Student Tuition and Transparency System (STATS) - Impact on Students

For students, the STATS program has the potential to change the landscape insofar as what degrees qualify for federal Direct Loans. With about 1 in 3 students using these loans, students should be paying close attention. To learn more about the program in general, see an overview article here.

Overview of Student Outcomes

The U.S. Department of Education (ED) has completed an analysis of programs to try and predict failure numbers - they estimate about 5% of 129,000 programs will fail, or 6,450 programs. This will most likely cause restructuring or closing of those programs as they will lose federal Direct Loans, which typically account for one-third of program funding. The good news for students is this is a reassurance that the degree they are in will lead to a higher paying job than them not having the degree. The downside for students is it may limit access to programs that have roles within society, but limited earnings potential, such as early childhood education, social work, ministry and the arts.

Federal Pell Grant Recipients - How Will They Be Affected?

Outside of federal Direct Loans, one of the other major sources of federal funding for students is federal Pell Grants. These grants are need-based financial aid and do not have to be paid back. One of the stipulations of the Pell Grant is students have a lifetime limit of six years of full time attendance in postsecondary education. This is tracked from short-term credentials through bachelor's degrees and includes moving to different states and colleges. STATS is not currently going to stop Pell Grant funding to failing programs in most cases (see next paragraph), with some arguing this additional step would give even more power to the current law. As it stands, a new requirement included in STATS is failing programs will be required to disclose to Pell grant recipients the program they are enrolling in is failing the earnings premium metric, as well as how much of their lifetime Pell grant limit they have remaining.

How Can a Program Lose Pell Grant Access?

There is a provision written into the STATS law for removal of all Title IV funding, then Pell Grants would be lost as well. The provision added by ED is that at least half of a college's Title IV recipients and at least half of their Title IV volume cannot be tied to programs that fail the earnings premium metric. If there is noncompliance to this rule for two out of three years, the institution will be placed on provisional status and lose access to all Title IV funding. This is a positive addition to the law for Pell Grant recipients and is a gateway for further sanctions once the program is underway.

Colleges need to prepare now for STATS changes coming to all postsecondary education. To learn more about what your institution can do to prepare, contact Dr. Mildred G. Coyne at mildred@coyneworkforce.com.