The WCC administration is considering the addition of a new $10 per-credit-hour “facilities fee”. Proceeds from the new fee will fund WCC debt payments on more than $20M in capital projects on campus. Similar to the “technology fee” – the money generated will not be accounted for separately; it will go into the General Fund account.
The Board of Trustees is considering a debt issuance to avoid going to the voters to seek additional funding for the College. At the March 12, 2019 Board of Trustees Retreat, Trustees David DeVarti and Richard Landau debated the merits of seeking capital loan funding over issuing voter-approved bonds.
Trustee DeVarti favored seeking voter support for the capital projects, in order to keep student tuition and fees low.
“This is going to be a big philosophical discussion for me, and I feel that we have property – a lot of value in property – including newly built property in the County that we could draw on the goodwill of the voters to help with our construction projects.”
Trustee Richard Landau disagreed, saying that it was risky to ask Washtenaw County voters – who have always been generous with the College – for more money.
” – in order to save a few dollars from students on a fee – you’re running the risk of essentially killing the goose that lays the golden eggs for us in terms of millage. And I’d be super conservative and cautious about us doing anything to the millage. We’re already getting a boatload of money from that millage, and you want to get more?”
PEA 115 transfers WCC debt to students
This isn’t the first time WCC has transferred its own debt to the students. The Health and Fitness Center at WCC wasn’t designed or intended to support students. After the building opened, it soon became clear that its operational costs were enormous and ongoing. WCC initially built the HFC to support a maximum of 6,000 subscribers. Today the building has more than 7,000 subscribers, and WCC would like to push that number closer to 8,000.
Initially, the building hosted no academic classes. That changed with PEA 115 – the only credit class offered at the Health and Fitness Center. The requirements for PEA 115 are simple. Students enroll in the class and pay a semester-long membership fee of $160. The only “eligibility requirement” is that the student must enroll in at least 3 additional credit hours at the College. PEA 115 has no meeting times or dates, no prerequisites, no books, no supplies, no classroom time, and no attendance requirements. PEA 115 is infinitely repeatable but does not fulfill any degree requirements for any degree program offered at WCC.
For the Fall 2019 semester, PEA 115 was capped at 1,700 students. For the Winter semester, WCC capped enrollment at 2,000 students. The College really pushes students to enroll in PEA 115 and uses the student membership fee to help pay for the Health and Fitness Center’s debt payments and maintenance projects.
Pell Grant Basics
The credit-hour enrollment requirement is interesting, only in its implications for students. Three credit hours is a magic number in terms of federal financial aid – specifically the Pell Grant program. A Pell Grant is a form of federal financial aid reserved for students who have extreme financial need. Often, you can find Pell-eligible students at a community college.
Most federal financial aid programs require students to maintain full-time or half-time enrollment in a degree program to qualify. The Pell Grant has lower enrollment requirements because many recipients work or have children to care for. To be eligible for the full amount of a Pell Grant, a student must take at least 12 credit hours per semester. Students who enroll in fewer hours will receive a lower Pell Grant award. To receive any type of aid through the Pell Grant program, students must remain enrolled in at least three credit hours.
Students who receive the Pell grant don’t need to repay the award. The grant means that they don’t accumulate student loan debt. In addition, the Pell grant is “portable.” Students can use the grant to take classes at WCC, then transfer to a four-year university to finish a bachelor’s degree.
There’s always a catch, right?
PEA 115 and the Pell Grant
In 2012, the federal government changed Pell grant eligibility rules. A student can only receive the Pell grant for 12 semesters, or the equivalent of 6 years. Previously, a student could receive Pell grants for 18 semesters, or 9 years.
Students can repeat enrollment in PEA 115. Over time, this could leave a Pell student short on the cash they need to finish school. With the change in the Pell’s lifetime eligibility rules, WCC shouldn’t be pushing meaningless credits – especially to help pay off a boondoggle that deliberately excluded the students. WCC should be encouraging students to take (and complete) only the classes they need to finish a degree. Each Pell semester – whether it’s complete or partial – burns a semester of Pell eligibility.
Financial aid outside of the Pell Grant
Outside of Pell grants, students can use other financial aid – including student loans – to pay for higher education expenses. WCC can lard on a $10 per credit hour fee, and students can use student loans to pay for them. Aside from transferring WCC debt to the student, the student pays much more than $10 per credit hour when using student loans. Over the course of a 10-year student loan repayment period, using the current federal student loan interest rate, that $10 per credit fee on a 60-70 credit degree program could add between $950 and $1,100 to the student’s overall student loan bill. WCC immediately realizes $600-$700 in additional revenue, while the student realizes an additional $350-$400 in useless debt.
If students are going to spend $10, they should sign up at Planet Fitness and let WCC figure out how to pay off its own debts.
Poor policy decisions will come back on the Trustees
WCC’s policy of transferring its own debts off to students can potentially do a lot of financial damage to them. While this route is an easy, convenient way for WCC to generate additional funds for itself, it comes at a stiff cost to the people who can least afford these losses.
Trustee Landau is correct to fear the voters. We have unceasingly supported WCC because we believe in education. We do not believe in building facilities that don’t serve students, that encumber enormous debt and maintenance costs, and policies that rob students of the financial stability we’re trying to provide for them.
During the Board of Trustees Retreat, the discussion focused on creating a new fee to generate more revenue. Not once did the subject of cutting expenses come up.
The voters must act to end taxpayer-funded support for this insanity. Vote on Proposal 1 on March 10, 2020.