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					            Higher Ed NewsWeekly
                                                   from the Illinois Board of Higher Education

February 11, 2010

ON CAMPUS                                                 ODDS AND ENDS
Page                                                      40 For this U. of Phoenix student, perseverance
1 UI union cries foul over new furlough, pay-cut          43 Inadequate information seen on college choices
    policies
3 Enrollment at SIC up 5.5 percent                        OTHER STATES
4 New Web site to share ideas, info on UI                 44 Leader of Ohio State, biggest U.S. campus, takes
    resources                                                on tenure
5 Lake Land College enrollment sets record
                                                          47 North Carolina: For students at risk, early
6 ICC enjoying record growth                                 college proves a draw
8 Enrollment of dislocated workers up 32 percent
    at Lake Land College
10 UI opposes university bond sales

STATE
13 Ill. teachers' fund gets $1.22B from state
14 Illinois lawmakers consider cutting some
   scholarship, tuition reduction programs

NATIONAL
15 For-profit colleges change higher education's
   landscape
21 With federal stimulus money gone, many
   schools face budget gaps
23 Enrollment growth amid recession creates long-
   term challenges for states
24 Fading stimulus saved colleges

MONEY AND BUDGET
27 U of I tuition increase reflects national trend
28 Merit-based raises will not happen for ISU
   employees this year
29 Public universities appeal for money they were
   promised
30 University leaders ask state for reliable payment
   schedule for overdue money
31 ISU leaders not panicking about state's late
   payments
32 SIUC eyes cash crisis, its options

COMMENTARY
33 Rising college costs: A federal role
37 A hidden tax hike for college kids' families?
39 Higher education going under
                                                                                                             1


The News-Gazette, February 5, 2010 (Page 1 of 2)

UI union cries foul over new furlough, pay-cut policies
                                              By Julie Wurth
                                          Friday February 5, 2010

URBANA – A union that represents visiting academic professionals at the University of Illinois has filed a
formal complaint about the UI's new furlough policy.

The Visiting Academic Professionals/Association of Academic Professionals filed an unfair-labor-practice
complaint Wednesday with the Illinois Educational Labor Relations Board, the union and state agency
both confirmed.

It alleges the university violated the state's labor act by failing to bargain for changes in employee notices
of appointment and unilaterally imposing furloughs.

The UI announced last month that 11,000 employees would have to take unpaid days off before the end
of the semester – 10 for top administrators and four for faculty and academic professionals who earn
more than $30,000 a year. The move was expected to save the school $17 million.

Later, the university said employees could take an equivalent pay cut instead of furlough days.

The academic professionals' union argued that the UI could not arbitrarily impose furloughs or pay cuts
on its members without negotiations. The union signed its first three-year contract with the university in
2006, and the two sides have been negotiating a new contract since the fall.

The union represents about 300 employees who have short-term contracts, usually for a year. They
advise students, conduct experiments, work in counseling centers or teach classes.

Gene Vanderport, area representative for the Illinois Education Association, said he had hoped the two
sides could come to a resolution when they met Monday, the first meeting since the furlough policy was
announced. But no progress was made, union officials said.

"We're flabbergasted," Vanderport said. "When you're bargaining, you just don't impose a pay cut in the
middle of bargaining. It's like the law doesn't exist."

The union has also filed a grievance alleging that the university violated its contract with visiting academic
professionals, Vanderport said.

"They both may very likely be remanded back to an arbitrator for a decision," he said.

The grievance process has a much shorter timetable than an unfair-labor-practice complaint, which could
take months for an administrative law judge to sort out, said chief negotiator Alan Bilansky, a UI
technology training specialist.

As with other UI unions, the contract for visiting academic professionals has no specific language
addressing furloughs.

Every academic professional receives an appointment letter describing the terms of his or her
2


The News-Gazette, February 5, 2010 (Page 2 of 2)

employment, Bilansky said, and under state labor law, that can't be changed without both sides agreeing
to it.

"It seems like a pretty open-and-shut case," he said.

The complaint asks the state labor board to order the university to end mandatory furloughs for the union
members, rescind the changes to their notices of appointment, rescind the offer for employees to take a
voluntary pay cut, and reimburse employees for any furloughs or pay cuts they take.

Bilansky said many visiting academic professionals have already taken furlough days, as the first was to
be taken during the monthly pay period that ends Feb. 15. The union has advi sed employees to comply
with the directive until the grievance and complaint are sorted out.
                                                                                                            3


The Southern Illinoisan, February 6, 2010

                      Enrollment at SIC up 5.5 percent
                       The Southern | Posted: Saturday, February 6, 2010 2:00 am

HARRISBURG — Enrollment is growing at Southeastern Illinois College, officials at the Harrisburg
campus report.

The full-time equivalency student number for Southeastern stands at 1,307 students, a 5.5 percent
increase from last year. Officials expect that increase to grow after mid-semester classes, specialized
training courses and some high school dual-credit programs begin.

“We’re extremely pleased with the growth we’ve seen in enrollment,” said SIC President Jonah Rice.
“Students know that they can receive a high-quality education at SIC and at a fraction of the cost they
would incur elsewhere. That’s the running story about community colleges — and in particular
Southeastern — these days, especially in these tight economic times.”

Southeastern’s online numbers continue to show a healthy performance as well, officials said. The
college is up 16 percent in online enrollment for the spring. Online growth is expected to be even better
next year, with the start of online programs in graphic design, biofuels education and other areas, officials
report.

“The phenomenal growth we’ve experienced in online education is a result of great cooperation among
faculty, staff and administration coupled with sensitivity to student needs,” said Dana Keating , Vice
President for Academic Affairs.

Community college enrollments typically experience an upswing during times of economic downturn.
Southeastern has been working to bolster some programs and create others, including a fire brigade
training and mine safety training in the college’s burn tunnel, customized training for local law
enforcement, and an AFA degree in Theater.

One of the key parts of the college’s strategy in addressing the state-imposed budget crunch was to
develop low-cost, high-reward new programs to attract new students, and despite a recent tuition
increase, the college retains the lowest tuition of any community college in the area, officials said.
4


The Champaign- Urbana News-Gazette, February 6, 2010

    New Web site to share ideas, info on UI resources
                                  Sat, 02/06/2010 - 9:00am | Julie Wurth

URBANA – The University of Illinois has launched a new budget Web site to give students and
employees input on how to best use scarce university resources.

The site, "Stewarding Excellence at Illinois," was created to provide a "one-stop source" for people who
are curious about the ongoing budget review process, are working on a budget issue on campus, or want
to offer ideas, UI spokeswoman Robin Kaler said on Friday.

Users can get the latest budget updates, review documents, see who serves on various budget
committees, check the schedule for upcoming meetings, and make a suggestion or ask a question
through a virtual suggestion box.

They can also subscribe to get weekly notices when new information is added to the site.

The site includes a list of the guiding principles behind the budget-review process, an archive of all
related communications and documents, a "Frequently Asked Questions" section, and links to data and
other resources on campus.

Kaler said the Web site will be continually updated and grow as the budget process unfolds and various
review teams generate reports.

A mass e-mail to the campus Friday from interim Chancellor Robert Easter and Richard Wheeler, interim
vice chancellor for academic affairs, who said they want the site to be a central source of information
about campus budget activities "as we move forward through the current financial challenges."

"Our goal is to make the process broadly visible to all who have a vested interest in it. We encourage you
to consult the site regularly, and we encourage our active responses to it and to the circumstances it
addresses," Easter and Wheeler said.
                                                                                                                5


Journal Gazette & Times-Courier, February 8, 2010

            Lake Land College enrollment sets record
                                   By HERB MEEKER, Staff Writer
                                         hmeeker@jg-tc.com
                                 Monday, February 8, 2010 9:53 PM CST

MATTOON — Lake Land College set an all-time enrollment record this semester with more than 9,000
students, but the story behind that figure might be bittersweet.

There are 9,069 students enrolled at the community college for the first 10 days of the spring semester,
said Tina Stovall, LLC vice president of student services. That amounts to an increase of 1,281 students
or 16.4 percent compared to spring 2009. Student totals are up this semester for the college classes
and corrections programs managed by Lake Land — by 907 students for college-based classes and
374 for correction center learning programs.

“This is the highest 10th-day enrollment in the history of the college,” said Stovall during Monday’s LLC
Board of Trustees meeting. The previous record was 7,944 in spring 2008.

The enrollment increase is welcomed by college officials, but trustee Mike Sullivan pointed out that high
unemployment in the college district might be a driving force. Many students, especially those outside
the traditional age categories, might be entering the college to seek degrees or job training to start new
careers after layoffs or business failures: Area counties have been reporting jobless figures in the
double digits month after month as the economic downturn continues in the area.

“This is bittersweet because we know why a lot of them are coming back to school. So we have to
continue to take care of them,” Sullivan said.

But the higher enrollment might have ensured the college did not lay off some of its work force,
President Scott Lensink said after the board meeting.

“The higher enrollment has helped us out. If it wasn’t for that, we might have looked at staff cuts,”
Lensink said.

Overall, the college has reduced its full-time teaching staff by three, but part-time faculty are being hired
to help with more students coming into the college. The board last year committed to avoiding staff cuts
unless funding shortfalls force that action.

The board also had good fiscal news with the college receiving $27,600 through the Illinois Board of
Higher Education Work Study Program grant, which provides on-the-job training for students in their
career fields, and $39,780 from an IBHE Nursing School Improvement Grant that provides interactive
technology instruction through patient simulators and audience response systems.

Pam Crisman, vice president of development, said the IBHE work study grant is the fifth largest of 22
awards granted to community colleges this year, while Lake Land was the only community college to
earn the nursing school award.

In other business Monday, the board learned that the college’s two classes of nurses achieved state
testing rates of 100 percent and 94 percent — only two students did not pass out of the latter group.
Both rates are outstanding, said Jim Hull, vice president of academic services.
6


Peoria Journal Star, February 9, 2010 (Page 1 of 2)

                           ICC enjoying record growth
              Credit hours and enrollment up double digits over last spring

                                  By DAVE HANEY (dhaney@pjstar.com)

                                          OF THE JOURNAL STAR

                                              EAST PEORIA —

Past tuition increases at four-year state colleges and universities coupled with the continued effects of the
recession have been a boon for Illinois Central College.

For the second year straight, more students are taking more classes at ICC.

Spring enrollment is up more than 10 percent from last year; the number of enrolled credit hours students
are taking is up 13 percent.

In fact, credit hours for the entire year - summer, fall and spring - hit 259,736 hours, the highest ever in
the college's history, topping last year's record 230,516 hours. Enrollment over the same period also is an
all-time high at 31,860 students, 8.8 percent over last year's 29,288 students.

"The growth has been phenomenal," ICC President John Erwin said Tuesday. "I think the recession
continues to play a factor in that but I also think . . . people see ICC as a value - we're a low-cost provider
to higher education in our area with quality classes, a large number of classes and a variety of classes."

Erwin pointed to a slight increase of students in the 35- to 45-year-old range, "an indicator of the
dislocated worker, or retraining of a displaced worker, at least generally."

But the largest growth continues to be in the traditional-age or high school-age students, which Erwin
predicts will continue to drive enrollment.

Also not to be lost are the benefits of Peoria Promise, which is helping about 300 students this semester
with tuition.

Peoria Promise, a two-year scholarship to ICC unveiled about four years ago, pays for tuition and fees for
every Peoria city public school graduate. Scholarship benefits are based on the length of attendance on a
sliding scale. Students must also apply for federal financial aid.

"Just wait, you haven't seen anything yet," Erwin said.

He added that as all colleges continue to face budget restraints and pass along tuition increases to
students and their parents, more will compare costs at four-year colleges and universities with those at
community colleges and look favorably at community college in many cases, he said.

Because of the uncertainty of state funding, all spending in personnel, travel, conference and meetings
must be pre-approved, Erwin said in a letter that went out to staff. All supplies, services, materials, and
capital expenses must be pre-approved by the college's vice president of administration and finance.
                                                                                                               7


Peoria Journal Star, February 9, 2010 (Page 2 of 2)

The amount of the shortfall from the state is greater than $4 million for ICC, Erwin said.

The volatility in state funding also has ICC and many other colleges eyeing tuition.

University of Illinois officials have said freshmen could face a tuition increase of at least 9 percent this
summer.

Next month, the ICC board of trustees will begin deliberation on the subject, Erwin said. Preliminary
recommendations are for an increase pegged at less than $10 per credit hour, though that could change
depending upon the state. Tuition is $87 per credit hour.

Enrollment growth at ICC is helping to bridge the gap in state funding, Erwin said; however, the college
must provide additional services and capacity to meet current and future demand. Renovation continues
at ICC North, as well as expansion at ICC South in Pekin and at the main campus in East Peoria.

"I've not seen us climb out of a recession very quickly, so I would believe there will be strong economic
reasons to look at the community college for at least another year or two," Erwin said. "There's always
been economic reasons, but then you add we have given quality an accent and are very student-service
oriented. I believe this (growth) is the indefinite future."

Dave Haney can be reached at 686-3181 or dhaney@pjstar.com.
8


Journal Gazette & Times-Courier, February 10, 2010 (Page 1 of 2)

    Enrollment of dislocated workers up 32 percent at
                   Lake Land College
                                        By HERB MEEKER, Staff Writer
                                             hmeeker@jg-tc.com

MATTOON — A record number of laid-off workers are enrolled at Lake Land College this semester.

However, a CEFS official in Effingham said the Dislocated Worker Program is now on hold for placing
new students in training programs due to federal funding concerns. The program offers tuition assistance
to qualified students seeking new jobs or careers.

Currently, Lake Land has 282 students enrolled in the Dislocated Worker Program, based on 10-day
enrollment data released this week.

“We’re on hold right now for new people. It depends on the federal lawmakers right now,” said Kevin
Bushur, a CEFS work force director in Effingham.

Area residents laid off or terminated from jobs may apply for up to two years of dislocated worker
assistance. Right now, applicants are being told the summer semester might be the earliest they can
enroll in college courses, Bushur said, which is not unusual for applicants coming forward after a college
semester has started.

The total of dislocated worker students this semester is an increase of 32 percent from fall 2009 and is
believed to be a record for the community college. That has strained program counselors this semester,
said President Scott Lensink.

“Due to the sheer numbers going through dislocated worker, the counselors don’t have enough time to
help everyone,” he said. “But we recommend they come out to us and talk about other financial
opportunities for college.”

Tina Stovall, vice president of student services, said applications for financial aid should be completed as
early as possible for students to gain a chance at state and federal dollars.

“Now is the time to be applying for financial aid, especially for next fall,” Stovall said.

Bushur said there are other financial aid programs to help the unemployed. One is the Adult Education
Program, which offers assistance to anyone 18 or older. Like the dislocated worker program, all
applicants must qualify to participate.

There is a rush to the community college this year. Overall, Lake Land’s enrollment increased by 1,281
students or 16.4 percent, based on the pupil count over the first 10 days for spring.

Total Full-Time Equivalent enrollment, based on 15 credit hours per FTE unit, has increased by 683 to
5,101 FTE or 76,511 credit hours. That is an increase of 15.5 percent from spring 2009. That FTE total,
like the head count, is a record for Lake Land.

But there is no way to calculate how many students have enrolled this year because they are without
jobs, officials said. One indication might be the high unemployment rates, above 10 percent for most of
the East Central Illinois counties in the Lake Land district.
                                                                                                            9


Journal Gazette & Times-Courier, February 10, 2010 (Page 2 of 2)

And many of the jobless are hoping a fresh start with a college degree or certification might turn their lives
around, Lensink said.

“Some dislocated workers say losing their jobs offered them a chance to change their lives. They found
out they were not done. They still had a future,” Lensink said.

Contact Herb Meeker at hmeeker@jg-tc.com. or 238-6869
10


The Champaign- Urbana News-Gazette, February 10, 2010 (Page 1 of 3)

                     UI opposes university bond sales
                                  Wed, 02/10/2010 - 9:00am | Julie Wurth

Borrowing would be short-lived solution to crisis, officials explain

In late 2009, with an employee payroll looming, Southern Illinois University appealed to the state
comptroller's office for some cash.

Like other universities, SIU was owed millions by the state, which is months – and hundreds of millions of
dollars – behind on payments to agencies and vendors because of a huge budget deficit.

The state eventually came through with enough money to cover SIU's December payroll, but not before
students, parents and faculty bombarded the school with questions about whether it would reopen for the
spring semester, said Dave Gross, SIU's executive director for government and media affairs.

Hoping to avoid a repeat scenario, SIU officials sought legislation that would let it borrow money on a
short-term basis against expected state appropriations. Senate Bill 642 would allow SIU, and potentially
other schools, to sell general obligation bonds to raise money for operating costs.

The measure passed out of a Senate committee last month, and its sponsor, state Sen. William Haine, D-
Alton, is considering amendments that would include other state universities. Gross said most schools
signed on to the idea in a conference call with the governor's budget director Monday.

The University of Illinois is not among them. UI officials say borrowing is only a temporary solution to a
much deeper state financial crisis, and would also cost the school money in interest. Under the bill,
universities would be responsible for repaying the bonds, not the state, said Randy Kangas, UI associate
vice president for planning and budgeting.

"We don't think that is a desirable public policy course," interim UI President Stanley Ikenberry said
Tuesday. But he added, "I think it's reflective of a sense of desperation universities are feeling on this
issue."

Ikenberry and the state's other public university presidents and chancellors released a joint letter Tuesday
asking state leaders to commit to a reliable payment schedule for past-due appropriations.

The letter calls on Gov. Pat Quinn and Comptroller Dan Hynes to provide a payment plan for fiscal 2010
appropriations. It also asks elected leaders to work together to develop long-term financial solutions to the
budget crisis.

As of last week, the state was $735 million behind on payments to the public universities for fiscal 2010,
which began July 1.

To meet the "unprecedented" cash crunch, schools are postponing payments, using other funds to meet
payroll and considering severe budget cuts. The UI last month announced unpaid furloughs for 11,000
employees.
                                                                                                                 11


The Champaign- Urbana News-Gazette, February 10, 2010 (Page 2 of 3)

"Without full funding of our appropriations in a timely manner, we will be forced to take even more drastic
actions that will diminish the educational opportunities of our students and our service to the people of
Illinois," says the letter, signed by 14 presidents and chancellors from the four-year public universities.

Ikenberry said the state must resolve its problems or risk permanent damage to its higher-education
system. The state owes the UI about $431 million.

"We are asking for some assurance of a payment schedule. If we knew we were going to get payments
every month for the next six months," that would allow schools to "plan more rationally," he said.

Ikenberry, who supports a tax increase and "belt-tightening" to resolve the budget crisis, hopes to spur
legislators to act.

"The distraction of the primary is gone, but it may be replaced by the distraction of a general election,"
Ikenberry said. "Certainly there's an opportunity now to take some kind of decisive action. Even if it were
not a complete solution, a first step toward a solution would help."

It may not be realistic to assume the state will come through with the full appropriation by June 30,
despite assurances from Quinn's staff, Gross said. He predicted the payments could drag into July or
August.

SIU President Glenn Poshard decided his university needed a line of credit as a backup plan, Gross said.

"We don't want to do it. It's going to cost us money. But weigh that against the consequences of not
making payroll," he said.

The UI's Kangas urged caution. The UI has already lost interest income because of late state payments
and didn't budget for interest costs on short-term borrowing.

"If other universities want to do this, that's their decision," Kangas said.

The UI has covered the state shortfall so far by borrowing internally from "unrestricted institutional funds"
– money generated by grants and contracts for overhead costs. But Ikenberry warned Tuesday that the
university is draining its cash balances.

"If, God forbid, the full appropriation is not received, the university's limited reserves will be decimated,"
he said in a speech to the Civic Federation in Chicago.

Northern Illinois University President John Peters said he "very reluctantly" signed on to the legislation.

"There's no state money coming in. We're out of solutions, so short-term borrowing might be all that we
have left," Peters said.

Northern imposed a hiring freeze last fall, extended winter break to save energy costs, delayed
equipment purchases and has approved only emergency repairs, he said.
12


The Champaign- Urbana News-Gazette, February 10, 2010 (Page 3 of 3)

Chicago State: $10.6 million

Eastern Illinois: $23.4 million

Governors State: $9.5 million

Illinois State: $40.5 million

Northeastern: $18.4 million

Northern Illinois: $59.6 million

Western Illinois: $21.3 million

Southern Illinois: $119.9 million

University of Illinois: $431.7 million

Total: $735 million

Source: Illinois Board of Higher Education
                                                                                                             13


Crain’s Chicago Business, February 9, 2010

              Ill. teachers' fund gets $1.22B from state
                                          By Christine Williamson

(Crain's) — Illinois Teachers’ Retirement System, Springfield, received a $1.22 billion contribution from
the state, part of the proceeds of a $3.466 billion pension obligation bond sale, said Stan Rupnik, acting
executive director and chief investment officer of the $30 billion fund.

About $250 million of the POB funds was invested with existing fixed-income managers; $400 million
went to existing real-return managers; and $571 million was set aside for benefit payments over the next
few months, Mr. Rupnik said.

(This report originally appeared on the Web site of Pensions & Investments, a sister publication of
Crain's Chicago Business.
14


St. Louis Post-Dispatch, February 10, 2010

Illinois lawmakers consider cutting some scholarship,
              tuition reduction programs
                                         By Kathleen Foody
                                POST-DISPATCH SPRINGFIELD BUREAU

SPRINGFIELD — Illinois lawmakers facing a record budget deficit have proposed cutting programs that
allow some university students to pay lower tuition than their peers, including a 50 percent discount for
children of state university employees.

The labor union representing those employees says lawmakers should look for new sources of revenue
rather than cut a program that decreases tuition costs.

"The goal should be making higher education easier, not harder, for young people to attain. Lawmakers
should raise adequate revenue to fund state universities, not cut programs that help working families
afford rising college costs," AFSCME Council 31 spokesman Anders Lindall said in a statement.

Rep. Dave Winters introduced the bill to eliminate the discount at the beginning of January, but
lawmakers haven't yet addressed the bill.

The tuition stipends amounted to $7 million in lost revenue for universities in the 2008-2009 school year.
Universities don't get any reimbursement from the state for the employees' children.

"I've had constituents call and ask why we favor some groups and not others," Winters said. "This is one
of the ways we want to save money and have everybody have the same state rights and services, not
write special little laws for certain groups."

The bill is "a starting point for discussion" Winters said, and he's willing to consider other compromises.
Any students already in school using the stipend will continue to receive it, he added.

Rep. Jack Franks filed a bill to eliminate another program that affects college hopefuls. The long-debated
General Assembly scholarships took another $13 million in potential revenue from state universities in the
2008-2009 school year.

Under the program, lawmakers can give out the scholarships to students in any way they choose. Critics
charge that a lack of oversight allows lawmakers to provide free rides as political favors.

"It's unfair to our university systems to continually put more financial burden on them," Franks said. "And
we've all certainly heard of abuse when individuals receiving these scholarships are connected financially
to legislators."

Franks said he did participate in the scholarship program but had no direct role in selecting winning
students. Instead, he asks each high school in his district to select a candidate.

"That's how I do it because I think it's the proper way, but the more I think about it the more I think we're
better off as a state without (the program)," Franks said.

Even in an election year, trimming programs from the state's budget and statutes could become a trend
this spring as Illinois legislators are again confronted by the historic budget deficit and hear pleas from
service providers struggling to stay afloat.

"We can't be everything to everyone," Franks said.
                                                                                                             15


The Chronicle of Higher Education, February 7, 2010 (Page 1 of 6)

       For-Profit Colleges Change Higher Education's
                         Landscape
               Nimble companies gain a fast-growing share of enrollments

                                               By Robin Wilson

At a time when American public higher education is cutting budgets, laying off people, and turning away
students, the rise of for-profit universities has been meteoric.

Enrollment in the country's nearly 3,000 career colleges has grown far faster than in the rest of higher
education—by an average of 9 percent per year over the past 30 years, compared with only 1.5 percent
per year for all institutions, according to an industry analyst. For-profit universities now educate about 7
percent of the nation's roughly 19 million students who enroll at degree-granting institutions each fall. And
the proportion rises to 10 percent, or 2.6 million, if you count students who enroll year round. Just this
academic year, the University of Phoenix eclipsed California State University as the second largest
higher-education system in the country, with 455,600 students as of this month—behind only the State
University of New York.

"It's been a tremendous growth story," says Jeffrey M. Silber, a stock analyst and managing director of
BMO Capital Markets, which figures the for-profit sector brought in $26-billion in 2009. Most of that was
earned by 13 large publicly traded companies that now dominate the market.

As those companies face shareholder pressure to expand, the for-profit sector is poised to capture
students that public institutions can't accommodate and that small private colleges desperately need to
maintain their enrollments. The sector is likely to be a key beneficiary of President Obama's $12-billion
plan to produce five million more two-year-college graduates over the next decade. That's partly because
for-profit colleges, which first opened more than 150 years ago offering certificates and diplomas, are
increasingly encroaching into the territory of traditional higher education by awarding degrees. "All of the
conditions are there for them to capitalize on their advantages and continue to grow," says David S.
Baime, vice president for government relations at the American Student Association of Community
Colleges.

Yet most professors and administrators on traditional campuses continue to dismiss for-profit colleges as
inferior alternatives that cost too much, consume more than their fair share of federal student aid, and
turn out unprepared graduates who default on their student loans. "Traditional faculty members think of
this as a little sideshow or as those matchbook places you see advertised on the bus," says Mark S.
Schneider, a vice president at the American Institutes for Research.

But the for-profit sector is not only more robust than the rest of higher education, it is helping to force
some changes in the way traditional colleges do business. Like for-profit institutions, traditional colleges
are reaching out to adult students, starting online programs, and saving money by rejecting tenure in
favor of hiring professors by the class. Still, traditional higher education is not known for being nimble. It
has been operating in roughly the same way for hundreds of years, so by its very nature it may not be
16


The Chronicle of Higher Education, February 7, 2010 (Page 2 of 6)

well suited to respond to competition from the for-profit sector. Cary Nelson, president of the American
Association of University Professors, likens the for-profit sector to "the blob," an alien life form that
consumed everything in its path in the 1958 Steve McQueen movie of the same name.

"The blob would shimmer and then be half again as big as before," Mr. Nelson says. "You'd turn your
attention away and look back and suddenly, it's blocking out most of the sun." At the end of the movie,
Steve McQueen kills the blob. The difference here? For-profit colleges aren't going away.

Neon Lights

Just over 30 years ago, fewer than 100,000 students attended for-profit colleges and universities. The
sector was populated primarily by small, privately owned businesses, "mom and pop" enterprises that
looked little like their traditional, four-year counterparts. The colleges—the first of which had started
primarily in port cities like New York, Philadelphia, and Boston—taught skills for front-line jobs in high-
demand fields, including business and health care, and later, cosmetology and food and secretarial
services. And they enrolled people that traditional higher education tended to ignore: working-class adults
with children of their own who needed more skills to get better-paying jobs but couldn't take time out to
attend a traditional campus.

For-profit colleges maintain much of the same mission today, but the market has seen sweeping
changes. Of the roughly 3,000 for-profit institutions, 40 percent are now owned by one of 13 large,
publicly traded companies. And whereas only 10 percent of the institutions offered associate, bachelor's,
or professional degrees in 1990, half do so today. Further, more than 90 percent of students at for-profit
institutions are now enrolled in degree programs. Only about 30 percent attend part time. As the sector
expands, it is attracting students who might otherwise have attended community colleges or even four-
year institutions. "They are clearly a threat for both public and private schools," says Jim Scannell,
president of the higher-education consulting group Scannell & Kurz, "especially for adult students
returning to get a B.A. or going part time to get a master's."

Some small, private liberal-arts colleges, seeing enrollments decline because of the economic downturn,
are looking to make up that lost tuition revenue by boosting their enrollment of adult students. Such
institutions are competing head to head with for-profit colleges. In addition, students who have been
turned away by budget-strapped public colleges, or who simply find the bureaucracy there too difficult to
deal with, are being welcomed by the for-profit sector. It's not clear whether this shift of students from
public institutions to for-profit universities will be permanent, industry analysts say, but for now it adds to
the size and legitimacy of the for-profit sector.

Corliss A. Ford attended a public junior college more than 25 years ago to earn her associate degree in
nursing. But when she decided to go back to earn her bachelor of science in nursing two and a half years
ago, she chose a for-profit, Kaplan University. Because she works two jobs, she says, she would never
have had time to travel to a traditional campus. "Trying to make it to a place where you sit in a class was
almost impossible," she says. At Kaplan, she started her program during the summer and took online
classes in the evenings. "I could start anytime online," says Ms. Ford, who graduated from Kaplan last
month and already has a new job as director of nursing for a home-health-aide company.

While Kaplan Higher Education is one of the country's largest for-profit companies, with approximately
103,800 students, it is owned by the Washington Post Company and so is not one of the 13 large publicly
traded for-profit universities.
                                                                                                           17


The Chronicle of Higher Education, February 7, 2010 (Page 3 of 6)

The biggest player among those is the Apollo Group. Its flagship University of Phoenix has morphed from
an institution with 25,100 students in 1995 to one with 455,600 today. That means that 15 years ago
Phoenix was about the same size as George Washington University. Now it is larger than the entire
undergraduate enrollment of the Big Ten.

Phoenix, by far the biggest part of Apollo, has 200 campuses in 39 states, Canada, Mexico, the
Netherlands, and Puerto Rico. Still, much of the university's growth has been fueled by students who
work primarily online (one of its key targets: working mothers, who can take classes from home in the
evenings while their children are sleeping). Phoenix's enrollment dwarfs that of each of the other 12
publicly traded companies, including Education Management Corporation, with 136,000 students; Career
Education Corporation, with about 113,900 students; and DeVry Inc., with 101,648 students.

Education Management is a case study in the trajectory of the for-profit sector. When John R. McKernan
                  ice
Jr. took over as v president in 1999, the company had 19 art institutes with 24,000 students. Since
then, the company's student population has increased more than fivefold as Education Management has
purchased a set of junior colleges in the Midwest, a small group of health-sciences colleges, a law school,
and Argosy University—which began as a graduate institution. Whereas in 2006, 4,000 of the company's
students worked fully online, says Mr. McKernan—who is now the company's chairman—that number has
grown to more than 30,000 today.

At first glance, the corporation's flagship art school—the Art Institute of Pittsburgh—doesn't look like a
traditional college. The "campus" is a 10-story building, just off the Monongahela River, that blares the
institute's name at the top in red and white neon. Each floor is devoted to a different program, starting at
the top with culinary arts and descending through industrial design, Web design, fashion and retail
management, interior design, and photography. The walls of each floor contain glass cases that display
posters, furniture, clothing, photographs, and even wrapping paper and greeting cards—all the work of
the institute's students and some of its 55,000 alumni.

But on the fourth floor is a classroom labeled "Western Civ. I," a course the institute added in 2001 after it
began offering bachelor's degrees. The institute also has a library and a writing center, where a teacher
and a handful of students work quietly. And a few blocks away are three residence halls that the art
institute opened in 2007 and 2008.

George L. Pry, the president, says that like other for-profit universities, the institute—which opened in
1921—has reinvented itself during the last decade, converting many of its associate-degree and diploma
programs into bachelor's degrees.

"Employers were asking for more well-rounded employees coming out of here, with communications skills
and the ability to comprehend more complex issues instead of just hands -on skills, " he says. "What I see
happening is the maturation of our sector, moving more and more toward traditional higher education."

Student Focused

A big reason places like the Art Institute have been so successful is that they offer course schedules that
suit students' lives. At traditional colleges, students might have a class at 9 a.m., another at 11 a.m. and a
third at 3 p.m. The Art Institute of Pittsburgh, however, runs three sessions each day: from 8 a.m. until
noon, 1 p.m. until 5 p.m., and 6 p.m. until 10 p.m. By concentrating their courses in one block, it is easier
for students to negotiate time for school and work, and 85 percent of the students at the institute have
jobs.
18


The Chronicle of Higher Education, February 7, 2010 (Page 4 of 6)

The University of Phoenix has pioneered another model that allows students to concentrate on one or two
classes at a time. Each class lasts from five to nine weeks, and students take courses year round. When
students enroll at Phoenix, the university lays out their entire course plan all the way through graduation.
"They know what that schedule will be, and they can plan their lives around it," says William J. Pepicello,
the university's president.

Unlike traditional colleges, Phoenix never turns away students because classes are full. It simply adds
more, depending on demand. And for-profit institutions move quickly, adding new programs to match
careers that are on the rise and getting rid of others that are on the decline. Phoenix can be so agile
because it is a business, with a 10-story, glass-and-copper corporate headquarters where most decisions
are made. Traditional campuses, by contrast, are run not only by administrators but by powerful faculty
committees that must approve most academic changes—a process that can take months, if not years.

Gregory M. St. L. O'Brien left a long administrative career in traditional higher education at the University
of New Orleans and then at the University of South Florida before serving as president of Argosy
University from 2004 until 2007. "I used to joke that if, at my public university, we were going to host the
world's fair and try to develop a program to manage it, the world's fair would be over by the time our
committee finished meeting on it," he says.

On traditional campuses, says Mr. O'Brien, the focus is on faculty members. At for-profit institutions, he
says, students are the No. 1 concern. "One senior faculty member would say: 'I just don't teach on
Tuesdays or Thursdays,' and we'd rewrite our schedule to accommodate that professor," says Mr.
O'Brien, recalling his days in traditional higher education. At for-profit institutions, faculty members teach
courses established by the university at times that work best for students.

"We have crafted our entire world around students," says Donna M. Loraine, vice president for academic
affairs at DeVry University, which offers undergraduate and graduate degrees in technology, science,
business, and management. "We are here to improve their futures, not make it more convenient for us."
Ms. Loraine, who has worked for DeVry for 17 years and was a professor there herself, says the
university offers early Saturday -morning classes because students have said that's a convenient time for
them. And in major urban areas like Washington, DeVry waits until after 10 a.m. to start the day because
students complained that crowded commutes made it difficult for them to get to class earlier.

The process of enrolling at a for-profit institution is often much quicker than at a traditional college.
Prospective students who make an inquiry at a traditional campus might get something in the mail a week
or two later, telling them how to apply. Then it takes months for the college to review their application and
either admit or reject them for the following fall.

At for-profit institutions, the timetable is entirely different. "If you express an interest today at a for-profit,
you will get a phone call from someone within 15 minutes, and that person will work with you to complete
your application and figure out what program makes sense for enrollment starting the next month," says
John Katzman, chief executive of 2tor—a company he founded that works with traditional universities to
establish online degree programs.

For-profit universities spend a lot of money to get students in the door. For the three-month period ending
November 30, 2009, the Apollo Group spent $275-million on "selling and promotional" expenses, or about
20 percent of its total net revenue of $1.3-billion for that quarter, according to a report the company
submitted to the federal government. Turn on a television, and within a half-hour, you'll most likely see a
slick commercial touting a for-profit university, complete with personal testimonies from graduates who
say the experience changed their lives—and pushed them up the economic ladder. If you telephone the
                                                                                                               19


The Chronicle of Higher Education, February 7, 2010 (Page 5 of 6)

main number of a for-profit university, a recruiter is likely to call back to ask when you want to enroll (even
if you are a newspaper reporter trying to reach the university's president). The big-bucks advertising
campaigns and marketing savvy, plus the high-pressure recruitment techniques, have helped the for-
profit industry blossom.

Once students are enrolled, for-profit institutions work hard to hold on to them. Phoenix has what it calls
an "early alert" system. If a student is absent or struggling in class, the student's professor contacts one
of three counselors who are part of the student's "graduation team": an enrollment counselor, who helps
choose and plot out students' program of study; an academic counselor, who works with them on any
classroom difficulties; and a financial counselor, who helps them complete student -aid applications and
sort out financial concerns. Of course, it's in a for-profit university's financial interest to hang onto students
through graduation, so that tuition money (and financial aid) keeps flowing.

Cost Questions

Proprietary schools charge a lot more than public colleges—an average of $14,174 this year, compared
with $2,544 at public two-year institutions and $7,020 for in-state tuition at public four-year institutions,
according to the College Board. But students frequently choose proprietary schools over public colleges
because for-profits do so much to limit the hassle of enrolling and applying for aid, and because students
can take the classes they need quickly and get on with their lives. Ms. Ford, the Kaplan student, said she
chose it for her nursing degree "because I could get into the class without having to wait."

Still, there are plenty of horror stories about career-college students who never graduate, or those who
leave with large student -loan bills and then fail to get jobs. Students from proprietary institutions borrow
more than students in other sectors of higher education, and have the largest student-loan default rates.
But they graduate from two-year programs at a much greater rate than do students at community
colleges: 60 percent in 2007 compared with 26 percent, according to the U.S. Education Department. In
addition, for-profit university leaders say their students are bound to have higher loan-default rates
because they are more likely than students on traditional campuses to be low income, to live on their
own—without their parents' support—and to be the first from their families to attend college.

When it comes to jobs, some for-profit institutions have become key suppliers of workers in certain
markets. Keiser University, a privately owned institution with 15 campuses in Florida, has been the No. 1
producer of associate-degree graduates in health professions and related sciences in the state for three
of the last five years. "Students like our culture," says Arthur Keiser, founder and chancellor of the
university. "It's very personal."

And employers like his graduates. The Cleveland Clinic Florida has hired more than 50 Keiser graduates
in the last five years. Keiser students, who become radiology or surgical technicians and medical
assistants, for example, are more mature and focused than those from other institutions, clinic officials
say.

Harris N. Miller, president of the Career College Association, acknowledges that for-profit institutions
aren't for everyone. "You don't go to one of our schools to be a classics major," he says. But proprietary
schools are often the top choice of students who want skills "related to a real job in the real world," he
says. And not just in the United States. If the growth curve for proprietary schools continues, they could
be educating more students than any other sector of higher education worldwide by 2020, says Mr. Miller.
20


The Chronicle of Higher Education, February 7, 2010 (Page 6 of 6)

The stocks of publicly held for-profit education companies have outperformed the Standard and Poor's
500 by about 40 percentage points in each of the past two years. And companies like Stifel Nicolaus that
analyze the market predict that the sector will continue to enjoy a "significant tailwind." Indeed, BMO
Capital Markets predicted in the fall that revenue from the for-profit sector would rise by 10 percent per
year through 2014.

But a report issued last month by Stifel Nicolaus says there is evidence that the rate of growth may be
slowing and that for-profit universities may have seen their largest enrollment gains this past summer and
fall. "Although we believe the benefits of the economic cycle will eventually wane, and growth for these
entities will slow to more normalized levels (and in some cases turn negative)," says the report, "we see
favorable prospects for potential price appreciation."

That doesn't deter Mr. Miller. "When you ask where the capacity is," he says, "the short answer is
primarily in our sector. We have the capital to invest the dollars to hire faculty, to make sure technology is
up to date, and to make sure these are real skills people can contribute to the economy."
                                                                                                           21


The New York Times, February 8, 2010 (Page 1 of 2)

    With Federal Stimulus Money Gone, Many Schools
                    Face Budget Gaps
                                              By SAM DILLON

Federal stimulus money has helped avoid drastic cuts at public schools in most parts of the nation, at
least so far. But with the federal money running out, many of the nation’s schools are approaching what
officials are calling a “funding cliff.”

Congress included about $100 billion for education in the stimulus law last year to cushion the recession’s
impact on schools and to help fuel an economic recovery. New studies show that many states will spend
all or nearly all that is left between now and the end of this school term.

With state and local tax revenues still in decline, the end of the federal money will leave big holes in
education budgets from Massachusetts and Florida to California and Washington, experts said.

“States are going to face a huge problem because they’ll have to find some way to replace these billions,
either with cuts to their K-12 systems or by finding alternative revenues,” said Bruce Baker, an education
professor at Rutgers University.

The stimulus program was the largest one-time infusion of federal education dollars to states and districts
in the nation’s history. As the program took shape last year, Education Secretary Arne Duncan and other
officials repeatedly warned states and districts to avoid spending the money in ways that could lead to
dislocations when the gush of federal money came to an end.

But from the start, those warnings seemed at odds with the stimulus law’s goal of jump-starting the
economy, and the administration trumpeted last fall that school districts had used stimulus money to
save, or create, some 250,000 education jobs.

Now the new studies point to the problems likely to beset thousands of school districts when the federal
money runs out.

One study, which Dr. Baker wrote with David Sciarra and Danielle Farrie of the Education Law Center in
Newark and which is to be presented on Monday at a conference at Teachers College of Columbia
University, examines how 11 states have used their education stimulus money. The 11 states received
amounts from the stabilization fund ranging from $234 million (Nebraska) to $2.5 billion (New York).

Nine of the 11 states had already allocated most of that money for this school year and last, the study
found, leaving a third or less of their federal money available for the 2010-11 school year.

Another bigger study, also to be presented at the conference, found that some states facing pressing
financial problems last year as the stimulus program emerged decided to use 100 percent of their
education stimulus money almost immediately.

Of the 20 states in the study by Michael A. Rebell, a professor at Teachers College, and two colleagues,
Jessica Wolff and Dan Yaverbaum, six of them — Alabama, Arizona, Georgia, Nevada, New Jersey and
Washington — had allotted all of their education stabilization money to schools for this school year and
last, leaving zero to spend on the school term beginning this fall.
22


The New York Times, February 8, 2010 (Page 2 of 2)

The two new studies based their findings on data supplied by the states last year to the federal
Department of Education on their applications for stimulus money, as well as on other financial reports
that have allowed the scholars to document states’ actual expenditures on public schools. Professor
Rebell’s study also involved phone interviews with state and local school officials in the 20 states, he said.

The new studies align with results of a broader, 50-state survey on the stimulus program carried out by
the National Conference of State Legislatures. The conference’s survey, based solely on an examination
of the states’ stimulus applications, found that 20 states said when applying that they intended to spend
100 percent of their stabilization funds in the 2008-9 and 2009-10 school years.

The 20 states were Alabama, Arizona, California, Florida, Georgia, Hawaii, Idaho, Illinois, Michigan,
Minnesota, Nevada, New Jersey, North Dakota, Oregon, Rhode Island, South Carolina, Utah, Virginia,
Washington and Wisconsin.

But Dan Thatcher, who conducted the conference’s survey, said that Idaho, and perhaps others among
the 20, had reconsidered those plans, deciding to reserve some stimulus money for the coming school
year.

On average, according to the conference’s survey, states allotted 38 percent of their stabilization money
to the 2008-9 year and 48 percent to the current school year, leaving only 14 percent for the school term
that begins this fall.

About $65 billion of the $100 billion in education stimulus money went to states in three pots: $39.5 billion
as part of a stabilization fund intended to bolster the finances of state public education systems, $13
billion for the federal program for poor students known as Title I, and $12.2 billion for students with
disabilities. Congress directed the rest of the $100 billion to smaller initiatives, including $4.3 billion to a
school improvement grant program the Obama administration calls Race to the Top.

Professor Rebell’s study examined in some detail how school districts have used the stimulus money they
received under the federal programs intended for poor and disabled students. Many districts have chosen
to spend much of the money they received for students with disabilities on things like lift buses, handicap-
accessible vans and renovated bathrooms.

“This was a godsend, and the investment will last for years,” Professor Rebell said. “In most cases,
districts didn’t put people on the payroll that they would now have to lay off.”

But many school systems have not been so prudent in their use of Title I money.

“The need to spend these funds quickly has led districts to add large numbers of temporary staff
positions,” Professor Rebell’s study says. “In most states that we studied, some school districts appear to
have spent a considerable amount of their Title I funds to save jobs formerly paid for through state and
local funding that were threatened as a result of cuts in that funding.”
                                                                                                               23


The Chronicle of Higher Education, February 11, 2010

    Enrollment Growth Amid Recession Creates Long-
               Term Challenges for States
                                               By Eric Kelderman

A new analysis of state financing and enrollment trends in higher education highlights the challenges the
nation's colleges will face even after the economy has fully recovered.

The analysis, released on Thursday by the State Higher Education Executive Officers association,
concludes that states will have a harder time restoring spending on higher education after this downturn
than they have in past recessions. Per-student state appropriations have generally recovered after past
recessions, but the current economic situation presents greater hurdles, the group says in its seventh
annual State Higher Education Finance report.

A major complicating factor this time around, says the report, is that enrollments continue to increase at a
decent pace, while the effects of budget cuts put institutions further behind. Nationally, full-time
enrollment grew by 3.4 percent from 2007-8 to 2008-9, while total state appropriations for higher
education increased by less than 1 percent for that period.

"The big story is that the demand for higher education is outstripping the ability of states to finance it,"
said Paul E. Lingenfelter, president of the state officers' association.

2 Recessions Take Their Toll

From 1984 to 2009, full-time enrollment at two- and four-year colleges increased by nearly 47 percent, to
more than 10.8-million students. Per-student state appropriations for higher education have remained
relatively stable during that time, increasing by a little less than 5 percent, after adjusting for inflation, to
$6,931.

Despite the growth in spending over that period, the 2009 level of per-student appropriations is 13
percent below the $7,961 that states were providing to colleges in 2001, when higher education budgets
were at a high point, the report says.

But the recession that began in 2001 forced states to make severe cuts in higher-education budgets.

Because those cuts had not been fully restored when the current downturn began, states and colleges
will be starting from further behind when state economies begin to recover, Mr. Lingenfelter said.

And even though states are using nearly $40-billion in federal stimulus money to offset cuts to education,
many states will have used up that money by the end of this fiscal year, which occurs in June for most
states. State tax revenues, in contrast, are not expected to recover until the 2012 budget cycle.
24


Inside Higher Ed, February 11, 2010 (Page 1 of 3)

                       Fading Stimulus Saved Colleges
As enrollments soared and state dollars dried up, the temporary fix of federal stimulus money staved off
significant financial losses for higher education that are still yet to be fully realized, according to a report
released today by the State Higher Education Executive Officers (SHEEO).

In the 2009 fiscal year, state support for higher education fell by $2.8 billion to $77.9 billion, but an
infusion of $2.4 billion in federal funds largely offset those losses. Absent a dramatic recovery that no one
expects in the coming year, however, colleges and universities are likely to feel the brunt of the economic
downturn in 2010 and 2011, the report suggests. That’s cold comfort for institutions that have already
been cutting budgets, raising tuition and considering or implementing enrollment caps.

Just as states were seeing revenues decline, the enrollment boom hit a record high of 10.8 million
students at public institutions – an uptick of 3.4 percent between 2008 and 2009. In a predictable pattern
for a recession, those students have been carrying a greater share of the cost of their education. Indeed,
37.3 percent of education revenue came from tuition in 2009 -- an increase of 2.6 percentage points in
five years, the report notes.

Paul Lingenfelter, president of SHEEO, said the data make a strong case for addressing enrollment
spikes with increases in state support coupled with concrete steps on the part of colleges and universities
to improve persistence rates. The cold reality, however, is that some colleges and states are in triage
mode, which often places true reform efforts behind developing short term survival strategies, Lingenfelter
said.

“It’s really hard to do some of those things when you’re putting out fires, and the persistence of this cycle
has long-term implications,” he said.

“It’s possible to make the changes within higher education, and it’s possible within government to meet
these needs,” Lingenfelter added. “We need to decide it’s important and find ways to do it.”

State support per full time equivalent (FTE) student has historically waned in the years following
recessions, and the most recent recession is already showing the same contours. Support per FTE fell to
$6,931 in 2009, the lowest since 2006, when recovery from the recession of the early 2000s began.

“We don’t know what it will be like next year, but [support] is almost certainly going to be lower,”
Lingenfelter said.

The average decline in appropriations per FTE was 4 percent, but nine states saw double digit declines.
Most of the states where declines were the largest also saw above average enrollment increases.

The SHEEO data illustrate a turbulent cycle of recession, recovery and recession that Lingenfelter says
makes a clear case for states to build up reserves in years of economic growth. History shows, however,
that states don’t typically do that.

“I think the big picture is sort of unrelenting enrollment demand in higher education outpacing the ability of
the states to finance this enrollment growth even with reasonable increases in productivity in higher
education,” Lingenfelter said. “Ev   ery time we have a recession it gets worse.”
                                                                                                25


Inside Higher Ed, February 11, 2010 (Page 2 of 3)

Educational Appropriations per Full Time Equivalent (FTE) Student in Constant Dollars


                                                             FY2009
                                                    1 Year                           Educational
                                                             Index to    5 Year
     State        FY 2004   FY 2008    FY 2009        %                            Appropriations
                                                               U.S.     %Change
                                                    Change                         from Stimulus
                                                             Average
   Alabama        $6,156     $8,765    $8,102       -7.6%     1.17       31.6%          0.0%
    Alaska        $10,149   $12,502    $12,962       3.7%     1.87       27.7%          0.0%
    Arizona       $6,240     $7,371    $7,301       -0.9%     1.05       17.0%          10.1%
   Arkansas       $7,486     $8,080    $7,955       -1.6%     1.15       6.3%           0.0%
   California     $6,859     $7,134    $6,899       -3.3%     1.00       0.6%           11.8%
   Colorado       $3,087     $3,624    $3,929        8.4%     0.57       27.3%          19.2%
  Connecticut     $8,287     $8,823    $8,317       -5.7%     1.20       0.4%           0.0%
   Delaware       $5,699     $5,878    $5,695       -3.1%     0.82       -0.1%          0.0%
    Florida       $6,624     $7,600    $6,564       -13.6%    0.95       -0.9%          0.0%
    Georgia       $8,496     $8,823    $8,765       -0.6%     1.26       3.2%           0.7%
    Hawaii        $6,866     $8,594    $8,849        3.0%     1.28       28.9%          0.0%
     Idaho        $8,567     $9,472    $9,255       -2.3%     1.34       8.0%           0.0%
    Illinois      $7,450     $7,393    $7,777        5.2%     1.12       4.4%           0.0%
    Indiana       $5,129     $4,814    $4,752       -1.3%     0.69       -7.3%          3.4%
     Iowa         $5,464     $5,847    $5,905        1.0%     0.85       8.1%           0.0%
    Kansas        $6,206     $5,762    $5,591       -3.0%     0.81       -9.9%          1.2%
   Kentucky       $8,252     $8,511    $7,969       -6.4%     1.15       -3.4%          0.0%
   Louisiana      $6,188     $8,376    $8,092       -3.4%     1.17       30.8%          0.0%
    Maine         $6,662     $6,787    $6,756       -0.5%     0.97       1.4%           5.3%
   Maryland       $7,948     $7,785    $8,100        4.0%     1.17       1.9%           0.0%
Massachusetts     $6,447     $7,328    $5,591       -23.7%    0.81      -13.3%          2.5%
   Michigan       $6,167     $5,521    $5,365       -2.8%     0.77      -13.0%          0.0%
  Minnesota       $6,064     $6,445    $6,161       -4.4%     0.89       1.6%           2.3%
  Mississippi     $7,025     $8,135    $7,316       -10.1%    1.06       4.1%           0.0%
   Missouri       $6,421     $5,923    $6,084        2.7%     0.88       -5.2%          0.0%
   Montana        $3,798     $4,399    $4,465        1.5%     0.64       17.6%          0.0%
   Nebraska       $5,899     $7,528    $7,048       -6.4%     1.02       19.5%          0.0%
    Nevada        $9,012     $9,167    $8,781       -4.2%     1.27       -2.6%          0.0%
New Hampshire     $3,338     $3,172    $3,131       -1.3%     0.45       -6.2%          0.0%
  New Jersey      $9,198     $8,007    $7,481       -6.6%     1.08      -18.7%          0.0%
26

Inside Higher Ed, February 11, 2010 (Page 3 of 3)

  New Mexico        $9,210      $9,765     $8,359     -14.4%        1.21       -9.2%           0.0%
     New York       $6,875      $8,266     $8,238      -0.3%        1.19       19.8%           0.0%
 North Carolina     $8,250      $9,723     $8,844      -9.0%        1.28       7.2%            4.0%
 North Dakota       $5,119      $5,789     $5,476      -5.4%        0.79       7.0%            0.0%
       Ohio         $5,068      $4,708     $4,858       3.2%        0.70       -4.2%           0.0%
     Oklahoma       $6,809      $8,833     $8,797      -0.4%        1.27       29.2%           0.0%
      Oregon        $5,107      $5,561     $5,020      -9.7%        0.72       -1.7%           7.6%
 Pennsylvania       $5,966      $5,718     $5,542      -3.1%        0.80       -7.1%           3.2%
 Rhode Island       $6,720      $5,669     $4,763     -16.0%        0.69      -29.1%           0.0%
 South Carolina     $6,284      $6,987     $5,700     -18.4%        0.82       -9.3%           0.0%
 South Dakota       $5,042      $5,402     $3,927     -27.3%        0.57      -22.1%           8.4%
     Tennessee      $6,269      $7,901     $7,901       0.0%        1.14       26.0%           6.3%
       Texas        $7,215      $8,664     $8,171      -5.7%        1.18       13.2%           0.0%
       Utah         $5,448      $6,783     $6,103     -10.0%        0.88       12.0%           4.1%
      Vermont       $3,122      $2,904     $2,654      -8.6%        0.38      -15.0%           0.0%
      Virginia      $5,249      $5,928     $5,702      -3.8%        0.82       8.6%            0.0%
  Washington        $6,053      $6,868     $6,483      -5.6%        0.94       7.1%            0.0%
 West Virginia      $5,872      $7,507     $6,433     -14.3%        0.93       9.5%            0.0%
     Wisconsin      $6,637      $6,443     $6,534       1.4%        0.94       -1.5%           0.0%
     Wyoming       $11,668     $14,721     $15,391      4.5%        2.22       31.9%           0.0%
        US          $6,661      $7,220     $6,928      -4.0%                   4.0%            3.1%

Note: Educational appropriations measure state and local support available for public higher education.
Operating expenses including ARRA funds and excludes appropriations for independent institutions,
financial aid for students attending independent institutions, and research.

— Jack Stripling
                                                                                                           27


The Chicago Sun-Times, February 6, 2010

           U of I tuition increase reflects national trend
                  9% hike in Champaign, 15% in Florida, 30% in California

                                            ASSOCIATED PRESS

As students around the country anxiously wait for college acceptance letters, their parents are sweating
the looming tuition bills at public universities.

At the University of Illinois, students will pay at least 9 percent more.

Mike Sarb, a University of Illinois senior from Elk Grove Village, says money is a big concern for his blue-
collar family scrambling to find the money to pay more than $20,000 for tuition, room and board.

They aren't pleased that university officials are likely to raise tuition 9 percent this summer.

"They do complain that the school's taking advantage of people" by raising tuition, Sarb said.

But interim President Stanley Ikenberry says the school has run out of options. With a budget deficit
expected to top $11 billion this year, the state of Illinois owes the university more than $430 million,
money he doesn't expect to see any time soon.

Elsewhere, Florida college students could face yearly 15 percent tuition increases for years. The
University of Washington will charge 14 percent more at its flagship campus. And in California, tuition
increases of more than 30 percent have sparked protests reminiscent of the 1960s.

The College Board says families are paying about $172 to $1,096 more in tuition and fees this school
year. The national average for 2009-2010 is about $7,020, not including room and board, according to the
nonprofit association of colleges that oversees the SATs and Advanced Placement tests.

The University of Wisconsin-Madison is in the first year of a four-year tuition increase plan aimed at
improving quality. In addition to statewide tuition increases of about 5.5 percent, in-state students at UW-
Madison will pay an extra $250 a year each year.

This year, tuition went up by $617 to $7,296 or about 9.2 percent, but financial aid increased at the same
time.

Still, few are complaining because the extra money -- $100 million in the first four years and $40 million
each year afterward -- is reserved for providing more classes, improving student services and increasing
need-based financial aid.
28


Bloomington, The Pantagraph, February 9, 2010

 Merit-based raises will not happen for ISU employees
                        this year
                    By Pantagraph staff | Posted: Tuesday, February 9, 2010 8:40 pm

NORMAL - The hope for merit-based raises at Illinois State University this year is a casualty of the state's
inability to fully fund its university appropriations, ISU employees were told Tuesday.

ISU received only $25 million of its $85 million state appropriation for 2009-10, ISU President Al Bowman
said in a statement issued Tuesday. He said it is unlikely the rest of the money will arrive by the June 30
end of the fiscal year, and election-year politics make a comprehensive budget fix unlikely in 2010.

While ISU remains committed to avoiding furlough days, layoffs, salary cuts and faculty hiring freezes,
plans for "a modest, merit-based salary increase" this fiscal year have to be shelved, Bowman said in his
statement.

"Given these uncertain circumstances, it would be irresponsible of me to commit resources that may not
materialize," he said.

Bowman was among the leaders of 12 public university campuses to ask Gov. Pat Quinn and Comptroller
Dan Hynes to lay out a schedule for paying more than $735 million in delayed state payments.
                                                                                                                29


The Chicago Tribune, February 9, 2010

        Public universities appeal for money they were
                           promised
        State payments to 9 taxpayer-funded schools are behind $735 million

                                      By Jodi S. Cohen, Tribune reporter

Saying they already have frozen hiring, hiked tuition, deferred purchases and lost top faculty, Illinois'
public university presidents and chancellors Tuesday urged the state to provide promised funding or risk
an even more dire situation.

They asked Gov. Pat Quinn and Comptroller Dan Hynes to commit to a reliable payment schedule for the
rest of this fiscal year, which goes through June. The state was $735 million behind in payments to the
nine taxpayer-supported universities as of Jan. 25.

"We are all surprised that things could get as perilous as they are," University of Illinois interim President
Stan Ikenberry said at a joint news conference with the UIC chancellor and the presidents of Northern
Illinois University and Chicago State University. "We owe it to the people of Illinois and the future of Illinois
to seek a prompt resolution."

He said the financial hole is so deep, the state will not be able to "cut or tax its way out of the hole. It will
require both." He said an income tax increase "would be the most obvious remedy."

Quinn spokeswoman Kelly Kraft said the governor is working with the universities to explore payment
options and with Hynes to "exhaust every possible avenue to improve our cash flow situation."

Public universities aren't the only ones reeling from the state's cash flow crisis. The backlog in state bills
hit $5.1 billion before dipping to $3.6 billion now, after the state borrowed more money. Illinois continues
to struggle to make payments to contractors and vendors that supply government with basic products and
services.

Throughout Illinois, social service agencies have voiced similar complaints because state payments are
months behind, causing a scaling back in assistance for people with physical and mental disabilities as
well as cuts in treatment for alcoholism and drug use. Some organizations have laid off staff.

"We wanted to add our voices, our help, our cooperation in solving these problems, which we think are
severe," said John Peters, president of NIU.

If a funding solution isn't realized soon, Ikenberry said, "there is concern about finishing the academic
year in an orderly way." U. of I. currently is owed about $430 million, NIU about $60 million and Chicago
State about $17 million.

"There will be a point where we … will have to shut down operations to the core," Peters said. "We are
basically living on tuition."

Monique Garcia contributed to this report.

jscohen@tribune.com
30


The News-Gazette, February 9, 2010

      University leaders ask state for reliable payment
                schedule for overdue money
                                               By Julie Wurth
                                        Created 02/09/2010 - 9:50am

UPDATED 11 a.m. -- The state’s public university presidents and chancellors released a joint letter today
asking state leaders to commit to a reliable payment schedule for the schools’ past-due appropriations.

The letter calls on Gov. Pat Quinn and Comptroller Dan Hynes to provide a payment plan for fiscal 2010
appropriations. It also asks elected leaders to work together to develop long-term financial solutions to the
state’s budget crisis.

As of last week, the state was $735 million behind on payments to the public universities for fiscal 2010,
which began July 1.

"Without full funding of our appropriations in a timely manner, we will be forced to take even more drastic
actions that will diminish the eduational opportunities of our students and our service to the people of
Illinois," the letter says. "We are currently past the halfway point in our fiscal year, but have received only
a fraction of our state funding."

To meet the "unprecedented" cash crunch, schools are postponing payments, borrowing from other funds
to meet payroll and considering severe budget cuts. The UI last month announced unpaid furloughs for
11,000 employees.

Interim University of Illinois President Stanley Ikenberry said this morning the state must resolve its
financial problems or risk damaging the long-term viability of its higher education system. The state owes
the UI about $431 million.

"We are asking for some assurance of a payment schedule" to help schools "plan more rationally,"
Ikenberry said this morning, before joining other university presidents at a press conference in Chicago.

The letter was signed by 14 presidents and chancellors from the state's four-year public universities.
                                                                                                            31


Bloomington, The Pantagraph, February 10, 2010

 ISU leaders not panicking about state's late payments
                         By Michele Steinbacher | msteinbacher@pantagraph.com
                             Posted: Wednesday, February 10, 2010 7:20 pm

NORMAL — Illinois State University leaders aren’t panicking about the state’s late payments.

After all, late payments, even those extending past the end of the fiscal year, aren’t new, said Dan
Layzell, ISU finance and planning chief.

But given the state’s dire economic straits — and this year’s $13 billion state budget deficit — ISU
President Al Bowman joined the chiefs of 11 other Illinois public university campuses to ask Gov. Pat
Quinn and Comptroller Dan Hynes to lay out a plan for paying what the state owes the institutions.

“We’re hopeful the funds still will arrive. What we’re seeking is a greater sense of clarity on when the
endpoint is,” said Layzell.

As of Wednesday, the Normal campus only had received about $25.6 million of its promised $85 million
annual state appropriation for the fiscal year that will end June 30. Last year by this time, it had received
about $44 million of the same total.

“We know the state has committed to send the payments, and that it’s just a cash-flow issue,” said
Layzell.

ISU has weathered the storm better than some campuses because it’s in good financial shape, he said.
The $85 million appropriation represents about 23 percent of its total $360 million budget.

About half of ISU’s operating budget comes from tuition and fees, and ISU is in a stronger position than
some universities in that regard. Many of ISU’s 20,000 students are less dependent on state financial aid
than are students at other institutions, he said.

But there has been fallout: ISU announced this week that a plan to award merit-based raises this year
has been abandoned.

“Given these uncertain circumstances, it would be irresponsible of me to commit resources that may not
materialize,” Bowman announced Tuesday in a statement to the campus community.

Layzell said Wednesday that despite the bad news ISU still is managing well enough.

“I don’t want to make it appear everything’s rosy. Because it isn’t,” he said. But past management and
prudent budget decisions have allowed ISU to remain fairly intact.

“Still, even the best managed institutions reach a point they can’t absorb the cuts anymore,” he said.
32


The Southern Illinoisan, February 11, 2010

                     SIUC eyes cash crisis, its options
           BY Codell Rodriguez/The Southern | Posted: Thursday, February 11, 2010 3:00 am

CARBONDALE - Duane Stucky, vice president for financial and administrative affairs at SIUC, outlined a
middle of the road and worst case scenario of the state cash flow problem.

Stucky presented the projections at the SIU Board of Trustees meeting Wednesday. With state
appropriations, stimulus funds and Monetary Award Program reimbursements, the university would end
June with a $3.9 million deficit in unrestricted funds. The worst-case scenario with none of that funding
would leave the university with a $129 million deficit by the end of June.

The middle-of-the-road projections include $30 million in state appropriations in March, $40 million in
April, $20 million in May and $10 million in June. Stucky said he expects higher appropriations in March
and April because they generally bring more revenue to the state.

The projection also includes $12 million in federal stimulus funding in February and $3.9 million in March.
There is also a potential of $10.7 million in MAP grant reimbursements. He said the university should be
ok through the fiscal year but said there could be reason to worry by August.

While SIU President Glenn Poshard said the university still needs $9 million to make payroll, Stucky said
he expects that figure will be available by mid-March.

The worst case scenario excludes all state appropriations, stimulus funds and MAP reimbursements. This
scenario sees the universities unrestricted fund debt hitting $9.4 million by March, compared to $46.5
million in the positive in the better case scenario.

Board member Bill Bonan II asked if the university was going to take precautions to prepare for the worst
case scenario even if it does not seem likely. Poshard said SIU captured whatever carryovers the
university had in 2009. Combined with funds saved by the colleges the university has about $12 million to
fall back on.

Poshard said they are getting the colleges to look at every program to see what needs to be kept and
what can potentially be cut.

"We're looking everywhere at a broad spectrum and changing things where we can," Poshard said.

Poshard is still hopeful that pending legislation will grant universities borrowing power, an ability already
given to community colleges and K-12 schools. Should SIUC get borrowing power, Poshard said it would
only be used to cover owed state appropriations to get the university through.

"It's only an emergency provision," Poshard said.

codell.rodriguez@thesouthern.com

618-351-5804
                                                                                                                33


The New York Times, OPINION, February 3, 2010 (Page 1 of 4)

                  Rising college costs: A federal role?
                                             By THE EDITORS
                                          February 3, 2010, 7:11 pm

The Obama administration, even as it tried to restrain other domestic spending in its 2011 budget
request, has called for expanding the Pell Grants, the main federal college aid program for low-income
families. If adopted by Congress, the president’s formula would raise the top grant to $5,710 in 2011,
compared with $5,550 this year, according to The Chronicle of Higher Education, and make the program
available to an additional one million students.

Supporters of the Pell Grants, which began in 1973, want to make them an entitlement, as the cost of
higher education continues to rise. But some researchers say the expansion of the grants and other
federal aid has a counterproductive effect — that colleges and universities simply soak up the gains by
increasing their tuition and other costs.

Is there a connection between federal education aid and the inflation rate in higher education? More
broadly, what can Washington do, if anything, to improve the effectiveness of its programs and reduce the
costs of college?



Losing Ground
Sandy Baum, an economist, is the senior policy analyst at the College Board.

In 2008-09, 6.1 million students relied on federal Pell Grants for postsecondary study — an increase of
almost 60 percent from a decade earlier. As a result of the weak economy, during the first six months of
2009-10, 6.3 million students received Pell Grants — up 33 percent from the same period a year earlier.
The average grant per student is about $3,000, but the least advantaged students receive as much as
$5,350.

While documenting the exact impact of this federal program on educational opportunity is difficult, there is
no doubt that many of these students would not be in school without this assistance and many others
would leave school with much more debt if this program did not support them.

The average size of a Pell Grant has increased over time, but it is this increase in use of the program that
explains most of the increase in expenditures. Because college prices have risen more rapidly than grant
levels, Pell covers a lower proportion of total college expenses than it did a decade ago.

There are a number of explanations for rising college prices, with declining state appropriations per
student high on the list for public colleges and universities. Difficulties in improving efficiency and
productivity, expansions in the services offered to students, rising costs of technology, and increases in
institutional financial aid budgets are also major factors. There is no convincing evidence that increases in
Pell Grants feed tuition increases in either public or private not-for-profit institutions.

Increases in federal grant funding for low- and moderate-income students are critical to assuring
educational opportunities for students with the most limited ability to pay and critical to the future of our
economy. It is important that we find ways to contain price increases. Fortunately, increasing the
generosity of the Pell Grant program is not likely to interfere with that goal.
34


The New York Times, OPINION, February 3, 2010 (Page 2 of 4)

More Money Is Not the Answer
 Richard Vedder is director of the Center of College Affordability and Productivity and teaches
economics at Ohio University.

President Obama wants more and bigger Pell Grants to help relieve rising college costs, along with
revamped student loan programs. I think he has it backward: federal student financial assistance is more
a cause than a consequence of rising college costs.

Work done at my research center reinforces findings of others that exploding student loan programs have
contributed to higher tuition charges, and if Pell Grants grow more inclusive and generous, the same
effect will occur with them.

The president joins many Americans in wanting to equalize college participation for all. Yet the root cause
of low college attainment among poor people is not a lack of resources. It is dysfunctional living
arrangements and abysmal academic preparation in our mostly free public secondary schools,
particularly those located in inner cities. Indeed, Pell Grant recipients on average are less likely to
graduate within six years from college — despite generous financial aid — than others, in large part
because of prior educational deficiencies.

It is an inconvenient truth that a larger portion of college students were from low-income backgrounds in
1970, before Pell Grants, than today. No doubt the rise in college costs relative to family incomes makes
more believe that higher education is something for the affluent, not everyone. But the cure — federal
student aid — is causing (at least in part) the disease.

The demand for higher education grows with rising federal financial assistance, but the supply grows less
rapidly, pushing up prices (tuition fees). Supply is comparatively rigid because the so-called best schools
attain their lofty reputation by turning away customers: college rankings are enhanced by taking very
qualified bright kids who likely will graduate (and are disproportionately affluent). Dropping money out of
airplanes over the houses of college students (or its equivalent) is not the solution.

The three “I”s of higher education reform are incentives, information and innovation. Colleges must
provide incentives for their staff to want to cut costs and be efficient, they must provide better information
on outcomes and finances to consumers, donors and taxpayers, and they must embrace innovation in the
forms of labor-saving technology. That, not more student financial aid, is the key to making colleges more
affordable.



Linking Aid to Cost Containment
Jane V. Wellman is executive director of the Delta Project on Postsecondary Education Costs,
Productivity and Accountability.

Our country needs to increase college attainment by nearly doubling the number of people who get to and
through college. We’re not going to get there if we don’t have better aid policies to help low-income
students — who will make up the majority of the students in the future — to pay for college. The states
are broke, and they can’t continue to pay for the lion’s share of funding for higher education. So
increasing federal need-based aid should be a top fiscal priority, and the Obama budget proposal is a
good thing.

Should the government require institutions to show evidence of fiscal discipline, as a quid pro quo for
getting the increased financing?
                                                                                                             35


The New York Times, OPINION, February 3, 2010 (Page 3 of 4)

But the funding strategy for the future has to encompass more than just increasing aid to try to keep up
with the rate of tuition increases. Our institutions have to be very serious about reducing their costs, to
hold tuition increases to no more than the consumer price index, without harming access or quality. And
they have to pay a lot more attention to helping students get degrees in a timely fashion, through smarter
course scheduling and better advising.

Nationwide, around 35 percent of the students who start college never get a degree. And those who do
graduate take on average between five and six years to get there.

The combination of attrition and “excess credits” adds almost 50 percent on average to the cost to
produce a degree. These costs dwarf the budgetary outlays required to fund the Pell Grant.

The question is: should the federal government require institutions to show evidence of cost containment,
as a quid pro quo for getting the increased funding? The colleges say no, and yell loudly about federal
“price control” if the government even goes so far as to publish information about tuition increases. But
public disclosure about cost increases is a far thing from “price control,” and if the institutions are right
when they claim that federal aid has no relation to their tuition policies, then they should have nothing to
fear.



A Crucial Safety Net
Patrick M. Callan is president of the National Center for Public Policy and Higher Education.

Federal Pell grants have served to partially insulate low income college students from three decades of
escalating tuition increases. With the current maximum grant level of $5,350 and most students not
eligible, there is little evidence that these means-tested grants are major factors in the tuition setting
decisions of most colleges.

As additional Pell dollars are absorbed by steep tuition increases, costs are shifted from colleges and
states to students and the federal taxpayer.

Today the grants cover a smaller portion of college tuition than they did 25 years ago; if colleges had
calibrated tuition increases to Pell Grants, steep tuition increases would not have been repeatedly
imposed in the years when the grant levels were not raised and tuition would be considerably lower
today.

But recent increases in Pell Grants during the Bush and Obama administrations and higher levels of
federal expenditure for the program have had little, if any effect, on improving college access and
affordability. As additional Pell dollars are absorbed by steep tuition increases, the effect is to shift costs
from colleges and states to students and the federal taxpayer, with little or no net gain in higher education
opportunity.

As long as tuition continues to grow faster than family income and other prices in the economy and faster
than Pell grant levels, American students and families will continue to lose ground in college affordability.
Pell Grants are a critical part of the safety net that helps many low income Americans enroll in college.
These grants do not cause higher tuition, but runaway tuition undermines their effectiveness in supporting
access for low income students.
36


The New York Times, OPINION, February 3, 2010 (Page 4 of 4)

Class Differences
Arthur M. Hauptman is a public policy consultant specializing in higher education finance.

The degree to which student aid affects what colleges and universities charge varies between the Pell
Grant and student loans. The Pell Grant has not had much effect on tuition levels in part because the
amount of the awards does not vary with where a student enrolls. Institutions cannot affect how much a
student receives, and the institutions that charge the most enroll the fewest Pell Grant recipients.

Pell Grants have not had much effect on the rising cost of college education but there is good reason to
believe rising student loan levels have.

By contrast, despite the argument that there is no proven causal relationship between aid and price
increases, there are several good reasons to believe that student loans have been a factor in the rising
cost of a college education. Tuition has increased by twice the inflation rate for the past three decades
while annual loan volume has increased tenfold in constant dollars.

Unlike Pell Grants, as part of the aid packaging process, colleges have some control over how much
students borrow as loan amounts. Moreover, just as one couldn’t imagine house prices being as high as
they now are if mortgage financing were not available, it is difficult to believe that colleges and universities
could have increased their charges so rapidly over time without the ready availability of students’ ability to
borrow.

Pell Grant recipients are much more likely to be averse to borrowing than students who come from
families with more financial resources.

It is worth noting that Pell Grant recipients are much more likely to be averse to borrowing than students
who come from families with more financial resources. So price effects are not the biggest concern when
Pell Grants are increased.

Instead, we should worry more that increases in Pell Grants may lead institutions to reduce the amount of
discounts they would otherwise have provided to the recipients, who are from poor families, and move the
aid these students would have received to others. This possibility of a substitution effect is supported by
the data showing that public and private institutions are now more likely to provide more aid to more
middle-income students than low-income students.

Another issue is whether more Pell Grants will lead to higher college completion rates and more
graduates. There is little or no evidence that more funding for Pell Grants will help increase degree
completion rates — the proportion of students who complete the program they begin in a reasonable
amount of time. If anything, more Pell Grants will lead to lower completion rates because more people are
likely to give college a try but not all will finish.

More Pell Grants should have a positive effect on attainment rates — the share of workers with a college
degree — but not nearly enough to reach the president’s lofty national goal of a 60 percent attainment
rate by 2020, up from the current 40 percent.
                                                                                                              37


Peoria Journal Star, EDITORIAL, February 7, 2010 (Page 1 of 2)

           A hidden tax hike for college kids' families?
                                               Journal Star
                                      Posted Feb 07, 2010 @ 09:57 PM

Deadbeat Illinois is still at it, piling up a mountain of bills and taking months at a stretch to pay them back.

That tidal wave of IOUs continues to wash over pharmacies, social service agencies, doctors, hospitals,
nursing homes - basically anybody who does business with a state that continues to spend more money
than it takes in. All told, the Illinois comptroller's office, which would happily pay the bills if there were
money available, has $3.2 billion worth of invoices stacked up, plus another $2.25 billion in loans that cut
to the front of the line once they start coming due next month.

Meanwhile, the impacted entities have to juggle the shortfall - read: the short-term loan forced on them by
free-spending Illinois - by dipping into reserves, cutting staff, eliminating programs or passing the added
costs along to consumers.

The state budget has been a mess for years, the spending completely out of control, but the trickle-down
costs aren't always noticed by rank-and-file Illinoisans. It isn't just private businesses and groups that help
the needy who feel the pinch; some prominent public entities have been hurt, as well. For example, state
universities are waiting for about a quarter of the outstanding bills - just shy of $754 million - even though
they've had their state funding chopped dramatically over the last decade.

About half of Western Illinois University's annual $123.9 million budget comes from the state, but $28
million of that is stuck in a holding pattern. Illinois State University is waiting on $53 million toward the
$85.1 million it's supposed to receive. The situation got so dire at Southern Illinois University that officials
there briefly worried they wouldn't make their January or February payroll. While they've been waiting for
the checks to show up, all have had to cut back on hiring and travel, while some have frozen wages -
hardly the way to keep attracting the best and brightest faculty to give college kids a quality education.

The University of Illinois is in such woeful shape - the state is behind to the tune of $430 million worth of
bills there, and school officials say the debt grows by $80 million a month - that it has gone beyond
freezes and cutbacks. Staff members are being required to take unpaid time off, and the school has had
to crack into its cash reserves for $20 million. Officials there have become pros at robbing Peter to pay
Paul, shuffling money around between accounts to pay bills. Of course that costs the school another $8
million to $12 million in lost interest.

"All of it has been patched together to keep the ship afloat," U of I Interim President Stanley Ikenberry told
the Champaign News-Gazette last month. They, too, might have a hard time meeting payroll if things
continue.

Same old story, eh?

Between a decade of budget cuts to higher education and reductions the university has already made,
there's no fat to cut. That leaves one other place to go to make up the shortfall: students and their
parents. Ikenberry said last month at a board of trustees meeting that it's likely the school's tuition of
$9,484 will have to be increased by at least 9 percent, maybe twice that if the financial picture doesn't
improve. Add in fees, which just increased, plus room and board, and the cost for an in-state student
could easily top $30,000 - closer to private-school territory than the affordable state school it's supposed
to be.
38


Peoria Journal Star, EDITORIAL, February 7, 2010 (Page 2 of 2)

Call it a hidden tax hike on families of college kids.

It's one more reminder of the real-world consequences of a state government that can't get its budget
under control. It's just shameful. As populous a state as Illinois is, it's just a wonder citizens can't seem to
get more competent representation in Springfield.
                                                                                                              39


Chicago Sun-Times, EDITORIAL, February 9, 2010

                         Higher education going under
                                               February 9, 2010

That feeling of looming dread you might sense on public university campuses these days has nothing to
do with final exams, which are still some months away.

What's alarming people -- mostly those working in administration offices -- is the "falling-off point," the
time when universities simply run out of money because the state hasn't been paying them.

The state has been cutting appropriations for higher education for years, but it was not until this year that
the state stopped regular payments altogether.

Since July 1, the state has made only sporadic payments on no particular schedule. At Southern Illinois
University, for example, the state has paid only 23 percent of the appropriated funds. At campuses
throughout Illinois, the state is $735 million behind, and as a result -- just as they teach in Accounting 101
-- the universities don't have the money to pay their own bills.

The influx of second-semester tuition money in January is keeping the schools going at the moment, but
that will work only until about the end of the month. That's when the universities hit the falling-off point, the
time when all the budget tricks have been played, the furloughs and hiring freezes have been announced,
and there still isn't enough money.

It doesn't seem likely that the Legislature will suddenly find a way to balance the state's declining
revenues with its mounting pile of overdue bills. So the Legislature should approve a measure now before
the Senate to allow public universities to keep going by borrowing against the money appropriated by the
state but not yet paid. So far, Southern Illinois, Eastern Illinois, Western Illinois and Illinois State
universities have asked for the borrowing power, and others may do so before the bill is acted on.

It's not an ideal solution. The universities will have to pay interest on the loans, an extra cost they don't
need right now. And there's a worry that once the universities can get money through loans, the state will
divert additional dollars away from them to put out fires elsewhere.

But the falling-off point is nearly here. And we need a way to keep the state's higher education from going
over the edge.
40


The Chronicle of Higher Education, February 7, 2010 (Page 1 of 3)

         For This U. of Phoenix Student, Perseverance
                           Pays Off
                                                  By Piper Fogg
                                                  Timonium, Md.

Cassandra Leach always planned to go to college. As an honors student and editor of her high-school
newspaper, she dreamed of a career in journalism. But after a couple of years at Morgan State
University, in Baltimore, she ran out of money and had to leave the historically black college.

Her plans to return dissolved when, at 19, she got pregnant. She eventually got out of a bad relationship
with the baby's father, only to get pregnant again six months later with someone else. Going back to
college was a luxury Ms. Leach couldn't afford.

At a bus stop several years later, she met a woman who worked for the University of Phoenix, who
persuaded her to enroll in Axia College, the institution's associate-degree college.

"It's been a really long road," says Ms. Leach.

The University of Phoenix, a for-profit institution that bills itself as a steppingstone to success for working
adults, is helping the 26-year-old mother of two to finally get what she wants. She takes all her courses
online, working mostly on her own schedule. She can squeeze in studying between caring for her children
and—before she got laid off two years ago—working as a customer-service supervisor, even if that
means logging in to a virtual classroom at 1 a.m.

Though she has never met any of her classmates, Ms. Leach, who is black, is like many of them. Phoenix
students are more likely to be black or Hispanic, female, and working part time or full time than are
students at traditional colleges. They are also more likely to be over the age of 24, single parents, and
receiving no financial support from their parents.

A decade ago, someone like Ms. Leach might have gravitated toward the community-college system, and
many still do. But the for-profit sector, which says it now accommodates nearly 10 percent of students in
higher education in this country, has attracted students by focusing on convenience.

Ms. Leach's experience with "U of P" has not been without hiccups. Her big criticism is the limited
interaction with faculty members. And she estimates she will graduate $15,000 to $16,000 in debt, since
loans and grants are financing her education. That will add to the $8,000 she owes for Morgan State
loans. What matters most to her now, though, is that she will soon be able to check off a major goal: In
April she will receive an associate-of-arts degree in business. One week later, she will start on her next
degree—a bachelor's from Phoenix.

Used to Setbacks

On a typical morning, Ms. Leach walks Lilian, her 6-year-old daughter, to school, returns to her cramped
and cluttered kitchen to make a cup of coffee, and settles down at her computer. She has to participate in
the two courses she is taking by posting to an online class discussion thread four days out of the week.
                                                                                                            41


The Chronicle of Higher Education, February 7, 2010 (Page 2 of 3)

She can respond to either another classmate or the instructor and has to write something substantial. She
also has a short assignment due on alternating weeks in each class, as well as a final project for both.

On weekends, her 4-year-old son, Solomon, who lives with his father, comes to visit. Then she does her
homework after tucking her kids into their bunk beds. But a few days before Christmas, her laptop
crashed.

"I wanted to die inside," says the normally upbeat woman, who is quick with a laugh and disarmingly open
about her personal life, her money woes, and her hopes for the future.

On a frosty, gray January morning, Ms. Leach, who can't afford a car, has to take a train and then a bus
to get from her row house in a Baltimore suburb to Timonium, the closest University of Phoenix center
accessible by public transportation. She could go to her public library, but there is a time limit on using the
computers there, and printing costs money.

Since getting laid off, Ms. Leach has been living on unemployment benefits. Though her live -in boyfriend
helps pay the bills with a job loading appliances onto trucks, she has no money to spare. She even let her
Internet service lapse until she can get her computer fixed, so she could save $60 a month. But she can't
get her computer fixed until she can come up with the cash to send the computer, which is still under
warranty, back to the manufacturer in Texas.

Now, with her 90-minute commute to the center, the convenience of taking courses online has
evaporated. But Ms. Leach does not complain; she is used to setbacks.

The learning center, housed in a glass office building next to a busy highway, is nothing like a traditional
college campus. Conference rooms, presumably for classes, are empty of students at this mid-morning
hour. Ms. Leach heads to a small business center labeled "student resource room," where she sits at one
of seven empty computer stations.

Over the next hour, only a couple of students drop in. One woman, a bus driver working toward a
bachelor's degree in health-care administration, clicks her tongue when she discovers the printer is
broken. After all, students pay a $70 materials fee for every course, which lets them print out documents
at Phoenix locations. That is on top of the $1,035 cost of a typical three-credit class at Axia.

Unlike traditional colleges, Axia does not have semesters. Instead, courses are offered in nine-week
blocks. Once she wraps up her classes this month, she will have earned 54 out of 60 credits toward her
associate degree, including the 18 credits that transferred out of 24 that she earned at Morgan State. At
Axia, she has a 3.17 GPA.

"I wish it were higher," says Ms. Leach, noting that she gets downgraded when she fails to fulfill weekly
participation requirements or turns assignments in late. Even when her laptop is working, if her daughter
gets an ear infection, or something else gets in the way, she isn't always able to complete every
assignment.

At the learning center, Ms. Leach e-mails an assignment to herself, then downloads it onto her iPod, the
closest thing she has to a computer now. She has to come up with a business plan for a fictitious
exporting company for her international-business course. She is also taking an introductory -accounting
survey course, "The Maze of Numbers."
42


The Chronicle of Higher Education, February 7, 2010 (Page 3 of 3)

When she started classes at Axia, in May of 2008, Ms. Leach felt a little lost, like she was in the middle of
her own maze of numbers. Online video tutorials from the college helped refresh her memory of algebra.
More recently she found a podcast lecture on the Web from Villanova University that helped clarify
concepts in her accounting class. "They definitely encourage you to find outside resources," she says of
her instructors. She hasn't had time to take any of the dozens of tutorials offered to business students on
Phoenix's library Web site, but appreciates the option. "If I want to train, it's there," she says. To succeed
at this enterprise, she says, self-direction is crucial. "The teacher is not going to hold your hand."

What Ms. Leach wishes she could change is how much contact she has with her instructors. If she has a
question, she says, it won't get answered until the next day. She says her instructors often have full-time
jobs and families, too. She does have occasional contact with an academic counselor assigned to her by
the university, but that is not the same as being able to have a substantive chat online with an instructor.

No Transcript Required

So far the benefits outweigh her concerns. This summer Ms. Leach had to drop out for a month when she
ran into financial-aid problems and had to reapply for some loans. She says Phoenix made it easy to start
back up. At Morgan State, she remembers spending torturous hours in the bursar's office.

She has been pleasantly surprised by how streamlined the admissions, enrollment, and financial-aid
processes have been at Phoenix. It took only a week or two to apply, a month to get accepted, and
another month to start classes. "They really get you in fast," says Ms. Leach. They did not, for example,
require a high-school transcript, as Morgan State did.

While it didn't worry her that the college did not require essays or transcripts to gain admission, its for-
profit status gave her pause. A University of Phoenix recruiter from Texas had called her once, giving her
the hard sell. It seemed like he was only trying to reach a quota, she says.

Then she met the woman at the bus stop, a recruiter based at the Timonium learning center. Ms. Leach
says the woman seemed genuinely enthusiastic about the institution. And when Ms. Leach found out that
Phoenix is accredited, it gave her confidence. So when she gets her diploma this spring, she will be
proud.

Her new dream is to become a chef, maybe own a restaurant someday. She hopes that a bachelor's
degree in hospitality management from Phoenix will get her there. Until then, she says, she is content to
set an example of perseverance for her children.

In the fall of 2008, when Axia automatically dropped her from a social-science course for lack of
participation, she had to start the course all over again. The second time she took it, she failed it. On the
third try, Ms. Leach earned a B-. Then she went right on to her next assignment.
                                                                                                             43


Inside Higher Ed, February 9, 2010

      Inadequate information seen on college choices
Many prospective students and their families lack the information they need to make informed choices
about colleges, according to a report being issued today, "Planning for College: A Consumer Approach to
the Higher Education Marketplace." The report examines the kinds of decisions families make and the
information they need. The report notes that there are 118 different "529" plans, which promote saving for
colleges by offering tax advantages to families, and that many do not know how to compare the plans;
that information about the actual prices families pay (as opposed to sticker price) remains hard to figure
out; and that there is relatively little information about such factors as price based on student-faculty ratios
or graduation rates. The report was produced by MassINC, a think tank in Massachusetts.
44


USA TODAY, February 5, 2010 (Page 1 of 3)

           Leader of Ohio State, biggest U.S. campus,
                        takes on tenure
                            By Andrew Welsh-Huggins, The Associated Press

COLUMBUS, Ohio — The leader of the country's largest university thinks it's time to re-examine how
professors are awarded tenure, a type of job-for-life protection virtually unknown outside academia.

Ohio State University President Gordon Gee says the traditional formula that rewards publishing in
scholarly journals over excellence in teaching and other contributions is outdated and too often favors the
quantity of a professor's output over quality.

"Someone should gain recognition at the university for writing the great American novel or for discovering
the cure for cancer," he told The Associated Press. "In a very complex world, you can no longer expect
everyone to be great at everything."

Plenty of people have raised the issue over the years, but Gee is one of the few American college
presidents with the reputation and political prowess — not to mention the golden touch at fundraising —
who might be able to begin the transformation.

Still, some professors are already skeptical.

"The idea of awarding tenure based on teaching makes me anxious," said Jennifer Higginbotham, an
English professor at Ohio State who's up for tenure in three years. By then, she will need to publish a
book she's writing about conceptions of girlhood in the Middle Ages to have any chance at the promotion.

"There's a feeling, I think, that good teachers are a dime a dozen," said Higginbotham, 32. "I'm not sure
what you'd have to do to distinguish yourself enough as a teacher to get tenure."

Tenure, which makes firing and other discipline difficult if not impossible, can seem ridiculously generous
to outsiders. But the job protection gives professors the freedom to express ideas and conduct studies
without fear of reprisal.

Tenure review, which took its current form in the 1940s, typically emphasizes publications over teaching
and sometimes weighs whether a professor brings in research grants. Besides job protection, tenure also
figures into salaries. A full professor with tenure at Ohio State earns about $126,000 annually.

The late Ernest Boyer, a former chancellor of New York's state university system, raised some of same
issues in his groundbreaking 1990 book, Reconsidering Scholarship.

A few universities have taken steps towards Boyer's model, including Portland State University and
Western Carolina University.

At California State University at Monterey Bay, professors are graded on their teaching, research, service
to the community and service to the university. Their teaching must be rated at least "commendable" —
the second highest rating.
                                                                                                                45


USA TODAY, February 5, 2010 (Page 2 of 3)

"We're asking faculty to look at their teaching really as an area of scholarship, just like they would their
research," said Marsha Moroh, dean of the school's college of science, media arts and technology.

Gee is not yet giving specific examples of how a reformed tenure system would work. In order to make
sweeping changes, he would need cooperation from faculty and administrators across the university
system.

Taking on tenure will be the third big academic undertaking for Gee, who was hired away from Vanderbilt
University in 2007 for his second stint at Ohio State after a term in the 1990s. Time magazine last year
named him the country's best college president.

The 65-year-old is seemingly omnipresent on campus, striding from event to event in his trademark bow
tie and horn-rimmed glasses at a pace that exhausts younger aides. He's up daily at 4:30 a.m. to exercise
and stays busy into the evenings, popping into student parties or attending athletic events.

Gee earlier reorganized Ohio State's arts-and-sciences division and switched the school from a calendar
based on quarters to one arranged by semester. Both changes ruffled plenty of feathers.

He raised a record $1.2 billion at Vanderbilt and is aiming for a record $2.5 billion at Ohio State.

Then there's the little matter of keeping tabs on one of the nation's biggest athletic departments and its
outsized football program at a school with a total statewide enrollment of more than 63,000.

Gee said a new approach to tenure is needed to ensure the university stays relevant to students and the
outside world. The recession has helped highlight the importance of higher education to the economy, he
said, so now is the right time to make big changes.

"The universities of the 21st century are going to be the smokestacks of the century," Gee said, referring
to the heavy industry that once dominated the American economy. "The notion of the large, massive
public university that can exist in isolated splendor is dead."

One challenge is the complexity of big universities, which have numerous divisions accustomed to doing
things their own way. Ohio State has more than 100 academic units capable of granting tenure.

"In effect, there are a hundred different sets of criteria for granting promotion or evaluating an individual
faculty member's case," said Tim Gerber, a longtime music professor and chairman of the university's
faculty council.

The pressure to get tenure is also greater as universities rely more on part-time faculty and non-tenure
track professors. While the number of tenure track positions grew by 7% between 1975 and 2007, the
number of non-tenure track jobs more than tripled, according to the American Association of University
Professors.

"There are many ways faculty members spend their time that may have been very important five years
ago but may not be as important now," said Molly Corbett Broad, president of the American Council on
Education. "Maybe we need to free them up so their time can be directed in ways that have an impact on
students."
46


USA TODAY, February 5, 2010 (Page 3 of 3)

Gee is the country's highest-paid public university president with an annual income of more than $1.5
million, including salary, retirement and deferred compensation.

His office is crammed with Ohio State memorabilia that includes a Gordon Gee bobblehead toy, but the
first thing that grabs a visitor's attention is the framed poster of John Belushi from the 1978 college party
film "Animal House."

The next poster to grab the eye is a quotation: "If you don't like change, you're going to like irrelevance
even less."
                                                                                                               47


The New York Times, February 8, 2010 (Page 1 of 3)

      For students at risk, early college proves a draw
                                             By TAMAR LEWIN
                                              February 8, 2010

RAEFORD, N.C. — Precious Holt, a 12th grader with dangly earrings and a SpongeBob pillow, climbs on
the yellow school bus and promptly falls asleep for the hour-plus ride to Sandhills Community College.

When the bus arrives, she checks in with a guidance counselor and heads off to a day of college classes,
blending with older classmates until 4 p.m., when she and the other seniors from SandHoke Early College
High School gather for the ride home.

There is a payoff for the long bus rides: The 48 SandHoke seniors are in a fast-track program that allows
them to earn their high-school diploma and up to two years of college credit in five years — completely
free.

Until recently, most programs like this were aimed at affluent, overachieving students — a way to keep
them challenged and give them a head start on college work. But the goal is quite different at SandHoke,
which enrolls only students whose parents do not have college degrees.

Here, and at North Carolina’s other 70 early-college schools, the goal is to keep at-risk students in school
by eliminating the divide between high school and college.

“We don’t want the kids who will do well if you drop them in Timbuktu,” said Lakisha Rice, the principal.
“We want the ones who need our kind of small setting.”

Results have been impressive. Not all students at North Carolina’s early-college high schools earn two
full years of college credit before they graduate — but few drop out.

“Last year, half our early-college high schools had zero dropouts, and that’s just unprecedented for North
Carolina, where only 62 percent of our high school students graduate after four years,” said Tony Habit,
president of the North Carolina New Schools Project, the nonprofit group spearheading the state’s high
school reform.

In addition, North Carolina’s early-college high school students are getting slightly better grades in their
college courses than their older classmates.

While North Carolina leads the way in early-college high schools, the model is spreading in California,
New York, Texas and elsewhere, where such schools are seen as a promising approach to reducing the
high school dropout rate and increasing the share of degree holders — two major goals of the Obama
administration.

More than 200 of the schools are part of the Bill and Melinda Gates Foundation’s Early College High
School Initiative, and dozens of others, scattered throughout the nation, have sprung up as projects of
individual school districts.

“As a nation, we just can’t afford to have students spending four years or more getting through high
school, when we all know senior year is a waste,” said Hilary Pennington of the Gates Foundation, “then
having this swirl between high school and college, when a lot more students get lost, then a two-year
degree that takes three or four years, if the student ever completes it at all.”
48


The New York Times, February 8, 2010 (Page 2 of 3)

Most of the early college high schools are on college campuses, but some stand alone. Some are four
years, some five. Most serve a low-income student body that is largely black or Latino. But all are small,
and all offer free college credits as part of the high school program.

“In 27 years as a college president, this is just about the most exciting thing I’ve been involved in,” said
John R. Dempsey, the president of Sandhills. “We picked these kids out of eighth grade, kids who were
academically representative at a school with very low performance. We didn’t cherry-pick them. Their
performance has been so startling that you see what high expectations can do.”

Initially, the prospect of two years of college at no cost was less appealing to Ms. Holt than to her mother,
Simone Dean, an Army mechanic at nearby Fort Bragg.

“I didn’t want to do it, because my middle school friends weren’t applying,” Ms. Holt said. “I cried, but my
mother made me do it.

“The first year, I didn’t like it, because my friends at the regular high school were having pep rallies and
actual fun, while I had all this homework. But when I look back at my middle school friends, I see how
many of them got pregnant or do drugs or dropped out. And now I’m excited, because I’m a year ahead.”

Because most of the nation’s early-college high schools are still new, it is too soon to say whether
strapped states will be impressed enough to justify the extra costs of college tuition, college textbooks
and academic support,

A recent report from Jobs for the Future, a nonprofit group that is coordinating the Gates initiative, found
that in 2008, the early-college schools that had been open for more than four years had a high school
graduation rate of 92 percent — and 4 out of 10 graduates had earned at least a year of college credit.

With a careful sequence of courses, including ninth-grade algebra, and attention to skills like note-taking,
the early-college high schools accelerate students so that they arrive in college needing less of the
remedial work that stalls so many low-income and first-generation students. “When we put kids on a
college campus, we see them change totally, because they’re integrated with college students, and they
don’t want to look immature,” said Michael Webb, associate vice president of Jobs for the Future.

The first early-college high schools — Bard College at Simon’s Rock, a residential private liberal-arts
college in Great Barrington, Mass., and Bard High School Early College, a public school in New York City
— were selective schools intended to cure the boredom that afflicts many talented high school students.

“The philosophy behind the school was that the last two years of high school are not engaging, and we
would set up something that would make them intellectually exciting.” said Ray Peterson, the principal of
Bard High School Early College.

But at the City University of New York’s early-college schools, the emphasis is less on preventing the
senior slump than on aligning high school with college.

“Our students are actually planning for college-level coursework from their first day in the school,” said
Cass Conrad, executive director for school support and development at CUNY, which has a dozen early-
college high schools. “And their teachers plan backwards from college, to make sure they’ll know what
they need to be successful in college-level classes.”

In the pine woods of North Carolina, SandHoke students start in a small Hoke County school down the
road from a turkey-processing plant, and begin traveling to the Sandhills campus, nestled among the golf
                                                                                                          49


The New York Times, February 8, 2010 (Page 3 of 3)

courses of Moore County, only as seniors. Their first college class, in 10th grade, is a user-friendly
communications course taught by Cathleen Kruska, a high-energy teacher who had them discussing job
interviews, learning which kinds of questions are legally permissible and doing mock interviews.

Ms. Kruska teaches the same course to college students at Sandhills, and said the only difference was
that the high school students were needier.

These days, aspirations run high. Ms. Holt, for example, is aiming for medical school. She was
disappointed last semester to get three B’s and two A’s.

“That’s not what I was hoping for,” she said, “and I’m going to work harder this semester.”

Her high standards have affected the whole family.

“My 13-year-old is going to apply to SandHoke for next year,” Ms. Dean said. “And I’m actually learning
from Precious. When I’m done with the military, I want to get my degree.”

This article has been revised to reflect the following correction:

Correction: February 9, 2010
An article on Monday about programs that allow students to earn high school diplomas and up to two
years of college credit in five years at no cost misstated the name of one of the country’s first early-
college high schools, which is now a private liberal-arts college in Great Barrington, Mass. It is Bard
College at Simon’s Rock, not Simon’s Rock at Bard College. The article also misstated the given name of
the president of Sandhill Community College in Raeford, N.C., which has an early-college high school. He
is John R. Dempsey, not Rick.

				
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