PJ Tabit
All right. Well, it is my pleasure now to introduce our panel on College Matched Savings Programs. Our moderator is Ray Boshara. He’s a Senior Advisor at the St. Louis Feds Institute for Economic Equity, where he focuses on wealth inequities. He’s also a senior fellow at the Aspen Institute. Before joining the Fed in 2011, he was Vice President of New America, a DC think tank, where you heard Wesley works, where he led congressional efforts around matched savings and savings account at birth for struggling Americans. He’ll be joined by Kate Hoffman, the CEO and Founder of Earn to Learn. Kate got the idea for Earn to Learn in 2010, the dream of using matched savings accounts to empower individuals to become financially competent and build lifelong assets such as education, home ownership. Prior to that, Kate worked in the financial services sector.
PJ Tabit
Eileen Klein is the former state treasurer of Arizona. She served as chief of staff to the governor during the Great Recession and was responsible for the state’s financial and economic recovery plan. She is President Emerita of the Arizona Board of Regents and a former member of the state board of education. Lee Lambert has been the Chancellor of Pima Community College since 2013. He has long held that community colleges such as Pima are instruments of social justice and are uniquely positioned to address systemic, educational and economic inequity. Throughout his community college career, he has been an innovator in connecting industry and community colleges to revitalize communities through educational opportunity.
PJ Tabit
Finally, Glenn Hamer became the President and CEO of the Texas Association of Business in March 2021. Prior to that, he had held the same position with the Arizona Chamber of Commerce and Industry for 14 years. Glenn has previously held positions as chief of staff to Arizona Congressman, Matt Salmon, executive director of the Arizona Republican party, legislative assistant to Senator John Kyle and executive director of the Solar Energy Industries Association. I’m really excited for this panel, so I’ll just move ahead and Ray, turn it over to you.
Ray Boshara
Great. Thank you so much, PJ, for the, not just today, but for the fabulous series that you’ve organized. It’s impressive as always, you’ve got a great team there. As PJ mentioned, I’m Ray Boshara. I’m with the institute, the newly-launched Institute for Economic Equity at the Federal Reserve Bank of St. Louis. For many years, I was working just really on wealth and equality, but we zoomed out now to look at economic equity a little bit more broadly. Why am I on this panel? Because Kate asked me to be, and then PJ followed up. I’ve had the good fortune of knowing Kate from the early years of Earn to Learn and probably most relevant for our conversation here today is, before I joined New America, I worked at what was then CFED, what is now Prosperity Now on a matched savings program that was enshrined in the law called the Assets for Independence Act.
Ray Boshara
What it did is it created a federally-matched individual development accounts for low-income struggling families who were saving for a first home, a small business and for higher education. That was authorized in 1998. Tens of thousands of people throughout the country now have these matched savings programs. Now, further into the program, Kate had the brilliant idea to seize this Assets for Independence Act framework and say maybe we can think about connecting high school kids, who may not college bound, but could be with a little bit of assistance and leverage the AFIA resources to provide matching dollars for these kids who were saving for their future. There was a non-federal matching requirement, which Kate did a brilliant job of leveraging and to what later became, of course, Earn to Learn.
Ray Boshara
She engaged me, she engaged partners nationwide and community colleges, thought leaders, policy makers. She’s really done great work in bringing this discussion to where it is today, where folks are talking about it as an alternative to financing higher education. We’re going to look more closely at that model today. Why is it compelling for financing higher ed? What are folks doing to contribute to its success? What can others do to scale it up?
Ray Boshara
Just to provide just a little bit more context for the discussion here, I thought I would just mention a couple of things. First is that, we’ve done research at the St. Louis Fed around education and around wealth and around income and who’s benefiting and who’s not. We were looking at college returns. We had a whole symposium on college returns and we found that the income returns on those with a college degree have been fairly steady across both generations and races.
Ray Boshara
In other words, if you compare the amount of income that you have compared to somebody who’s similarly situated but does not have a college degree, you’ll come out better off. You’ll have a higher income than you would have had you not gone to college. However, when we looked at the wealth returns, how much more wealth do you have by going to college versus not, we found that the wealth returns were declining across both generations and races, especially among blacks. Then, we tried to figure out, “Well, what’s going on? Why are income returns holding up, but why are not wealth returns holding up?” It turns out that student loans are really one of the big reasons why the wealth returns have been diminishing. Many of you are familiar with other research by Pew and by Willy Elliot showing that student loans displace other forms of building wealth disproportionately, and so it made sense that these student loans would eat into these wealth returns.
Ray Boshara
But we also found in our research that those who start but don’t complete college and still have their loans were also seeing pretty precipitous declines in their wealth as well. That’s because, among other reasons that or in cast and others have argued that there aren’t enough alternatives to a four-year college degree and we needed a stronger pipeline to our nation’s community colleges. What I’m trying to do here with this context is make two really important points. I think that by Earn to Learn, focusing on reducing student loans and creating a much stronger pipeline to community colleges really is in line with the latest and best research that we’ve done and I think others have done. I think this program is right on mark for what families need in order to have better college success.
Ray Boshara
Just the last piece of context that I want to provide is a little bit about what we’ve learned about savings and matched savings through the Assets for Independence Act and other matched savings programs around the country. Here, I think, again, you’re going to find that Earn to Learn is right on track. As I mentioned, IDAs have been around for a long time, they’ve been tested experimentally, they’ve been evaluated thoroughly. I think the reason we have a matched savings program is really to achieve two things. One is equity, and one is incentive. Okay, you match somebody’s savings account to give them a greater opportunity to accumulate more so they can purchase some kind of an asset. The match is basically the equivalent of a federal tax break that somebody with a higher income might get.
Ray Boshara
Not having access to those tax breaks, the match becomes a way of achieving some level of equity in terms of incentives in terms of for accumulating wealth. Then, the incentive part is a little easier. If you match somebody’s savings, are they more likely to save than they would and maybe save more? The match actually did promote both equity and savings. However, the most fascinating finding coming out of the IDA experiments was that something mattered even more than the match, and that was access to a structured savings mechanism. We even found in research that the very lowest income people, people at 50% of the poverty line or below, saved a greater percentage of their income than those who were relatively better off poor families. In other words, it was access to the structure that actually had the strongest effect on savings than anything else. Here, again, I think what Earn to Learn has done right is it structured a savings opportunity, and I think that’s one of the reasons that it has succeeded.
Ray Boshara
With that brief introduction, I’m pleased to turn it over to our panel. I do have a couple of questions I’m just going to throw out there that maybe we can get to towards after the presentations and in the discussion. The first has to do with the 529 platform, just wondering what the pros and cons of using that platform is. I’ve been using it in my efforts related to setting up 529 savings accounts at birth and I was wondering what your experience with that has been.
Ray Boshara
Then, my second question revolves around what we’ve learned in the child savings accounts field, which is that when kids have a savings account in their name, they develop what’s called a college bound identity. They’re more likely to think of themselves as going to college, which creates incentives and behavior changes in the short term and I was just wondering if that’s something you’re seeing in Earn to Learn as well. With that, please keep those questions in mind. I hope we can get to them and we look forward to the panel questions as well. The order today is Kate will kick us off and talk a little bit more about Earn to Learn and its successes. Then, we’ll move to Eileen, then to Lee, and then to Glenn. With that, Kate, the stage is all yours.
Kate Hoffman
Good morning, everybody. I’m really excited to be here and be part of this amazing series of sessions on innovation in financing higher education. I would really like to thank both PJ and Ray for setting the stage for us to share with you all about Earn to Learn. I definitely appreciate that context that you’ve provided, Ray, relative to the significance of matched savings and what it could mean for supporting low-income students and families, and not only in the state of Arizona, but at scale across multiple states.
Kate Hoffman
My background, as PJ shared, is I worked in the financial services sector prior to shifting into non-profit. Really early on in my research in the nonprofit world, I came across matched savings and the concept of individual development accounts. It really resonated with me because of my background. I would also say what also really spoke to me was the aspect of financial capability training being a core component of individual development accounts or matched savings.
Kate Hoffman
Ultimately, I had the opportunity to take this concept to the three state universities in Arizona back in 2011, 2012 timeframe, and really spearheaded these conversations with the financial aid offices with Arizona State University, Northern Arizona University and University of Arizona. I am so grateful that all three of those schools agreed to apply to Assets for Independence and effectively launch Earn to Learn in Arizona. The program got up and off the ground in January of 2013, and it was definitely a building-the-plane-while-you’re-flying-it scenario. We had to figure out who we were partnering with to house the accounts on behalf of the students. We certainly had to figure out the flow of funds with financial aid and how this would work. Then, ultimately, we also had to go out and recruit students to participate in the program.
Kate Hoffman
The first couple of years, there was a lot of learning that was happening here in Arizona, but ultimately the decision was made that this program wasn’t going to simply be about access and recruitment, that we really wanted to support the students all the way through to graduation. It became a renewable opportunity whereby the students could do this their first year on campus, their second year on campus, their third year on campus, et cetera, supporting them all the way through to graduation with the intent of those students being able to enter the workforce with little to no student loan debt.
Kate Hoffman
The other piece that I would share with you guys about the target population is not only was this program positioned to support students coming up out of high school, but we were also looking to support students of all ages. In fact, even to this day, we have students enrolled in the program who are in their early 60s, and all of those ages in between. I think one of the things that I’m really excited about with a program like Earn to Learn is that we are positioned to be able to support adult learners, especially in light of the fact that the issue or the need to look at the opportunity to re-skill or up-skill certainly existed before this pandemic, but has been amplified as a result of this pandemic.
Kate Hoffman
We’re really excited about the ability to support adult learners with a program like Earn to Learn, which leads me to my next point before I talk about the actual program design, and that is that, since we launched in Arizona, we’ve also now successfully expanded the program to community college students. We’re working with Pima Community College and Maricopa Community College district, so that Earn to Learn is not only supporting students on the four-year pathway, we’re also able to support students on the two-year pathway, and most recently, we’ve expanded to support vocational training and CTE. I think there’s a lot to be said about supporting multiple pathways and supporting those students through to completion with little to no student loan debt.
Kate Hoffman
To talk a little bit about the way that the program works, we’re serving the Pell eligible target population with this model. As long as students qualify for at least $1 of Pell grant aid, they are able to participate in Earn to Learn. The very first step is that they have to complete personal finance training as a prerequisite to even apply. It’s approximately three hours of personal finance training, which we are providing on an online platform for students.
Kate Hoffman
Once they’ve completed that step, they meet with our success coaching team, who make sure that they are indeed income-eligible, and that’s when they establish the account to start to systematically save towards a savings goal of $500 per academic year, as long as they’re successfully completing the program requirements and they’re on track to attend one of our partner institutions of higher education. They receive $8 for every dollar they save in that account, so it’s an 800% return on that college savings account. Again, it is renewable. For students who participate as many as four years, they would save a total of $2,000 over that four year period to earn $16,000 in additional grant aid and that’s money that they don’t have to borrow and they don’t have to pay back.
Kate Hoffman
The other really key point that I would like to share is that Earn to Learn is really positioned to address unmet need. Certainly, if students have a need to support tuition, Earn to Learn can help to support tuition if they qualify for Pell and there’s still a gap relative to tuition. But ultimately, what I’m very excited about is Earn to Learn can also be positioned to support books, fees, housing, meal plans, parking, transportation, and honestly, I feel like a lot of borrowing is happening in some of those other costs that make up the overall cost of attendance.
Kate Hoffman
In Arizona, we have successfully served over 2000 students with this model, and I would like to share with you guys, the success metrics are really impressive for the students and families that we’ve served. The first year retention rate for the program is hovering around 90%. We’ve recently pulled reports from the National Student Clearing House to be able to provide projections on the potential completion rate or graduation rate. For the traditional students that we’re serving, it appears that we’re on track to see completion rates approaching 80%. For that non-traditional student population, again, think adult learners or students who didn’t come directly into post-secondary right out of high school, we are on track to see completion rates potentially over 85%. I really think if Earn to Learn is positioned as a supplement to Pell effectively as an additional tool in the tool chest to support college affordability, that is an important concept for the presentation today in terms of affordability ranking, number one, when PJ started off with that poll.
Kate Hoffman
Ultimately, the average student loan debt coming out of our university system here in Arizona is around $23,000, $24,000, which is lower than the national average, but the students in Earn to Learn are actually graduating with the vast past majority between zero and $10,000 in student loan debt. It’s dramatically lower than their peers potentially. That’s a really big deal when you’re getting ready to enter the workforce that you don’t have that potential albatross of student loan debt really weighing you down. I think the comments that were shared by Ray around students potentially not participating in the 401k, not purchasing a home, putting off some of those next steps in their life journey is a direct result of really being overwhelmed by student loan debt.
Kate Hoffman
The other piece that I would like to share with you all is the Success Coaching model of Earn to Learn. As I mentioned, there’s a financial capability pre-requisite before you can even participate in the program or enroll in the program. Think of that as the student’s initial investment in themselves. At that point, they’re establishing that savings account and starting to systematically save. But in addition to that, there’s an ongoing, personal finance training requirement with this program. I’m a big believer in financial capability training, and I feel that just because a student attends a budgeting workshop doesn’t mean that they’re necessarily equipped to be able to manage that budgeting aspect of their financial well-being. I think it’s the context of repeated exposure to these core financial skills and knowledge that ultimately translate into changing behavior over time. That’s really, in my mind, one of the brilliant aspects of matched savings and individual development accounts was not only was it meant to develop a consistent savings behavior, but it was also really meant to help break the cycle of multi-generational poverty.
Kate Hoffman
Additionally, with our Success Coaching model, we also have a college readiness training component, which incorporates aspects of helping students with the FAFSA, et cetera. We also have a workforce readiness training component. I know we’re going to be able to hear from some of the other panelists today on some of the aspects of this workforce development training piece. But I will tell you, it is a really, in my mind, critical component of the Earn to Learn program. In that, we are partnering with employers here in Arizona and creating business mentoring opportunities, job shadowing opportunities, informational session opportunities for the students, so they can really learn what’s out there and start that process of building that critical network that ultimately translates into them successfully securing work when they graduate in their respective field. I guess I’ll share a couple of remarks relative to some of the questions that Ray teed up for the panel.
Kate Hoffman
When we launched Earn to Learn, we launched it on a platform working with credit unions and regional banks, where we were opening these accounts on behalf of the students as either custodial or custodial-like. When I had the opportunity to meet Ray and talk to Ray in=depth about the program and share with him some of our early successes, he had asked me, what would it look like to replicate the model on the 529? I am really excited to share that we just recently strategically partnered with the Arizona state treasurer, Treasurer Yee, to actually do just that and pilot Earn to Learn on the 529, which is really geared as a college savings account. This is going to be the first time that we’re piloting on the 529, but what’s happened over the past period of years is we’ve been approached by multiple states, namely 529 administrators interested in the possibility of replicating the model on the 529.
Kate Hoffman
I’m really excited to see where this goes. We’re working with a target population that not only is dead adverse, but probably is not even familiar with the 529. I remember standing in a room of 200 parents of college-age going students and starting my remarks off talking about federal financial aid and Pell grants. I asked the audience of 200, how many of them were familiar with Pell grant aid, and literally, less than 10 hands went up. It took my breath away on that stage. Ultimately, my thought is that if they’re not familiar with Pell, they very well are not familiar with 529. I think this is a really innovative opportunity to bridge two tools in the tool chest to support the low to moderate income population in terms of bringing them to the 529 and successfully serving those families.
Kate Hoffman
The other piece, and I just mentioned it a little bit, is that multiple states are at the table interested in potentially replicating this model. I am really excited to say many of them were actually funded by Assets for Independence. We’re really excited to see this growing momentum behind the concept of matched savings. The level of excitement around what I’m about to share, which is this ultimately inspired drafting legislation, working with legislative councils in the US Senate.
Kate Hoffman
Back in 2019, I had the opportunity to work with legislative council in the US Senate to draft the Earn to Learn Act, which is effectively, in the legislative language, mirror of the model that I just described to you all. It’s going to require a local match, much like Ray shared relative to Assets for Independence. The intent is that this program may ultimately be housed with the Department of Education that will then match that local match. We are really excited about the possibility of this. I’m also excited to share with you guys that it looks like this bill could literally be potentially introduced with bi-partisan support in the Senate in the next couple of weeks. Anyway, I have a lot to say, and I could take up the entire time, but I will pause for air and hand this presentation off to Eileen. I just really, really appreciate the opportunity to talk to you guys about Earn to Learn.
Eileen Klein
Thank you so much, Kate. It is a pleasure to join everyone today and to share a little bit about Arizona’s experience with Earn to Learn, share our excitement at the prospect of this becoming potentially a national model, and really share some observations and reflections of what we can learn from the Arizona experience that we can fast forward to the rest of the country. Today, I’d like to just share some remarks, really, to talk a bit about why in Arizona, at the Arizona board of Regents, the governing body for our public universities, we were excited at the prospect of the model of Earn to Learn. Then, really shift into why it’s not just an opportunity for an era of innovation and post-secondary funding and finance, but increasingly becoming an imperative.
Eileen Klein
It’s terrific to be with this group today, a group that’s been working together for quite a long time, to increase opportunities for students and to build economic opportunity for all, which we know increasingly depends on educational attainment. In Arizona, we really had the opportunity to meet Kate and understand her vision for Earn to Learn, and it came about right at the appropriate and perfect time. If you think back 10 years ago, that seems so long ago in many ways, but it has really created a lot of underpinnings to the challenges that we’re facing as a nation now in terms of higher ed finance. We were in the wake of the Great Recession. I’m going to continue with the Arizona example, which was one of the most extreme. We were suffering from one of the largest budget deficits in the nation on the order of 40%, and it became very clear that not just budget stabilization and fiscal recovery was important, but really, we needed to think about what was going to need to be done to help with economic recovery.
Eileen Klein
We also took a look at what students were experiencing and what people were experiencing. If you recall in the Great Recession, you were more likely to keep your job if you had a higher education degree. Certainly, a four-year degree meant you were much more likely to keep your job. We fast forward to this most recent pandemic, we want to think a little bit differently about what that experience was, particularly the impacts on women. But even in this most recent pandemic, you were probably more likely to be able to work, because you could work from home and have more flexibility, but certainly, an opportunity area for research for those of you who are tuning in today. Thinking about the impacts of the great recession, not only were states grappling with jobs, the intense focus on jobs and the real recognition finally, at the level at which we needed to get thousands, hundreds of thousands, millions of Americans with higher education attainment credentials, that really became the forefront of all of the movement in higher education nationally.
Eileen Klein
If you think back, states were creating attainment goals for the first time, higher education institutions were revising their strategic plans. While they were enjoying, really, a surplus of students who were coming through the doors to become better educated or retool perhaps, it also really exposed the lack of sustainability that we have for the higher education financing model in part, because of the impacts of the recession to be sure that resulted in a lot of budget cuts, but certainly also because of the changing structure of state and federal budgets, which we could talk more about. The prospect of Earn to Learn was very appealing. It gave us a chance at this moment where, for the first time, Arizona like many states was putting student success into the strategic plans of universities. If you think long ago, the constitution wanted us to have institutions of higher learning. There really wasn’t an expectation for completion or for retaining students from year-to-year.
Eileen Klein
With this new focus on student success, Kate’s model in Earn to Learn was very appealing, because the model itself required two things. One, for the student to fully participate in their own experience. They were going to be providing skin in the game, as you would say, to help fund their education. They would not be locked out of other resources that could be made available to them, but that savings experience clearly was showing students had the ability and the desire to persist. At the same time, the elements of financial training really helped students understand better what student loans and grants were about. Importantly, the program also extended financial literacy training to family members. Thinking holistically about the family and the college experience, particularly at a point in time where more first gen students than ever were going to college, this was all very exciting.
Eileen Klein
Now that we’ve had the benefit of close to 10 years, we can see that these students are persisting, that they are more likely to succeed. Something in this combination of the enhanced match, where the student puts together some dollars fundamental to their own savings and then gets matched with other grant aid is a very compelling model for us to think about as the federal government continues to update its notion of how it’s going to help support financing higher education. This is going to become even more important for a couple of reasons. I talked about the Arizona example. We are seeing tremendous changes demographically here at Arizona. For 10 years, we’ve had a majority, minority K12 system, so that’s not new. But what we’re seeing is that more students than ever need to get educated at higher levels than ever before. Some of these groups are, really, for the first time realizing meaningful access to our higher education system.
Eileen Klein
At the same time, we have this economic imperative that they will not have access to jobs. Here, it’s 2/3 of the jobs require a post-secondary level credential to really even be a door opened to a student. All these things are coming together at a point in time that makes it more important for us to really examine what’s happening in states that are high growth, high rates of demographic change, and who are growing in terms of economy and population. We hope to share this example of Arizona and Earn to Learn in particular with the rest of the nation. The notion that we could have a federal bill that will allow this to proliferate further in states is very exciting. The program itself, Earn to Learn, is now manifesting in other states and they have their own touches, but the core concepts of Earn to Learn, remain the same and I think are worthy of further examination.
Eileen Klein
Let’s just talk for a few minutes about state and federal governments and, as I said earlier, imperative for them to continue to innovate in financing. Wesley did a terrific job in summarizing for us the landscape in the beginning. He started with talking about Pell grants and President Johnson. That was two generations of Americans ago. I would be the first to argue that that is going to be insufficient for us to continue to expect that we’re only going to address higher education, finance and policy every 25, 50 years. This needs to be something that moves to the top of the agenda, and we can’t let it lose its place. What we’ve seen largely in the wake of the Great Recession, and remember, this is our fourth economic shock in 20 years, so we need to change our game plan. We need to think about what’s happening in the federal budget pressures and in state budget pressures.
Eileen Klein
Apart from recovery, we have a huge uptick in spending for healthcare that is putting a greater compression on state budgets, including higher education, which has largely been seen dispensable. I think Earn to Learn, again, provides us with a model where we can begin to think about how we set completion and how we can meaningfully attach federal and state dollars to help support the great ambitions of Pell, but move students along to completion. We know that the institutions themselves are dependent on the dollars that come from Pell, students are as well, but we’re going to have to think about where we go from here if we’re going to move greater numbers of people to higher levels of educational attainment. while the notions of debt forgiveness are laudable, those things are, I think, more of something we should be considering for relief. They create very uneven impacts.
Eileen Klein
Ultimately, they encourage by just waving and forgiving debt, we encourage just the addition to the federal debt loads. That’s really not … it’s not just kicking the can, that’s creating a terrific tax burden shift in terms of financing higher education. While that might be great as a temporary relief measure, we really need to begin to think about how holistically we’re going to revamp our expectations of the state and federal partnership and how we’re going to incent students to greater levels of completion and how we’re going to make those models sustainable, particularly in era where we have greater budget compression. I will pause here and save some further remarks for when we have Q&A. I want to thank you for paying attention to this and for tuning in today. This, to me, is one of America’s great challenges, it’s one of its great opportunities, and I absolutely believe it’s one of our most important federal imperatives. Thank you.
Lee Lambert
Good morning, everybody, or good afternoon, depending on which time zone you’re in. My name is Lee Lambert, and I’m honored to be the Chancellor of the Pima Community College District here in Tucson, Arizona. We’re just about an hour north of the Arizona state of Sonora line. What I’d like to do is talk about why this is important and then touch on how a little bit of how it’s working at Pima Community College. Let me start with the story, because I think the story illuminates why this is so important. When I was the President of Shoreline Community College in the Seattle, Washington area, I work with employers, especially in the automotive service training area, and they would repeatedly express concerns that the students who were going through the technician program were not able to manage their money very well once they completed the program and went into the dealerships.
Lee Lambert
They were going from, some of them just making minimum wage to all of a sudden making $50,000, $60,000. In just a few short years, they could be making a hundred thousand dollars a year and they were blowing their money, because they didn’t understand how money works and how to manage their money. The dealers worked with us to run financial literacy workshops during the lunch period for the students. When you take that story and then you couple it with the notion of college affordability, student success, the need to develop skills, we needed a more holistic, comprehensive solution. I didn’t realize that there was one that was already percolating in the state of Arizona until I arrived in the state of Arizona. Within my first year, I would have the great pleasure of meeting Kate Hoffman.
Lee Lambert
Kate came to visit me within my first year here at Pima Community College and she shared with me this innovative program called Earn to Learn. It was really designed initially for a student starting out at the University and going on to get their baccalaureate education, and I said to Kate, “Well, why can’t this be done at the associate degree level?” Many of our students will come and do the first two years and then transfer on to a university, and many of our students are low-income, many of them first in their family, disadvantaged in terms of going to college. I also, at that time, talked to her about many of our students were also taking our career technical education programs and they have an attempt to go directly into employment, tying back to my Shoreline experience, and so could we, at some point in the future, start to incorporate the community college students and those CTE students into an Earn to Learn model?
Lee Lambert
I’m so excited and so pleased that Pima Community College and Maricopa Community College district, we’re the first two community colleges in the country to be offering Earn to Learn. Just to put it in perspective from an equity standpoint, because so much of what we do and is noted at the outset, I really believe community colleges, especially we’re institutions of social justice. We are a place where hope, opportunity come together, especially for so many people of color and especially for so many of our female students. At Pima, 66% of our students participating in Earn to Learn are female. Seventy six percent of our students participating in Earn to Learn are people of color and specifically, 53% are LatinX. When we think about the future of this country and where things are headed, we have to do more to support our communities of color, more to support our female students, especially to pursue skill-based programs.
Lee Lambert
When I look at Earn to Learn and some of the key elements that all come together, and this is the key part of it, it actually addresses the college affordability piece. It actually teaches students how to manage money and the whole debt management piece. It also, with the success coaches, it builds in that student success support piece, and ultimately, it all integrates around we’re going to give you skills. This isn’t just, as Eileen was pointing out, let’s just forgive your debt. Well, in forgiving a debt, I’m not necessarily against that as a general concept, but are we making sure that people don’t return to debt because do they understand how to manage the money? That’s what earn to learn does. It actually does that skill building. I think that’s so essential, but then with that coaching piece, you have someone who’s there with you all along the way, and I think that’s equally as important.
Lee Lambert
Let me talk a little bit about, not so much the transfer side, I think many folks understand the transfer side. First two years, you come to a community college and then you go on to the university, it’s the Career Technical Education side. We are beginning a pilot that is focused on our aviation technology program. In our aviation technology program, there are great jobs in this community. As many of you may be aware, Arizona is one of the leading states for aviation employment and a key part of that is having the airframe and power plant technician, the person who can service the aircraft available.
Lee Lambert
Unfortunately, there’s more vacancies or more opportunities than there are individuals who are prepared to come into that part of the workforce to work on aircraft. I just want to do a shoutout to Glenn Hamer, and I want to shout out to Governor Ducey and the business leaders in this community for supporting the doubling of Pima’s aviation program. Thanks for their support. The state of Arizona has made an investment in that expansion in the form of a building build out, which will allow us to double our output of aviation technicians for the industry.
Lee Lambert
If you go through this program, in about 18 months, you’re going to be in a great position to be earning over $50,000 a year, and it’s akin to that same problem I mentioned too, when I was in Seattle, Washington. As this goes, well, we’re hoping to scale it to other high-demand, high-wage opportunity programs. I think we need to keep in mind that for a lot of these students to go through these programs, sometimes just building an on-ramp, providing the resources and the student supports are essential as they move through that.
Lee Lambert
I’ll illustrate another one. I know there was a question brought up about supporting short term Pell. Many of us in the community college world, we believe that we’ve got to do a better job of supporting short term Pell, and I’ll use an illustration as an example. Our EMT program, Emergency Medical Technicians, that’s a 9-credit program. But what sometimes gets lost, it’s that for many of those individuals who go through that program, they then decide to go on to be doctors, they then decide to go on to be nurses. I think you get what I’m saying, right? Sometimes it’s easy to just look at a short term program and say, “Well, that’s not going to lead to X.” It actually is a gateway. It’s an on-ramp to greater opportunities, so we have to find a way to support the funding for those types of programs to bring more folks and especially individuals of color.
Lee Lambert
We’re doing that in the aviation program. We create some shorter term pieces that bring them into the aviation piece and then move them through. We’ve created shorter term programs and megatronics, so that way folks can come in and then they want to go on and we’re finding a lot of these folks want to go on and get the degree. We can’t think of them in isolation. We need to look at things as a whole piece, and then having an Earn to Learn model that really starts to provide that holistic 360 support mechanism from the funding, to the debt management, to the career coaching, and more importantly, that skill building. I will stop there and I’m going to turn it over to Glenn.
Glenn Hamer
Well, it’s tough to follow Kate, Eileen and Chancellor Lambert, but I will do my best. First, I will say thank you for the chance to participate today. The Earn to Learn program is something that we in Arizona took great pride in, and it’s exciting to see that there’s going to be federal legislation as well as this is an effort that’s expanding out to other states. The state of Texas, and I’ve been here for about five or six weeks now, is a great state for Earn to Learn to expand in. The statistics in Texas are as follows. The average student loan debt in Texas looks to be a little bit higher than in Arizona. It’s about $32,000 or so and the total number is about $111 billion. You could see right from there, that’s a big issue, and for reasons discussed earlier, it does delay things like home ownership and things.
Glenn Hamer
What I do believe is the universal applicability of Kate’s Earn to Learn program is the skin in the game and the way the funds are leveraged. In my book, putting in a dollar, getting $8 back of value, that’s quite a bit. The numbers that she used, $2,000 to get $16,000, that equals $18,000, which is a significant number is very, very important. One of the things that, I don’t care if you’re in Arizona, Texas, or one of the 48 other states, if you talk to the business community pre-pandemic, the number one issue really became workforce development. Chancellor Lambert talked about some of his exciting initiatives at Pima Community College, workforce development was at the top of our agenda.
Glenn Hamer
Fortunately, as the vaccines are going in people’s arms, workforce is coming back as if it’s not the top issue, it’s pretty darn close to it. Arizona has had a great program to get a significant percentage of its population by 2030 with a post high school credential and I’m proud to report Texas has something similar as well. I believe it was a program that, or an initiative led by Governor Abbott, the 60×30 Texas program, the goals support Earn to Learn. I’ll talk about a couple of these. One, increasing the number of adult learners, completing a certificate or a degree, and we certainly see earned to learn enrollees having a vastly higher completion rates compared to non-participating students. The numbers that Kate put out there are just really incredible. To think 85% for non-traditional enrollees, to have that level of completion, is something that we need in Arizona, Texas, and all 48 states. Providing students marketable skills and having that coaching component also very, very important.
Glenn Hamer
We all need help. I know that I needed a lot of help throughout the college process and even well beyond that. Again, reducing the student loan debt. The numbers from the presentation earlier about the difference between 2008 and today are pretty astonishing. That $1.6 trillion number nationally, that is a big number. We have to figure out a way to, in a smart, effective way, reduce that number.
Glenn Hamer
Then, I want to just point out a couple of other things. The pandemic has made it similar I’d argue to 2008, we learn in these difficult economic times, that advanced degree, that post high school credential becomes all the more important to weather those types of storms. 2008 might have been in the background for a lot of people. With the pandemic, we are reminded again how important it is to have some certificate, degree post high school. Again, I want to commend Kate for the continued evolution of the program, which has gone from universities to community colleges, to other types of vocational training, including CTE.
Glenn Hamer
I’ll close on a couple of points and then we could open it up for Q&A, because I do think our previous speakers covered most of the ground I wanted to talk about. This, to me, is just a terrific example of a public private partnership. You’ve got the private sector involved, you’ve got students, you’ve got government, all leveraging funds for the most noble of purposes to provide educational experiences that will serve these students, these adults well, and their families well throughout their lives. Actually, I think this has a generational impact. It’s that powerful. As we all work towards reducing poverty, increasing equality, increasing opportunity, the Earn to Learn program is a very important component of that. I could say, as someone who certainly has a lot of Arizona DNA and now I’m getting some Texas DNA, we want to see this program successful in Arizona, Texas, and across the country. Again, I commend Kate Hoffman for her incredible work, and thank you for the opportunity to be here this afternoon.
Ray Boshara
Thank you. That was fabulous, Kate, Eileen, Lee and Glen. We’re really looking forward to the Q&A. I have a million questions, but I put a couple on the table already. I understand that the chat will be, PJ will be forwarding me questions from the chat, so I’m wondering if we have any to start with. Okay, while folks are getting organized, let me just throw out another question that kind of struck me as I was listening to the presentations. This is such a great idea, the financial literacy effects, the completion rates, the reductions on student loans, but you’re starting with high school kids. What if you were to start the program earlier in life? There’s really good research coming out of the asset buildings, the child savings account field, showing that when kids have these accounts, they think differently and more positively about their future, they make behavior changes. What if we were to maybe start these in junior high or elementary school? Do you think that we could even have more impact than we’re having already?
Ray Boshara
Okay. That’s my question, think about that. Actually, a few questions have come in on the chat now. What if, this can be for anybody. Yeah, turn on your videos, please when you have a question, if you would like. The first question is, are students on the hook for any of the matched funds if they end up not completing? Okay. Panelists, please turn on your video. Yeah, please turn on your video when you’re responding. Okay? Got to unmute Kate.
Kate Hoffman
Sorry about that. The students are not on the hook for that matched component and predicated on them successfully completing the semester, that’s additional grant aid. The way that I’ve often described it is that’s money that they didn’t have to borrow and they don’t have to pay back. Now, if the student happens to stop moving forward in the semester before the drop at date, they wouldn’t be receiving the match, but they would get their student savings returned to them. The money that those students save in that account does belong to the student. Obviously, once they’re on campus, the combination of the savings plus the match go towards offsetting that unmet need, as I had shared before.
Kate Hoffman
Then, I just want to say really quickly, relative to enrolling students at an earlier age, as you know, we were blessed to receive the seed money from Assets for Independence, but because of the grant terms that were associated with that funding through the federal government, we really only had the ability to recruit juniors and seniors, because otherwise, we would’ve run out of runway with those grant terms. I have definitely been a big believer that recruiting students at a younger age, especially middle school, when a lot of students are making those critical decisions about the possibility of post-secondary, it could be really powerful to have a program like this starting at an earlier age.
Ray Boshara
Great. Thank you. Okay. Here’s a question. One listener says it was implied that Earn to Learn can replace Pells. How do you solve for families that cannot save the $500 match? Replacing Pells with Earn to Learn is not a total solution.
Kate Hoffman
I’ll answer this question, but there may be others on the panel that would like to also respond. I have definitely described Earn to Learn over the last 10 years as a supplement to Pell. Pell is a critical, critical tool in the tool chest to support college affordability and access. I think with a program like Earn to Learn, in combination with other forms of supports for those students, it’s a really amazing supplement to the Pell program.
Ray Boshara
Great. Great. Okay. Here’s one, another question here. If the program’s-
Eileen Klein
Ray, before we go on-
Ray Boshara
Oh, sure.
Eileen Klein
Before we go on, if I could just add on to Kate’s point.
Ray Boshara
Please.
Eileen Klein
We do have some data and the program is geared toward low-income, maybe moderate-income students. It could work for all students, let’s face it, but we really have had a focus on low-income students. What we’ve seen so far is that about 89% of our students are able to meet their monthly savings goals. It’s not to suggest that we shouldn’t start earlier or that there might be families that would have a very hard time with the $500, but I do think we’ve got a body of data here to build from and a very good success rate to suggest that setting up these stage savings goals is helping students meet the goals for their part.
Ray Boshara
Thank you, Eileen. It reinforces my point earlier that income was not the strongest predictor of who could save and who could not. It was access to a structured savings mechanism that really made all the difference. Good. Here’s another question. If the program scales nationally, is the expectation that the matching funds will continue to come primarily from college budgets?
Kate Hoffman
I’ll go ahead and take a stab at that question. As we shared, and I think you actually mentioned this, Ray, in the state of Arizona, we, working with the universities here in Arizona and now the community college as well, positioned institutional aid as that local match here in Arizona to leverage the federal funding through Assets for Independence. Ultimately, when we first launched the program in partnership with the three state universities, they allocated $10.5 million in institutional aid that was then matched by the federal program and we ultimately had $21 million in seed funding to get this project up and off the ground. I will share that several of the states that are at the table interested in replicating the model are looking at the possibility of using state funded needs-based aid as that local match. There’s also an example in Oregon, where they had also been an AFI-funded program and they have state tax credits that are being utilized as the local match.
Kate Hoffman
I also have had conversations with some of these states about the possibility of the private sector and philanthropy in combination with state funding providing that local match. When we drafted the Earn to Learn Act, we provided a lot of flexibility in that section where the language is talking about what’s possible in terms of the local match. In the case of Arizona, the schools came to the table with money that was already earmarked to support low-income students coming to those schools. It was an interesting way to effectively be able to double those dollars with the matching opportunity.
Ray Boshara
Great. Okay. That’s great. Let’s talk, I was really, the other speakers, Eileen and Lee and Glenn, really talked about their enthusiasm for this program and talked about, they would love to see it go nationally. Kate, what’s the real potential here? If the legislation passes, if I’m correct, it really only authorizes a demonstration project, it doesn’t necessarily go right to scale. What’s the theory of change here that you’re operating under, that we need more evidence before we can really reach more people across the country? Is that really your vision, Kate?
Kate Hoffman
Ultimately, my vision for this model is that, as Glenn stated, it could be available across the country in every single state, supporting low to moderate income students, not just in terms of affordability and access, but also retaining those students through to completion. I think that’s a really critical piece with this approach. I also think the financial capability training cannot be underscored enough in terms of how significant that is and important that is. When we drafted the Earn to Learn Act back in the fall of 2019 prior to this pandemic, we had positioned it to be a billion dollar expansion of this concept, which in effect, would be $500 million in local match to $500 million in federal match. I will just say, your question is fantastic. Ultimately, the vision is that this is going to potentially become a new model of financing higher education for the country. I think the vision in writing that legislation was that that would be the next level above what’s happening currently in the country.
Glenn Hamer
Kate, if I can jump in here. Ray, you’ve got an extraordinary group of leaders on this call. This has been, I’d argue, so I’ve got two shots of Pfizer in my system well over two weeks. Clinical trials, it works, so for me I’m back by the way, so be careful, it’s like it’s 1999 again. This has been battle-tested. You have Eileen Klein, who’s one of the most well-respected public officials in Arizona in our state’s history. Chancellor Lambert is a nationally, internationally regarded chancellor. This has been a tested program. The key here is scale. When you see numbers like 85%, 80% for first time, if this isn’t a silver bullet, it’s the closest thing I’ve seen to it. The key is to scale. While I’ve bragged about Arizona, now I’m going to brag a little bit about Texas, where this is coming.
Glenn Hamer
Texas, here’s a secret, it’s a country. The GDP is $1.9 trillion, will be at $2 trillion very soon, 9th largest country if you just took the GDP. Between the two states with what’s going on and with the way the gusher of cash is coming out of the Feds, this is proven. This is a case of scale. We scale, more Americans not particularly of lower income, are going to be able to get a post secondary degree, a four-year college tier degree or some sort of certificate and enjoy the American dream. It’s really that simple. This is a question of scale. Ray, the federal reserve, we’ve got a treasury of the secretary that obviously understands the reserve, understands the government incredibly well, we’ve got to figure out a way to get there quickly. There’s no time to waste.
Ray Boshara
Thank you, Glenn. That’s very powerful. Yeah. I see the potential as well. When we talk about this reaching everybody, a question came into the chat, would Earn to Learn work for undocumented students?
Kate Hoffman
In Arizona, the nature of the funding that provided the local match was that it was supporting low to moderate income students in the state of Arizona who qualified for in-state tuition and qualified for federal financial aid. I did have conversations with our institutions of higher ed about the possibility of expanding this to support the undocumented students and there absolutely was a very positive response from all of our institutions of higher ed in terms of how critical it is to support those students. Due to the nature of the local match, it allowed for us to support students who qualified for in-state tuition and qualified for federal financial aid. I think it’s really predicated on the rules around the funding and how those rules are written, if that is indeed a future possibility.
Ray Boshara
Thank you. I’ve worked with 529, as I mentioned, throughout the country, seven of them now create these accounts at birth. The lesson here is you have leadership in some states and you don’t have leadership in others. You can make 529 a very regressive structure progressive through things like Accounts at Birth and Earn to Learn. The real question is, from the chat here is, what if states have different political appetites or willingness to really want to take this up and to fund this program? Is it really sustainable if you don’t have state aid? Is there enough support through corporations and philanthropic efforts if the states themselves aren’t willing to do it?
Kate Hoffman
I’m certainly happy to take a stab at answering that question and then would certainly like other panelists to weigh in on this, because I think it’s an excellent question. I think, as we know, there are lots of different approaches to supporting higher education depending on the state you’re coming from. Some have a much greater appetite for supporting innovation and supporting different funding mechanisms for students and families within those states. I think, ultimately, over time as a program like this continues to grow and is taken to scale and is consistently showing the demonstrated success that we’ve shared today in this panel presentation, that more of those states who are maybe on the sidelines or on the fence might be ready to make those types of investments, because ultimately, that’s the population of their state, that’s the future workforce of their state, and the reality of the situation is, this is a workforce development strategy.
Kate Hoffman
We’re not just trying to build a pipeline into post-secondary, we’re really trying to successfully build that pipeline into the workforce. I imagine that with this model consistently proving that this is working, it’s going to bring some of those folks off the fence.
Ray Boshara
Great. Okay. We’re going to wrap up here. I’m going to invite each of our panelists to give me 30 seconds of closing reflections or comments, and I would like to start with Lee.
Lee Lamber
Thank you for that, Ray. Oh, sorry. I think we have to keep everything in a broader context. This is just one piece of an overall strategy that hopefully will be tied to the nation’s re-skilling recovery effort, and we also have to not lose sight. We either pay on the front end or we’re going to pay on the back end. Over 56% of four-year college graduates drop out of college within six years. Can we afford that price tag?
Ray Boshara
Thank you. Great. Eileen, would you like to go next?
Eileen Klein
Thanks. Thanks for this opportunity today. As we’ve talked about, this is an exciting innovation opportunity. Importantly, it’s time for us to get very serious about innovating at both the federal and the state level. We’re going to have to figure out how we’re going to make up for not being able to take advantage perhaps of as many international students or other things that have helped us defray costs. Our short-term opportunities to figure out how to maximize institutional aid, so that we can scale this program, see what we can learn from it and hopefully drive additional innovations that are going to allow states to reach their attainment goals and individuals to really, to reach their full potential and economic opportunity. Thank you.
Ray Boshara
Thank you. Thank you. Glenn, you’re up.
Glenn Hamer
This is about maximizing the potential of all Americans. When you think about the international situation and the competition, anytime you see 80%, 85% completion rates, this is a federal responsibility and, in my opinion, to get engaged. We will get states engaged, but the numbers are so astonishingly good that we need the support on the federal level. When I see federal reserve bank of St. Louis behind me, I’m grateful to be participating here today. Thank you.
Ray Boshara
I love your optimism. I really appreciate that Glenn. Kate, final word, before we turn it back over to PJ.
Kate Hoffman
I just guess I will reiterate that my background was from the financial services sector. When I learned about matched savings and individual development accounts and the fact that it brought to the table financial capability training and that it encouraged, not only for individuals to invest in themselves with the potential of the match, but also that it had the potential to break the cycle of multi-generational poverty. I just feel like this is a really incredible time to bring the asset building world together with higher ed in such a way that it could be really transformative for this country and really transformative for so many students and families who are struggling to figure out how they’re going to afford to go. You asked this earlier, I think that’s probably the number one reason, not only are they not moving forward potentially with a post-secondary opportunity, but they’re not completing. They’re already there and they’re not completing. I think a program like this is a really wonderful additional tool in the tool chest to support students on that journey of post-secondary success.
Ray Boshara
Thank you, Kate. Congratulations on your success. Keep breaking those silos. I was also thrilled to hear from Eileen and Lee and Glenn, and turn it back over to PJ and thank him again for his leadership on this issue.