This commentary originally appeared in Forbes on April 5, 2015.
Can the college student-loan debt crisis get any worse? According to the latest Federal Reserve Bank of New York report, the answer is, “Yes, and it already has.” During the last quarter of 2014, delinquency rates for student loans worsened. “Although we’ve seen an overall improvement in delinquency rates since the Great Recession, the increasing trend in student loan balances and delinquencies is concerning,” said a Federal Reserve Bank researcher. “Student loan delinquencies and repayment problems appear to be reducing borrowers’ ability to form their own households.”
But there could be better news on the horizon. The Texas Legislature is currently considering a bill—the “I CAN” Bill (“Incentivizing College Affordability Now”)—that would take statewide a new initiative called the Texas Affordable Baccalaureate Program (TABP), which offers targeted college degrees for far less than what Texas public university students currently pay.
The breakthrough can’t come fast enough for students. According to a recent summaryof data compiled by the Texas comptroller’s office, “In 2012, 20.5 percent of . . . [Texas’s] student loan borrowers were more than 90 days delinquent, surpassing the national rate of 17 percent and marking the 10th highest rate in the country.” The comptroller’s report adds, “Particularly worrying is the fact that rising tuition rates are driving an equally steep increase in college loan debt. . . . Many Texas college graduates and former students are entering adult life hobbled by years and even decades of crippling debt.”
As I detail in a just-released study, last year, four higher-education partners—Texas A&M University-Commerce, South Texas College, the Texas Higher Education Coordinating Board, and the College for All Texans Foundation—launched the TABP, the state’s first public university bachelor’s degree combining online learning and competency-based standards. Crafted by community college and university faculty, with an eye toward meeting the needs identified by business and community leaders, a new bachelor’s degree in Organizational Leadership can cost as little as $750 per (seven-week) term and allows students to receive credit for as many competencies and courses as they can master each term. According to the Texas Higher Education Coordinating Board’s website, students who enroll “with no prior college credits should be able to complete the degree program in three years at a total cost of $13,000 to $15,000”—less than half the price of a traditional degree at a Texas public four-year university. Students who enroll having already met their general education requirements can complete the degree in two years. Those enrolling with “90 credit hours and no credential” can finish their degree “in one year for $4,500 to $6,000.
In addition to targeting applied degrees, the TABP also has a target audience in mind. And here, a little-noticed change in the demographics of higher education emerges. We still tend to think of the college experience as consisting of fulltime students attending a residential campus for four (-plus) years. But that picture has given way to the new reality. Today, the majority seeking some kind of postsecondary education—be it a two- or four-year degree or a certificate or credential—are “nontraditional students.” Nontraditional students are over 25 years of age and/or work fulltime and/or have families of their own to support. For this group, the new majority, the traditional college experience is generally out of reach.
Moreover, many of these nontraditional students have at least some college credit garnered in the past. By one estimate, Texas alone houses 1.3 million residents with some college credit but no degree. For such students, the TABP could be the only way to complete college.
How does the new program work? TABP offers an online-based, self-paced degree plan tailored for non-traditional students’ busy lives, and saves them and taxpayers money through granting course credit for competencies already acquired in the military, the workforce, or during prior college enrollment.
According to the Texas Higher Education Coordinating Board’s website, the TABP was crafted “with two critical challenges in mind: (1) the rising cost of tuition for students and (2) a growing adult population, particularly Hispanic, that often lacks the right credentials and academic training to thrive in today’s economy.” In addition to fulfilling general education requirements via online courses, the program’s other novel feature is competency-based programs: “Advancement is based on showing competency in the subject area rather than spending hours in class.” Guiding this effort are three “main principles.” (1) “Students learn better when content is personalized and delivered at their level.” (2) “Students need targeted supports most in the first years and direct faculty instruction in their final years.” (3) “Students need a degree and an experience that will have value in the workforce.”
You would think there would be no obstacles to expanding a program of applied degrees that cost significantly less money and take significantly less time than traditional degrees. But currently, there are. Texas formula funding restrictions deny schools funding for many non-traditional students. These restrictions have a sound rationale, which is to increase graduation rates and lower the burden of taxpayer support for public higher education. But, in the case of the non-traditional students seeking to enroll in the TABP, such restrictions can be counterproductive to the state’s workforce needs. As long as these restrictions remain in place, other universities could lack the financial incentive needed to craft TABP offerings of their own.
This is where the “I CAN” Bill comes in. By granting TABP programs exemptions from these restrictions, ICAN would allow Texas public universities to receive formula funding for students enrolled in the TABP, thus removing the barrier standing between many non-traditional students and the degrees they need to continue to advance in their careers.
Supporters of the proposed legislation point to an additional benefit it would yield: Texas could lessen the financial burden on universities that enroll military veterans. Under Texas’s Hazlewood Act, the state provides qualified veterans, spouses, and dependent children up to 150 hours of tuition exemption, including many fee charges, at Texas public higher education institutions. Under Hazlewood, colleges absorb the total cost of a qualifying veteran’s tuition and fees once GI Bill benefits are exhausted. The cost of Hazlewood to the state will soon top $2 billion annually, according to a recent article, which adds that “the price tag has increased sevenfold since 2009, when legislators in Texas — which has the country’s second-highest veteran population, 1.7 million — allowed the benefit to be passed on to veterans’ children under a legacy provision.”
Because, under Hazlewood, qualifying veterans have their tuition paid for by the state regardless of the cost of their degree program, TABP’s (and, by extension, “I CAN”’s) benefit to veterans is not directly financial. However, veterans are uniquely placed to benefit from competency testing, with military training constituting a major source of skills for which competency testing awards credit. As a result, veterans benefit through gaining access to a more practical pathway to graduation, which is itself financially valuable; the opportunity cost of being in school, as opposed to working with a bachelor’s degree, runs in the tens of thousands annually.
In short, because it costs less for colleges that offer the TABP to educate veterans, the program saves colleges money, while the veterans who participate save time.
Finally, while we likely won’t know the “I CAN” bill’s fate in the Texas Legislature until May, the push for such low-cost degrees already has moved beyond the borders of the Lone Star State. Last December, the American Legislative Exchange Council approved a similar, Texas-inspired model proposal seeking to incentivize the development of low-cost bachelor’s degrees in all 50 states.