On August 22, 2013, the regulator proposed to distribute federal financial aid such as Pell grant with a new rating system called College Affordability Rating or CAR. According to the announcement, this new system which will be implemented by 2015 is the latest effort to curb college cost increases. The rating depends on four factors:
- Average tuition.
- Graduation rates.
- Student loans debt and
- Average earning of graduates.
Except for point 4, colleges to some extend can affect the outcome of Factor #1, #2 and #3. Higher tuition, lower graduation rates and higher student debt potentially will lower the CAR. Higher rating (example AAA) perceived as better than lower one (example DDD).
Using the first three listed factors above and ten-year historical data, the Association has applied the IRI (education analytics) paradigms to calculate and complete a “proxy” rating studies by state for US colleges. Please click the following LINK to read the complete ratings. The results show that even with the least stringent conditions, rules or conditions, some colleges may potentially loss million of dollars on Pell grant alone if the CAR policy got implemented. Please share your thoughts or comments?