ISAs – investing in value, sharing risk

March 4, 2014

Last week, the American Enterprise Institute (AEI) published an informative article and report on Income Share Agreements (ISAs) and their strong potential future within the student loan landscape.

With an ISA, an investor or other organization provides a student with financing for higher education in exchange for a percentage of the student’s future income for a defined period of time after the student finishes school. Unlike a loan, there is no principal balance to repay with an ISA. Depending on the level of the student’s success after school, the student may ultimately pay more or less than the amount financed. This instrument for the private financing of higher education is not currently a full substitute for federal student aid programs, but it can help correct some of the existing system’s shortcomings and improve student outcomes.

Authors Miguel Palacios, Andrew Kelly and Tonio De Sorrento of AEI clearly outline why they believe ISAs are better suited for student financing than traditional student loans in their article, and what steps policymakers should take to facilitate the growth of ISAs. Please read and let me know what you think about ISAs’ potential in the comment section below.

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The future of direct assessment

February 26, 2014

Today’s guest post is from Capella’s Director of Public & Federal Aid Policy, Jillian Klein. I would like to welcome Jillian back from maternity leave!

Jillian-Klein-Headshot-259x300

Jillian Klein, Director of Public & Federal Aid Policy

An article in last week’s Inside Higher Ed called “Taking the Direct Path” talks all about the recent history of direct assessment programs in higher education, including the opportunities and the challenges in moving this innovative style of learning forward. Capella University has been on the forefront of this change, with the development of the FlexPath program in 2013, which allows learners the flexibility to move through their program at their own pace, spending more time on the areas that are new to them and moving more quickly through those with which they are familiar. This decoupling of learning from credit hours and seat time just makes sense, but the road to move education in that direction continues to be a bumpy one.

The current federal financial aid rules require that direct assessment correlates back to the credit hour, but the extent to which this needs to happen is unclear. And even when schools can pass that hurdle, the reality is that the federal financial aid system is built around the concept of the credit hour and seat time, making it difficult to completely innovate in this area. This winter, the Department of Education requested that the higher education community submit proposals for experimental site initiatives geared at providing schools with the authority to experiment with options of how to administer financial aid in a true direct assessment model. This sort of safe place for innovation is exactly what is needed in order to build the basis for regulatory and policy changes that will fully allow direct assessment programs to operate separate from the credit hour model.

While the Department of Education is moving the ball forward on direct assessment, however, there are restrictions to those issues which the Secretary can focus on, such as modifications to Title IV awarding rules. Understanding this, a bipartisan group in Congress introduced HR 3136, the Advancing Competency-Based Education Act. This bill would create a demonstration program, which facilitates the same type of safe space as the Department’s experimental sites initiative, but is more comprehensive and factors in the necessary authority to make crucial Title IV modifications.

Through the development of the FlexPath program, Capella discovered first-hand the federal financial aid rules that inhibit true innovation in the direct assessment model, and the credit hour is just a piece of the puzzle. For example, in a more flexible model, where learners are able to move at their own pace, rules around what happens to a student’s financial aid eligibility when they drop courses need to be revisited. Currently the percentage of aid a student retains is based on a time component, but what happens when that disappears? The same question exists for a concept like satisfactory academic progress. Likewise, how can we rethink concepts like limits to annual aid eligibility in light of a model that is geared towards decreasing the amount of time it takes a learner to complete their degree? There are other challenges in the current system, too, like reconciling aid-eligible direct assessment programs with the current prohibition on granting federal financial aid for prior learning.

These issues provide a clear indication that there is a real need for the development of federal financial aid rules that make sense with the move towards direct assessment, and Capella is excited to be part of that conversation. Through the FlexPath program we are learning more about the opportunities that exist for learners in this new method of educational delivery, and we look forward to continued dialog around the topic.

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The real proof is in the students themselves

January 21, 2014

Michelle Navarre Cleary, of DePaul University’s School of New Learning, wrote a blog post for Inside Higher Ed last week about competency-based learning and the benefits it offers students.

In her post, Michelle shares a few examples of why she believes competency-based education is a strong alternative to traditional programs. She explains how it can save students both time and money, how competency programs increase access to college for nontraditional students and minorities, and how information is more likely to be retained and used again when learners engage in metacognition.

Michelle emphasizes that while all these reasons are important to think about when considering competency-based programs, the best indicator of how well these programs work are the students themselves. “Again and again, I see students grow in confidence, revel in the joy of learning, leave jobs to begin careers, and expand their worlds. And that, as any educator worth her salt will tell you, is what it’s all about.”

Michelle also highlighted Capella as a provider of competency-based education. Capella’s competency-based curriculum is designed for busy, experienced professionals who want to gain the relevant competencies to help advance their career – and in the most efficient way.  For the past 10 years, we have wholly-integrated and continually invested in a competency-based learning approach throughout our university. As a result, we’re able to map academic and professional standards to all of our degree programs and more fully support students as they progress through their program.

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The bricks of modern education need the straw of experience-based skills

January 13, 2014

Harvard Business Review recently published a post about competency-based education and the advantage it gives employers when they are looking for the right job candidate.

McKinsey & Company’s “Education to Employment” report, referenced in the article, gives a thorough look into what students, employers and educational institutions think about the education students are receiving today. It outlines huge opportunities for growth that are only possible if the three groups work together.

Employers worldwide have expressed that college transcripts are oftentimes not very helpful when assessing a candidate for a position.  This is where competency-based education and assessment comes in. “To link education to meaningful outcomes, what’s needed is the ability in college to assess – in detail and at scale – the development of real world-relevant skills.” Employers can then take this assessment and compare it directly to the job position to determine if the candidate has what it takes to get the position.

A few companies in the United States (HBR’s article outlines them) have used skills-based hiring techniques to pick job candidates. It seems to be working very well for them; there has been a 25-75% reduction in turnover, a 40-70% reduction in time to hire, a 70% reduction in cost to hire, and a 50% reduction in time to train.

These numbers are very promising. We’re going to hear more about employers using competency-based education and assessment in 2014.

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Interstate Passport Initiative

January 9, 2014

Inside Higher Ed outlined a promising development in higher education, the credit hour and transfer programs today.

The Interstate Passport Initiative, a set of mutually agreed-upon learning outcomes that are a new way of thinking about students transferring between institutions, was announced this week. This initiative is led by the Western Interstate Commission for Higher Education (WICHE). It is now possible for students to transfer from one of the 16 participating institutions to another by showing they hold certain competencies.

Institutions on both sides of the process decide which courses and credits equate with competency. The receiving institution also decides which credits a transfer student should earn for his or her proven proficiency.

This project is important for what it signals about the credit hour and college transcripts. The Interstate Passport Initiative goes beyond the credit hour – “it could contribute to the ‘unbundling’ of higher education, where assessed learning typically trumps time spent in the traditional classroom.” It is a widespread belief that college transcripts are inadequate at depicting student learning; by measuring proficiencies and competencies, one could get a better idea of what a student accomplished at their institution.

This initiative could create a more streamlined transfer process and save money along the way. The leaders of the project are hopeful that many more colleges and higher education systems will sign on and participate.

See the full article here.

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