Category Archives: Costs and Tuition

Stop the Presses: Colleges Give Heavily to Democrats

It’s no shock to learn that employees of colleges and universities donate more heavily to Democrats than to Republicans. In the University of California system, 10 times as much money went to Democrats than to Republicans, according to reports to the Federal Election Commission through May 21. At Harvard, it was 7X Democratic, Northwestern 6X Democratic, and both Duke and the University of North Carolina system were 17X Democratic. Yale, apparently in the most desperate need of politically balanced staff, weighed in at 42X Democratic. Georgetown, a notable outlier among well-known universities, gave 50 percent more to Republicans that to Democrats. Source: Center for Responsive Politics.

Fast Food Wages for Fast Food Education

The reduction in pay by Argosy University for its online instructors, from a reported $2,200 per course to $1,600 per course, is creating a stir. Disciplinary associations, the New Faculty Majority, and the Coalition on the Academic Workforce, see such dismal pay as “exploitation.”

Continue reading Fast Food Wages for Fast Food Education

Still For Obama, But Disenchanted

For the Obama campaign, the college campus poses a whole different challenge in 2012 than it did in 2008. Earlier, the campus was one of the most solid and energized pro-Obama zones in the country. The group Students4Obama, which operated on more than 700 campuses, was just one program in the conversion of the campaign into a youth-oriented, cool-emanating social movement among the students. Among young voters in general, 18-29-year-olds, the preference for Obama over McCain ended up reaching an unprecedented 27 points.

Continue reading Still For Obama, But Disenchanted

The Loan Defaults Are Coming–Here’s What to Do

coins for college.jpgNo modern-day Paul Revere is taking a midnight ride to warn about this, but the defaults are coming. Many are already here. They are coming from student loans given to the wrong students for the wrong reasons. The portfolio of federally guaranteed student loans passed the one trillion dollar mark in early 2012, and it continues to grow. The portfolio consists not only of loans for students from low-income families currently in college but also of hundreds of millions of dollars of education loans taken out by students who graduated from college or quit before graduating that have not been fully repaid. Such loans were extended either by the Department of Education directly or by financial institutions like Sallie Mae and banks and guaranteed by the United States Treasury. The total size of this loan portfolio exceeds the total credit card debt of the American population.

Continue reading The Loan Defaults Are Coming–Here’s What to Do

The Tuition Story That Never Dies

student-loan-programs.jpgSome commentaries on higher education appear year after year, almost unchanged. One of these hardy perennials is the story that tuition and fees don’t come close to paying for the actual cost of educating college students. In his popular book, The Economic Naturalist, Cornell University economist Robert Frank claims that tuition payments cover only a fraction of the total cost of students’ education. The Dartmouth College Fund defends what it refers to as a wacky business model: selling its product at a discount, and then–begging for money. Similar articles are here and here.

Last week The Chronicle of Higher Education ran one of these stories “Hey, Students, Your Education Costs More Than You Might Think,” referring to Hamilton College.

First, some background. From the story:

Continue reading The Tuition Story That Never Dies

‘The For-Profits Care More for Their Students’

Inside Higher Education has just released its second annual survey of college presidents on their views about major problems and challenges facing higher education. Over 1,000 presidents responded to the survey, from all types of schools, including over 50 for-profit institutions. To me the most interesting finding is that public and private schools have somewhat different top-level issues they ponder, and that the for-profit schools are clearly more student-centered in their concerns than the not-for-profits, a marked contrast to what to some is conventional wisdom. Before discussing the differences however, it is important to note that for all three groups (public four-year schools, private four-year schools, and for-profit schools) whose data I examined, “potential cuts in federal student aid” was either the most important or second (of 14 listed) most important issue. There are two possible interpretations of this. The conventional wisdom is that college presidents are extremely concerned about student affordability and access, and cuts in federal aid threaten that access. A second, admittedly more cynical but I think more accurate interpretation, was suggested by Education Secretary Bill Bennett some 25 years ago, and addressed in a symposium at Minding the Campus February 20. Higher federal student financial aid translates into higher tuition fees, which, in turn, means more money for universities. More student financial aid means more money for universities. Taxpayer money is transferred not to students (in some meaningful sense) but to universities–a stealth form of federal higher education subsidy. The evidence is strong that this second interpretation is probably closer to the truth. Stephanie Riegg Cellini and Claudia Goldin nicely demonstrated that empirically recently in a study for the National Bureau of Economic Research, showing that schools where students were eligible for federal assistance responded with bigger tuition hikes after federal financial assistance increased than schools where students were ineligible for such aid. And my colleague at the Center for College Affordability and Productivity Andrew Gillen demonstrated it using both simple economic theory and logic (along with some empirical observation). Bill Bennett is right. I appeared on his radio show recently, and the reaction from listeners suggests many agree with the Bennett Hypothesis. But even more interesting to me was the difference in the concerns of private versus public school presidents. For the 228 presidents of public four-year schools, the other two major concerns were “declining state support” and “budget shortfalls.” Because I think the concern over student financial aid cuts is, in effect, also a budgetary concern, I would say that all three of the top concerns of state university presidents related to finances and budgets. Not only does money matter to these persons, it is almost true that “money alone matters.” Let the Market Work This is in contrast to the 372 private not-for-profit presidents included in the survey. Aside from the common concern about cuts in federal student aid, they were most concerned about “rising tuition/affordability” and “increasing competition for students.” As I see it, these reflect greater sensitivity to markets in general and the customer in particular. And these schools, on average, are more tuition-driven. At some of the schools, tuition and other fees are 70 or more percent of total revenues. Thus, if students balk at a college on cost grounds, its existence is imperiled (obviously, this is not true for wealthy highly selective admission schools, but those schools are certainly a minority of the total sample). The same applies for “increasing competition for students” which, to a private college president, leads itself to greater tuition discounting and/or provision of greater amenities like luxury dorms and recreation centers with huge climbing walls–both of which are costly. Price and quality competition are more important than in the public schools that are more insulated by subsidies from market forces. What about the presidents of the for-profit schools? Aside from the universal concern about potential cuts in federal student aid, their biggest concerns were about “student assessment and educational outcomes,” as well as “increased competition for students.” Alone among the groupings of presidents, the for-profit providers had very strong interests in student outcomes. Successful students are, on average, happier and financially more successful, so they spread the word about the fine educational offerings of the relevant school. They are good for business. As Adam Smith stated so beautifully 236 years ago, “It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own self-interest.” The for-profits are totally dependent on market forces for their fate. Nearly 100 percent of their income comes from fees paid by customers (to be sure, a very substantial portion of this income comes from government-run student loan programs). The incentives, therefore, are to make the customer happy, to focus with laser-like intensity on what it takes to create a class of consumer who extol the virtues of the school. Those incentives are muted (as Smith predicted) at endowment-laden schools which have 10 applicants for every place in the entering class. They are muted also at state schools where tuition dollars pay a small minority of the school’s bills. The market-driven schools focus more on outcomes, while other schools are more obsessed with inputs. Critics of for-profit higher education like Senator Tom Harkin have it backwards: it is the for-profits that care the most for students, and push them to learn, because it is in their self-interest to do so. The bashing of this sector by the Obama Administration and its allies is, therefore, all the more unfortunate. From all of this a general rule of college presidential behavior emerges: the more a school is exposed to the forces of demand and supply in a competitive marketplace, the more it is likely to focus its efforts on improving the quality and satisfaction with the learning experience. That is the primary reason why I believe true educational reform must involve exposing higher education more to market force.

The Student Loan Debacle–What a Mess

Until recently, much talk about student loans was fact-free: There simply weren’t publicly available figures worth paying attention to.

The official balance of student loans from the NY Fed were unreliable:

There was a bucket of random obligations called “Miscellaneous”, which included things like utility bills, child support, and alimony. And it turns out that if you went burrowing in that miscellaneous debt, there was actually a pile of weirdly-categorized student loans in there. [AG: And these mis-categorized student loans were not included.]

Continue reading The Student Loan Debacle–What a Mess

On “The Birth of Critical University Studies”

The first sentences of Jeffrey Williams’ essay in the Chronicle
of Higher Education
, “Deconstructing Academe: The Birth of Critical
University Studies”,
sounds like an introduction to the many conservative and libertarian critiques
of higher education that have appeared in recent decades, starting with Allan
Bloom’s The Closing of the American Mind, Martin Anderson’s Imposters
in the Temple
, Roger Kimball’s Tenured Radicals, Dinesh D’Souza’s Illiberal
Education,
and Richard Bernstein’s Dictatorship of Virtue.  The
sentence reads:

“Over the past two decades in the United States, there has
been a new wave of criticism of higher education. ” 

But the second sentence dispels them all.

Continue reading On “The Birth of Critical University Studies”

A Funny Book about Worthless Degrees

“Here are some [college] degrees that cost you roughly $30,000 in tuition, their much cheaper replacements, and the savings you’d realize:

                  Degree                                  Replacement                                        Savings

                  Foreign Languages                 Language
Software                               $29,721

                  Philosophy                             Read
Socrates                                    $29,980

                  Women’s Studies                   Watch
Daytime TV                               $30,000

                  Journalism                             Start
a blog                                          $30,000

…Since none of these degrees help increase your employability, you might as well avoid these majors and do it on your own.”

The above is an excerpt from one of the funnier paragraphs
in “Worthless: The Young Person’s Indispensable Guide to Choosing the
Right Major” (Paric Publications), Aaron Clarey’s hilarious primer
for college students who would like to work as something other than nannies and
theater interns after graduation.

Continue reading A Funny Book about Worthless Degrees

Why They Seem to Rise Together:
Federal Aid and College Tuition

It’s called “the Bennett Hypothesis,” and it explains–or tries to explain–why the cost of college lies so tantalizingly out of reach for so many. In 1987, then Secretary of Education William J. Bennett launched a quarter century of debate by saying, in effect, “Federal aid doesn’t help; colleges and universities just cream off the extra money by raising tuition.” Now Andrew Gillen, research director of CCAP–the Center for College Affordability and Productivity–has tweaked the data and produced a sophisticated “2.0” version of the hypothesis. It’s filled with heavy math, game theory and terms like “inelastic fairly vertical curves.” You probably won’t read it. We know. But it’s important. So here are some smart people who have read it, and have something to say: Peter Wood, Hans Bader, Richard Vedder, George Leef and Herbert London. image for mtc.jpeg

Peter Wood: They Are Insatiable

Long before I knew it was called the “Bennett Hypothesis” I knew that colleges and universities increase tuition to capture increases in federal and state financial aid. I attended numerous meetings of university administrators where the topic of setting next year’s tuition was discussed.
The regnant phrase was “Don’t leave money sitting on the table.” The metaphoric table in question was the one on which the government had laid out a sumptuous banquet of increases of financial aid. Our job was to figure out how to consume as much of it as possible in tuition increases. This didn’t necessarily mean we were insensitive to the needs of financially less well-off students. A substantial portion of the money we captured would be reallocated as “tuition discounts” or “institutional aid.” That is to say, just as Andrew Gillen observes, we combined Bennett Hypothesis-style capture of external student financial aid with “price discrimination.” And we did all this in the pursuit of educational excellence. It was a large private university in the shadow of world-ranked neighbors and it was attempting to pull itself up in the world of prestige and influence by its bootstraps. There were townhouses that needed buying; laboratories that needed building; faculty stars that needed hiring; classrooms and residence halls that needed refurbishing; symphonies that needed performing; grotesque modern sculptures that needed displaying; and administrators that needed chauffeuring. So long before I heard of “Bowen’s Rule,” I was also familiar with the idea that “in the quest for excellence, prestige, and influence, there is virtually no limit to the amount of money” a university could spend. Familiar as these ideas are, I have never seen them as well elucidated as Andrew Gillen has in Introducing Bennett Hypothesis 2.0. If there is a fault in this remarkable policy paper it lies in the modesty of the title. Gillen has provided what by all rights should be a foundational document for any further analysis of the vexed issue of how federal (and state) financial aid interacts with the pricing strategies of colleges and universities. Gillen’s sophisticated revision of Bill Bennett’s idea explains many of the perplexities of the data. Yes, Pell Grants do not drive tuition increases the way general tuition assistance does. Yes, many colleges prefer to increase their selectivity rather than expand capacity. (He doesn’t mention, however, the strategy of doing both at once by creating highly selective “honors programs” and remedial tracts at the same institution.) Price discrimination in the form of variable tuition discounts ensures that no ordinary observer can figure out what is happening when federal aid mixes with pricing strategies. One of Gillen’s most compelling observations, however, is what he calls “the dynamic story,” which he introduces by way of game theory. This is his explanation of why a college cannot plausibly sit on the sidelines as its competitors raise tuition and use the increased income to raise their standing. Gillen’s theory, though highly plausible, remains to be tested. Let’s hope that comes soon.

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Richard Vedder: Market Discipline, Please

Andrew Gillen masterfully demonstrates that Bill Bennett is right–federal financial aid programs lead to higher tuition. The implications of this and related financial aid effects are profound:

1. The intended income transfers from taxpayers (and, increasingly bondholders) to students have been largely diverted to college coffers; swelling payrolls and leading to armies of new university bureaucrats, million-dollar college presidents, an academic arms race and other pathologies;

2. This, in turn, has thwarted university productivity growth and helps explain why higher education is vastly more expensive than in most other major developed countries;

3. The goal of helping low-income students has not been met, and a lower percent of recent college graduates come from less affluent students than was true in 1970 when Pell Grants did not exist;

4. To the extent that these aid programs have increased enrollments (read Gillen), they have added to the growing disconnect between labor-market realities and student job expectations, creating armies of college graduates who are bartenders, taxi drivers, etc.

5. Enrollment increases, in turn, have contributed to a dumbing down of higher education and to declining standards.

What to do? The federal government needs to wind down its financial aid commitment. Restrict eligibility for aid to truly low-income students. Impose performance criteria for aid recipients: mediocre students will lose aid. Make the college absorb some of the risk for loan defaults–a lesson we should have learned from the financial crisis. Give Pell Grants as vouchers directly to students, not schools. Reinstate private lending options. Unveil new human capital contract approaches that reduce debt reliance. Downsize and reinvent federal programs and allow market discipline to operate more.

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George Leef: Will Politicians Pay Attention?

William Bennett is no economist (in fact, he once told an interviewer that he never reads books on economics) but his instinct on the connection between federal aid and rising college costs was pretty accurate. While higher education establishment defenders have often tried to dismiss Bennett’s insight, it’s basically correct, Gillen shows.Not always, however. Gillen argues persuasively that student aid targeted at low-income students who otherwise wouldn’t have gone to college contributes little or nothing to rising costs because the institutions cannot “capture” the additional funds. That finding doesn’t mean that it would be a good policy to increase this kind of aid, of course.Government student-aid programs that are universally available, however, do lead to rising college costs. Gillen has worked through various differing scenarios to show how increasing student aid is apt to influence college officials. Particularly important in that regard is his emphasis on looking not just at short-run effects, but also what he calls “the dynamic story.” Here’s what he means. Even if some schools decide not to raise tuition when government aid puts more dollars in student pockets, those that do will spend the revenues gained on the zero-sum game of gaining prestige. Since most colleges won’t want to keep falling behind in that arms race, they’ll eventually give in and raise tuition. Not always, however. Gillen argues persuasively that student aid targeted at low-income students who otherwise wouldn’t have gone to college contributes little or nothing to rising costs because the institutions cannot “capture” the additional funds. That finding doesn’t mean that it would be a good policy to increase this kind of aid, of course.Gillen concludes that the only escape from Bennett 2.0 is for the nature of competition in higher education to change–away from seeking greater “prestige” and toward competing for consumer dollars by offering better value. He’s right and the rumblings of disaffection with mere credentials and the search for real education seems to presage just that.I applaud this work, but will it make any difference? After all, it is clear beyond any doubt that raising the minimum wage is counter-productive, but politicians keep doing that. Why should Gillen’s demonstration that the more politicians try to make college “affordable,” the more costly it becomes be any different?

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Hans Bader: Ever-growing Bureaucracies

You don’t need to be a Ph.D in economics, like Gillen is, to know that government subsidies usually lead to higher costs. That subsidies drive up costs is something I learned in introductory economics, long before I got my degree in economics or worked for the Education Department. The value of Gillen’s study is to show that this conclusion logically remains true even under widely-varying assumptions about educational markets. Gillen does not discuss certain Education Department rules that drive up tuition even more directly. For example, certain low-cost schools are affected by the Education Department’s 90-10 rule, which requires that the school keep tuition high enough for students that no more than 90 percent of its funding is covered by federal financial aid. So as financial aid rises, tuition necessarily rises even faster. But financial aid is not the only way that the government drives up tuition. State and federal regulations imposed on colleges have mushroomed in recent years, requiring colleges to hire ever-increasing numbers of administrators to comply with them. (There are now more college administrators than faculty at the California State University system and many other colleges). For example, colleges in New Jersey are subject to a costly and complicated anti-bullying law that has 18 pages of required components. Colleges in some states are subject to state sexual harassment laws that are more stringent than federal law, and hold colleges liable for uncapped damages for harassment by students, effectively requiring them to create specialized university bureaucracies to swiftly investigate and discipline students, rather than relying on ordinary campus disciplinary bodies that operate at a slower and more deliberative pace. Government regulations often require that a school be accredited, a condition that accreditors like the American Bar Association use to force law schools to use racial preferences in admissions or run costly diversity and sensitivity-training programs (despite the dubious legality of some such programs and admissions preferences). Such mandates have contributed to the growth of a vast and costly “diversity machine” in college administrations. Recent Education Department guidance documents have also made Title IX compliance more difficult and costly for colleges, by seeking to force them to process sexual harassment complaints against students in ways that differ from customary college procedures in disciplinary cases, and to give certain complainants the ability to appeal a school’s finding that an accused student was innocent. Gillen cites a study showing that for-profit colleges whose students received federal financial aid charged 75 percent more than those whose students were not eligible. I wonder if some fraction of this difference was the result of government mandates tied to the financial aid, rather than the aid itself. image for mtc.jpeg

Herbert I. London: We Need Controls

My experience in higher education confirms the opinion that federal aid has an influence, a profound influence, on tuition decisions and other aspects of university finances.

Clearly not all federal aid is the same and not all college responses to aid are the same. However, there is a dynamic quality to federal subsidies that cannot be ignored. Every federal dollar given to a university will be spent. This is a version of higher education’s Parkinson’s Law. The institution expands in multiple ways to accommodate government largesse. Derek Bok, former Harvard president, said, “Universities share one characteristic with compulsive gamblers and exiled royalty: there is never enough money to satisfy their desires.”

Every dollar given to a college goes through the turnstile of institutional improvement. Teaching loads could be reduced, new laboratories might be built, an academic “star” might be lured into a newly created position. But year one in this allocational arrangement is not always related to year two. If the initial costs are borne by government aid, the future costs may put pressure on the administration to seek additional revenue, very often in the form of tuition increases.

In fact, the process tends to be self-fulfilling. Aid producers reforms; reform leads to additional expense; additional expense very often translates into upward pressure on tuition rates. While President Obama has discussed controlling college costs, he overlooks the influence federal assistance has on college affordability. Nor is there any reason to assume a change of direction. There is political capital to be garnered by demanding cost controls and, at the same time, expanding access to tuition assistance. That these conditions may be contradictory is lost on a public increasingly frustrated with the inflated cost of a college education.

Is Investing in Community Colleges a Good Idea?

obama-speech.jpg

President Obama’s fiscal 2013 budget contains an $8 billion program called the “Community College to Career Fund.” It would encourage community colleges, in partnerships with employers, to train about two million workers for future jobs. Since there are about 1,045 community colleges in America, the program would amount to a grant–over three years–of a little under $8 million per institution. Not all the funds, however, would go directly to the colleges themselves; some would go to state and local governments to recruit participating companies, some to underwrite an online entrepreneurship training program, and some to underwrite paid internships for low-income community-college students.

Using federal grants, the colleges would set up “community career centers where people learn crucial skills that local businesses are looking for right now, ensuring that employers have the skilled workforce they need and workers are gaining industry-recognized credentials to build strong careers,” according to a White House statement. The career centers would specifically train students for employment in health care, high technology, and “green” industries–areas expected, at least in the predictions of the Obama administration, to grow substantially over the next few years.

The federal money undoubtedly looks good to administrators at community colleges, which currently enroll some 6 million students, more than half of all Americans attending undergraduate institutions of higher learning. Nearly all community colleges, which typically award two-year associate degrees and shorter-term vocational certificates, report burgeoning enrollments during the current period of recession and shrinking funding from the strapped localities and states. There is a problem, however: community colleges have an admirable goal of providing second-chance education to young people who either performed too poorly in high school to get admitted to a conventional four-year college or can’t afford four-year-school tuition. But they have a poor track record in keeping those students around until graduation with any sort of degree or certificate.

The retention figures are not encouraging. According to the Education Department’s National Center for Education Statistics, only 12 percent of community-college students earn an associate degree within the standard two years. That figure rises to 22 percent if students stay on for a third year and 28 percent if they stretch out their educations for four years, or twice the norm. Four-year colleges, by contrast, graduate about 53 percent of their students within six years. Students’ poor preparation for college-level work is clearly the reason for the dismal graduation rates of community colleges. About two-thirds of their entering students must first pass remedial math and English courses before they can qualify to take a single course for college credit–and most never succeed in passing those elementary classes. You can blame urban America’s failed K-12 system, or you can conclude that substantial numbers of young Americans lack the cognitive ability to succeed in college, but the fact remains that community colleges, with their bulging populations of directionless and under-performing students, may not be the best settings in which to produce a skilled workforce.

Exacerbating the problem is that most of the anticipated job openings in the U.S. during the near future will require workers who possess exactly the sort of math and reading-comprehension skills that most community-college students these days seem unable to master. There is currently a shortage of skilled employees in high-tech industries, and some two million manufacturing jobs are expected to open up by 2018 thanks to expected retirements–but most of those jobs require workers who can operate sophisticated machinery, follow complex instructions, and demonstrate some facility at math and statistics. The training itself for 21st-century jobs can be expensive. Mark Schneider, a former commissioner of education statistics who currently serves a vice president of the American Institutes for Research and a fellow at the American Enterprise Institute, told the Associated Press that little is known about the effectiveness of most community college programs.

“We need measures of how well they are training their students, how well their students are being placed in the job market, and…are they making money?” Schneider told the AP. “We need to track them really, really carefully. And we need to make all that information available to students before they sign on…and before taxpayers subsidize all of this.”

A few months ago I surveyed some successful vocational-training programs at community colleges. In contrast to the Obama administration’s ambitious vision of using federal dollars to turn out large numbers of skilled workers in short order, these programs tended to be small-scale, dependent on modest grants from the involved industries themselves, and centered around nationally recognized certificates issued by private entities that attested to the recipients’ specific job skills and underlying cognitive attainments. Key to many of the programs was ACT’s National Career Readiness Certificate (NCRC), which measures recipients’ math and reading abilities. One of the programs was at Shoreline Community College near Seattle. Shoreline used a grant from the Manufacturing Institute, a nonprofit affiliate of the National Institute of Manufacturers, to integrate the NCRC and certification from the National Institute for Metalworking Skills into a three-quarter-long manufacturing program. The program’s retention rate (95 percent) and job-placement rate (100 percent) were stellar–but it was also a small, highly focused program with only 50 students per cohort. The obvious question is: can that sort of success be replicated on a large scale with widely varying students, faculty, and educational standards–along with the potential for waste that a spigot of federal dollars always presents?

Of course it is also possible that the $8 billion that the Obama administration envisions for transforming community colleges into massive job-training centers may never materialize. In 2009 Obama’s budget promised some $12 million in federal funding to community colleges that aimed mostly at building and repairing new infrastructure. A Democratic Congress pared that amount down to $2 billion. With deficit-conscious Republicans in control of at least one chamber this time around, Obama’s promised $8 billion could be trimmed even more drastically.

For Crippling Debt, Why Not Try Grad School?

student debt.gifThere’s something even worse than undergraduate debt. It’s graduate-school debt. According to the American Student Assistance website, which uses figures from such sources as the National Center for Education Statistics, the College Board, and the nonprofit Finaid.org, 60 percent of recipients of bachelor’s’ degrees borrowed to fund their education during the 2000s, with the average debt load per borrower on graduation close to $23,000 by 2007. By 2010 that figure had jumped to more than $25,000 per borrower, according to the Institute for College Access’s Project on Student Debt.

Those numbers sound bad, but what if you go on to obtain a master’s degree, adding another one or two years’ worth of education to your resume? According to American Student Assistance, nearly half of those who obtained master-of-science degrees during the late 2000s borrowed to finance their schooling, and their average cumulative debt load for those two years was $29,975–on top of what they already owed for their bachelor’s degrees. Of recipients of master-of-arts degrees, degrees that typically qualify their holders mostly for low-paying teaching jobs at community colleges and private high schools, 61 percent borrowed to finance their two additional years of education, with a per-borrower average debt of $29,975.

And what if you go all the way to a doctorate in the humanities or sciences? Fewer students have to borrow in order to earn Ph.D.’s (graduate schools typically subsidize tuition and pay modest stipends in exchange for on-campus teaching or research). Still, 35 percent of doctoral students in the humanities and sciences went into the red to pay for at least part of their education and living costs, racking up an average cumulative debt of $44,995, according to American Student Assistance. About 48 percent of doctoral students had borrowed for their undergraduate degrees, and the total average cumulative amount borrowed for both degrees was $45,455.

Now let’s factor in two additional pieces of data that bring home what it means to owe $45,000 for your Ph.D. after the ceremonies are over and you’ve stashed your doctoral gown inside its garment bag. First, you are likely to be as much as a decade older than your college classmates who collected only a bachelor’s degree before setting out on a career path. According to the National Science Foundation, the median time spent registered in graduate school in order to earn a doctorate is 7.5 years. The median age of recipients of Ph.D.’s in science and engineering is 31.8 years. Among recipients of Ph.D.’s in the humanities the median age is 34.6 years. That is because it takes an average of nine years in school to earn a doctorate in the humanities. The total average time from receipt of bachelor’s degree to receipt of doctoral degree is about eleven years in the humanities and nearly eight years in science and engineering.

Men and women outside academia who are in their early thirties are typically feeling ready, or even more than ready, to buy homes and start families. They are also typically feeling financially able to shoulder those new financial burdens, with careers nailed down and netting them decent incomes, most student loans paid off, and savings accumulated for down payments. Not so the members of their age cohorts who chose to go to graduate school instead. They are at the bottom of their career ladders and salary scales, just as their college classmates who didn’t attend graduate school were ten years ago–except that the Ph.D.-holders now owe on average nearly twice as much in student debt as their former classmates. Holders of doctorates do earn more than holders of bachelor’s and master’s degrees, but not much more. The average starting salary of an assistant professor on the tenure track, for example, can be as low as $37,500 a year and almost never tops $60,000. A study cited by the Economist in 2010 found that a Ph.D. gives its holder only a 3 percent earnings premium over a master’s degree, which takes only one or two years to complete. The study noted that in some fields, such as mathematics, computing, social sciences, and languages, holders of doctorates earn no more than holders of master’s degrees. They have also incurred the opportunity cost of foregoing years of income that would have helped them pay off existing student loans.

Think Twice about Doing This

It gets worse. Doctoral programs are essentially vocational training–for the job of college professor. But the training is so time-consuming and exacts such a psychic toll, with Ph.D. students struggling for years to squeeze in research on their dissertations as they cope with the backbreaking hours and abject penury of a teaching assistant, that the dropout rate is extraordinary. Only about 57 percent of students who enroll in doctoral programs complete their degrees, according to a 2007 report from the Council on Graduate Programs. Students in the humanities, especially English and history, fare the worst, with about a 49 percent completion rate. In the humanities the dropouts tend to cluster in the later years of the program when the students finally run out of money and hope. That translates into up to a decade wasted in academia with nothing to show for those years except forgone earnings elsewhere and in many cases, more debt.

Those who do manage to collect their doctorates–at about age 35 for the humanities–face a further horror. There are very few jobs, or at least very few of those full-time, tenure-track teaching jobs, even at $37,500 a year, for which their highly specialized education has prepared them. The humanities, as ever, occupy the bottom of the misery index. The Modern Language Association, the leading professional organization for English and foreign-language professors, projects one-third fewer professorial job openings during the academic year 2011-12 than during 2007-08–and that’s a slight improvement over last academic year. Yet the STEM fields (science, technology, engineering, and mathematics), where financial support from universities is higher and doctorates get completed more quickly, don’t offer significantly better job prospects for their newly minted Ph.D.’s. The typical career path for nearly half of them these days doesn’t start with a tenure-track assistant professorship but with two, four, or even more years as a lowly “postdoc” laboratory researcher earning a starting salary of about $42,000 a year. That doesn’t help pay down student loans very quickly.

What to do about this? “The gigantic indebtedness of graduate students threatens to turn them into intellectual sharecroppers,” Leonard Cassuto, an English professor at Fordham University, wrote recently in the Chronicle of Higher Education. Cassuto’s proffered suggestions–that the government pay for graduate education and that universities hire more tenure-track professors–don’t sound realistic in these economically pinched times. A more practical suggestion would be for more college graduates to think twice about enrolling in grad school. If $25,000 in student loans sounds daunting, why boost that figure to $45,000–especially since the jobs won’t be there to enable you to pay it back?

More College Aid for Low-Income Families, Please

college campus.pngWhen individuals seek higher education, why should all of us have to pay? After all, individuals decide whether to seek a college degree based on their own calculations of expected costs and benefits. That taxpayers must bear the burden of financial aid to these individuals seems unfair.

Given the billions of dollars governments pay individuals to help finance their college expenses, taxpayers must be assured that their investment is not wasted.

In short, we would rather not be sucked dry to pay for C students — whose weak academic preparation makes them unsuited for higher education — just so they can party hard for four or five years.

In a policy paper released this week, Andrew Gillen, the research director at the Center for College Affordability and Productivity, says he has the solution to creating rationality in our messy and unaccountable financial aid system.
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Our Dysfunctional Campuses Will Have to Change

Victor Davis Hanson has a brilliant essay here on how dysfunctional our colleges and universities have become.  Here are two excerpts:

 “I noticed about 1990 that some students in my classes at CSU were both clearly illiterate and yet beneficiaries of lots of federal cash, loans, and university support to ensure their graduation.  And when one had to flunk them, an entire apparatus was in place at the university to see that they in fact did not flunk.  Just as coaches steered jocks to the right courses, so too counselors did the same with those poorly prepared but on fat federal grants and loans.  By the millennium, faculty were conscious that the university was a sort of farm and the students the paying crop that had to be cultivated if it were to make it all the way to harvest and sale — and thus pay for the farmers’ livelihood.”

 Later Hanson explains why change is coming, however slowly:

“… what cannot go on will not go on — at least for most universities without the billion-dollar plus endowments.  The present reckoning is brought on not by introspection, self-critique, or concern for our increasingly poorly educated students, but by money, or rather the lack of it.  Higher education is desperately searching for…

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The Next Corporate Tax Target: The University?

Here is a story in The Fiscal Times that may sound a distant warning to wealthy universities.  It raises a question that might sound repeatedly in the coming years: Since some private universities are so wealthy, why don’t they pay taxes?

As the article notes, last year was a good year for endowments.  Harvard’s climbed $4.4 billion (!) last year to reach a total of $35 billion.  Stanford’s went up 22 percent, Yale’s 21.9 percent, Penn’s 19 percent, and MIT’s 17.9 percent.  Because they are non-profit institutions, they aren’t taxed on those increases, leading some to wonder, in these tough times and in light of Federal debt, why?

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‘Cutthroat Admissions’ at Elite Colleges?

The Chronicle Review is notorious for publishing outlandish opinion pieces more in the nature of white-hot rants than well-reasoned essays. A good case in point is Professor John Quiggin’s “A Vicious Duo” (September 16 – subscriber site), is one of the most overwrought pieces I’ve read there.

Quiggin, who teaches economics at the University of Queensland in Australia, contends that America is beset by the twin problems of rising inequality of income and “cutthroat admissions” at our elite colleges and universities. That combination allegedly leads to a “self-sustaining oligarchy.” Whatever superficial plausibility his argument might have — especially for people like himself who live outside the United States — vanishes when you comprehend the following points.

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Too-Large Subsidies for Too-Selective Colleges

A new report on higher education from the American Enterprise Institute, out today, contains an eye-catching finding likely to generate a lot of headlines: the more selective a school is, and the fewer low-income students it serves, the larger its taxpayer subsidy.  Calling this system of funding “perverse,” the report says: “Average taxpayers provide more in subsidies to elite public and private schools than to less competitive schools where their own children are likely to be educated.”

Basing college selectivity on Barron’s Profiles of American Colleges, the authors of the report, Mark Schneider and Jorge Klor de Alva, write that for public institutions, there is a consistent increase in subsidies across the first four levels of selectivity, with substantially more in the most competitive schools. Among not-for-profits, subsidies per student are between $1000 and $2000, but for the most selective (and already well-endowed) schools, taxpayer subsidies jump to more than $13,00 per student.

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Does Student Debt Really Matter?

IOU.jpgIn a recent essay in The Atlantic, Andrew Hacker and Claudia Dreifus lament that most students have to take out college loans. They write: “At colleges lacking rich endowments, budgeting is based on turning a generation of young people into debtors.”

While Hacker and Dreifus blame the universities for encouraging students to take on more debt to pay for lavish facilities and other non-educational amenities, others focus on student debt itself as perhaps the key barrier to college facing millions of students from families with low and modest incomes. Indeed, entire organizations have been founded on that very notion, such as the Project On Student Debt.

Analysts who belong to the debt-is-bad school of financial aid policy are correct in noting that student borrowing increased dramatically in the past decade, ballooning 128 percent to more than $96 billion, according to the College Board’s annual survey of financial aid trends. On the other hand, federal grants and institutional grants mitigated the rising student debt. From 2000 to 2010, federal financial aid shot up 136 percent to more than $146 billion; and institutional grants rose 69 percent to more than $33 billion.

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Yes, $16 per Muffin

In 2009, reeling from the shrinkage in its $32 billion endowment, Harvard moved to slash costs by cutting back on the cookies served at faculty meetings. Eliminating the cookies, we were told, saved $500 per meeting, thus raising the obvious question of whether the Harvard faculty was obtaining its pastries from the wholesaler who supplied the $600 Pentagon toilet seats and the $434 Pentagon hammers.

But now Harvard and the Pentagon are off the hook: the New York Times reports that snacks at a Justice Department conference to train immigration lawyers in August 2009 cost taxpayers more than $16 per muffin, nearly $10 per cookie or brownie, plus $5.57 each for 1,334 cans of soda. The $500 cookie spreads are back at Harvard, by the way. Harvard investments are doing so well that the faculty can afford them once again.

The Incredible Shrinking Tenure

For a variety of reasons, but mainly because of cost, tenure has become a focus of debate in recent months. Given the trends in hiring and working conditions, though, one wonders why, for the fact is that tenure has been squeezed into an ever-smaller portion of the instructional employee population for years.

Two charts in the Chronicle of Higher Education’s almanac this month display stark numbers against it.  In 2009, the rate of teachers in four-year colleges who were “full-time tenure” stood at 25 percent.  The rate of those on the tenure-track stood at 11 percent.  That means that nearly two-thirds of instructional personnel didn’t have tenure and didn’t expect to win it, either.  The breakdown was:

  • Non-tenure-track, full time                        15 percent
  • Part-time                                                 25 percent
  • Graduate assistants                                 25 percent

The other chart details what happened in the previous decade.  It shows the growth in numbers of teachers by tenure status.  Every category went up, including the number of tenured professors, as one would expect at a time when the full-time undergraduate population swelled by an extraordinary 45 percent.

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The New Divide over Productivity

A rift is building between, on one side, university professors and, on the other side, university administrators (including finance officers), politicians, and parents.  The rift doesn’t fall into one of the usual conflicts over ideology (for example, leftist faculty vs. moderate or conservative others) or educational mission (for example, social justice vs. workforce training).  It opens over the meaning of faculty productivity.  With education funding threatened, efficiency measures evolving, administrative and extra-curricular costs rising, and tuition a point of bad publicity, officials on and off campus are increasingly posing questions about what academic work counts and what academic work doesn’t.

See, for instance, these two reports on productivity, one by Richard  O’Donnell, former-adviser to the University of Texas, and  one by Richard Vedder et  al, whose Center for College Affordability and Productivity has become a leading voice on the issue. Both documents focus on faculty activity in Texas, where the productivity debate is heated. It was heated here, too, when I posted on the issue at the Chronicle of Higher Education. See here, too, for more description of faculty-administration tensions in the state. If Gov. Perry makes it through the primaries to become the Republican nominee in 2012, you can be sure that the education establishment will make his higher education policies a central point of criticism (and, I predict, an effective one).

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For-Profit v. Non-Profit Colleges–Which Use More Federal Cash?

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Are for-profit colleges and universities getting a raw deal from the government compared to their more elitist peers in the private non-profit sector of American higher education?

Vance H. Fried, writing in a recent policy analysis brief published by the libertarian think-tank, the Cato Foundation, argues just that.  Fried is a former private-practice attorney, oil company executive, and investment bankernow a professor of Entrepreneurship at Oklahoma State University. He targets private non-profit colleges and universities as the beneficiaries of federal largesse, waste and inefficiency. 

“Undergraduate education is a highly profit

Sometimes Tuition Increases Are Good News

Almost lost in the welter of legislation to make it through the New York State government policy mill in its closing minutes was some help for New York’s two public universities – CUNY and SUNY.  Having endured hundreds of millions of dollars of cuts in state support over the last three years, they are finally getting some relief (but not from state taxpayers); they will be permitted to raise tuition by $300 per year for the next five years.  This may not appear to be a big deal unless one puts the new revenue opportunity into context. 

The two university systems, with over 650,000 students between them, are among the most important linchpins of New York State’s long term economic prospects and frankly, they have been budgetarily starved for years.  Over the last three years, SUNY, for example, has lost $500  million in state support, amounting to 20 percent of its operating budget.  Even with the new tuition revenue, only $50 million of that loss will be restored in the coming year, and $250 million by 2017.  Both university systems’ officials are gleeful about the ostensible windfall but, at best, it only gets them half way to where they were before the state’s recent economic and fiscal meltdown.  Further, it remains to be seen how much of the new tuition revenue really translates into more generous budgets for SUNY and CUNY.  Although the new agreement – in soft and essentially unenforceable language – promises “maintenance of effort” with respect to the state’s tax levy contribution, in the past any tuition increases were invariably offset by corresponding – or sometimes larger – reductions in state support.  One can only hope that this time will be different.

For years the state assembly has held up tuition increases proposed by university officials, alleging that this would be financially devastating for prospective students and make college attendance unaffordable.  First off, the charge is hypocritical because the assembly has been raising tuition for years, but rather than authorizing the kind of gradual and predictable annual increases just adopted, it favored huge hikes in the middle of recessions.  In any case SUNY and CUNY have always been bargains, and will continue to be, even with the projected tuition increases.  Even at the end of the five year run of increases, all CUNY and SUNY campuses will be cheaper than any university – public or private – along the Eastern seaboard or New England.  Under the state authorized increases, SUNY’s tuition and fees in 2012 will average $7,200, and by 2017, $8,400 (CUNY’s will be slightly lower).  In contrast, New Jersey’s Rutgers today costs $10,000; the University of Virginia: $11,600 and Penn State: $14,400.  Even the lesser colleges of surrounding states cost more today than any SUNY or CUNY campus will in five years. 

Compounding the bargain for those students opting for – and getting into – the most prestigious SUNY or CUNY campuses, the legislature continues to insist that all undergraduate public college tuition be the same, regardless of campus or program.  Every other state public higher education system in the United States, without exception, has tuition schedules that vary by campus, and usually program, charging more to attend the more rigorous and prestigious “flagships” and charging more for engineering or nursing than say English or history.  For example, the University of Massachusetts in Amherst costs $12,600 while a typical Massachusetts state college charges $7,550.  But students attending SUNY’s highly ranked Binghamton or Buffalo campuses pay the same – even with the new tuition schedule – as those going to Alfred State or Plattsburgh, and those enrolled in City College’s architecture program pay no more than those studying Spanish at Medgar Evers College in Brooklyn.  Finally, none of this makes any difference for New York’s poorer students because the higher SUNY and CUNY tuition rates are still well within the combined value of New York’s tuition assistance program (TAP) grants and federal student aid such as PELL. 

As a SUNY faculty member, and former administrator of the SUNY system, I am grateful for any crumbs that the New York legislature throws our way.  And, given the unreasonable intransigence of the assembly (Assembly Speaker Silver and Assemblywoman Glick have been the most vociferous opponents of tuition hikes) in the face of pleas from SUNY and CUNY chancellors over several decades for a “rational tuition policy,” maybe this is indeed a signal moment.  For my part, I will uncork my champagne bottle when the state legislature some day leaves tuition-setting – and budgeting in general – entirely to the two systems’ trustees. 

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Fraud Up and Down Our Educational System

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In Frank Baum’s The Wizard of Oz the Wizard says he wants an educated populace, “so by the power vested in me I will grant everyone diplomas.” Welcome to the education system of 2011. Much of what we now observe comes right out of the Baum novel.

When Charles Eliot was president of Harvard, he was asked why there is so much intelligence at this college, He replied, “because the freshmen bring so much in and the seniors take so little out.” My guess is if a university president were completely honest today, he might say the freshman bring almost nothing in and leave by taking nothing out.

The question is, if the society spends billions on primary, secondary and higher education, why is so little accomplished? There are many answers to this question, of course, but I would argue the overarching reason is fraud, fraud at every level in order to satisfy political demands.

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What’s the Point of Academic Conferences?

At research universities in the United States, most departments in the humanities have a travel budget that supports professional activities for their faculty members.  Most of it goes to help professors attend academic conferences and deliver a paper to colleagues and attend sessions as an audience member as well.  For a department of 30 people, the amount may run to $50,000 or more, enough to fund at least one trip by every individual who requests support.

From what I’ve seen of the conferences, though, the amount of genuine research inquiry that is shared and remembered is negligible.  Yes, some papers are strong, but more of them are thin, half-hearted, or hastily-composed.  Those that are strong are often too dense to follow, especially when they have to share time with three other papers at the panel.  This is not to mention, moreover, those sessions that are attended by less than ten people. 

No, the main purpose of the meetings, it seems to me, is to provide academics scattered around the country but in the same general field the chance to gather and re-connect.  The actual research preparation they put in before the meeting and the research effort they expend during it are minimal. They have enough general knowledge of the panel topic to be able to listen with some understanding to the deliveries and formulate a question.  Their own papers may be part of a larger project, and the activity of composing and presenting a conference version of that part is, though helpful, often a last-minute composition to fill 12 minutes at the podium.

Continue reading What’s the Point of Academic Conferences?