Massive Spending Gap Between Athletes and Academics

This year’s national championship between Alabama and Georgia was a nail-biter of a game, with a deep pass to seal the win for the Crimson Tide. The competition on the turf seems to align off the field as well, as the average amount spent per year on a single player by both teams was between $300,000 and $350,000.

According to a recent study performed by the Knight Commission on Intercollegiate Athletics, annual spending on sports by public non-profit universities in the largest ‘big six’ conferences, has surpassed $100,000 per athlete—around 8 to 12 times the amount spent on academics per full time student. Twenty plus schools spend more than $200,000 per football player, including all of the ten top-ranked FCS programs.

The increased spending on student athletes comes at a time when many college and universities are struggling to fill the gap with funding needs. According to the Center on Budget and Policy Priorities, state spending on public higher education is now at lower levels than pre-recession rates. A recent study from the CBPP highlights that funds allocated to colleges and universities for the 2017 school year were almost $9 billion below the 2008 level.

Concurrently, spending on athletics has grown immensely since the recession. According to the Knight Commission data, major conferences (Big Ten, SEC, ACC, Pac12, Big12) have seen growth in player spending of around 30% and as high as 42%, since the recession. In a report by the American Association of University Professors, average pay of head basketball and football coaches almost doubled from 2006 to 2012. The average salaries for fulltime professors grew at a rate of 4 % at top doctoral level institutions.

University presidents face the reality of seeking new solutions to funding shortages, and athletics can be a tempting source for increased revenue. However, in doing so they must not lose overall sight of their purpose: educating their student body. According to an NCAA report, officials argue that only around two dozen of the 300 plus Division I athletic departments are truly self-sustaining—with revenues exceeding or breaking even with overall costs.  As state schools increase funding to their athletic departments to compete, many are having to balance their budgets by increasing student fees and tuition at alarming rates. As institutions spend more on athletes at vastly disproportionate amounts compared to their average students, they risk undermining themselves, and in turn perpetuating the public’s increased weariness of the higher education system itself.


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New Tax Reform and Higher Education

On December 20, 2017, Congress passed a tax reform bill that revised the nation’s tax code and will ultimately result in significant changes to higher education. Most notably will be a new tax imposed on excess compensation and investment income of the highest endowed private institutions. The legislation also modifies certain rules in relation to charitable deductions while excluding many of the highly publicized proposed provisions, such as taxing graduate school waivers.

New tax on large university endowments

  • A 1.4 percent excise tax will be added to private universities with endowments greater than $500,000 per student.
  • Will affect around 35 higher education institutions.

Excise tax imposed on executive compensation

  • Non-profits will be taxed 21% on compensations over $1 million paid to employees.
  • According to The Chronicle of Higher Education, the tax would be imposed on 158 private, nonprofit college employees (based of tax filings from the 2015 calendar year).

Eliminates the exemption for “advance refunding bonds”

  • Previously allowed non-profits to refinance old bonds earlier to take advantage of lower interest rates and postpone upcoming debt payments.

Doubles the standard deduction for tax filers

  • Will likely cut the number of people who itemize charitable contributions to colleges and universities by providing less incentive to donate.

Eliminates the charitable deduction for college seating event rights

  • Donations made to universities will no longer be deductible federally if the donations are made in exchange for an opportunity to buy tickets.
  • Tickets prices are likely to increase at colleges and universities with larger, more competitive athletic programs.

Tuition waivers for Graduate students will remain tax-free

  • The original House bill would have taxed graduate students’ tuition waivers as income.

Johnson Amendment will not be repealed

  • The Johnson Amendment prohibits tax-exempt organizations—churches, nonprofits, charities, foundations—from endorsing candidates running for political office.

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Renewed Effort to Close Loophole Targeting Veterans and Education

A recent report, from Veterans Education Success indicates that for-profit institutions are using a federal loophole to increase revenue and disproportionally target veterans and service members. From 2011 to 2014, tuition payments to for-profit schools from the Department of Veterans Affairs and the Department of Defense increased by 60 percent—to the tune of $1.1 billion—and according to researchers, the number is an understatement since the Department of Education data doesn’t include all G.I. Bill benefit programs. The now closed Corinthian Colleges and ITT Technical Institutes alone, are estimated to have received over $1 billion in G.I. Bill benefits prior to suddenly shutting down in the last year.

The increase is likely due to declining enrollment at for-profit colleges, universities and trade schools as a result of decreased Title IV funding. To offset this loss in revenue, for-profits are using the 90-10 loophole to fill their financial voids. The 90-10 rule was passed in 1992 and bars for-profit institutions from receiving more than 90 percent of revenues from Title IV federal student funds. However, the law excludes GI bill benefits and the DOD’s tuition assistance funds from its figuring. Congressional staff said that GI Bill and DOD funds were not included in the 1992 cap on Title IV revenue because the GI Bill was not generous enough at the time. In 2008, a new Post 9/11 G.I. bill was passed allowing veterans and service members the ability to receive tens of thousands of dollars towards higher education.

This oversight has become known as the 90/10 loophole, and as a result, for-profit schools have been aggressively recruiting and enrolling veterans and service members ever since. According to Holly Petraeus, of the Consumer Financial Protection Bureau, this loophole “gives for-profit colleges the incentive to see service members as nothing more than dollar signs in a uniform, and to use aggressive marketing to draw them in.” According to Time magazine, a civil complaint filed by the state of California expressed concern over Corinthian College’s unauthorized use of the official seals of the United States Navy, Army, Air Force, and Coast Guard in its effort to boost recruitment of discharged servicemen and women. Other for-profits have been accused of similar recruitment tactics—inflated graduate salaries, false job prospects, and misleading graduation rates.

Concerned with the exploitation of veterans, Senators have reintroduced legislation to tighten VA and DOD educational funds to for-profit schools. Introduced last week, the Military and Veterans Education Protection Act, would close the 90/10 loophole in hopes of protecting veterans. According to Senator Tom Carper (D-DE), “Closing the 90/10 loophole and counting G.I. Bill dollars as federal dollars, which they are, is a commonsense fix that will help us improve educational outcomes for veterans and protect taxpayers.” The bipartisan bill is supported by more than 25 senators and endorsed by over two dozen groups and organizations including: Iraq and Afghanistan Veterans of America (IAVA), Veterans of Foreign Wars (VFW), and the National Association of Independent Colleges and Universities (NAICU). Currently, the bill is awaiting the Senate’s Committee on Health, Education, Labor, and Pensions for review.


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UNC Under Fire, Accreditation at Risk

UNC Chapel Hill is being investigated by its accreditor, the Southern Association of Colleges and Schools, after SACS found that controversial “paper courses” are now being credited towards graduation.

According the (Raleigh) News & Observer, the Southern Association of Colleges and Schools first confronted UNC over allegations of the questionable classes in 2013, when the school claimed it would not honor the classes towards a degree. For students to receive credit for said classes, the university claimed that students would have to take another course altogether to make up the credits. By agreeing to not recognize “paper” classes, UNC was able to hold off sanctions from the Southern Association of Colleges and Schools.

Released last month, the NCAA’s final report on the scandal contradicts what the university initially told its accreditor with, “Despite the fact that the courses failed to meet, involved little, if any, faculty engagement, and were often graded by the secretary, UNC argued the courses violated no UNC policy. UNC further claimed that work was assigned, completed and graded, and the grades counted towards a UNC degree.” UNC officials previously called the classes “academic fraud” but recently reported the phrase as “a typo.” With UNC up for accreditation next month, the Southern Association of Colleges and Schools is investigating the NCAA’s final report and UNC’s lack of transparency.


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Tennessee Promise Program Continues to Grow, Students More Likely to Succeed

Students enrolled in Tennessee’s free community college scholarship, the Tennessee Promise, are showing more signs of success in higher education than their peers not using the program. According to data released by the Tennessee State Board of Regents, 56% of students who started in the Promise program’s first year (2015) remained in school two years later. Only 39% of high school graduates not in the program were still in school during the same time frame.

The program was introduced in 2014 and gives students up to five semesters of tuition-free attendance at any of the state’s 13 community colleges, 27 colleges of applied technology, or eligible 4-year institutions offering associate’s degrees. Beyond removing the financial burden, Tennessee Promise offers individual guidance to each participant from a mentor. Mentors help students maneuver through application and financial aid processes, and are mandatory for students to remain eligible for the program. Tennessee Promise scholarship recipients must also complete 8 hours of community service per semester enrolled and keep a GPA above a 2.0.

Tennessee Governor Bill Haslam said, “When we launched Tennessee Promise, one of the legitimate questions was, … ‘Can theses Students succeed?’ I think the results show that these students are succeeding at a decidedly better rate.”  Though drop-out rates are lower for Tennessee Promise students, the data also shows that 44 percent of the program’s first classmore than 5,500 studentshad dropped out of college without a degree by 2017. Officials argue that the number is a sign of progress with over 60 percent of non-Promise students dropping out in the same timeframe, a 17 percent difference. Tennessee’s Promise program also continues to grow, and according to The Nashville Tennessean is up four percentage points from last year with nearly 85 percent of high school seniors applying.

According to Governor Haslam, “A lot of our efforts in the remaining year and a half that we have in office will be around how do we dramatically increase the percentage of students who complete.” As an educated workforce becomes critical to ensuring economic prosperity in one’s local, state, and national communities, it seems that Tennessee’s Promise program—with its positive application, retention and graduation rates—is setting up its students for a more certain future.


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Department of Education Backs Controversial Nonprofit Conversions

The U.S. Department of Education has “preliminarily concluded” that it will allow two controversial for-profit institutions to become nonprofits. Purdue University announced its intention to acquire the for-profit Kaplan University system back in April. The acquisition has since been approved by the state of Indiana, but still needed backing from the Department of Education and the Higher Learning Commission, its accreditor. Now, with federal approval, all that is needed to finalize the acquisition is authorization from the Higher Learning Commission. The move has set a major precedent in the integration of for-profits with traditional colleges and universities.

The second deal, that seems to have jumped another regulatory hurdle on its way to becoming a non-profit, is the acquisition of Education Management Corp (EDMC)—parent company of Argosy University, South University, and the Art Institutes—by The Dream Center Foundation, a non-profit created to fund philanthropic programs across the country. The Education Department said “it does not see any impediment to EDMC’s request for approval of the change in ownership or its request for approval of nonprofit institution status.” Many are concerned that the Dream Center, which has no experience running higher education institutions, will continue to operate the schools in the same manner as before. If approved by its accreditors, the move would be one of the largest for-profit to nonprofit changeovers on record.

Critics of the acquisitions cite that nonprofit conversions are being used to skirt regulations and mask hidden financial incentives. Unlike for-profits, nonprofit schools are tax exempt. Nonprofit colleges are also excluded from the 90/10 rule, which prohibits schools from earning more than 90 percent of their revenue from federal student loans. Bob Shireman of the Century Foundation—a think tank that investigates for-profit institutions—told the USA Today that the deals are like a bad restaurant being able to claim new ownership in order to improve its reputation without making any additional changes, and cites that Kaplan has been the focal point of past government investigations and lawsuits.

According to a Department of Education spokeswoman, “the department has preliminarily concluded that, based on the information provided to the department, there are no current impediments to the requests for approval of change of ownership.” For the deals to be finalized, both must be approved by their accreditors. The Dream Center-EDMC deal is a more complicated because it requires the approval of two different accrediting agencies. Argosy University is accredited by the Western Association of Colleges and Schools, while South University is accredited by the Southern Association of Colleges and Schools. The Purdue-Kaplan deal relies on approval from the Higher Learning Commission only. The HLC is reviewing the plan now and is expected to make a decision by November 2017.


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Harvard Dean Named Next UVA President

According to the Richmond Times Dispatch, the dean of the Harvard Graduate School of Education, James E. Ryan, is set to become the University of Virginia’s next president. Ryan, 50, is a former alumnus from UVA’s School of Law–where he finished at the top of his class. After working in New Jersey as a public interest lawyer, he returned to UVA as a law professor and served as the School of Law’s academic associate dean from 2005-2009. He left Virginia in 2013 to become the dean of Harvard’s Graduate School of Education. At Harvard, Ryan was a successful fundraiser and made a number of significant faculty appointments. A presidential search committee was formed earlier this year by a select committee of board members, faculty and students after current president, Teresa Sullivan, announced her plans to step down in January of this year. Ryan will begin as president next summer.


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Latest Senate Funding Bill Increases Pell Grants, Extends ACICS Accreditation

The Senate Committee on Appropriations has approved the Fiscal Year 2018 Labor, HHS, and Education Appropriations Bill, which as part of its overall package, will dedicate $68.3 billion in funding to the U.S. Department of Education. A previous proposal by President Trump, to cut spending from the Education Department, was denied when the Senate Subcommittee voted unanimously to increase overall education spending to the tune of $29 million.

More specifically, the bill promotes higher education affordability with a discretionary increase in Pell grants, from $5,920 to $6,020—the first in over 10 years. According to the Senate Committee, “This discretionary increase ensures the maximum award will continue to increase next school year to help students keep up with rising costs and reduce the need for student loans.”

The proposed bill also adds funding to the Year-Round Pell Program, which allows students to receive up to 150 percent of grants over a whole year, not just the fall and spring semesters. The new grant is designed to add $1,600 annually to allow students to pursue higher education year-round, in hopes of finishing up degree programs faster. The bill also outlines a plan to restore Pell aid for defrauded students and those attending colleges or universities that have closed.

Also, as reported by Inside Higher Ed, the 269 institutions accredited by the Accrediting Council for Independent Colleges and Schools have been granted an additional 18-month extension to find new accreditors. ACICS is an accrediting agency that mostly recognizes for-profit schools. In December of 2016, the U.S. Department of Education announced that it would no longer recognize ACICS, and gave schools 18 months to find valid accreditation. Under the new funding bill, schools recognized by ACICS now have 36 months, from December of 2016, to find new accreditation.

Chairman of the Appropriations Subcommittee, Senator Roy Blunt said, “The bill also continues building on our efforts to combat the opioid epidemic and make college more affordable. I urge all of my Senate colleagues to support this measure when it reaches the floor.” The bill awaits a final vote from the entire U.S. Senate.


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Devos Selects For-Profit Administrator as Chief Enforcement Officer

Former for-profit college official, Julian Schmoke, has been hired by the Department of Education to become its new chief enforcement officer for higher education, Politico reports. Essentially, Schmoke’s job will be investigating and protecting students from fraudulent practices by higher education institutions. Schmoke was formerly employed by Devry University, the for-profit institution that was forced to pay over $100 million last year by the Federal Trade Commission and Department of Education on charges that it committed the type of fraud that Schmoke’s department will now be investigating.

Ethics experts and Democrats have become increasingly frustrated with the Betsy Devos administration and its ties to the for-profit, higher education industry. Earlier this year, the DOE was sued by 18 states for not enforcing the Borrower Defense rule. The rule protects students from predatory loans seen as fraudulent and was rescinded by the department in July, citing a federal lawsuit—filed by a group of for-profit colleges.

In June, the DOE hired A. Wayne Johnson, the CEO of a private student lending company, to head the department’s $1.3 trillion federal student loan system. Devos said in a statement, “[Johnson] will bring a unique combination of CEO-level operating skills and an in-depth understanding of the needs and issues associated with student loan borrowers and their families.” Former head of federal student aid, James Runcie, resigned in May saying he could not “in good conscience continue to be accountable as Chief Operating Officer given the risk associated with the current environment at the [Education] Department.”

In a letter to Education Secretary Devos and A Wayne. Johnson, Senate Democrats urged Devos to appoint a chief enforcement officer that has “relevant experience in consumer protection or litigation, managing attorneys, and conducting investigations with the highest ethical standards.”  Schmoke previously oversaw Devry University’s science and engineering school, and currently serves as the director of operations at a tech school in Georgia. According to Politico, Johnson wrote in an email, “Julian possesses over 16 years of experience in higher education leadership with extensive knowledge in the development and implementation of strategies for achieving student success, higher education policy and evaluation of academic programs.” The Department of Education and Schmoke have not responded to requests for comment from Politico.


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Female Presidents at Doctoral Research Universities Decreasing

New research from Higher Education Publications, Inc., indicates that the number of women in presidential positions at the major research universities is decreasing. The analysis tracked presidents of the 115 colleges and universities in the United States that are Carnegie classified as doctoral research, highest activity institutions. Carnegie classified doctoral institutions include schools that award at least 20 research/doctoral degrees during a given year, such as Princeton, Stanford and Michigan.

The report, based on information from the HigherEd Direct Database, examined Carnegie classified doctoral universities from 1988 to the present. Currently, 16 of the 115, or just under 14% of institutions listed, have female presidents. The number of women in chief executive positions peaked from 2009 through 2012, when 23 of the 115 schools had women as presidents. The lowest year for female presidents was in 1994, with only 4 female and 111 male presidents.

Data from the study shows significant growth in the number of female presidents from 1988 to 2012, when it topped out at 20%. Since then, the percentage of females in presidential positions at doctoral universities has trended downward, to under 14%.

Female presidents chart

Conversely, according to a report by the American Council on Education, 30% of all colleges and universities in the U.S. have female presidents, with the most (36%) at associate institutions. The ACE Report also shows continuous growth in the percentage of female presidents in the last 30 years, from 9.5 % in 1986 to 30% in 2016.

HEP’s Research shows that the average tenure of male presidents is longer than that of female presidents. On average, male presidents serve for 5.96 years at doctoral research institutions, while females serve for an average of 4.87 years. The longest serving tenure for a female president in the study was a 15-year tenure by Dr. Shirly Kenny, of SUNY Stony Brook. The longest serving male is Dr. John Hitt, who has been at the University of Central Florida for the past 25 years.

Tenure Chart

While the percentage of women in presidential positions at colleges and universities has grown in the last thirty years, research from Higher Education Publications, Inc. indicates a major disparity between top research institutions and other higher education institutions. While the Ivy league has made progress in gender diversity—four out of the eight schools are run by females—overall, just under 14% of college presidents are female at top doctoral research institutions, while the rest of the country is at 30%.



ACE’s “American College President Study 2017”:

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