Student Lending Analytics Blog

University of Phoenix Enrollment Growth Slows; Changing Business Strategy In Light of Regulatory Environment

Apollo Group's 4Q earnings announcement highlighted changes that the company is making to their business model in fiscal 2011: 

"The Company expects fiscal 2011 to be a year of continuing transition in its operations as it implements initiatives, primarily at University of Phoenix, aimed at enhancing the student experience, expanding student protections and shifting the mix of enrollment to more experienced students who have a greater likelihood of succeeding in the Company's programs. Some of these initiatives include:

Changes in the roles of the Company's admissions personnel and comprehensive changes in their evaluation and compensation systems, including the elimination of enrollment results as a component of compensation effective September 1, 2010; University Orientation, a free, three-week, non-credit bearing program which, beginning November 1, 2010, will be required for all new students enrolling at University of Phoenix with fewer than 24 transfer credits; and The continued reduction in emphasis on third-party affiliates for lead generation and other enhancements to the Company's marketing approach."

Which Schools Experienced Largest Growth In FAFSA Filings In 1Q Of 2010?

Think proprietary and community colleges.  Of the almost 700 schools that had over 5,000 FAFSA filings in the first quarter, these twenty-five schools all experienced over 50% growth in FAFSA filings on a year-over-year basis:

A Sign of the Time: Pay Double To Get Off The Waiting List

Thanks to blog reader, Christine, for passing this one along from The Boston Channel: 

"A Massachusetts college has a new plan to give students an edge in getting admitted.Bristol Community College is about to launch a plan that would allow students to skip the waiting list if they agree to pay double the school's tuition.The school is teaming up the Princeton Review. As part of the deal, the for-profit company would invest $2 million in the college, which includes a new facility in downtown New Bedford.The program would specifically apply to courses designed to train health care workers and cost about $8,500 a year.

College officials said it's a creative way for the school to meet the growing demand for that kind of training.But the head of the state's Community College Council is already blasting the program saying allowing students who can pay more to go to the head of the line goes against the idea of public education."

In a survey accompanying this article, 85% of respondents didn't think this policy was fair.  Meanwhile in February, Kaplan has an agreement with the overcrowded California Community College system to offer their online courses:

Reactions To President Obama's Signing Student Loan Reform Into Law

Here are reactions from across the media spectrum:

• President Obama had this to say at the signing ceremony at Northern Virginia Community College (from New York Times, here is transcript of the comments):

"Mr. Obama portrayed the overhaul of the student loan program as a triumph over an "army of lobbyists," singling out Sallie Mae, the nation’s largest student lender, which he said spent $3 million on lobbying to stop the changes. "For almost two decades, we’ve been trying to fix a sweetheart deal in federal law that essentially gave billions of dollars to banks,"he said. The money, he said, “was spent padding student lenders’ pockets."

S&P Ratings: Student Loan Legislation Not Likely To Impact 2010-11 School Year

As reported by the Wall Street Journal:

"Standard & Poor's Ratings Services somewhat lessened the threat of moving student-loan companies SLM Corp. (SLM) and Nelnet Inc. (NNI) into junk territory, saying U.S. legislation overhauling student lending likely won't pass in time to affect the 2010-2011 school year.

A bill, backed by the White House, to end private lenders originating federally guaranteed student loans passed in the House, but S&P said Friday it is increasingly unclear whether the Senate will vote on the legislation in the next few months.

Analyst Adom Rosengarten said it is likely both Nelnet and SLM, also known as Sallie Mae, may still be involved in the origination of federal student loans for at least another year, limiting the immediate impact that legislative changes would have on the companies."

Meanwhile Rep. George Miller, chairman of the House Education and Labor Committee appeared on CSPAN Newsmakers (at 15 minute mark of video) today and had this to say about the status of student loan reform (paraphrase below).  As you will see, the legislation is still tied in with health care which means we still have weeks for this to play out.  Rep. Miller did say he anticipated that the bill would be part of the same reconciliation package as health care:

Demos Study Highlights Economic Value of One and Two Year Certificate Programs

Here is the executive summary for the report "Graduated Success: Sustainable Economic Opportunity Through One- and Two-Year Credentials" released today.  It ostensibly makes the argument that investments in higher education (such as community colleges) pays off through job creation (see article from The Hill):

"We often assume that a higher degree guarantees earning a higher salary and having greater economic opportunity. This assumption is not always the case. One- and two-year credentials can represent a viable path to economic prosperity, particularly for those graduates who, for whatever reason, do not earn more advanced degrees.

What Does CBO Baseline Report Mean for Student Aid Reform Bill?

Sorry, I wasn't much help with my earlier post which tried to decipher how the new CBO baseline would impact student aid reform legislation stuck in the Senate.   Thanks to the folks at Higher Ed Watch Blog for their analysis of the CBO baseline which noted that the cost of Pell Grant funding increased by $17 billion from earlier estimates:

Notable Quotables From Financial Aid Directors (Update)

• On the similarities between completing the FAFSA and going to the dentist (from Columbus Dispatch):  

And although the process has been simplified, most people still will be a little anxious about applying for aid.  "It's like going to the dentist," said Craig Daugherty, director of financial aid at Kenyon College. "You're afraid, but know you should go, and (you're) glad once it's over."

• On the recent improvements to the FAFSA form (from Columbus Dispatch): 

"It should reduce a lot of the errors, speed up the process and make it a lot less intimidating for students and families," said David Metz, director of financial aid and veterans services at Columbus State Community College.  The college leaders also gave high marks to a new Web feature that allows applicants to skip questions that don't apply to them.  "As many as 22 questions can be eliminated," said Randy J. Ulses, senior associate director of student financial aid at the University of Cincinnati.

• On the urgency of applying for financial aid (from The News Record): 

“Certainly, students should be applying for scholarships and aid,” said Randy Ulses, senior associate director of financial aid at UC [University of Cincinnati]. “It’s a first-come, first-serve basis.”

• On the federal student loan program and the importance of avoiding default (from the Omaha World Herald): 

“We’re loaning money to 18- to 22-year-olds without jobs and without assets,” said Craig Munier, director of financial aid at the University of Nebraska-Lincoln.  “This is a social program. We put our taxpayer dollars at risk because we think there’s a greater potential to society with education.”  Munier said the federal student loan program offers options to avoid situations such as the one faced by Ann: loan deferments, if students return to college; forbearances, if they haven’t yet found jobs in their fields; and reduced payment plans, if they enter a public service field.  He said his office works with former students who are late with payments so the situation can be fixed before their loans go into default.  “Default is a terrible place to be,” Munier said. “The federal government has a long, long memory.”

• On growth of Pell Grants at Cape Fear Community College (CFCC) (from StarNews Online):

At CFCC alone, the Pell grant program has awarded a whopping 116 percent more money than last year, with 61 percent more students receiving the grants.  “More people are qualifying for more money because of the economy, because so many more people are out of work,” Craig said.

• Strong enrollment growth seen at Ohio community colleges (from Dayton Daily News):

• "Sinclair Community College started its winter quarter Monday, Jan. 4, with 24,204 degree and credit course students, nearly 7 percent more than in winter 2009, according to college officials.  Sinclair also has 14,960 full-time equivalent students for winter term — nearly 15 percent more than last year at this time, officials said.  Figures are not final or official, as students continue to enroll...Students are taking heavier course loads and “seem to be more serious about finishing their degrees,” Johnson said."
• "Registration for the spring semester starting Jan. 17 at Edison Community College in Piqua is up 20 percent to 25 percent over last year at this time, according to college officials.  Edison’s enrollment last January exceeded 3,400. “This year it could approach 4,000, a record-breaking, all-time high,” said Jack Kramer, college spokesman."

Update:  Thanks to Kevin Bruns of America's Student Loan Providers (ASLP) for tagging this other interesting quote which captures one financial aid director's perspective on managing cohort default rates:

Financial aid officers said community colleges and private vocational schools tend to see higher default rates because the students they serve tend to be pressed for time and money, while some have struggled academically. ...

The University of Nebraska-Lincoln had the lowest default rate in the Big 12 conference, 2.6 percent for 2006-07 loans, Munier said, an improvement from a decade ago, when it ranked among the top third.  It wasn’t because of anything the financial aid office did, he said.  We raised our admissions standards, so that we have better academically prepared students,” he said.

Comparing Borrower Demographics And Default Rates

Once every few weeks, I am crunching some data where I expect a certain result and then when I finish the analysis, I have one of those AHA! moments.  Such was the case earlier today.  Bizzaro Watchdog's comment on one of my recent posts led me to dig deeper on the issue he raised : "To truly compare default performance, one has to isolate for the borrower demographics and only then compare across all institutions." 

While I didn't have borrower demographic information, I did have a proxy for income by analyzing Pell Grant recipients as a percentage of students enrolled.  And as luck would have it, when the Dept. of Education recently released their 3-year cohort default data they also provided enrollment data for all of the Title IV schools too.  When I analyzed the figures, here is what I got for the 2007 cohort:

Wondering How Your State Stacks Up When It Comes to Student Loan Defaults?

Below is the list created by SLA, which ranks states based on their three-year cohort default rate figures, from data provided by the Department of Education earlier today.  I also thought it would be interesting to take into account the enrollment mix at the state level, since that can have an impact on a state's default rates given the variance in the three-year 2007 cohort default rate by school type: