Outstanding student loan debt in the United States has ballooned to $1.4 trillion. The average student of the class of 2016 graduated owing about $37,000, according to the Institute for College Access and Success. However, with the exception of a handful of grantmakers that includes the Lumina Foundation, funders have been slow to address the problem of exploding student debt—even as research shows that such burdens can undermine the economic mobility of young people and make it hard for them to build assets. These negative effects are greatest for indebted former students of color.
The Ayers Foundation is looking to help address this problem. Focusing on Tennessee, the foundation has partnered with a nonprofit that provides free online access to college courses to help high school students get a leg up on their freshman year. The hope is that if high school students take college classes while they’re still in high school, they’ll earn enough college credits to graduate early and save money. It’s the same financial argument that’s bolstered the popularity of Advanced Placement courses for years—and likely has the same weaknesses.
The Ayers Foundation is not a stranger to education funding. The foundation focuses on education, conservation and social welfare in Tennessee. Jim Ayers, half of the couple behind the foundation, grew up in West Tennessee and became a successful businessman in healthcare and real estate. His wife Janet, the president of the foundation, also has a healthcare background. They are both active in Tennessee philanthropy.
Last year, we reported on a major gift by the Ayers Foundation to fund scholarships at Belmont University in Nashville for disadvantaged students. Funds from the couple have already helped several thousand needy students attend college and many more stand to benefit from their generosity. But, in writing about that donation, we also pointed out that big gifts for scholarships—a favorite of alumni donors—do nothing to reduce ballooning tuitions and have placed college out of reach for even the middle class. On the contrary, campus donors may be inadvertently fueling that problem by offering scholarship help without demanding that schools rein in tuition costs.
Now Ayers is taking a broader approach to college accessibility. The foundation pledged $50,000 to students in several Tennessee counties who take college-level courses through the Modern States Education Alliance. The foundation will make in-kind contributions to support students through tutoring, mentoring, college counseling and other services.
Through its Freshman Year Free project, the Modern States Education Alliance offers free online college courses designed to prepare students for Advanced Placement and College Level Examination Program tests offered by the College Board. If students accumulate enough credits, they could graduate a year early and lower tuition costs.
Modern States was created and initially funded by financier and philanthropist Steve Klinsky, who made his money in private equity; he serves as its CEO. Klinsky's earlier philanthropic efforts focused on creating after-school programs and charter schools before he turned to college access in 2012. Modern States describes itself as a "nonprofit dedicated to making a high quality college education free of cost and accessible to any person who seeks one." It's collaborating with edX, the online learning platform founded by Harvard and MIT to back the creation of "30 high-quality freshman college courses taught by some of the world’s leading universities and professors."
Like everywhere else in the country, rising student debt is a problem in Tennessee. It’s gotten worse over the past four years. Sixty percent of Tennessee college students graduate with student loans, according to the Institute for College Access and Success. The state ranks 18th in the country for the proportion of students graduating with debt, but ranked 48th out of 50 back in 2012.
That’s a big jump. If Ayers and Modern States could move the needle, it would be good for Tennessee students. The question is whether this is the right approach.
Helping kids get college credit for free is a more upstream approach than, say, endowing a scholarship, but will it be effective?
By the College Board’s own admission, most students who take AP courses do not graduate from college early, according to reporting from Education Week. Research backs up claims that kids who take AP classes are more likely to succeed academically when they reach college, and more likely to graduate on time, but there’s not much indication that they graduate early. Even though many colleges accept AP course credit, most students use the credits to place out of intro classes and take higher-level or more elective courses rather than opt out of a semester entirely.
As for CLEP exams, they're similar to AP exams in that they can translate into college credits, but historically have been more popular with nontraditional students, especially military service members. It's possible that CLEP holds more promise than AP exams, but there isn't enough data to know for sure. Seventy percent of students who take the exams said CLEP credits helped them finance tuition and other expenses, like text books, according to the College Board.
There's even data to suggest that CLEP credits helped students graduate earlier than they would have otherwise. However, the study cited by the College Board compared CLEP students to peers who graduated well out of the four-year range, not unusual for nontraditional students. CLEP credits helped the students surveyed complete their degrees in four years or close to it, but nothing pointed to a large number graduating in three years.
Research does show that students to take AP or CLEP exams benefit students in other ways though. Those students tend to perform better in college courses once they enroll and are more likely to graduate, period. Students are likely to see benefits from Freshman Year for Free, but time will tell how many will graduate a full year earlier.
Most of the funders backing solutions to the student debt crisis take a more systemic approach to this problem by giving to policy-focused organizations, as we’ve reported. The Institute for College Access and Success, cited several times in this article, is a nonprofit that develops and advocates for policy changes to reduce student debt burdens. It’s received support from the Ford, Gates, Lumina, Kresge and Carnegie foundations. Demos, another public policy organization pushing for debt-free college, has also received philanthropic support from Ford, Kellogg and others.