Education

Last week's National Journal Education Experts blog asks whether the president’s plan to expand all 4-year-olds access to high quality pre-K is a step in the right direction.

I say yes. His plan gives weight to the idea that we should no longer think of education as a K-12 system, but instead as a PreK-12 system.

In January, we held an event called Turnaround 2.0 to draw attention to the challenge of turning around elementary schools without improving the early years – including the early grades of elementary school – when children are building their foundational skills for academic success. Now that we have seen the outlines of President Obama's preschool proposal, these questions are hotter than ever. Depending on how and if Obama's plan moves forward, improvements to elementary schools may come more easily (though, no doubt, much work would still be required to improve instruction across the PreK-3rd grades.)

In his State of the Union address, President Obama proposed to expand access to preschool, but offered few details on how much money the federal government would contribute. When the White House eventually releases that figure, everyone will want to know how it stacks up against what the federal government already spends on education each year. The trouble is, that number is tough to pin down. You might try to look it up.

At a Georgia preschool last week, President Obama sat in a tiny wooden chair and played a science game with a group of four-year-olds. He held up a magnifying glass and peered playfully at the little boy next to him. For a second it looked as if he was trying to figure him out. It is an apt metaphor of where our country stands on education these days. Obama's preschool plan builds on a decade's fascination with studies on brain growth.

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.

An under-examined aspect of President Obama’s new early childhood education plan is his proposal to encourage states to create more full-day kindergarten seats – though only after states are able to guarantee access to pre-K for all 4-year olds from low and moderate-income families.

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.