Increasing College Access and Success: Investing in Human Capital
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MAP Capital Investment Bonds Presentation to Higher Education Finance Commission September 23, 2010
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Increasing College Access and Success: Investing in Human Capital. MAP Capital Investment Bonds Presentation to Higher Education Finance Commission September 23, 2010. Students-in-Need Do Not Complete College. - PowerPoint PPT Presentation
Transcript of Increasing College Access and Success: Investing in Human Capital
MAP Capital Investment BondsPresentation to Higher Education Finance
CommissionSeptember 23, 2010
Students-in-Need Do Not Complete College
11%
25%
52%
38%
0%10%20%30%40%50%60%
Lowest 2nd Lowest Top 3 (Average) Overall Average
Income Quintiles
% Of Students Who Complete Within 12 Years Of Graduating 8th Grade By Income Quintile
2Source: Goldberger, Susan, “Doing the Math: What It Means to Double the Number of Low-Income College Graduates,” Minding the Gap: Why Integrating High School with College Makes Sense and How to Do It, 2007.
Current Illinois Need-Based Grant Program Helps Low-Income Students Attend SchoolSince 1967, Illinois has provided grant
assistance for low-income students through the Monetary Award Program (MAP)
In FY 2009, 144,230 students received MAP grants totaling $384 million56,326 MAP grants totaling $57 million went to
students attending community colleges, with an average award of $1,008 per student
Critical factor in aligning workforce of the future to changing economic opportunities
3Source: ISAC Databook, 2009
•FY2011 MAP appropriation is $404 M (plus S/LEAP)•Additional MAP funds in FY2011 come primarily from IIA - $4.5 million.•MAP not impacted by 2% reserve requirement•MAP remains the 4th largest state need-based aid program in the country
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Applications and Number of Eligible Students Continue to Rise while Funding is Level
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Good Investments Shouldn’t Lack for CapitalMAP successful in helping students afford collegeOpportunity for state-funded expansion limited;
need greatest in challenging economyEvaluate how much MAP recipients pay in state
income tax revenue v. other low income taxpayersFindings: College has a good return on investment
from individual and state tax perspectiveGood investments should not lack for capitalISAC Challenge: How to get capital for educationISAC Solution: Use capital markets to invest in
people
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Individual Return to Education: Lifetime Earnings Are Greater for Those with More Education
8Source: Georgetown University Center on Education and the Workforce, Help Wanted: Projections of Jobs and Education Requirements through 2018, June 2010, Figure 5.6
9Source: ISAC Analysis of Illinois Dept. of Revenue data
State Return to Education: Income Taxes Increase
Maintaining or Even Sustaining Illinois’ Need-Based Program Is At Risk42,000 students eligible for MAP and who
wanted to attend community college did not receive grants due to lack of funds in FY 09; only 28% actually enrolled without the MAP support
Each year, more students apply for these limited dollars. So far in 2010, over 70,000 eligible community college students have been denied MAP since funds ran out
Unlikely State will have resources in short- and long-term necessitating new, innovative approach
10Source: ISAC data collection and analysis
MAP Human Capital Investment BondsA New Paradigm in Funding$550 million in bonds over 5 years10-year bonds 100,000 low-income community college
students per year funded; up to 50,000 additional students per year
$1,000 average MAP awardMore funds, available to more students
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MAP Cap Bonds Are a Sound Investment
Expands the number of low-income community college students receiving MAP by nearly 50,000
Repays bonds with Illinois Income Tax revenue received from these MAP recipients
Income Tax revenue exceeds debt service each year, with a minimum debt service coverage ratio of 1.85
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13Source: Loop Capital Markets analysis for ISAC
Appendix IOther studies find similar returns to higher
education investment as ISAC/DOR Analysis
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2007 NIU Study Finds Comparable Pattern of Earning Increases from Community College Completion
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NIU and ISAC Analysis Find Similar Impact from Community College
Displaced Workers’ Earnings Increase After Attending Community College
Men less than 35 years old
Men over 35 years old
Women less than 35 years old
Women over 35 years old
Just Showing-up Effect
1.9% 2.6% (2.0%) 1.9%
One Academic Year of CC Credits
7.3% 7.2% 14.6% 11.3%
One Academic Year of Technically-oriented vocational or academic courses
9.7% 10.0% 28.1% 21.9%
One Academic Year of All Other Credits
4.7% 3.3% 6.5% 5.1%
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Source: “Do Displaced Workers Benefit from Community College Courses? Findings from Administrative Data and Directions for Future Research, Louis Jacobson, Robert LaLonde, Daniel Sullivan, Hudson Institute Center for Employment Policy, October, 2005 http://ssrn.com/abstract=1020996
Percentage of Earnings Increase by Age and Gender
Analysis of Census Data Finds Positive Federal Income Tax Return to College Completion
“[I]t is worthwhile for the federal government to invest in federal student aid if the per-student cost is less than about $57,000.”
Source: Mark Kantrowitz, “The Financial Value of a Higher Education, NASFAA Journal of Student Financial Aid, Vol 37, No1, 2007
Added Value
Work-Life Earnings
Federal Income Tax
Bachelor’s v. High School
$519,261 $56,681
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Net Present Value of College Degree and Federal Income Tax, 2005
Appendix IIDetails on MAP Program
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Effective Maximum MAP Award and Tuition and Fees, 1980-Present
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