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Beyond the News

Behind the News

University Business, May 2010

Reconciliation Act to Provide Better Funding

The federal student loan program is going through some big changes, namely that it will create direct lending from the federal government to students, eliminating the current bank-based system of lending. The changes are expected to save $61 billion over the next 10 years by ending subsidies to banks. The provisions were detailed in the Health Care and Education Reconciliation Act of 2010 passed into law on March 21. The direct lending model will, purportedly, eliminate third-party lenders, help students consolidate loans rather than attempting to pay back several lenders, expand income-based repayment, and provide funding to current loan services to keep existing jobs.

By July 1, all colleges and universities will be required to switch to the federal direct lending program. Savings from the switch will be used to provide $255 million to historically black colleges and universities, Hispanic-serving institutions, and tribal colleges per year for the next 10 years, and $500 million per year from 2011 to 2014 to the Community College and Career Training Grant program.

That money could not come soon enough, says George Boggs, president and CEO of the American Association of Community Colleges. "Enrollment is surging in community colleges in response to this economic downturn. There has been a 17 percent increase over two years, so our institutions are struggling financially as state funds are being cut." The Pell Grant will receive $36 billion, more than half of the funds. An additional $150 million per year from 2011 to 2014 will be given to College Access Challenge Grants totaling $750 million, and $50 million earmarked for tech assistance will go to the Secretary of Education.

Community college administrators are of course thrilled that funds will be devoted to them, especially after the American Graduation Initiative, which would have provided $12 billion to community colleges, failed earlier this year. "There was a degree of disappointment that the AGI was not authorized by Congress," says Boggs. "However, we are pleased that Pell grants will be increased because many of our students are financially needy. We're also pleased that there's $2.5 billion [going] to minority-serving institutions, which many of our institutions are."

In addition, the bill seeks to guard students against default by changing the parameters of the income-based repayment plan. Currently, monthly federal student loan payments cannot exceed 15 percent of discretionary income, and any balance remaining after 25 years is forgiven. Under the Reconciliation Act, payments will not exceed 10 percent and loan balances will be forgiven after 20 years.

Financial aid experts believe interest rates will become more stable and provide students with better options for repayment. "There were no strong rules preventing banks from promoting different programs if they wanted to, and every time a change was made the interest rate on loans was at risk of going up," says Walter Ventrice, the financial aid administrator at Cleveland State University. "But the government is not in the business for profit, they're in it for service. And if students do run into problems paying back their loans, IBR will prevent them from going into default."

Joan Crissman, interim president and CEO of the National Association of Student Financial Aid Administrators, believes the changes to the system will be instrumental in making college possible for many Americans. "Congress has provided relief to student loan borrowers through a stronger income-based repayment plan and by allowing borrowers to consolidate their myriad student loans while they are in school. Both of these provisions will help borrowers avoid the awful consequences of default," she notes. Boggs says, "I was encouraged I got to shake the president's hand when he signed the document. He said he was going to build on this for community colleges, so I am hopeful for the future." -KeriLee Horan

By Srikant M. Datar, David A. Garvin, and Patrick G. Cullen; 2010 Harvard Business Review; 400 pp.; $39.95


It wasn't that long ago that a business degree was the golden key to a bright future and a good-paying job. But with a down economy and a recent, seemingly endless string of financial scandals, many are questioning the purpose and value of an MBA. Rethinking the MBA follows the evolution of business schools over the past few decades and how they arrived at their current point. Like the housing bubble that economists foresaw, but few did anything about, the authors argue that for too long, business schools wore "if it ain't broke, don't fix it" blinders. Now they find themselves in the position of having to "rebalance" curriculum and direction to adapt to a changing business landscape.

The book offers six case studies of MBA programs - including the University of Chicago's Booth School, Harvard Business School, and Yale School of Management - that are reinventing themselves for the better. B-schools must become more socially responsive in their teaching, the authors say, with greater emphasis on accountability and ethics. -Tim Goral

Hamilton College (N.Y.) will begin its need- blind admission policy with this fall's class.

A new need-blind admission policy at Hamilton College (N.Y.)which admits students without factoring in ability to pay could be a counter wave, as other institutions have chosen to switch to need-aware policies for financial reasons.

Hamilton's move fulfills a priority in its Strategic Plan, and officials see it as a way to ensure a demographic mix in its future student body. Monica Inzer, dean of admission and financial aid, says they felt it was important to provide as much access as possible to middle- and low-income families.

Starting this fall with the Class of 2014, the policy applies only to domestic undergraduate freshmen. Six $500,000 pledges from the college's trustees will be set aside in a fund and drawn over the course of six years to help bridge the initiative's funding. Forty million must be raised to create a permanent endowment to support the policy.

Need-blind policies are hardly unheard of. Current colleges and universities with them include several Ivies - Yale, Princeton, Harvard, and Dartmouth - and liberal arts schools such as Bowdoin College (Maine) and Wesleyan University (Conn.).

Could these policies gain momentum? Barmak Nassirian, associate executive director for the American Association of College Registrars and Admissions Officers, says most institutions, particularly private ones, depend too much on tuition to carry out such a policy. "If [an institution] doesn't have the resources, it's a completely meaningless promise because you won't make good on it."

In 2005, Macalester College (Minn.) switched from a need-blind to need-aware policy, reportedly over concern about the college's fiscal health. This February, Williams College (Mass.) announced that, while remaining need-blind for domestic students, it would be need-aware for international students beginning with the Class of 2014.

Kristine Sawicki, acting dean of admission at Reed College (Ore.), which is need-aware, says it's not odd for a college to bring on a new policy in a recession as it can help in raising funds. Reed's current financial campaign aims to increase need-based aid by 20 percent.

By contrast, Inzer says Hamilton administrators think the initiative has good timing. "The negative economy has forced us to look at how we're spending every dollar in our budget. It helped financial aid emerge as a real strength and priority for the college."

"Some say this is not a good time to do something so bold," acknowledges Inzer. "I think if other schools in this economy are doing it, that's all we can ask for." -Michele Herrmann

Sometimes it takes a formal study to confirm what most in higher ed already knew. With stretched budgets and the constant directive to do more with less, administrators are doing all they can to rein in excessive spending on goods and services. But many public institutions find themselves hindered in their efforts. That's the conclusion of a new report by The American Association of State Colleges and Universities and the National Association of Educational Procurement. As "Public College and University Procurement: A Survey of the State Regulatory Environment, Institutional Procurement Practices and Efforts Toward Cost Containment" notes, existing state standards and requirements don't always fit with the realities of the current economy or business models offered by vendors that could save money.

For example, states may restrict competitive bid negotiation or participation in cooperative purchasing consortiums or reverse auctions. "The mandated use of state contracts and requirements to accept the lowest bids for contracts (thus ruling out consideration of nonmonetary factors such as product/service quality and servicing) were reported as barriers to more effective procurement spending," the report states. "Some state policies limit institutions' ability to ... tailor their purchasing needs."

Help may be on the way. As some states are recognizing, administrators may be able to negotiate better procurement contracts and save money. Services from E&I Cooperative Purchasing, SciQuest, and others can often provide better pricing through direct contact with manufacturers and suppliers.

The survey also indicates that the growing trend toward e-procurement saves time and money. But, there is room for improvement in helping institutions better assess, control, and leverage expenditures.

The entire report is available as a PDF download at -T.G.


This fall, as Binghamton University (N.Y.) began planning an April launch of the public phase of its "Bold. Brilliant. Binghamton." gift campaign - a launch postponed a few times because of the economy - advancement officials settled on something different from the standard launch dinner. Something bold. The two-hour event, held from 8 to 10 p.m. on April 22, took place almost entirely virtually.

All alumni were invited to the event, which featured a Q&A with the president and well-known alumni, videos about academic programs (with an after-viewing chat option), Binghamton-themed games, 360-degree tours, voting on best one-minute videos submitted by the campus community, alumni photos, and - for those interested in just hanging out - chat rooms with current students and faculty. Participants could also, of course, open their wallets.

The last campaign launch, a traditional one for a campaign that ended in 2003, involved a few hundred people, shares Rebecca Benner, senior director for advancement services and campaign operations. This time around, she said a few weeks before the event, "Our happy target is 1,000." In budgeting, the university considered both raw and per-person costs, Benner adds. With the per-person cost at about $150 (depending on final number of attendees) and savings on venue, food, giveaways, and printing and postage for communication, the virtual launch is less expensive than a traditional launch.

Binghamton hired event planning/consulting firm Herson Group (, to assist. "We've been wanting to do this for a long time," says firm president/principle Matt Herson. A challenge with in-person campaign events, he says, are that "most of the major donors are in New York, Chicago, LA, and San Francisco. It's always a problem to get major donors to come back to campus." Also, a virtual launch can reach a much larger audience.

Going virtual also means virtually limitless possibilities for an event. Brainstormed event ideas got tested against the event objectives, Benner says. Those included thanking the initial top donors, engaging a broad spectrum of people with the message about the university's core values and mission, and instilling pride in the university.

Regardless of the amount raised, officials can be proud of themselves for trying something new. Herson said before the event, "This is taking guts. Binghamton is going to be the first one to do this. I think they're being smart about what they're doing and how they're doing it. But it's a risk." -Melissa Ezarik

Richard Hurley

Richard Hurley, newly-selected president of the University of Mary Washington (Va.), has had his share of title changes. He was both acting president and vice president there from May 2007 through June 2008. He has served as executive vice president since July 2008 and was appointed acting president for a second time in April. As treasurer of the University of Mary Washington Foundation, he led the school's first public-private partnership. ... Aaron Podolefsky will also start a new presidency - at Buffalo State College (N.Y.). The post starts July 1, the day after his term at University of Central Missouri concludes. Last fall, Central Missouri's governing board narrowly voted not to renew his contract, despite a faculty petition of support. He led the university in developing a new strategic plan and a campus master plan, as well as through adoption of a new vision, name, and crest.

In April, LaGrange College (Ga.) welcomed new president Dan McAlexander, former provost of Belmont University (Tenn.). During his tenure, Belmont experienced a 68 percent increase in enrollment, launched academic programs, and added 40 faculty positions. ... Also last month, Greensboro College (N.C.) greeted Lawrence Czarda as president, a year after Craven Williams' retirement during a period of severe budgetary turmoil. ... Jeffery Elwell, professor and dean of the East Carolina University's (N.C.) College of Fine Arts and Communication, will become Auburn Montgomery's (Ala.) first provost in June. ... Knox College (Ill.) President Roger Taylor will retire by June 2011. In July, John Burness, a former senior vice president and now visiting professor at Duke, will become interim president of Franklin & Marshall College (Pa.), his alma mater. -M.H.

It seems that the economic crisis and its effect on families, plus an already high competitive recruitment and admissions environment among independent institutions, have led to an all-time high in tuition discounting. That's what data from the NACUBO 2009 Tuition Discounting Study suggests. Unfortunately for many private colleges and universities, increases in discount rates have come at a high price - with measures such as salary freezes, hiring freezes, and staff reductions implemented to allow for the increased spending on institutional grants.


As data gathered from 355 independent four-year colleges and universities about fall 2008 shows, the average tuition discount rate for first-time, full-time freshmen hit 42 percent. In the 1990s and early 2000s, discount rates jumped rapidly, but since 2002, the average tuition rate had remained stable. As institutions have struggled to keep their enrollments stable during the recession, increasing grant awards to undergraduates has been a strategy of choice for many. The percentage of freshmen receiving institutional grants was at 82.3 percent, slightly higher than the share for 2007 (81.7 percent) but a substantial increase from 78.8 percent in 2000. For students who received these grants, the reported average award covered more than half (53.5 percent) of the fall 2008 tuition and fee "sticker price."

This year marked the first time institutions were asked about:

  • The portion of institutional grants funded by endowment earnings. Overall, 12 percent were funded in this way. The results suggest that institutions with a higher percentage of institutional aid funded by endowments could have a harder time increasing their institutional grant aid, thanks to the investment losses that have occurred.
  • The portion of grants awarded based on students' demonstrated financial need and other factors. The data showed that 41.5 percent were awarded based entirely on non-need criteria. An increase in non-need-based awards is troublesome because of the related college access issues for low-income students.

The study can be purchased ($29.95 for NACUBO members, $39.95 for nonmembers) at -M.E.

First Lady Michelle Obama participates in a United We Serve service volunteer event along with GW students Shakir Cannon- Moye and Julie Bindleglass at a Habitat For Humanity site in Washington, D.C., Sept. 11, 2009.

Securing the current First Lady as your commencement speaker is no easy feat. In fact, the faculty, staff, students, and board of trustee members of The George Washington University hustled to complete 100,000 hours of community service before May 1 in order to seal the deal with Michelle Obama. By comparison, 61,626 hours of service were completed during the 2008-2009 academic school year.

Obama issued the challenge on September 11, 2009, during the "First National Day of Service and Remembrance" after Student Association President Julie Bindleglass and Vice President Jason Lifton wrote her a letter explaining GW's longstanding commitment to community service, explains Greta Murray, special service events program manager in the Office of Community Service.

"We fully expected the GW community to complete the 100,000-hour service challenge," says spokeswoman Courtney Bowe, explaining that a back-up speaker was not considered. Only projects conforming to the federal government's Corporation for National and Community Service guidelines were counted. The goal was reached in seven months, and hours are still being calculated using, Murray says.

Since the university has hosted Hillary Rodham Clinton and Barbara Bush as speakers in the past, leaders know this is no time to relax as they plan security for the May 16 event. "Our university-wide commencement will be held on the National Mall, and we are working with U.S. Secret Service and the National Park Service to plan the momentous event," says Bowe. -Ann McClure


Women's Ways of Knowing by Mary Field Belenky, et al. (Basic Books, 1986, 1997) captured the challenges women face not just at home, but in classroom settings. It suggested that educators can help women develop their own authentic voices if they emphasize connection over separation, and collaboration over debate. Fast forward to the American Association of University Women's recent study "Why so few? Women in science, technology, engineering and mathematics." It notes that, 30 years ago, there were 13 boys for every girl who scored above 700 on the SAT math exam - today, that ratio has shrunk to about 3:1. This trend provides a useful segue for asking American colleges and universities: How can we get more women interested in studying science, engineering, and technologies?

We now know there is a strong correlation between increased women engineering faculty and increased likelihood of female students majoring in a scientific or technical field. In engineering, female faculty leaders can serve as living examples in recruiting women and sharing their special science and engineering learning experience. From this perspective, Wentworth Institute of Technology (Mass.) is a somewhat unique best practices institution. As the first female president to lead Wentworth, Zorica Pantic has been a positive change agent, academic leader, and champion for the recruiting and mentoring of women engineering students.

Pantic suggests one solution is getting female students involved in science at an early age. "I decided on my career early in life. So, I think it is very important to have role models. That's why we want to go to high schools and even middle schools, and talk to girls and show them examples of women in science and engineering and other disciplines. ... One of the hallmarks of a Wentworth education is the development and application of a technical skill in a real world setting."

Part industry expert and insider, part women's engineering student mentor and part faculty leader, Pantic has painted an empowering pathway for inspiring future women engineering scholars. As a role model for future female leaders and engineers, she embodies the technical, scientific, professional and interpersonal skills important to success.

Columnists James Martin and James E. Samels are authors of Turnaround: Leading Stressed Colleges and Universities to Excellence (Johns Hopkins University Press, 2009). Martin is a professor of English at Mount Ida College (Mass.). Samels is president/CEO of The Education Alliance.

Internal accident reports are a good place to learn about potential risks on an individual college or university campus. A broader view can be found in the "Student Claims Report" issued in April by United Educators Insurance, which specializes in higher education institutions. The report is the result of an analysis of claims from 2004 through 2008 for both General Liability and Educators Legal Liability. Twenty-nine percent of student GL claims related to bodily injury from slips and falls, while 20 percent were from assaults.

Alcohol consumption was a factor in many of the claims, indicating the importance of continuing education efforts in this area, says Constance Neary, VP of risk management. Better facilities management to reduce student access to roofs and other high places is another important preventative measure institutions can take, she says.

Under ELL, claims discrimination (usually related to disabilities) accounted for 52 percent, while breach of contract counted for 33 percent. The remaining 15 percent were "other." These claims tend to be in situations where decision-making was done at the institutional level rather than by an individual student. "Breach of contract can come out of programs that were discontinued," cautions Neary. For instance, if a course of study is ended while students are still enrolled, careful consideration needs to be given to either finishing the cohort or making other arrangements for those students.

The report can be downloaded from the Risk Management Library section of -A.M.

Seton Hill University student Katie Fritsch uses an iPad to read a book.

Like consumers, higher ed officials are getting their hands on Apple's iPad, while critics debate whether it's a worthwhile investment. So far, at least two schools have launched plans for the touch screen tablet at their institutions.

This fall, Seton Hill University (Pa.) will give an iPad and a MacBook laptop to full-time students through its newly launched Griffin Technology Advantage Program. George Fox University (Ore.), meanwhile, will give incoming students a choice between the two devices.

In a media release, George Fox CIO Greg Smith states, "It would be reckless to make a switch and only offer the iPad. We honestly don't know everything about it. But by doing this, we're opening the door to innovation. What we learn can influence the future of technology as it pertains to higher education."

The iPad has its faults. It doesn't support Flash, can't multitask, and has a screen-based keyboard that not all users like. Jessica Tsai, an associate analyst, education technology, at Ovum, thinks the lack of multitasking can be inconvenient to a tech-savvy generation. She refers to Princeton's participation in the Kindle pilot program where students were said to be frustrated about being unable to view multiple documents at once.

Tsai adds that it seems duplicative to market the iPad as an option since incoming students bring similarly equipped mobile devices they already own to school. "The ground is [already] covered with two devices: laptops and smart phones."

Debates aside, the iPad is requiring campus IT departments to upgrade network infrastructures to meet its operation system needs and expanded Wi-Fi coverage.

Guy Jones, CTO at The George Washington University (D.C.), says a new 802.1x authentication method is being developed to better support smart phones and tablets on their wireless network. "We think the iPad and other tablet computers now being sold represent a new type of platform placed midway between cell phones and laptops that have the potential to change how mobile services are delivered," he says. GWU groups are evaluating its potential. M.H.