Office of the President

Speeches

Financial Aid Testimony

Testimony by Kevin P. Reilly, University of Wisconsin System President,
for the Special Committee on the Review of Higher Education Financial Aid Programs

Tuesday, August 17, 2010

Slide 1
 

Good afternoon, Chairperson Ballweg, Vice Chairperson Risser, and Members of the Special Committee on the Review of Higher Education Financial Aid Programs.  Thank you for inviting us to testify on behalf of the University of Wisconsin System and our 179,000 students, the largest number ever! Joining me here at the table is Kristofer Frederick, a Senior Budget and Policy Analyst with the Office of Budget and Planning, and our resident expert on financial aid. 

As you know, the UW System has embarked on a Growth Agenda for Wisconsin – our strategic plan to boost the state’s economic health.

I’m going to very briefly outline that plan, and talk about why financial aid is such an important factor in our success, and the long-term success of Wisconsin.   

 

 

Slide two provides a handy visualization of two of our core Growth Agenda goals – to grow more graduates and grow more jobs. As we focus on those core goals, we recognize the importance of a competitive UW workforce. That goes to our ability to attract and retain the professors and staff who will teach those graduates, and engage in research and outreach that spurs new job creation, and outfits our staple industries in Wisconsin for the 21st century. Underlying these strategies is the need for state support and more flexibility.

Slide 2
Slide 2

 

[Next slide]

Let’s talk more about our core goal to increase the supply of college-educated workers, and the state’s need for workers with some type of postsecondary degree.

This effort confronts a growing threat to the economic viability of our State and our Nation. The College Board addressed this threat in a new report that they released last month, noting that:

“The United States is facing an alarming education deficit that threatens our global competitiveness and economic future. The country is not keeping pace with other industrialized nations: Once a world leader in the proportion of adults ages 25 to 34 with postsecondary credentials, the United States now ranks 12th.”

"In fact, the majority of new jobs in Wisconsin, and most of the country, will require some kind of postsecondary education."

In fact, the majority of new jobs in Wisconsin, and most of the country, will require some kind of postsecondary education. According to a June 2010 report by Georgetown University, the number of jobs requiring postsecondary education will increase to a national average of 63% by 2018, outpacing the number of qualified workers by 3 million. By 2018, 61% of jobs in Wisconsin will require postsecondary education – 139,000 more than in 2008.

If we’re successful in addressing these mounting challenges, a more educated Wisconsin workforce will yield many other dividends, as faster job growth and higher incomes lead to a broader tax base that supports education, healthcare, transportation, public safety, and other core public services. Together, these forces will lead to an “upward spiral” of economic vitality.

Slide 3
Slide 3

For comparison’s sake, look to Minnesota, a state with significantly more college-educated citizens than Wisconsin. Not long ago, our two states were very similar in terms of education and per capita income. Today, the disparity is staggering. Minnesota has 32% of its workforce with a baccalaureate degree, whereas Wisconsin lags with just 26%.  They’ve jumped out ahead of us in incomes too. In fact, if per capita income in Wisconsin were raised to the Minnesota average, residents here would collectively take home nearly $30 billion more in earnings every year.

The UW System’s “More Graduates for Wisconsin” initiative, which we launched this spring, aims to boost the cumulative number of our graduates by 80,000 over the next 15 years.

Even if we achieve this steady growth in graduates, it won’t be enough by itself. All the college graduates in the world won’t do us any good if there aren’t good jobs here to employ them, so the UW System is also working to create more jobs through an expanded emphasis on targeted academic research and development, building on a proven record of success.

According to the Wisconsin Technology Council, academic research and development is a $1.1-billion industry in Wisconsin, translating into more than 38,000 jobs -- more than the plastics and rubber industry (32,380) or wood product manufacturing (23,790). More important are the private-sector jobs created by university spin-offs – the kind of high-wage “green” jobs you see a few miles west of here at the UW Research Park.

By investing strategically in this established job-creation research engine, Wisconsin can cement its position as a global leader, attract new businesses, and provide new employment options for the people of Wisconsin. 

But to keep focused on this Committee’s work, I’ll summarize jobs in our Agenda by saying:  we’re not going to create more good jobs if we don’t have the graduates, and we’re not going to have the graduates if education isn’t affordable and accessible.

 

[Next slide]

So let me move on to talk about our challenges when it comes to more graduates. It’s no surprise that low- and moderate-income parents and students are more likely than others to rate financial aid and college expenses as “very important.”  Students with financial concerns are less likely to enroll, and less likely to graduate, and the picture gets worse as financial need increases. 

Slide 4
Slide 4

 

[Next slide]

This slide illustrates this by showing how Wisconsin’s overall “population in need” – those eligible for free and reduced lunch – has increased significantly and is projected to continue to increase.  This means that our traditional college age population will need more financial assistance if they are to achieve a college education.

Slide 5
Slide 5

 

[Next slide]

For students of color, the fiscal picture gets even worse. Among these students, the documented financial need is more than $4,000 greater than other students – a difference of about 36%. 

This slide shows that our high school population is becoming more diverse, which (once again) means more potential college students with more financial need. Financial aid – particularly need-based grant funding – is increasingly important in addressing these trends. 

Slide 6
Slide 6

 

[Next slide]

We’re working hard to reach a broader, deeper cut of Wisconsin’s population, helping them achieve their college dreams and create a better future for their children and grandchildren. We know that price can be a barrier to access and success for these students and their families, and we know that need-based financial aid plays a major part in their ability to pursue a college education. In the end, it will have a significant impact on our ability to create and sustain a vibrant Wisconsin economy.

I don’t want to leave you with the impression, however, that this problem is lurking far off in the future. It’s here now. I believe that Connie Hutchison may have mentioned this earlier today, but we had more than seven thousand UW students eligible for WHEG awards last year who did not receive a grant. Just last month, we were informed by HEAB that WHEG awards for the Fall 2010 semester would be suspended on July 28th – much earlier than normal. The last two years have seen a dramatic increase in eligible students not funded through WHEG. This year we decreased individual WHEG awards by 14% to fund more students, and we still ran out of money early.

Slide 7 UW: Challenges
Slide 7

I’m going to turn it over to my colleague Kris Frederick now, so he can talk more in depth about financial aid at UW, and then I’ll join him at the conclusion of his testimony to talk about some of UW’s principles on financial aid, as well as to offer some recommendations for the Committee to consider.  Kris…. 

 

[Kris reviews Slides 8-16]

I think Kris has given you a useful look at the financial aid picture for UW students. Let me review the broad “principles” we apply to financial aid at the UW System. 

 

[Next slide]

When we and our Board of Regents look at the matter of financial aid, we apply a set of formal principles to the discussion, and I want to share that policy framework with you.

First, we believe that socio-economic diversity in higher education is crucial to American democracy. Student recruitment, retention, and degree completion is most successful when financial barriers are eliminated. Financial aid should ensure that cost of attendance dose not limit a student’s choice of UW institution. We believe that students should graduate with reasonable debt. In these times, asking for students to graduate debt free may not be reasonable, but that debt amount should be manageable.

Slide 17
Slide 17

 

[Next slide]

The priority for public higher education should be on need-based aid, so that everyone who wants to work at it can access a college education, and enjoy the benefits that accrue to both the individual and our entire citizenry. Scholarships for those who demonstrate high achievement early are important too. We can, should, and do offer both!

We must work to hone our message more sharply and convince people that college is possible – that means more work in the high schools, the middle schools, and even in the elementary school populations. It means reaching out through Facebook pages, Twitter feeds, church groups, and community organizations, creating a culture of aspiration and a deeper understanding about the real “net price” of a college education.

Financial aid should be consistent and predictable for students and financial aid programs. Uncertainty in this area is a real enemy.

Slide 18
Slide 18

 

[Next slides, 19-22]

With those principles as the backdrop, I’d like to offer six recommendations for the committee to consider:

  1. No one should be priced out of a college education: Any qualified Wisconsin resident should be able to access, afford, and complete a UW degree. We may think that’s the case today, but Kris’s presentation explained that we have some gaps to close before that promise can be fulfilled.

  2. Grants through the WHEG program should increase dollar-for dollar with tuition, so that low-income students are held-harmless against rising costs.  The Board of Regents has consistently supported this approach for the state’s primary need-based grant.

  3. Middle-income students and families should be helped with costs through increased financial aid.  While this is always important, it becomes even more critical during periods of economic stress. 

  4. “Aspirational” programs that educate students about higher education and financial aid, such as KnowHow2Go and the Wisconsin Covenant, should be supported and expanded.  We can’t graduate students who never apply or enroll.

  5. Financial aid should not be a patchwork of programs and should be easily understood.  Therefore, new or additional programs should be integrated into current ones.

  6. It is important to acknowledge that for financial aid, “money does matter.”  Budget reductions that result in tuition increases also impact affordability and access.

Slide 19
Slide 19

 

Slide 20
Slide 20

 

Slide 21
Slide 21

 

I hope these recommendations are helpful as you proceed with your very important work.  Kris and I would be happy to answer any questions you have at this time.

 

* * * * * * * *

Presentation: View the complete presentation on "Financial Aid and University of Wisconsin Students:"