Tag Archives: budget

Universities Are Vocational Schools

Why do students go to college? A new poll has a one-word
answer: money. That’s one of the findings in a broad Gallup survey of college admissions officers done for Inside
Higher Ed
. The admissions officers seem to believe that those planning to
attend college view it largely as a signaling device that directs the best and
brightest young Americans to the best and highest-paying jobs. It is not
primarily about acquiring knowledge (“human capital”), critical learning or
leadership skills, or better perceiving the difference between right and wrong,
but more about achieving the American Dream of a comfortable, moderately
affluent life.

To cite one statistic, 99 percent of admission directors
at public four-year colleges agreed or strongly agreed that “parents of
applicants place high importance on the ability of degree programs to help
students get a good job.” With regards to the prospective students themselves,
“only” 87 percent of the counselors agree that getting a good job is
important/very important.  Most of the
counselors also agree, at all forms of higher education institutions, that
their schools are putting more emphasis on job placement.

Continue reading Universities Are Vocational Schools

Three Pell Grant Scams

Many politicians, including senators such as Tom Harkin and Dick Durbin, have grown indignant over the allegedly vast amounts of higher education money captured by for-profit institutions via the Pell Grant program. In fact, they consider this something of a scam. The truth, of course, is that throughout its history, including now, the vast majority of Pell Grant funds—at least 75 percent– have gone to students attending not-for-profit colleges.

The implication of the criticism, of course, is that for-profit institutions (or at least many of them) are diploma mills, whereas the educational experience offered by institutions untainted by the corruptive influence of profits is of high quality, and provided by selfless individuals working for the public good. I think that is hogwash, but that is a subject for another day. Suffice it to say that there are documented instances where for-profit institutions pressured relatively unqualified students to enroll using Pell Grants, but there are numerous examples of not-for-profit schools doing similar things. The scam here is much broader than the good senatorial critics claim.

Continue reading Three Pell Grant Scams

Some Hope for Higher Ed Reform

The current conversation on higher ed reform coming is unusually platitudinous even for an election year. This was clearest earlier this year during the battle between Barack Obama and Mitt Romney on the proposed federal student loan interest rate, a subject fairly inconsequential in larger problem of sky-high college costs. In his Democratic nomination acceptance speech, President Obama claimed he would work to “cut college tuition in half” in the next ten years. How he would do this, or if he truly grasped what he was saying, is anyone’s guess.

But Senators Ron Wyden (D-Oregon) and Marco Rubio (R-Florida) have shown a great deal of care in crafting the “Know Before You Go Act.” The bill, currently under consideration in the Senate, will “support statewide individual-level integrated postsecondary education data systems.” More specifically, under the proposed bill the federal government will help states coordinate student educational and postgraduate employment data. The bill’s aim is to help consumers make better choices about the products they are considering. Per a press release from Wyden’s office, the bill focuses on making the following metrics more accessible to consumers:

  1. Post-graduation average annual earning;
  2. Rates of remedial enrollment, credit accumulation, and graduation;
  3. Average cost (both before and after financial aid) of the program and average debt accumulated;
  4. The effects of remedial education and financial aid on credential attainment and a greater understanding of what student success can mean.

We should praise the Know Before You Go Act for several reasons. First, instead of trying to instituting IPAB style price-control to help reform educational choices and costs, it respects the consumer’s volition to make his or her own determinations as to what is best for their particular circumstance. As Rubio said, “We want people to know what the new jobs, skills, careers in the 21st century are. The reason you need to know what your professional prospects are is that you have to weigh that against how much you will borrow.” He continued, “I graduated with $125,000 in student loans. That’s nobody’s fault – it was an investment for me. We want kids to have access to information before they make this investment.”

Secondly, the bill does not create a new federal database to obtain data by tracking students. Instead, its coordinates already extant data gathering mechanisms in the states. In describing this aspect of the bill, Wyden sounded like a Republican. “The new database is state-based and individually considered. The states can do this on their own but there’s a problem. There’s no uniform standards. If there’s no standards…then the system is failing families.”

Lastly, of concern to many conservatives, Wyden emphasized that the bill would produce a glut of computer science or accounting majors, to the neglect of the liberal arts. “This legislation is about empowering students to make their own choices. Are we going to miss out on opportunities for rich liberal arts education? I reject the either/or choice. A lot of universities are starting to pick up on labor trends – after 9/11 and Arabic for instance. Is it liberal arts or an education for a high paying job? That’s a false choice.”

Granted, it still seems Congress is far from addressing the main driver of college cost inflation – federal subsidies in the form of loans for anyone who wants them. Said Wyden, “Federal education policy is at a fork in the road. Historically it is about access. I want to keep that focus – support Pell grants, Stafford Loans, and all of the assistance that ensures access.” Nonetheless, a respected Democratic policy thinker is supporting a bill that is conservative in its temperament. By supplying greater amounts of data to consumers, the Wyden-Rubio bill is the right move in reforming an industry badly in need of more transparency and accountability.

Wesleyan Abandons Need-Blind Admissions

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The
vast majority of American colleges and universities make admission decisions
without considering the financial need of applicants. Only a handful of private
institutions admit their entire first-year class need-blind and then fully meet
the financial need of all of their admitted students through a combination of
grants, loans and employment opportunities. These institutions tend to be our
nation’s most selective, in terms of entrance test scores, and wealthiest, in
terms of their endowment per student levels and their flows of annual giving.
 

Why
do these selective private institutions pursue such policies?  In part it is because as nonprofits they are
major beneficiaries of federal and state tax policies that reduce the federal
and state income tax liabilities of donors who make contributions to them, thereby
increasing the contributions they receive. These policies also exempt them from
having to pay federal and state income taxes on their endowment earnings,
exempt their property that is used for educational purposes from local property
taxes, and allow them to borrow funds for educational facilities at lower
tax-exempt interest rates.  Because of
all of these tax benefits, the public at large is subsidizing these
institutions to the tune of literally billions of dollars of lost tax revenue a
year and the willingness to do so is based upon the belief that the selective
private academic institutions are yielding benefits to society as a whole.  Because many of the leaders of society are
graduates of these institutions and a well-functioning democratic society
requires that leaders come from all socioeconomic backgrounds, these
institutions have long understood that they have a special obligation to admit
and enroll students from all socioeconomic backgrounds.

Continue reading Wesleyan Abandons Need-Blind Admissions

Why President Obama Can’t Lower Tuition

In his acceptance speech at the Democratic National
Convention last night, President Obama promised that he would “work with
colleges and universities” to slow the steady rise in tuition we have experienced,
cutting the rate of increase in half. Inside Higher Ed has the
story
.

Naturally, the president’s statement drew applause from the
Democratic faithful, but is there the slightest reason to think that Obama can
slow the rise in tuition any more than King Canute could roll back the tide? I
think not.

First, the executive branch of the federal government has no
constitutional authority over higher education. The president can “jaw-bone”
college leaders, imploring them not to increase tuition, just as President
Kennedy pleaded with steel executives not to raise prices in 1962, but he can’t
command either private college officials or state university leaders to keep
tuition at any level.

Second, there are reasons
why tuition has been increasing and it’s hard to see how President Obama is
going to change the underlying reality. He continues to encourage more young
people to go to college and has facilitated that by getting Congress to
increase Pell grant amounts.  More
students with more money to spend – that’s a perfect recipe for college
officials to increase their revenues. Why wouldn’t they take advantage of the
situation, just because the president made a speech?

Third, it’s possible that Obama might resort to asking
Congress to enact some kind of price control over higher education, threatening
to take away federal dollars unless the schools keep their price increases down
to “reasonable” levels. The Republicans threatened to do that back in the Bush
years, but the bill never went anywhere, and for good reason. Price controls
are blunt, clumsy instruments that are easy to evade.

Finally, merely halving the rate of increase in college
costs, assuming that could be done, wouldn’t be much of a victory. If indeed
college and university administrators felt pressured to cut costs, there is
little reason to think that they would start with the most needless of budget
items. In California, for instance, where the state’s budgetary woes have
required cuts in university budgets, the sacred cows of “diversity”–academic
programs and administrative offices – have been spared.

Lower tuition sounds good, but what Americans should want
from higher education is increasing value. We’ll only get that through more
competition.

The California College System under Scrutiny

A recent report by the American Council of Trustees and Alumni (ACTA), entitled “Best Laid Plans: The Unfulfilled Promise of Public Higher Education,” explores a fair number of problems the California college system faces. However, I don’t think it covers them all.

The report states openly and rightly the problems that California’s public colleges face are not primarily a function of declining revenues. As it notes, “the real danger is a fundamental failure by today’s trustees and system leaders to apply the same creativity and thoughtfulness that informed the Master Plan to a new world of reduced resources and a shrinking tax base.”

This point is crucial. The behemoth California college system has been fed an enormous amount of money, but there is obviously a limit to how much more the citizens can provide. In just the last five years, tuition at the UC system has gone up nearly 75% and at the CSU system by nearly 85%. And California’s taxpayers already pay steep sales, property and income taxes–among the highest in the nation. It is hard to imagine that much more can be squeezed from either the students or the taxpayers.

The report documents in detail some of the dramatic problems the system faces, including:

  • Low graduation rates at the CSU system: only 17.2% of new full-time freshmen graduate within 4 years, and only 52.4% within 6 years.
  • The leaders of the California public college system have a severe Edifice Complex, looking constantly to increase the amount of buildings and other infrastructure, much of it unnecessary.
  • The leaders are also reluctant to close or consolidate low-enrollment programs, and too easily eager to add new ones.
  • There is considerable administrative bloat, with the compensation of the top administrators increasingly over-generous, even while the taxpayers and students are impoverished.

I would note some other major problems:

The California community colleges have a grotesquely high drop-out rate: only 20% of CCC students either got an AA degree or transfer to a regular college.

  • The CCC system also spends way too much on recreational courses (courses that are meant to provide recreational outlets to adults). While these courses are supposed to pay their own way, they utilize the system’s physical resources.
  • The whole CSU system has suffered endemic “mission creep” regarding remedial education. Under the wise original 1960 master plan, CSU would take only college-ready students, while those needing remedial education (in math and English) were supposed to go to the huge and inexpensive CCC system. Along the way, the CSU system developed a costly remediation system. Now, half of all incoming CSU take remedial math or English or both.
  • Professors and administrators of the CSU system have over the years pushed for more and more focus on research, with tenure-track professors expected to publish, leaving much of the teaching to adjuncts. It is unclear, to say the least, that this has really benefitted the citizens of the state.

The report calls upon the UC Regents and the CSU Trustees to reassert control and enact necessary reforms, including establishing clear measures of productivity; re-prioritizing the academic mission of the college, restoring core curricula; rewarding good teaching; cutting back on administrative bloat; and restoring academic freedom and true intellectual diversity.

I can’t help feeling that the report is an exercise in naiveté. The administrators and faculty are agents in an institution that suffers from the principal/agent problem. Because the real principals — taxpayers, students and parents — have little knowledge of and even less power over the workings of the colleges for which they pay, the agents (faculty and administrators) can run them for self-serving purposes. Until this problem is rectified by radical reform, I see little hope for change any time soon.

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Gary Jason is a philosophy instructor and a senior editor of Liberty, and is the author of Dangerous Thoughts.

The Problem with Bonuses for Masters Degrees

Carol Howley, a nursing instructor at Chicago’s Richard J. Daley College, pocketed $307,000 in extra salary over the years by enrolling in doctoral classes at Chicago’s Rush University and receiving her doctorate. There’s only one problem, though: Rush has no record of Howley’s attendence. Cook County prosecutors recently indicted her for theft of government property.             

Howley’s story is symptomatic of a larger problem. As George Leef points out, institutions routinely hand out automatic pay boosts to their employees on the basis of the degrees the employees possess. College nursing instructors are relatively rare, but in America’s K-12 public-school system, where instruction costs total more than $308 billion annually, nearly half of teachers receive bonuses averaging about $3,000 a year just because they have an advanced degree. And these degrees are mostly worthless: only 10 percent of teachers’ master’s degrees are in substantive fields such as math, science, or English, where the teacher’s extra education might do the students some good. Ninety percent of teachers get their advanced degrees in education, a field notorious for its less than rigorous academic standards and its embrace of pedagogical fads. And academic and think-tank research, starting with a 1997 study by University of Washington research professor Dan Goldhaber has consistently revealed that students taught by teachers with advanced degrees make no more progress than students taught by teachers lacking such degrees.             

A master’s degree in education is such a lucrative deal for teachers that the blog Teacher Portal advises its readers simply to “[g]et one!” Sure, the tuition isn’t cheap. In 2009, an online master’s degree from the nonprofit Western Governors University and the for-profit Walden University cost an identical $12,000. Teacher Portal calculated that the compound-interest payoff of a master’s degree in education adds up to $221,000 over a thirty-year career. Teacher Portal concluded: “You may be a [slightly] better teacher but you’ll be setting yourself up much better to live comfortably in retirement…or at least to splurge on a fantastic vacation each summer :).”

A 2009 New York Times forum over the value of advanced education degrees confirmed Teacher Portal’s cheerful cynicism. Several participants who were seasoned teachers deemed their education classes “utterly useless,” “laughable,” and of “zero benefit.” One teacher, who had an undergraduate degree from Wellesley and a graduate degree from Columbia, said the college where she obtained her teaching certificate launched a “sales pitch” for its master’s and doctoral programs in education that emphasized “how little work we would have to do to get an advanced degree.”

Proposals for reconsidering these bonuses remain anathema to the education establishment. Teachers’ unions have resisted any effort to peg teacher pay to any factors except seniority and advanced degrees, and school administrators, boards of education, and state legislators seem to regard across-the-board pay raises for teachers as a way of life. But there is another constituency that is likely to resist ferociously the elimination of master’s-degree salary bumps: the faculty and administrators of the advanced-degree programs in education that are cash cows for the colleges and universities that sponsor them. Kathleen Wilson, an associate professor at the University of Nebraska’s College of Education and Human Sciences, vigorously defended the programs. “I don’t see how they couldn’t make a difference,” she said. “These programs really allow teachers to gain a better perspective in their area of instruction.” Expect that kind of rhetoric on steroids from education professors should school districts try to get rid of the salary bump for advanced degrees.  

Student Voices
Ryan’s Plan is Good for Higher Ed

Now that Paul Ryan has joined the Republican ticket, it’s worth considering how his much-discussed budget changes higher education.

Ryan wants to cap the maximum amount of Pell Grant awards at the current level of $5,550, eliminating the automatic increase according to inflation. Ryan would also shore up the eligibility requirements, adding a maximum income cap (leaving undefined exactly where that cap would begin) and excluding students who attend school less than part-time. On the Federal Student loan front, Ryan proposes ending federally-subsidized loans, wherein the government pays the interest on behalf of students. Instead, students could take out unsubsidized federal loans and pay an interest rate of 6.8%, giving them an immediate, healthy financial stake in their own education.

Ryan’s plan follows the logic of the Bennett Hypothesis. Developed by former Education Secretary William J. Bennett, for whom Ryan worked as a speechwriter, it states that though federal subsidization of higher education aims to reduce tution, easy access to federal money actually increases it. Federal money increases students’ ability to pay and, subsequently, their demand for higher education, which raises the price of college education. Colleges, confident that federal money will cushion any tuition increase, can artificially increase tuition in an attempt to capture some of that federal money.

The problem is especially evident when middle class students who could afford college education without aid receive it nonetheless. Colleges desire to capture both the federal aid money and the initial amount these students can afford to pay. Ryan would reduce federal aid primarily for these students. Therefore, in contrast to President Obama’s promise to lower the cost of education by increasing Pell Grants and preventing Federal Student loan interest rate increases, Ryan’s plan could indeed cut back on the source of artificial tuition increases and contribute to the sustainability of the higher education market.

For himself, Romney has been largely quiet on higher education, though his white paper “A Chance for Every Child” does acknowledge that “a flood of federal dollars is driving up tuition.” His remedies are nonspecific: “simplify the financial aid system,” “welcome private sector participation” in the student loan market, and “replace burdensome regulation with innovation and competition.” While Romney has already made it clear that his campaign runs on his budget plan, not on Ryan’s, Romney could benefit from the hard numbers and policy prescriptions that Ryan’s plan affords.

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Rachelle DeJong is a rising senior at The King’s College and an intern at Minding the Campus.

Elite College ($50,000 a Year) or Good State School ($20,000)?

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The new Sallie Mae-Gallup survey of attitudes toward higher education, “How America Pays for College 2012,” shows that Americans are becoming increasingly resistant to rising college prices. Some people who were saying “I want the best college money can buy” a few years ago, are now saying “We aren’t going to pay sky-high tuition when there are much cheaper colleges nearly as good.”

Continue reading Elite College ($50,000 a Year) or Good State School ($20,000)?

The 12 Reasons College Costs Keep Rising

When asked the question, “Why do colleges keep raising tuition fees?” I give answers ranging from three words (“because they can”), to 85,000 (my book, Going Broke By Degree). Avoiding both extremes, let’s evaluate two rival explanations for the college cost explosion, followed by 12 key expressions that add more detail.

Continue reading The 12 Reasons College Costs Keep Rising

Cheaper Student Loans–A Bad Idea Whose Time Has Come

student-loan-debt.jpgWhen Victor Hugo claimed that all the world’s armies are powerless against an idea whose time has come, he probably had in mind good ideas. But the time can come for a bad idea also. Low-cost student loans, embraced by President Obama, Governor Romney, and Congressional leaders of both parties, is a bad idea. Students and prospective students love the prospect of paying less for college, and so do their parents. Moreover, some economists say that investing more in educating youngsters from low-income families will increase the ability of American workers to compete in the global marketplace.

But students don’t need cheaper loans. What they need are loans that give them an incentive to get good enough college educations to qualify for jobs – well-paying jobs that enable them to pay off their loans. The flaw in the federal guaranteed student-loan program – from its beginning in 1965 – has been its exclusive concern with whether or not students came from families with low-incomes, not whether loans would help launch careers.

Continue reading Cheaper Student Loans–A Bad Idea Whose Time Has Come

The Hidden Cost of University 2.0

university 2.0.jpgWe have entered a new digital era that appears to have made the traditional trappings of higher education–e.g., fixed curricula, going to lectures, even physically attending a college or university–about as necessary to getting a college degree as the telegraph is for sending messages. Out with hierarchy, structure, and the top-down approach to higher education. In with collaboration, more student input, and above all else, greater interactivity.

Let’s call this disruption University 2.0, which promises to be every bit as revolutionary to higher education as Web 2.0 has been to the Internet.

In the old days (Web 1.0), the Internet was largely a passive medium through which users viewed web sites created by others and had little or no input on content or design. In the new era of Web 2.0, users interact, share information, add or modify content, and collaborate in communities, such as social networking sites, blogs, Twitter, and wikis.

Continue reading The Hidden Cost of University 2.0

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

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.

College Budget Cuts: How Course Corrections Can Undermine Students

Governor Scott of Florida has decided to save taxpayers’ money by developing a way to ensure that people who study under state auspices in Florida do so in programs that will secure jobs. The way to do this, he says, is to stop training students to get degrees in subjects such as psychology and anthropology–especially anthropology, a subject I’ve taught at Rutgers for many years.

We never know with complete confidence what will work to support and dignify a society and how what we do now will affect the future. If the past is prologue, then studying anthropology can help build a thriving society.  And studying behavior and how the brain responds to different stimuli is an important cog in the wheel of the social contract.  Even so, a plague on both their houses – the anthropologist’s thatched one and the Governor’s marble one.

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Faculty Bewildered as Administrators Siphon Off Money

“Inside Higher Ed” reports that Dartmouth College, facing a $100 million budget gap, is taking more funds from endowed chairs and endowed programs to help pay for administrative costs, alarming faculty, some of whom think the move is unethical.

Here is a first reaction to this news: we still think faculty run our institutions, but I’m not sure that is correct any more. Administrations run them, and more and more we are seeing the bureaucracies siphoning off funds from academic enterprises, including faculties.  At almost every school, bureaucratic spending has grown much faster over the past decade than spending on faculty salaries and the like.  There are several reasons for that, I think, but the big point is that the balance of power has shifted.  One thing that struck me on the Dartmouth experience was how much support we had from many faculty members, even those who disliked our politics.  What they liked was that we were railing against the proliferation of bureaucracy and the diversion of resources from the classroom. In many ways the modern academy has become much like the Washington administrative state: the bureaucracy/adminisration has grown in size and power and the legislature/faculty has shrunk. Of course the people (the students) become more and more irrelevant!

The Financial Pressure on Faculty

The report entitled “What’s It Worth? The Economic Value of College Majors” is an important study that adds to the growing data base on the outcome of a college education.  It’s a product of Georgetown’s Center on Education and the Workforce, and is authored by Anthony Carnevale, Jeff Strohl, and Michelle Melton.

The study collects data from the 2009 American Community Survey, administered by the U.S. Census Bureau, which asked people the usual questions about income etc., but also asked those who earned a bachelor’s degree what they majored in.  The result is a breakdown of majors by income.  (Respondents had to work full time and be 25 to 64 years of age.)
 
Nothing surprising showed up.  Engineers, computer science, mathematics, and business topped the field, while humanities, arts, education, and psychology/social work came out at the bottom.  This survey includes actual salary figures for each field, along with a breakdown of each field into specific majors. 

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Gainful Employment: A Detriment to Competition

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Today the Obama Administration unveiled its long-anticipated and highly controversial final gainful employment (GE) regulation  that ties program eligibility for federal student aid to new metrics that are based on student loan repayment rates. Under the new GE rule, a vocational program can qualify as leading to gainful employment and remain eligible for federal aid if one of three metrics is met:

1.     At least 35% of former students are repaying their loans;

2.     The estimated annual loan payment of a typical graduate does not exceed 30% of discretionary income;

3.     The estimated annual loan payment of a typical graduate does not exceed 12% of total earnings.

The rule requires that a program fail to meet one of the three metric three times in a four year period before becoming ineligible for federal student aid, with 2015 being the first year that a program can lose eligibility. Education Secretary Arne Duncan defended the metrics as a “perfectly reasonable bar…that every for-profit program should be able to reach. We’re also giving poor performing for-profit programs every chance to improve. But if you get three strikes in four years, you’re out.”

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Is “Productivity” a Dirty Word on Campus?

If the 80 percent of faculty at the University of Texas-Austin with the lowest teaching loads were pushed to teach just half as much as the 20 percent of faculty who do most of the teaching, tuition could be cut by more than half. That’s the stark conclusion of a preliminary report from the Center for College Affordability and Productivity, and it is understandably causing a stir in the academic world.

Here are some of the findings:

One, the “productivity” of professors ranges widely in terms of teaching and research.   One fifth of UT Austin faculty handle more than half (57 percent) of the total student credit hours.  At the same time, the “least productive 20 percent teach only 2 percent of all student credit hours.”

Two, the 20 percent who do most of the teaching also bring in 18 percent of the campus’s research funding, a fact that leads the authors, Richard Vedder, Christopher Matgouranis and Jonathan Robe, to state that heavy teaching duties do not “jeopardize their status as researchers.”

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A Coddled Professor Speaks Out

A good deal of outraged reaction greeted “Fat City: Thank You, Illinois Taxpayers, for My Cushy Life,”  an article posted on the Weekly Standard’s website on Friday by David Rubinstein, a recently retired (after 34 years) sociology professor at the publicly funded University of Illinois-Chicago.

 The article was a hoot and a half.  Rubinstein chronicled in detail the charmed lifestyle of a tenured full professor at a prestigious research university: the “2-2” loads (translated into English, that means teaching just two classes per semester, at least one of those classes often a tiny graduate seminar); the no-dress code, so that profs could show up in class unshaven and wearing T-shirts and jeans if they liked; the easy hours (no classes before 11 a.m. if you liked), hugely long vacations, especially over the summer, and academic conferences aplenty, often in exotic European locales, all paid for by his university–that is, by the taxpayers of the state of Illinois. Best of all were the retirement benefits (including, at UI-Chicago, a generous health plan), constitutionally guaranteed because Rubinstein taught at a state school and contractually guaranteed because of the institution of tenure itself, which means lifetime employment. Rubinstein wrote: “Why do I put ‘worked’ in quotation marks? Because my main task as a university professor was self-cultivation: reading and writing about topics that interested me. Maybe that counts as work.”

            Even funnier than Rubinstein’s piece, though, was the reaction of other college professors to his emperor’s-no-clothes take on professorial life at a top-tier university. National Public Radio’s website reposted the piece, and nearly all of the 38 academics who submitted comments completely misunderstood Rubinstein’s point, leading you to wonder how smart people with Ph.D.’s really are. Most of the commenters, reading Rubinstein’s piece as a personal confession rather than a description of prestige-university culture, excoriated him as a “slacker,” a “whiny contrarian,” and a “nobody” who had somehow weaseled the University of Illinois-Chicago out of vast sums of salary. One of Rubinstein’s own colleagues, Peter Hales, an art history professor at UI-Chicago, sniffed, “The UIC I taught at was a place of passion, energy, and hard work.”

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Helping SUNY’s Flagships

Governor Andrew Cuomo proposes giving the four SUNY research universities (Albany, Binghamton, Buffalo and Stony Brook) $140 million in economic development funds and – perhaps, if the legislature agrees – permission to levy higher tuition.  The governor is right in viewing SUNY campuses, and especially its most senior ones, as economic engines; indeed, outside of Manhattan, they are about the only economic engines New York State has, adding billions of dollars to the state gross product.  He is also right in supporting higher tuition, because with state tax levy support having been cut by hundreds of millions of dollars over the last three years, all SUNY campuses will wither unless they can offset this loss with increased tuition revenue.  Where I part company with the governor is in the requirement that this potential windfall for the SUNY “flagships” be conditioned on their submitting for bureaucratic review yet another set of academic and economic development blueprints.  The way that major American universities contribute so much to the economy – regionally and nationally – is never through the kinds of high-sounding but vaporous plans they periodically churn out, but through their peer vetted, competitively funded research.  My recommendation: forget about generating more plans; allow all SUNY campuses to raise tuition in small annual increments – and keep all of the resulting revenue – and tie the level of any supplemental “economic development” aid to each campus’s volume of externally awarded research grants. 

No Comeback for the Humanities

Here is a story from the Baton Rouge Advocate that confirms the decline of the humanities in the state system (although cuts struck deep into the sciences and education as well).  Officials reviewed hundreds of programs in state colleges and universities, judging them by, among other things, the number of students they graduated each year.  If, on average, they produced less than eight bachelor’s degrees, they received a “low-completer” designation.  The result is the termination of 111 programs, consolidation of 17 programs, “consolidation & termination” of 171 programs, “conditional” maintenance of 106 programs, and “maintenance” of 51 programs (see the Regents’ report here.

A few specifics:

—–LSU ended its undergraduate major in Latin and in German (saving the university $500,000 per year)

—–Southern University, a historically black college, lost majors in Spanish and in French

—–The “Liberal Arts” major was dropped at three institutions

—–According to the Advocate, “no public historically black college in the state will offer a bachelor’s degree in a foreign language once the programs are phased out”

The move is part of a national trend that has been well-publicized in the last year.  If the terminations at LSU do not receive the same withering criticism that fell on SUNY-Albany when it dropped majors in French, Italian, Classics, Russian, and Theater, it means that the humanists have lost the national debate.  Albany took the lead and absorbed the backlash.  Now, foreign language eliminations are an accomplished fact.

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Why Do the Big Donors Give?

From reading news stories about multimillion-dollar gifts to universities, it’s easy to get the impression that the donors are mostly rich people with pronounced ideological agendas–or else they wouldn’t open their wallets so readily. In April 2010, for example, the billionaire-financier George Soros, known for his funding of progressive causes and his efforts to defeat George W. Bush in 2004, pledged $10 million to Oxford University. The gift will set up an institute at Oxford aimed at steering university economists  away from support for free markets and deregulation, and in the direction of heavier government intervention in financial markets. Soros’s gift came via the Institute for New Economic Thinking, a $50 million foundation he created in 2009 to fund similar projects at universities.

At the opposite end of the political spectrum are the many gifts to colleges and universities from the banker John Allison, with stipulations that the recipients incorporate Ayn Rand’s free-market ideals into their curriculums. One of the largest controversies over  a conservative gift was the famous Bass debacle at Yale. Billionaire-financier, Lee Bass, who had graduated from Yale in 1979, gave $20 million to his alma mater in 1991 to create a program (including seven endowed professorships)  for the study of Western civilization. Amid complaints from professors hostile to the idea of focusing on the West, as well as charges that Bass was interfering with Yale’s academic autonomy by trying to retain veto power over the hiring of the program’s professors, Yale returned the $20 million in 1995.

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Does the record show that most college and university donors are inspired by politics or ideology? The picture appears to be more subtle and complex. The Manhattan Institute’s Center for the American University surveyed 1,353 substantial gifts to U.S. institutions of higher learning from 2003 to 2010 collected in the Foundation Directory Online’s data base and interviewed development and public-relations officers at several elite private and public research universities that are typical beneficiaries of large gifts. Their donors tend to be self-made billionaires and multimillionaires, but few are eager to propagate their views at institutions of higher learning. Most large gifts to universities are apolitical, the Center for the American University found. Science and medicine accounted for the largest category of targeted donations. Campus building projects and student scholarships also ranked high for wealthy donors and their family foundations.

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Should University Flagships Go It Alone?

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Overshadowed by the big political confrontation in Wisconsin is a higher-education story of note: The highly regarded “flagship” Madison campus of the University of Wisconsin seeks permission to secede from the rest of the state public higher education system (yet remain under the state’s oversight and subsidization).  While this is being justified now by the state’s budgetary problems, it is an aspiration long held by Madison and some of its sister “flagships” in other states. Is flagship independence a good idea?  Probably not, but in each state it depends on how its public higher education institutions are currently managed, and what any new-found autonomy might permit or restrict.

Two quite distinct issues are embroiled in this debate. One –the more important, I think–is the degree of financial and managerial autonomy that any state campus is allowed.  The other is the coherence and consistency with which state campuses are managed and financially supported as a group.  My views are colored by my ten-year experience as the chief academic officer of the State University of New York System, the largest in the nation, and one that manages, under one administrative roof,  64 diverse institutions, from community colleges to research universities.

I learned soon after I began as a SUNY system official how desirable it was to give the state’s public campuses enough administrative freedom to effectively meet their local responsibilities and balance their budgets.  After all, there was no way that a small staff in Albany could possibly micro-manage 64 widely dispersed campuses with different missions, thousands of faculty and staff and more than 450,000 students.  Thus, after 1997, every SUNY campus, not Albany, was given the last word on how its budgetary resources were spent, how its faculty and staff were deployed, and how it delivered education in the classroom.  But, giving campuses a greater measure of administrative freedom only worked because we also held campuses accountable to clear-cut, mutually agreed upon, operational academic and financial goals and metrics. 

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