Student Incentives and Time to Degree in Texas What Five Credits Can Mean Between 2004 and 2011, the average number of credits attempted by nontransfer bachelor s degree graduates at Texas public colleges and universities declined by five. That finding is based on a summary of data reported in the state s statutorily required Timely Graduation Reports (Texas Higher Education Coordinating Board 2011). Five credits may seem like small change, but with about 60,000 non-transfer bachelor s graduates each year, the decline represents 300,000 credits saved, or enough to graduate 2,500 more bachelor s degree recipients without adding additional enrollment capacity. That is equivalent to adding a mid-sized university. If there have been similar declines for associate degree or transfer students, not captured in these reports, then the savings were even greater. Those 300,000 credits also represent over $100 million in saved educational expenditures, at average rates of expenditures per credit (based on a 2012 THECB cost analysis). In addition, nearly 10,000 years of students time was saved, (at 30 credits per full-time equivalent). November 2013 Given that the average income of a new bachelor s graduate in Texas is about $40,000 (Schneider 2013), the saved time represents as much as $400 million in additional earning potential. When the focus or measure is only on the cost per enrolled student, whether it s state appropriations or students tuition expenses, the important dimension of time can be lost. On average nationally, a degree that takes five years to finish costs state taxpayers $5,900 more, and students $5,200 more, than one that takes four, in direct expenses alone (State Higher Education Executive Officers (SHEEO) 2013). Recommendations for Other States Between 1997 and 2011 Texas enacted multiple measures in a varied and persistent policy reform effort focused on student incentives and time-to-degree. That effort coincides with results at least as good as what other states around the country are obtaining, though comparable data are often difficult to obtain. Others looking to Texas s experience will want to know about specific policies and which ones have made the biggest What s Working? Quick Takes on Evidence for Increasing Attainment Evidence briefs in this series summarize selected dimensions of the evidence for success of a program or policy that is expected to improve higher education outcomes. They are not intended to take the place of more formal or long-term comprehensive evaluations, but rather to provide timely snapshots of relevant data. Policymakers and analysts are encouraged to use these briefs as starting points for policy development or further investigation and to consult the resources cited at the end of each brief.
difference. While states that have seen even better results than those in Texas would be well advised to stay the course, those that have lagged behind the generally positive national trends may find good examples of state and institutional practice. The following recommendations are based on our analysis of available data sources and what we know from research about how students respond to incentives. They should not be taken as definitive evaluations of these complex programs. Recommendation: States should build incentives to take more courses into their aid programs. The requirement instituted in 2005 that Texas Grant recipients complete 24 hours per year to renew grants is consistent with research in financial aid showing that students respond to short-term renewal incentives (Dynarski and Scott- Clayton 2013). Effective incentives should be clear and focused on a single year. Students subject to the 2005 requirement would likely have begun graduating in 2008-09, and most 2010-11 graduates would probably have been subject to that requirement. Since 24 credits per year are not enough to finish within the standard degree time, states might also consider additional incentives to complete 30 hours (though not necessarily an all-ornothing policy). Recommendation: States where requirements for degrees exceed the national norm should enact 120 hour caps on bachelor s programs and 60 hours on associate degrees. Reductions in required lengths of bachelor s degree programs to the national norm of 120 hours (with limited exceptions) were also an important part of the 2005 legislation. Program requirements are a relatively small part of the excess credit issue for bachelor s degrees, but one that is directly under institutions control, rather than dependent on student choice or behavior (Johnson, et al. 2012). While the deadline for implementation was fall 2008, many institutions beat the deadline and reduced program lengths sooner. This is probably responsible for some of the reduction in credits to degree seen across the state. Recommendation: States should encourage institutional efforts to reduce time and credits to degree. The efforts undertaken by Texas institutions to improve time-to-degree may have been just as or more significant than specific statewide requirements. Some of these efforts might have been undertaken without the accountability requirement of HB 1172, while others were probably inspired by the fact that the state was paying close attention to the issue. The Timely Graduation reports required by that legislation, which have since been eliminated, are worth reading for institutions elsewhere in the country that want to see what their Texas peers have put in place. It may not be necessary to require similar reports annually Texas itself sunset them in 2011 but states might consider other ways to focus Student Incentives and Time to Degree in Texas - 2
attention and energy on the issue. The institutions that early perceived that their own students could do better, and that acted aggressively to create change, were able to generate significant improvements in time to degree and graduation rates. Recommendation: More states and institutions should consider experimental design in pilot programs for evaluation before investing on a large scale. The lack of good control groups is a chronic problem in evaluating the impact of aid and tuition policies. Even the best regression analysis cannot account for all the possible factors that affect outcomes other than price. To overcome that challenge, the University of Texas at Austin is using a random control trial to evaluate a shorter-term loan forgiveness program that will pay off portions of students loans each year that they complete 30 credits. More states and institutions should consider such true experimental design in pilot programs before investing large sums of money in full-scale programs. Recommendation: States should focus on shorter-term incentives for progress rather than policies similar to Texas s Excess Hours Surcharges, B-on-Time Loans, or Tuition Rebates for graduates. There is little evidence that long-term incentive policies, by themselves, have a significant impact, and good reason to think the impact would be limited. The threat of a penalty or reward at the end of a student s academic career is far removed from the time that many of the problematic choices take place--often years earlier, at the beginning, when students are changing majors, withdrawing from or repeating courses, etc. The eternal student phenomenon of seniors hanging on in college by choice is a widespread stereotype, but actually a fairly small part of the excess hours problem. Policies focused on the total length of degree programs do not include a concrete and immediate ask of students, but rather present a long-term goal with multiple complex choices to be made in the intervening years. Behavioral economists have found incentives to be of limited value when the response they seek is too complex (Kamenica 2012), which seems likely to be the case here. There may be very modest effects from these programs, but given the high costs, most of the funding would end up going to students who would have performed well anyway, limiting the overall return on investment. A particular issue with the B-on-Time program is that funding and availability has been unpredictable, and participation thin, with large amounts of money spent on relatively few students. That has made it difficult to promote as a reliable statewide program for the typical collegebound Texan, especially the target audience of those at risk of taking extended time to graduate. Again, economic research suggests that it is not just the amount and target of an incentive that matters, but the context, frame, and way in which it is communicated. A legislative sunset report in 2012 found that the program had higher rates of Student Incentives and Time to Degree in Texas - 3
default and lower rates of forgiveness than expected (Sunset Advisory Commission, Texas Legislature 2012). The $1,000 tuition rebate program also presents challenges in implementation. While required by Texas Statutes, funding for it comes from institutions themselves, which have promoted the incentive with varying levels of enthusiasm. Most Timely Graduation reports from 2005-2009 made no mention of the incentive. Those that did typically only said that the policy existed and that they implemented it. Just a few provided details indicating that they promoted the incentive actively. No statewide data on the numbers of participants are published. One of the few institutions that provided details, University of North Texas, said in its Timely Graduation report that in 2004-2005 it awarded $142,000 in rebates, which would mean 142 students received the award out of a graduating class of 4,349. In addition to the problem of distant incentives and complex responses, which it shares with tuition surcharges and B- on-time, the rebate presents a small incentive with a narrow window of eligibility. Those who benefit might well be the type of students who would have graduated with credits close to their degree requirements anyway. Background In 2000, Texas adopted a vision for higher education in Closing the Gaps by 2015, a strategic plan that has informed many of the state s policy choices since (Texas Higher Education Coordinating Board and Richard Ingram Center 2008). While the state has pursued a variety of reforms, it has been particularly innovative in policies to encourage students to progress more quickly through higher education. A series of programs and legislative mandates have targeted students and institutions alike with incentives, penalties, regulations, and accountability requirements all directed at reducing time to degree. (At least two policies were in place prior to the Closing the Gaps report, but would not have affected graduates before about 2001.) Policies that Texas has put in place with this objective over the last fifteen years have... 1997 Permitted (but did not require) institutions to charge higher tuition to students who attempt 45 or more credits in excess of the number of hours required for a bachelor s degree. Created a $1,000 Tuition Rebate program for students who complete bachelor s degrees with few or no excess hours. Statewide data on numbers of beneficiaries or participants are not available. 1999 Created a major state need-based financial aid program, the Texas Grant. As a result of this and other aid Student Incentives and Time to Degree in Texas - 4
program investments, total state spending on financial aid increased from $67 million in 1998-99 to $659 million in 2010-11 (Table A-1), and the state went from far below to near the national average in financial aid spending per capita. 2003 Provided B-On-Time (BOT) forgivable loans, which are zerointerest loans that can be forgiven entirely if students complete their degrees within the normal timeframe. In 2010, the program served 7,800 students at a cost of about 40 million (Shook 2012). 2005 Passed HB 1172, which included multiple provisions that: Required students to complete 24 credits per year to remain eligible for need-based TEXAS Grants Limited most bachelor s degree program requirements to 120 hours for students starting in fall 2008 or later Reduced the threshold for excess hours tuition from 45 to 30 Required institutions to submit annual Timely Graduation Reports detailing campus-based efforts to reduce timeto-degree Required institutions to provide students with online progress reports 2011 Repealed (in SB 5) the timely graduation report requirement, along with other required institutional reports that were deemed to have limited value. Required (HB 3025) students to indicate an intended major before reaching 45 credit hours. Institutional Initiatives Over the same period of time, individual institutions and higher education systems (Texas has six four-year university systems in addition to locally-governed community college districts) implemented their own policies to reduce time-to-degree, many of which are detailed in the Timely Graduation reports that were provided to THECB prior to 2011. The efforts at institutions varied in scope and type, but often were very extensive, encompassing both academic and financial reforms. The University of Texas El Paso, for example, reported: New orientation and advising campaigns that emphasize the importance of taking 15 rather than 12 credits per term Restructured remedial and entry level classes, including 8-week math courses, and co-enrollment in remedial and college-level courses Tuition incentives for students who complete 30 credits per year Targeted grant and work-study support to enable full-time attendance Student Incentives and Time to Degree in Texas - 5
Most other institutions that had significant improvements reported that they had enacted financial incentives (through tuition and/or aid programs), advising campaigns, or both, that went well beyond what the state requires as a minimum. Many of these efforts, like UT El Paso s, focused on encouraging more students to take 15 or more credits per term. Some had also implemented the required cap on degree program requirements at 120 hours in advance of the legislature s deadline. While these are institutional rather than state-level policies, they arose in an environment that encouraged experimentation; promoting local institutional innovation was one of the state s intentional strategies for improvement. What were the results? Reducing the number of years and credits students take to graduate should, in principle, free up capacity for the existing system to serve more students with less additional cost, and should benefit students by increasing their odds of graduation and getting those who do graduate into higher-paying jobs sooner than they would otherwise do. If efforts to reduce time-to-degree are successful, they should result in: Fewer years and credit hours between college entrance and degree completion 30 Figure 1. Public Bachelor's Degrees Per 1000 Population Age 18-24, US and Texas 27 32 28 36 2000 2005 2011 Source: Postsecondary Analytics, from Digest of Education Statistics, 2000 Census, and 2011 American Community Survey 33 Higher four-year graduation rates, either in absolute terms or relative to six-year rates Larger total numbers of students graduating Our finding is that trends in Texas related to degrees awarded and time to degree are modestly positive, but that the connection between those trends and the policy initiatives of the 2000s is hard to establish. Since most of the policy initiatives focused on bachelor s degrees, the results described below also relate to four-year degrees. Degrees per capita are up at the same rate as in the rest of the country US TX The number of public institution bachelor s degrees per 1000 college-age residents (Figure 1) went from 27 to 33, even as the population of the state increased. There were similar increases, however, across the entire country, making it difficult to attribute the result to unique policy initiatives in Texas. Given that so many states were engaged in aggressive reform efforts over the same Student Incentives and Time to Degree in Texas - 6
time period, and that there was such a strong growth rate overall, even keeping pace with (and actually slightly exceeding) the improvements nationally could be seen as a significant accomplishment. This is a very crude measure of quantitative degree growth, and does not relate directly to time-to-degree. Yet an ultimate goal of time-to-degree policies is to help move the dial noticeably on these big measures of attainment. Genuinely transformative statewide reform efforts should be expected to have an impact on these bottom-line numbers. Taking associate and bachelor s degrees together, the results appear similar, with a slight narrowing of the gap between Texas and the nation in degrees awarded per capita (Figure A-1 in the appendix). Time and credits to degree are down modestly since 2004 As part of the timely graduation reporting requirement, the Texas Higher Education Coordinating Board collected information from institutions on the number of credits accumulated and semesters enrolled for bachelor s degree graduates who started and finished at the same institution. While this is a limited measure, since it excludes large numbers of students who transfer before graduation, Figure 2 does show modest improvements in both time and credits for this subgroup of students the 2003-04 and 2004-05 academic years (FY 2004 and 2005) and 2009-10. The time scale of the data is limited, however, since it does not include a good baseline for reforms enacted prior to 2004. 155 150 145 140 135 130 125 120 149 Figure 2. Semesters and Credits to Degree, Non-Transfer Bachelor's Graduates 10.14 10.05 144 10.50 10.00 9.50 9.00 8.50 8.00 Total student credit hours attempted by graduates declined by an average of 5 statewide, from 149 to 144 from 2004 to 2011, and semesters to degree declined by 0.1 semesters Credit Hours Semesters Source: THECB Timely Graduation Reports (equivalent to about 10 days) from 2005 to 2011. Credits to degree were down at 31 out of 35 institutions, and semesters declined at 23 of 35 over the slightly shorter timeframe. Some institutions, such as UT El Paso, UT Pan American, Sul Ross State, and West Texas A&M, had Student Incentives and Time to Degree in Texas - 7
much more substantial improvements than the average. These were typically institutions that had among the least favorable baseline numbers (and so the most room to improve). Institutions that had the best numbers to start with, not surprisingly, showed less improvement. From an institutional perspective, the results look better than from a statewide point of view. The median institutional decline in time-to-degree was 7 credits, and 0.16 semesters, but since total numbers of students grew faster at the lower-performing institutions, the state totals did not go down by as much. Four-year graduation rates are up in both Texas and the US as a whole. While there is no national data to use as comparison for the semester and credit accumulation data reported to THECB, four-year graduation rates are a related measure that can be calculated for all institutions in the country. They have moved in a positive direction throughout the 2000s (Figure A-2), at about the same rate as the rest of the country. The first cohort of students on this graph entered college prior to the 1997 reforms; the last cohort entered prior to the effective date of the 2005 reforms. (THECB data indicate that average four-year graduation rates in Texas have continued to improve, though no comparable national numbers are yet available.) Four-year graduation rates are not by themselves an ideal measure of time-todegree they can also go up or down depending on how many students drop or transfer out of an institution, even if those who do graduate are taking the same amount of time. But the movement on this measure tends to confirm the locally available THECB data on semesters and credits. The institutions that had the strongest improvements in credits accumulated and time-to-degree, also had among the most significant improvements in graduation rates. If efforts to reduce time-to-degree are successful, we might expect four-year rates (which reflect only students who finish on time) to improve faster than sixyear rates (which are closer to an overall graduation rate, including most late graduates. A measure of the average time taken by graduates, based on the numbers reported graduating in 4, 5, or 6 years, is consistent with the other trends, declining slightly over the decade at about the same rate in Texas and the United States (Figure A-3). (Here, too, the average institutional improvement was greater than the total state improvement because of shifting enrollment patterns.) One criticism of efforts to accelerate students progress to degree is that lower-performing students are at higher risk of failure if they are rushed or asked to do more than they are already doing. If this were a significant problem, we might expect to see six year graduation rates drop (because of higher failure rates) even as four-year rates improve. In fact, however, in Texas and elsewhere in the country, six-year (and eight-year) rates tend to improve, especially at institutions with high proportions of low-income or less-prepared students, when four-year rates go up. There is no evidence that focusing on time hurts overall graduation Student Incentives and Time to Degree in Texas - 8
rates; in fact, these descriptive data and the limited number of rigorous studies available suggest that reducing time probably helps overall completion rates (Dynarski and Scott-Clayton 2013). Graduation rates for program participants The Texas Higher Education Coordinating Board publishes graduation rates for participants in state aid programs, including Texas Grants and B-On-Time Loans (Texas Higher Education Coordinating Board 2012). While fouryear graduation rates are higher for B- On-Time Loan recipients and slightly lower for Texas Grant recipients than for other students with aid, there is no true control group here to allow a comparison. The report also shows, for example that B-On-Time recipients have much higher family incomes on average than participants in many other aid programs. While the published numbers are informative as descriptive statistics, they are not useful indicators of the programs effectiveness. Tuition and time-to-degree While high tuition can be a barrier to access and completion for many students, it could also be, paradoxically, a strong incentive to reduce time and credits to degree. Rising tuition in both Texas and the rest of the United States may well be keeping some students away from postsecondary institutions, but for others it may be encouraging more careful selection of courses and majors. While this is a weak argument for high prices, it could be a reasonable one against free or very low tuition, especially for students who can afford to pay part of the cost. Over the last fifteen years, median tuition in Texas has risen from below the national average to just slightly above (Figure 3). Average tuition nationally went up considerably as well. At the same time, as noted earlier, Texas invested substantially more in financial aid, some of which was in programs with progress or completion requirements (Texas $8,000 $7,000 $6,000 $5,000 $4,000 $3,000 $2,000 $1,000 $0 Figure 3. Median Institutional Resident Undergraduate Tuition, Public Four-Year Colleges (Not Adjusted for Inflation) $2,601 $1,992 $6,951 $4,579 $4,182 1996-97 2004-05 2011-12 $7,198 50 States and D.C. Texas Source: SREB Fact Book Student Incentives and Time to Degree in Texas - 9
Grants, B-On-Time), which blunted some of the potential negative impact of the increases, while reinforcing the motivation to progress more efficiently. Cost Implications Data from the State Higher Education Executive Officers finance survey show that core revenues per student in Texas appropriations and student tuition remain modestly above the national average (Figure 4), and are a few hundred dollars less than in 2000, when adjusted for inflation and enrollment mix (graduate, undergraduate, etc.). This is a very rough measure of costs, since institutions spend more or less everything that they bring in. Next Steps Current trends are encouraging, and seem likely to continue. Texas continues to innovate, both at the state level and at institutions, with more recent reforms focused on degree plans and associatelevel education. Many of the policies put in place in 2005, including efforts launched by institutions, may have effects that have not yet showed up in bottom line data, especially where national comparisons are needed. As successful reforms at institutions such as University of Texas El Paso become more evident and better known, other colleges in Texas and elsewhere may adopt similar policies, creating a virtuous cycle of improvement. Thousands $16 $14 $12 $10 $8 $6 $4 $2 $0 Figure 4. Tuition and Appropriation Revenues per FTE Student $13.2 $12.7 $11.9 $11.0 Texas U.S. Student Incentives and Time to Degree in Texas - 10
Where to learn more References cited in this report include... Dynarski, Susan, and Judy Scott-Clayton. "Financial Aid Policy: Lessons from Research." The Future of Children, 2013: 67-92. Johnson, Nate, Leonard Reidy, Mike Droll, and R.E. LeMon. Program Requirements for Associate and Bachelor's Degrees: A National Survey. Washington: Complete College America, 2012. Kamenica, Emir. "Behavioral Economics and Psychology of Incentives." Annual Review of Economics, 2012: 1-26. NASSGAP. Annual Survey Report on State- Sponsored Student Financial Aid, NASSGAP, 1997-2012. National Center for Education Statistics, Digest of Education Statistics. Schneider, Mark. Higher Education Pays: The Initial Earnings of Graduates of Texas Public Colleges and Universities. Washington: College Measures, 2013. State Higher Education Executive Officers (SHEEO). "State Higher Education Finance Survey." State Higher Education Executive Officers. 2013. Sunset Advisory Commission, Texas Legislature. Texas Higher Education Coordinating Board, Staff Report. Austin: Texas, 2012. Texas Higher Education Coordinating Board and Richard Ingram Center. Closing the Gap by 2015: Texas' Strategies for Improving Student Participation and Success. Austin: THECB and Richard T. Ingram Center for Public Trusteeship of the Association of Governing Boards, 2008. Texas Higher Education Coordinating Board. Report on Student Financial Aid in Texas Higher Education for Fiscal Year 2012. Austin: THECB, 2012.. "Timely Graduation Reports for HB 1172." On Texas Higher Education Data Website. 2011. Shook, Melissa. A Brief Look at the B-On- Time Texas Loan Program. Austin: Texas Guaranteed Student Loan Corporation, 2012. Southern Regional Education Board. Higher Education Fact Book, 2013. What s Working? Quick Takes on Evidence for Increasing Attainment Evidence briefs in this series summarize selected dimensions of the evidence for success of a program or policy that is expected to improve higher education outcomes. They are not intended to take the place of more formal or long-term comprehensive evaluations, but rather to provide timely snapshots of relevant data. Policymakers and analysts are encouraged to use these briefs as starting points for policy development or further investigation and to consult the resources cited at the end of each brief.
Appendix: Additional Figures and Tables Figure A-1. Public Associate and Bachelor's Degrees Per 1000 Population Age 18-24, US and Texas 46 38 50 43 58 53 US Texas 2000 2005 2011 Sources: Digest of Education Statistics, 2000 Census, 2011 American Community Survey 35% 30% 25% 20% 15% 10% 5% 0% Figure A-2. Same-Institution Four-Year Graduation Rates at Texas and US Public Colleges and Universities 26% 19% 32% 26% US TX Source: IPEDS Student Incentives and Time to Degree in Texas - 12
4.9 5 4.8 4.7 4.6 4.5 4.4 4.3 4.2 4.1 4 4.86 Figure A-3. Estimated Bachelor's Time-to-Degree in Years for IPEDS Cohort Students 4.81 4.82 4.79 US Texas Sources: Postsecondary Analytics, from IPEDS and Baccalaureate and Beyond 2000 Student Incentives and Time to Degree in Texas - 13
Table A-1. Texas State Financial Aid Investments, 1998-99 to 2010-11 State Expenditures on Student Grant Aid (Millions) Grant Aid per Resident Population Texas US Total Texas US Total 1998-99 $ 67 $ 3,626 $ 3 $ 14 1999-2000 $ 101 $ 4,150 $ 5 $ 17 2000-2001 $ 116 $ 4,678 $ 6 $ 17 2001-02 $ 212 $ 5,141 $ 10 $ 18 2002-03 $ 342 $ 5,784 $ 16 $ 20 2003-04 $ 349 $ 6,166 $ 16 $ 21 2004-05 $ 362 $ 6,684 $ 16 $ 22 2005-06 $ 400 $ 7,043 $ 17 $ 23 2006-07 $ 411 $ 7,241 $ 17 $ 25 2007-08 $ 538 $ 8,047 $ 23 $ 26 2008-09 $ 473 $ 8,562 $ 19 $ 27 2009-10 $ 651 $ 8,874 $ 26 $ 29 2010-11 $ 739 $ 9,242 $ 29 $ 30 2011-12 $ 659 $ 9,399 $ 26 $ 30 Source: NASSGAP Annual Reports Student Incentives and Time to Degree in Texas - 14
Table A-2. IPEDS and THECB Graduation Data for Non-Transfer Bachelor s Students, Selected Institutions Credit Accumulation of Graduates FY FY 2004 2011 Semesters Enrolled per Graduate 4-Year Cohort Grad Rate 6-Year Cohort Grad Rate FY FY 1996-2001- 2005-1996- 2001-2005- 2005 2011 2000 2005 2009 2002 2007 2011 Institution SUL ROSS STATE UNIVERSITY 160 145 10.40 9.82 6% 8% 9% 15% 19% 24% U. OF TEXAS AT EL PASO 164 148 11.65 11.12 3% 4% 10% 25% 29% 37% U. OF TEXAS-PAN AMERICAN 167 151 11.05 10.5 6% 10% 17% 24% 33% 42% WEST TEXAS A&M UNIVERSITY 151 137 10.44 10.19 20% 14% 22% 36% 37% 42% Texas Average 149 144 10.14 10.04 19% 22% 26% 46% 48% 50% US Average n/a n/a n/a n/a 26% 29% 32% 51% 55% 56% Sources: IPEDS Graduation files and THECB Timely Graduation Reports Student Incentives and Time to Degree in Texas - 15