The California Student Aid Commission last week explored at a hearing whether, at a time of limited funds for college financial aid, the state should allow Cal Grants to cover all online degree programs.
The commissioners held the meeting in part because they have been seeing an increasing number of colleges and universities entering into agreements with outside groups to provide online education, such as the now-defunct partnership between Kaplan University and the California Community Colleges, said Diana Fuentes-Michel, executive director of the commission.
The panel is reviewing proposed changes to its Institutional Participation Agreement, the contract between the commission and the colleges that are eligible to receive Cal Grants. Fuentes-Michel said Thursday's hearing was the first of several that could lead to recommendations for changes to the agreement – or proposed statutory changes to increase the quality of education at Cal Grant institutions.
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Some of those changes might deal with online education, but Fuentes-Michel said it's too early to speculate on what they'll be. She said, however, that the commission will begin to ask institutions to report their online participation.
Robert Shireman, director of the nonprofit advocacy group California Competes and former deputy undersecretary at the U.S. Department of Education, told the commission that the focus on distance education was too narrow.
"We need to be focused on how can we do a better job of separating out those (institutions) that are not worth taxpayer subsidy and those that are worth a taxpayer subsidy," he said. "What I find distressing is the lack of leadership in general in California to tackle these issues in serious ways."
Shireman recommended that in order to receive Cal Grants, colleges and universities be should required to make public all of the documents they give to private accreditors. Many federal and state financial aid programs rely on the seal of approval from private accrediting bodies as a marker of educational quality, but accreditors don't disclose all of their documents to the public.
Shireman's group, California Competes, has begun to post accreditation documents provided by colleges on its website.
Commissioners were particularly interested in hearing more about Western Governors University, a nonprofit, fully online university based in Utah that serves 3,200 California students.
Under state law, California residents can't apply state financial aid to their attendance at WGU because the college is out of state. A partnership between WGU and the state of Indiana has made students eligible for state aid there.
In her testimony at the hearing, Sally Johnstone, vice president of academic advancement at Western Governors, said the partnership with Indiana has added "affordable capacity" to higher education in that state.
Indiana enrollments in Western Governors have increased eightfold in the 18 months since the partnership began, from 250 to 2,000 students. But only 1 in 4 of those students use need-based state aid, Johnstone said. And the state doesn't subsidize the school's operational costs, which Johnstone said are covered completely by tuition revenue.
The cost of attendance at Western Governors is about $6,000 per year for most degree programs.
The California Legislative Analyst's Office recommended in a 2010 report [PDF] that lawmakers create a task force to pursue a public-private partnership with WGU, with the goal of expanding access to higher education with minimal cost to the state.
It's unclear exactly how such a partnership would affect the state aid doled out by the California Student Aid Commission. The majority [PDF] of Cal Grants – 72 percent – are entitlement awards that go to students who attend college within one year of high school graduation. The vast majority of Western Governors' students don't fit that profile.
The average age of a Western Governors student is 36, and only about 10 percent of students are 25 or younger, a spokeswoman for the university said. In fact, Johnstone said at the hearing that the typical 18- to 22-year-old would not be successful in the program.
That's because it requires a high level of self-discipline and commitment, Johnstone said. Plus, she said, the school does not offer the full range of programs offered at traditional nonprofit universities.
If the state were to make Cal Grants available to Californians studying at Western Governors, these students could be eligible for a smaller pool of 22,500 competitive Cal Grants. Because the competitive Cal Grants are limited, Western Governors students might take grants that would have gone to less-competitive students at other institutions.
Johnstone said that in the case of Indiana, it was the governor's public endorsement of Western Governors that led to the increased enrollment – not the state aid itself.
"The governor was very public about considering WGU as another state university," Johnstone said. "It has a real impact, particularly for low-income students."