Photo by flickr user pamhule used under a Creative Commons license.

[UPDATE: A previous version of the debt-to-degree chart misidentified Northwestern Oklahoma State University as a community college when it is a four-year university. The corrected chart reflects that NWOSU has the lowest debt to degree ratio among Oklahoma's public universities.]

We’ve previously discussed the overwhelming evidence that college is a good investment both for students and the state as a whole. The need for at least some college education to get a good job is greater than ever. That’s reflected in Oklahoma by record-breaking college enrollment.

Lawmakers are also taking a growing interest in Oklahoma’s higher education system, with much of their criticism focused on tuition increases. A bill has already been introduced to return the power to approve tuition increases to the legislature, reversing a 2003 change that gave the State Regents full control.

Rising tuition is a legitimate concern. However, advertised tuition rates are not the best way to evaluate colleges and universities for a number of reasons. Due to scholarships and financial aid, fewer than half of all public university students and fewer than 18 percent of private college students pay the full “sticker price” for their education.

What may be a better metric for how well students are being served by a school are the federal loan default rates. The federal government made or guaranteed more than 80 percent of all outstanding student loans this year. If a large proportion of students are unable to pay back their loans, that is a strong indicator that they are not able to find well-paying jobs after leaving school, with or without a degree.

Oklahoma’s overall default rate was sixth highest in the nation at 10.77 percent, compared to a national average of 8.8 percent. However, as the below chart shows, default rates varied widely between schools.

This shows the percentage of students at Oklahoma colleges and universities who defaulted on federal student loans between FY ‘07 and FY ’09. Schools are divided into three groups: public community colleges, public universities, and private universities.

The data comes from the U.S. Department of Education. You can download specific numbers for Oklahoma schools as a spreadsheet here.

Students at public universities generally had higher default rates than those at private universities, but the best performing public universities were also the largest. Students at OU and OSU had loan default rates of just 3.4 percent and 3.5 percent, respectively. These two schools did better than all of other public and private colleges except for Southern Nazarene University, which posted a rate of 3.1 percent, and Oklahoma City University, with a default rate of 3.3 percent.

The best performing community college was Tulsa Community College, which posted a default rate of 11.0 percent, while the worst was Eastern Oklahoma State College, with a rate of 18.7 percent. The worst-performing private college was the the Spartan College of Aeronautics and Technology, with a default rate of 14.2 percent. Among public 4-year schools, Langston University performed especially poorly, with 17.7 percent of students defaulting on loans.

Community colleges in general fared worse than most public and private 4-year universities. However, we should keep in mind that community college students as a group are less economically secure than those attending 4-year schools, and even after graduating, they face a tougher job market in most fields than do applicants with bachelor’s degrees. Community colleges must also accept all applicants, while universities are able to selectively admit the students most likely to succeed.

Another way to look at the situation is the debt to degree ratio. Using data from Education Sector, this chart shows the the total amount of money borrowed by undergraduates at Oklahoma post-secondary schools divided by the total number of degrees awarded. [Click the chart to see a full-sized version.]

When we combine these measures, OU comes out looking like the best deal with both a very low student default rate and a relatively low debt to degree ratio. Carl Albert State College has a significantly lower debt to degree ratio than any other, yet has one of the worst loan default rates at 16.0 percent. Relative to other community colleges, TCC performs well on both measures.

In what may be a sign of serious trouble for particular schools, some fare badly on both measures. Langston University is the most obvious poorly-performing outlier in the public higher education system. Among private schools, Bacone College, the Spartan College of Aeronautics and Technology, and St. Gregory’s University share the dubious distinction of having both high default rates and a high debt to degree ratio.

Across different types of colleges, the debt to degree ratio is in some respects a mirror image of the student loan default rate. While community college students are most likely to default, these schools leave students with the least amount of debt per degree awarded. Conversely, most private university students have significantly higher debts but are less likely to default. If nothing else, this should tell us that keeping tuition low is no silver bullet for helping students to succeed.

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Photo by flickr user pamhule used under a Creative Commons license.

Last month, Governor Fallin released her plan  to increase by two-thirds the number of students graduating from Oklahoma’s public colleges and universities. At the same time, some Oklahoma lawmakers and other critics are questioning the state’s spending on higher education, arguing that colleges and universities should face the same budget cutbacks as other areas of government and the legislature should limit tuition increases.

Tuition and fees in Oklahoma remain comparatively inexpensive, but we have not avoided the nationwide trend of rising costs at both public and private universities. We certainly should take this trend seriously and work to ensure college is affordable and accessible to students from diverse backgrounds.

Yet even though the cost is rising, the value of a college education remains very high. Oklahoma should maintain strong investments in higher education for several reasons:

1) College is a solid investment both for students and the state as a whole.

The Hamilton Project calculated that “on average, the benefits of a four-year college degree are equivalent to an investment that returns 15.2% per year.” College outperforms virtually any other investment, from the stock market to government bonds to gold. While the upfront costs of college attendance are considerable and may represent a barrier for many potential students, those who are able to attend college realize substantial gains in lifetime earnings.

Higher education is also a good investment for the state of Oklahoma. Regional Economic Models, Inc. studied the impact of higher education on the state’s economy. The study, performed for the Oklahoma State Regents for Higher Education, estimated that for every dollar the state spends on higher education, $5.15 is injected into the state’s economy. This increased economic activity primarily comes from college and university employee spending and institutional spending on goods and services. Over time, college graduates will earn more than non-graduates, which also boosts economic activity.

Critics of Oklahoma’s higher education system cite the movement of graduates out of the state as evidence of an oversupply of college educated workers. In reality, 78 percent of bachelor’s degree recipients who graduated in 2007 were employed in Oklahoma a year later, and 86 percent of associate degree recipients were employed in the state.

2) Some college is better than no college, even without a degree.

A common target for those critical of higher education is the number of students who begin a college degree program but never finish. According to Complete College America, in Oklahoma less than 10 percent of associate degree-seeking students graduate within two years, and less than 25 percent graduate in four years. Students seeking bachelor’s degrees fare better: 19 percent graduate in four years, and 50 percent graduate within six years.

Low graduation rates are certainly a legitimate concern, especially at regional and community colleges, but there is evidence that students benefit from attending college, whether or not they graduate. The Center on Education and the Workforce at Georgetown University found that, on average, an individual with some college but no degree can expect to earn $200,000 more over a lifetime than someone with only a high school diploma. Even those with jobs that do not require degrees, like plumbers or cashiers, earn more with some college education.

That’s because college is not just about the piece of paper earned at the end. Students also learn to meet deadlines, work collaboratively on projects, broaden their social circles, and make connections that can help them find jobs in the future. They learn new ways of thinking that can help them recognize opportunities in almost any career, even if their classes aren’t focused on specific job skills.

3) The demand for workers with some training beyond high school is expected to rise.

An educated workforce is a public good, attracting businesses to the state and fueling innovation. Employers recognize the value of educated workers, which is why people with more education tend to be paid more. Even if some graduates leave Oklahoma, many more are retained who would have sought higher education elsewhere were it not available in state.

Data presented by the Lumina Foundation about employment levels of graduates versus non-graduates.

Despite some misguided assertions, Oklahoma is not experiencing a glut of overeducated workers. According to the Center on Education and the Workforce at Georgetown University, “[t]he overall demand for postsecondary education and training will continue to grow. This is true not only of high-tech industries, but even in wholesale and retail trade or personal services, where more than 50 percent of the workforce requires some postsecondary education beyond high school.”

Complete College America projects that by 2020, 59 percent of Oklahoma jobs will require a career certificate or a college degree. Currently, only 30 percent of Oklahoma adults have an associate degree or higher.

The rising cost of higher education remains troubling, and in a future post we will provide some recommendations on how to keep tuition and other costs under control. But in our efforts to control costs, we should not lose sight of the great value higher education creates for all of us.

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In 2003, late Senator Keith Leftwich authored a bill to extend scholarships, financial aid, and resident tuition eligibility at state colleges and universities to the undocumented children of undocumented Oklahoma residents.  Essentially, the law allowed for high school students without U.S. citizenship status to receive the same treatment as their classmates: resident tuition and the chance to compete for scholarships and financial aid. It was a quintessentially American gesture – any young person brought to the state as a dependent child would not be denied a chance to succeed because of circumstances that were beyond their control.

The bill passed the state legislature with the support of several prominent Republicans, including the sitting Attorney General Scott Pruitt, the sitting Secretary of State Glenn Coffee, and currently serving Senators Harry Coates and Cliff Branan.  Saul Munoz started making plans.  When the bill became law he enrolled at Tulsa Community College.  Resident tuition payments at the community college were manageable if he worked full-time and he eventually transferred to a four-year state university.  After taking time off from his studies to do religious mission work, he has re-enrolled to complete his degree and hopes to attend graduate school.  Saul is not sure where he would be today without the legislature’s action in 2003 and he doesn’t like to think about it.

Not long after the bill’s passage, groups hostile to undocumented immigrants used the law as campaign fodder against both Democrats and Republicans, accusing them of using tax dollars to subsidize ‘illegal aliens.’  Elected officials responded in 2007 with a partial repeal of the law embedded in immigration bill HB 1804, blocking undocumented students from receiving scholarships and financial aid.  Resident tuition waivers were left up to the Regents for Higher Education, who continue to offer them to eligible undocumented students.  There were 272 undocumented students enrolled in Oklahoma higher education institutions during the 2008-2009 school-year.  This represents one tenth of one percent (.11) of total enrollment; only 16 of those students received resident tuition waivers.  Despite the claim that tax-payers are subsidizing ‘illegal aliens’, the amount in tuition and fees paid into the higher education system by undocumented students – $1,074,693 between 2005 and 2009 – far exceeded the amount the state waived for in-state status ($254,026).

This session there are two bills working their way through the legislative process that seek to turn the clock back entirely.  SB 683, a standalone bill, and HB 1446, an omnibus immigration bill, would deny even residency status to undocumented high school residents enrolling in public colleges and universities.  Students opposed to the bills visited the Capitol in March to urge lawmakers not to pass SB 683, a measure that “would cripple the growth of future highly qualified professionals in Oklahoma.”  The Senate passed the bill that same day with a 32 (Y) to 13 (N) vote.

Designations like ‘undocumented’ and ‘illegal’ obscure the reality of the lives of the friends, classmates, and neighbors that they apply to – people like Saul Munoz.  Working hard, earning the respect of your teachers and peers, and striving to get ahead is as American an ethic as any.  If lawmakers listened to the better angels of their nature, instead of the ill-formed fears of a narrow constituency, they wouldn’t be working against Saul and the hundreds of Oklahoma students just like him.

*Name changed to protect the student’s privacy.

Update:  For a final update on these bills, see Where Are They Now? Bills we kept our eye on

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Preliminary results for the school year finished in May, 2008-09, show a headcount enrollment (in which all students, part- and full-time alike, are counted as one) of 256,012. That’s down slightly from the previous year and the second lowest enrollment in the last five years.

Overall enrollment is down 1.5 percent from the peak levels of 2003-04 and 2004-05. The decline is all at the four-year college level, where enrollment is down 2.4 percent over five years. Two-year college enrollment has risen slightly, 1.6 percent, in the same period.

Why is this bad news? Because we are not making a dent in our state’s already low education level. That makes it harder to move up the income scale and to attract the high-skilled jobs we’ll need in the future.

In 2006, Oklahoma ranked 39th among the states with only 22.9 percent of adults over 25 holding a four-year college degree. Not coincidentally, we ranked 41st in economic output per person and 12th in percentage of residents in poverty. Those numbers will always be entwined. We must work harder on the one we can affect directly.

There is, however, a glimmer of hope. Earlier this month the Oklahoma State Regents for Higher Education announced a slight increase in the percentage of high school graduates attending college, now 52.8 percent. There’s also some evidence that enrollment is higher at many state colleges and universities this fall than the last few years. Time will tell whether those numbers pan out and whether it’s any more than a reaction to a tough job market.

Meanwhile, we can and should think hard about how we can do better. We encourage the regents, campus leaders, and state legislators to examine all the factors that could contribute to our low educational attainment–college funding and affordability, high school dropout and achievement levels, better guidance for students, and culture. We can do better and we’ll have to if we want our young people–and our economy–to prosper.

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