmakers are adapting outcomes-based funding models that allocate a portion of public funding for colleges and universities based on their students’ credit completion, rather than just enrollment growth. And research supported by the Lumina Foundation suggests states that have adopted such an approach have seen growth in on-time graduation, the number of overall graduates and the percentage of students seeking STEM-related degrees. (The Lumina Foundation is among the funders of The Hechinger Report.) 

While our national discussion has reached relative consensus about the dual threat that tuition costs and student debt pose to college access, new approaches — at the policy and institutional level — remind us that creative solutions can drive meaningful improvement in post-secondary attainment.

At Strayer, we know that college costs and student debt are hurdles for access to education, and these same challenges threaten degree attainment and persistence of enrolled students. The need for new approaches to this challenge is made more acute by the changing composition of today’s college student population."

NASFAA's "Headlines" section highlights media coverage of financial aid to help members stay up to date with the latest news. Inclusion in Today's News does not imply endorsement of the material or guarantee the accuracy of information presented.

 

Publication Date: 12/6/2017

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