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Economix Blog: Only Half of First-Time College Students Graduate in 6 Years

February 26, 2013 by Leave a Comment

CATHERINE RAMPELL

CATHERINE RAMPELL

Dollars to doughnuts.

As we’ve covered here many times before, there is an abundance of evidence showing that going to college is worth it. But that’s really only true if you go to college and then graduate, and the United States is doing a terrible job of helping enrolled college students complete their educations.

A new report from the National Student Clearinghouse Research Center digs deeper into these graduation rates. It finds that of the 1.9 million students enrolled for the first time in all degree-granting institutions in fall 2006, just over half of them (54.1 percent) had graduated within six years. Another 16.1 percent were still enrolled in some sort of postsecondary program after six years, and 29.8 percent had dropped out altogether.

Source: National Student Clearinghouse Research Center. Source: National Student Clearinghouse Research Center.

As you can see, many of the students who ultimately graduated did so at a different institution than the one where they had originally enrolled. Of the whole cohort of 2006 matriculants, 42 percent graduated where they had first enrolled, and another 9.1 percent graduated from a place to which they had transferred.

The graduation and transfer rates varied greatly by state, and by the type of institution in which the student first enrolled. In Minnesota, for example, 27 percent of students who enrolled at four-year public institutions graduated at a different school within six years. That was the highest share for any state in this metric.

A small share of students (3.2 percent) who started out at four-year schools ended up receiving their first degree or certificate instead from a two-year school, with rates above 5 percent in Minnesota, North Dakota and Wisconsin. On the other hand, 9.4 percent of all students who initially enrolled at a two-year public institution received their first degree at a four-year school.

The report also looked at the state-level completion rates for students who are “traditional” (that is, age 24 and younger) versus “nontraditional” or “adult” (over age 24).

Not surprisingly, in almost every state, traditional-age students starting at public four-year schools had higher completion rates than nontraditional-age students. The smallest gap was in Arizona (1 percentage point, 68.4 percent of traditional students graduating versus 67.6 percent of adult students) and the highest was in Vermont (42 percentage points, 74.3 percent versus 32.2 percent).

For more on this release, check out the Chronicle of Higher Education’s neat interactive visualization of the study.

Article source: http://economix.blogs.nytimes.com/2013/02/26/only-half-of-first-time-college-students-graduate-in-6-years/?partner=rss&emc=rss

Filed Under: Economy News Tagged With: , ,

Auditor Says F.H.A. Could Need Bailout

November 16, 2011 by Leave a Comment

The F.H.A., which offers private lenders guarantees against homeowner default, has just $2.6 billion in cash reserves, the report found, down from $4.7 billion last year.

The agency’s woes stem from the national foreclosure crisis. In the last three years, the F.H.A. has paid $37 billion in insurance claims against defaulting homeowners, shrinking its cash cushion.

The auditors determined the agency’s level of supplemental cash reserves by projecting losses on its mortgage portfolio and counting them against expected premium revenue. This year, the audit found that the F.H.A. supplemental reserve was less than one-quarter of a percentage point of its current portfolio: $2.6 billion against a $1.1 trillion mortgage portfolio, as of Sept. 30. Legally, the housing agency is required to keep a 2 percent cash buffer, a target it has not met since 2008.

F.H.A. officials argue that the likelihood the 77-year-old agency will need its first taxpayer bailout is slim. “It would take very significant home price declines to create a situation in which the portfolio would require any additional support,” said Carol Galante, acting commissioner. “There is no evidence or widespread prediction that home prices are going to decline to the kind of levels” requiring a bailout, she said.

The baseline plan included in the report does not foresee the F.H.A.’s going into the red. It presumes that home prices will stabilize in coming months and start to rise in 2012. In that case, the agency’s capital ratio will increase to 1 percent in 2012 and 2 percent, the legal minimum, in 2014.

But if housing prices decline, losses from an enormous cohort of loans, most originated between 2006 and 2009, could subsume the agency’s reserves. The audit contends that “significant declines of home prices” in fiscal year 2012 “would create a situation in which the current portfolio would require additional support” from the Treasury Department. In the worst case provided in the report, housing prices would continue to decline through 2014 and the agency would require a total of $43.2 billion from the Treasury. (Congress would not need to approve these funds.)

Ms. Galante said that before the agency got to that point, it would consider several measures, including raising the F.H.A. insurance premiums borrowers pay.

Traditionally, the F.H.A. has helped borrowing by first-time home buyers or those with low to moderate income. When the housing bust hit, the agency greatly expanded its purview, and the value of its loan portfolio more than tripled. In 2006, the F.H.A. backed about 5 percent of mortgages. In 2010, it insured one-third.

The F.H.A. provides lenders with a guarantee if mortgages meet certain underwriting criteria. It finances itself by charging borrowers a premium that offsets the cost of payouts on defaulting loans.

Numerous independent reports in the last three years have predicted the agency’s insolvency. Last week, for instance, the American Enterprise Institute, a policy research organization, released a study by Joseph Gyourko, a professor at the Wharton School at the University of Pennsylvania, stating that the agency was underestimating its future losses by “tens of billions” and arguing that “the recapitalization required will be at least $50 billion, and likely much more.”

“If the economy and housing markets deteriorate unexpectedly, we need to be ready to infuse even more capital” into the reserve account, Mr. Gyourko wrote, estimating that the F.H.A. may ultimately need as much as $100 billion.

Many housing experts have called for additional Congressional oversight of the agency, given the possibility of a bailout. “Along with Fannie Mae and Freddie Mac, the F.H.A. is the third leg of the government stool supporting the entire housing market,” said Christopher Papagianis, managing director of Economics21, a research organization. “What is embarrassing for Congress is that, unlike Fannie and Freddie, the F.H.A. is directly under their purview. It’s always been a government agency, subject to hearings and oversight. They clearly haven’t been minding the store, given this report.”

Other housing experts caution that the F.H.A.’s insolvency is not a foregone conclusion. “Whether or not they are adequately capitalized depends on their projections,” says Ann B. Schnare, an independent housing consultant, who has studied F.H.A. solvency. “But they have been over-optimistic about their future book for three or four years. Every year, it’s like, ‘We’re losing on this end, but we’re going to make it up going forward!’ ”

Ms. Schnare added: “They are doing very high loan-to-value loans in a market that is extremely fragile. People are entering the program without a lot of equity. They’re skating on thin ice.”

The F.H.A. report comes as lawmakers are considering raising the maximum loan amount that the agency can guarantee, possibly exposing the agency to more risk. On Oct. 1, the ceiling dropped to $625,500, from $729,750, in some high-cost areas like the New York metropolitan area. However, a bill moving through Congress would return the ceiling to the higher level.

Article source: http://feeds.nytimes.com/click.phdo?i=3c827a55d45f80301c6473c89db6bc89

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Temp Workers in Germany Dismay Unions

April 20, 2011 by Leave a Comment

Originally from the area around Erfurt in eastern Germany, Mr. Hintermeier has spent 15 years as a temporary worker, going wherever the jobs are.

“You’re doing the same work for less pay,” said Mr. Hintermeier, who earns about 9 euros, or almost $13, an hour. That is about $2.86 an hour less than the average for eastern Germany, and $7.16 to $8.59 less than in wealthier regions of the country, where Mr. Hintermeier often works.

On top of that, “there aren’t many opportunities to develop,” he complained. And he said he often encountered resentment from co-workers who consider him low-cost competition.

Mr. Hintermeier is one of nearly a million temporary workers, almost 3 percent of the work force, who in recent years have given German companies much more flexibility than before. Temporary employment played a critical role in helping Germany weather the 2009 downturn, as employers were able to quickly respond to ebbing demand by reducing payrolls.

But an increasingly vocal group of critics say that the loosening of regulations in 2003 allowing companies to hire temporary workers has created a vast cohort of poorly paid, poorly treated employees with slim chances of obtaining permanent jobs. With the economy surging once again, unions are lobbying for legislative changes and raising the issue of temporary workers at contract talks.

“Temporary work has enabled a shadow labor market,” Berthold Huber, chairman of the IG Metall labor union, said at a news conference in Frankfurt last week. “That is intolerable.”

Temporary employment, already a boom industry in Europe, is about to get more support when the last restrictions on labor mobility among European Union countries fall away on May 1 — coincidentally the day when Europe celebrates the labor movement. Temporary-employment agencies will then be able to recruit workers in low-wage countries like Poland for jobs in Germany and elsewhere.

“That will certainly raise the pressure,” said Sandra Siebenhüter, who has studied temporary work for the Otto Brenner Foundation, a research organization in Frankfurt that is financially supported by IG Metall.

While there are plenty of anecdotes about temporary workers who are receiving worse deals than permanent employees, the loosening of Germany’s traditionally rigid labor market has been crucial in preventing at least some companies from shipping production abroad.

“Our global competitiveness would deteriorate if we were unable to use the instrument of temporary employment,” Bayerische Motoren Werke, the maker of BMW vehicles, said in a statement, noting that 75 percent of its work force was in Germany, while 80 percent of its car and motorcycle sales were abroad.

At the heart of the debate is the question of whether a temporary, lower-wage job is better than no job at all.

The rise of temporary labor has contributed to a plunge in German joblessness. The unemployment rate has fallen to just above 7 percent, or 3.2 million people, from nearly 12 percent in 2005, or almost 5 million people.

Temporary employment agencies have soaked up a large proportion of those jobless people, many of whom lack training. The industry draws two-thirds of its new employees from the ranks of the unemployed, according to a study by the German Federal Employment Agency.

Randstad Holding, a global temporary-employment agency based outside Amsterdam, has created 50,000 jobs in Germany over the last two years, said Ben Noteboom, Randstad’s chief executive. Most of the people hired had been jobless, he said.

“In the past, staffing was difficult legally,” Mr. Noteboom said. “The moment it changed, the market started to boom.”

He said that he was baffled by efforts to tighten restrictions on temporary hiring. Abuses by a few companies had turned public opinion against the industry, he said. “In Germany, we do see that there is more aggressive talk against our business,” Mr. Noteboom said. “I don’t know how many difficulties you want to create for your companies to stay in the country.”

In fact, Mr. Noteboom said, Germany still has some of the tightest protections anywhere for temporary workers. He said that he considered “temporary worker” a misnomer in the first place. In Germany, Randstad’s workers have the status of regular employees with full health and pension benefits. They are simply lent to other employers.

Article source: http://feeds.nytimes.com/click.phdo?i=3a62e983397857445cb7938fe7b0f675

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