Tag Archives: Richard Vedder

The Unstoppable MOOCs

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By
Richard Vedder

Although difficult to measure, it is unlikely that higher
education has had any productivity advance in the 50 years since I finished
college. Economists like Princeton’s William Baumol have argued that rising
college costs are inevitable, given inherent limitations on reducing the cost
of disseminating knowledge -only so many people can fit into a room to hear a
lecture.

Yet on-line education, including massive open on-line
courses (MOOCs), are changing that. Prestigious universities like Harvard,
M.I.T., and Stanford are working with various providers to offer courses taught
by well known and often very effective professors. Coursera, Udacity, edX and
others are providing increasing numbers of courses where students can learn.
They join other low-cost options such as provided by StraighterLine and the
extensive, high quality free offerings of the Saylor Foundation, a pioneer in
the free open source movement. Khan Academy also offers materials at all levels
of learning, and some of those materials are used by college providers.

Continue reading The Unstoppable MOOCs

Should We Charge Different Fees for Different Majors?

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In the first couple weeks of any survey course in the
principles of economics, students are taught that prices are determined by the
interactions of consumers (demand) and producers (supply). Prices for many
things, such as oil, or of common stocks, constantly change with the frequent
shifts in the willingness of consumers and producers to buy or sell the good or
service in question.

Yet the price of college–tuition fees–seems to be
determined differently. For starters, tuition fees change but once a year, not
constantly. Universities are like restaurants, with “menus” giving prices for a
variety of different offerings, with the menu changing once a year.  For many schools, however, the listed price
is not what economists call an “equilibrium” price–a price equating quantity
demanded with quantity supplied. Rather, thousands are turned away at the
listed price at selective admission universities.  Also, massive price discrimination exists, so
many customers–often a majority–pay less than the stated or sticker price.

Amidst all of this, schools typically charge students the
same regardless of their major. A committee advising Florida Governor Rick
Scott has recommended a move to differential pricing–majors would pay
differing amounts. The goal is partly to entice students into the STEM
disciplines (science, technology, engineering and math) on grounds that our
future would be enhanced by having more scientists relative to, say, English
majors or anthropologists. By making STEM tuition fees lower, we will encourage
enrollment expansion in those fields. Ohio University’s Board of Trustees
recently considered (but did not yet adopt) a multiple-price approach, and
other schools are doing so. 

Continue reading Should We Charge Different Fees for Different Majors?

Out of Sync: America’s University Faculty

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Every three years or so, the highly regarded Higher
Education Research Institute (HERI) at UCLA surveys large numbers of faculty at hundreds of colleges and universities across the nation.  This year’s survey of some 30,000 faculty
reminds us of how different university faculty are from ordinary Americans.

Take politics. In the latest survey, for the 2010-2011
academic year, 62.7 percent of faculty said that they were either “far left” or
“liberal,” while only 11.9 percent said they were “far right” or
“conservative.”  The notion that
universities are hot beds for left-wing politics has a solid basis in
fact.  Moreover, the left-right imbalance
is growing –a lot.  The proportion of
those on the left is rising, on the right declining. In a HERI survey three
years earlier, there were 3.51 professors on the left for each one on the
right; in the latest survey, that ratio rose sharply to 5.27, not likely
explainable solely by sample variations. Meanwhile, the middle-of-the-road
professor is becoming less common (the proportion fell from 28.4 to 25.4
percent in three years).

Contrast this with the general public. In an article
written earlier this year, Atlantic
senior editor Richard Florida concluded Americans were becoming more
conservative (opposite the trend amongst academics), with 40 percent labeling
themselves conservative, and only 21 percent liberal–one one-third the
proportion of the faculty. Also, the 36 percent of Americans who call themselves
“moderate” contrast with a much smaller proportion of faculty who are
“middle-of-the-road.”

Continue reading Out of Sync: America’s University Faculty

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

Three Things Colleges Don’t Want Us to Know

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Universities are in the knowledge business, and the creation and
dissemination of it is at the very core of what colleges do. Yet some forms of
knowledge about higher education itself are either unknown, or hidden from the
public. Why? Release of the information would prove embarrassing and possibly
even costly to the school.

1. What Are the Teaching Loads?

This is prompted by an email I received from Bill Armstrong, President
of Colorado Christian College and former two-term U.S. Senator. He is looking
for data on faculty teaching loads and cannot find it. Going to the latest Digest of Education Statistics, I learn
that there were 7,500 faculty members teaching agricultural or home economics
courses in 2003 between the ages of 35 and 39, or that there were 1,959
full-time equivalent faculty teaching in Delaware in 2009. But in over 20
tables on staffing, there is not a word on teaching loads.

Why? I suspect the reason is simple: faculty don’t teach very much, and
far less than they used to. I have been around higher education for over 50
years, and my recollection is that at middling quality state schools in the
early 1960s, most faculty taught around 12 hours a week. At those same schools
today, the average load is almost certainly not more than 9 hours. At
top-flight universities, faculty taught about six hours a week in the 1960s,
and often 3 hours or 4.5 hours (one semester, one course, the second semester,
two courses) now.  On average, we have
seen at least a 25 percent reduction in loads.

Why? We are told it is because of the need to expand research output.
And surely the number of academic journals and other outlets has exploded.  But what percent of the research gets
seriously read or cited? Mark Bauerlein of Emory, a regular contributor to
Minding the Campus, has demonstrated that vast amounts of research are seldom
even cited, and that the number of articles written in the last 25 years or so
about, say, Shakespeare, reaches into the tens of thousands. Do not diminishing
returns set in regarding academic research like it does everything else in
life?

Continue reading Three Things Colleges Don’t Want Us to Know

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

The Insecurity of Black Studies

Posted by Mark Bauerlein and Richard Vedder

The removal of Naomi Shaefer Riley from the blogging staff of the Chronicle of Higher Education has been widely circulated in the cybersphere and the press, including Riley’s own account in the Wall Street Journal and many of our own contributors at Minding the Campus. All of them understand the psycho-political dynamics behind the whole affair, but people unfamiliar with the social climate of higher education may not understand how Riley could have provoked such a harsh and voluminous reaction from the academic community, albeit given her provocative post.

Continue reading The Insecurity of Black Studies

‘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.

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.

How Universities Promote the “Coming Apart” of America

Coming Apart.JPGEvery decade or so, Charles Murray writes a blockbuster book captivating America. First came Losing Ground, focusing attention on our dysfunctional system of public assistance, and, along with Richard Herrnstein, The Bell Curve, a controversial but rigorous examination of the role played by cognitive endowments in American life. I suspect his new book, Coming Apart: The State of White America, 1960-2010, will be another mega hit. Based on a quick read, Murray demonstrates the growing gaps between affluent upper-middle-class Americans and their blue-collar, lower-income counterparts. He confines his analysis to whites to avoid all sorts of unrelated side issues, including the tendency to see the growing gap between Americans as primarily a problem of race, ethnicity or bias.

Murray’s thesis is simple: a powerful new class has emerged in America, based on cognitive and educational homogamy–the interbreeding of individuals with like characteristics. Colleges and universities have played a key role–particularly the elite institutions, which attract almost no one outside the top ten percent of the nation’s cognitive talent. (Fifty years ago, only three percent of Americans graduated from college, and the elite institutions tended to attract the well-connected and the economically successful, not necessarily the brightest.) These institutions now function as sorting mechanisms. The exceptionally bright now tend to meet and then marry similarly bright partners. In addition to building a culture vastly different from that of mainstream America, they perpetuate the advantages that high levels of cognitive skills offer. As a result, Murray concludes, “Highly disproportionate numbers of exceptionally able children in the next generation will come from parents in the upper-middle class, and more specifically from parents who are already part of the broad elite.” As the new class pulls away from mainstream America, so does the discouraged underclass–now made up of all ethnicities–giving up on work, family and community.

Continue reading How Universities Promote the “Coming Apart” of America

About All Those STEM Dropouts…

science_lab_students.jpgThe New York Times proclaimed recently that science educators and others are vitally concerned that high dropout rates of students studying math, science, and engineering (the “STEM” disciplines) will imperil our nation’s technological leadership. There is a shortage of people in these fields, it is argued, and efforts to increase numbers are thwarted by dropout rates that run from 40 to as high as 60 percent (for those originally pre-med majors).

I want to make two points. First, the high dropout rates are not only far from surprising; indeed, they should be expected, and we should rejoice that someone in higher education is trying to maintain standards of academic excellence. Second, for well over half of a century, STEM advocates have cried “shortages of key personnel” and “crisis” when none really existed, showing a lamentable lack of scientific objectivity and intellectual honesty in the process. I fear this may be happening again.

Continue reading About All Those STEM Dropouts…

Steve Jobs and Our Non-Innovating Universities

steve jobs.jpgThe passing of Steve Jobs has focused my mind on something I haven’t thought about for a while: American capitalism is so vibrant, so creative, so much a creator of wealth and happiness, while higher education is far less so on all scores. Perhaps this explains why, when we tax capitalists and their suppliers (including employees) to support higher education, we actually often lower our nation’s output and, arguably, gross national happiness.

Starting 35 years or so ago out of a garage,  Steve Jobs provided Americans with thousands of great jobs and created a lot of wealth, including $8 billion or so for himself and more than $300 billion more for countless shareholders. The stockholder gains Apple created roughly equal one year’s worth of spending on American higher education.

Apple rose to the top tier of American corporations based on market capitalization in little more than a generation. Yet Jobs was once fired from the company for so-so performance.  Success came–but along with that came disappointments, risks, and sticks as well as carrots. Google, Intel, Facebook, Wal-Mart–America is replete with great companies that were essentially non-existent half a century ago and succeeded by building a better mousetrap or the equivalent–with enormous positive consequences. For example, I think Wal-Mart has done more to…

Continue reading Steve Jobs and Our Non-Innovating Universities

‘Yes, Some Teachers Do Very Little’

A huge brouhaha has erupted over the release and interpretation of data about the faculty of the University of Texas, centering on whether a relatively few individuals are doing most of the teaching at the system’s flagship institution, UT-Austin. Two reports drew most of the fire, one by my organization, the Center for College Affordability and Productivity (CCAP), the other by Rick O’Donnell, a recently fired aide to the system.

The CCAP bottom line: it seems like a relatively small portion of the over 4,000 persons teaching on the Austin campus shoulder a huge percent of teaching burden (especially in relation to the costs they incur to the University) and an even smaller group garners the bulk of the outside research funds viewed as critical to the maintenance of the research mission. This means a large group of faculty members do moderate amounts of teaching and not much funded-research.

Our report said preliminary data “strongly suggest that the state of Texas could move towards making college more affordable by moderately increasing faculty emphasis on teaching. Looking only at the UT Austin campus, if the 80 percent of the faculty with the lowest teaching loads were to teach just half as much as the 20 percent with the highest loads, and if the savings were dedicated to tuition reduction, tuition could be cut by more than half ….”

Continue reading ‘Yes, Some Teachers Do Very Little’

Why University Presidents Are Clueless About the Real World

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New Pew Research Center data show that a large majority of Americans think U.S. colleges and universities offer only fair or poor value for the financial cost -but college presidents strikingly disagree, with a majority of them thinking college offers at least a good value (though college presidents are overwhelmingly pessimistic about the quality of American higher education compared to the world ten years from now). Similarly, a majority of Americans question whether college is truly affordable any more, a view that most college presidents do not share. More generally, people in the academy have views widely divergent from the mainstream of the American population.

Turning to college presidents, I think a lot of this attitudinal divide relates to the non-market environment in which colleges operate. How do you become a successful college president? You raise lots of money, which you then use to bribe the various constituents in the university community to keep them happy. The faculty you bribe with low teaching loads, good fringe benefits, and perhaps a nearby parking place. Your fellow top administrators whose support is vital you bribe with not only good salaries, but also lots of assistants who do much of the heavy lifting associated with the job. You bribe the students by giving them nice recreational and dorm facilities, and reach an implicit bargain with them to not demand much academically (hence grade inflation) and to largely ignore their hedonistic bouts of alcoholic and sexual excesses. You bribe the alumni with decent football and basketball teams and a nice campus facility where they can hang out. You bribe the trustees with whatever idiosyncratic whim they want. In short, you spend money to keep a narrow group of people associated with the Ivory Tower happy.

Contrast that with business leaders. They are motivated by profits, maximizing the gap between revenue and costs. To increase revenues, they must please vast numbers of persons with new or improved products. They also enhance profits by reducing costs, raising productivity so they can do more with less. They reward subordinates who further these goals with bonuses, stock options, etc.

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College Presidents–Do They Make Too Much Money?

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The Chronicle of Higher Education‘s recently released annual survey of the salaries of university presidents provides empirical support for the proposition that higher education today appears to be less about achieving lofty goals like disseminating knowledge, building character, promoting virtue and expanding the frontiers of what humans can do than it is about something far more mundane: keeping the members of the academy happy and well fed.

I believe strongly that free markets work remarkably well and that includes the market for labor. The reason LeBron James, Oprah Winfrey and CEOs of highly profitable top corporations (including for-profit universities) are exceedingly well paid (many millions of dollars annually) is that their contribution to their employers is huge and can usually be pretty well measured–so markets dictate that they are paid, roughly, what they contribute to output at the margin. The Cleveland Cavaliers sank as a basketball power when Mr. James moved to Miami, and with that the revenue stream generated by Mr. James’s talents fell as well.

Traditional higher education, however, is a different matter. Markets are not truly “free” (indeed, they are rather expensive!) Gordon Gee, the president of Ohio State, cost that institution over $1.8 million in compensation last year (double the next highest paid public university president). But did that school have a good year because of President Gee? Who knows? Are students learning more?  Is Ohio State broadening our horizons of human potentialities more than in the past? Is President Gee worth roughly three times the salary of his predecessor? Is he well over twice as productive as the long-time president of the school’s arch athletic rival, Mary Sue Coleman of the University of Michigan? Again, who knows?

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Cut the Sniping—It’s a Great Book

The sniping has begun about Richard Arum and Josipa Roksa’s great new book Academically Adrift. Predictably, people are saying the test instruments used (especially the Collegiate Learning Assessment or CLA but also the National Survey of Student Engagement or NSSE) are imperfect, they look at only a small number of relatively anonymous schools, etc. These complaints on the survey have some validity, but the reality is the higher education community has not collected the data or developed the test instruments that could allow for a broader wider test. Why, for example, don’t we have a test of general knowledge, something of an extension of the Adult Civic Literacy Test developed by the Intercollegiate Studies Institute, that is administered widely at the beginning and end of the college careers of students at any institutions receiving (or whose students receive) federal grant or loan money? Why aren’t the NSSE results published for the hundreds of schools using it? Or, why not at least administer the National Assessment of Educational Progress exam given to 17 year olds again to 21 or 22 year olds near the end of their college career? Higher education has fought transparency and accountability, so researchers have to use the limited information available.

Basically, Arum and Roksa argue that students work little in college and consequently learn little. Most of us who have been in higher education for decades know that this is true, even when we don’t want to admit it. But why? You don’t have to read very far in Academically Adrift to find the answers. Below are a series of quotes either from the authors or from sources they cite, one from each of the first 10 pages of the book:

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Let’s Not Conflate Education and Job Preparation

Richard Vedder’s basic argument is sound: universities have become too expensive and too mediocre and too often the default for young people who might do well to pursue appropriate schooling through the secondary level. And as he writes, with too many seeking to preserve a bloated system, a reckoning is at hand.
But in the writings of Vedder, Charles Murray and a host of other conservatives, there is a strong equation of education and job preparation, and with the presumption that unless one is equipped with the native intelligence or disposable wealth and leisure to pursue a university education, then one’s education should consist dominantly if not exclusively of acquiring useful skills that can be employed in relatively menial labors.
We mustn’t draw a nearly exclusive connection between education and its economic benefits. It’s the very emphasis on careerism that is leading some ( from conservatives like Charles Murray to liberals like President Obama) to seek the near-elimination of the liberal arts from a central place in the curriculum. It is worth recalling that universal education was an American ideal born during the colonial period for reasons having nothing to do with job preparation. The first real move toward universal education was a 1647 law passed by the General Court of Massachusetts, requiring any town with a hundred or more families to establish a grammar school where typically emphasis was placed upon the learning of Latin and Greek.
If one looks at the entrance requirements for a typical New England college during the colonial period, one is stunned by the incredible learning expected of grammar school graduates, typically about 13 years old. Young people in most cases are capable of profound learning – if the goal sought is sufficiently demanding and integrated early enough into one’s schooling. One need only read the letters of ordinary citizens during this period (or look at the letters written by ordinary soldiers during the Civil War).
The problem, then, lies not in the ideal of universality of education, but the widespread transformation of the end that education serves. The goal of education toward fostering moral and virtuous members of their communities has been completely displaced by narrow utilitarian ends among students and moral relativism among the teachers.
A society driven by private ambitions of materialistic gain can expect education to become diluted by a utilitarian ethic. The tool will conform to its end, and so education becomes defined by the ethic of the short-cut. Rampant cheating and academic dishonesty are now campus (and societal) norms (students learn ethics from widespread practices in sports and business, not from Aristotle and the Bible), and the professoriate in turn emphasizes that all norms and codes are simply expressions of arbitrary power that limit what should be our thoroughgoing autonomy. As David Brooks has noted, there is an absolute consistency between the moral relativism of postmodern academia and the careerism in the student body.
I agree that colleges bear much of the blame for their current crisis (indeed, that they bear considerable responsibility for educating the class that precipitated the financial crisis that now ironically threatens their existence), and I hope and expect that they will have to change their current practices, including a serious effort to reduce tuition costs.
What disturbs me about arguments such as those found in the Vedder report is the implication that education should be fitted to the narrow vocational needs of airline attendants and cashiers, that an appropriate education will prepare them as efficiently as possible for a life of menial labor. I lament that a major thrust is afoot to dismantle whatever remnant of our older liberal arts tradition persists and to replace it with measurable forms of study that produce narrowly-trained careerists. We need virtuous cashiers and moral airline attendants as much as we need virtuous politicians and moral philosophers. Assuming that a major reassessment of the role of education is in the offing, then it is not the ideal of universal education that should be the whipping-boy, but the belief that a society can flourish without a moral core at the heart of its educational mission.

The BA is a False God

That I disagree with nothing important in Patrick Deneen’s post is a measure of how different this elephant seems, depending on what part you’ve got hold of.

Very briefly: I want everybody, not just an elite, to acquire as much liberal education as possible, for the reasons that Deneen describes. But we don’t have to wait until college to get a great deal of that done. E.D. Hirsch’s Core Knowledge curriculum is a wonderful example of how much can be done in K-8, and a lot more can be added in high school. At that point, I think this way of formulating our objective is helpful: “The educational system has succeeded when a child reaches adulthood having discovered something he loves to do, and having learned how to do it well.” If that’s the objective, then of course we want to say to the young person who has high academic ability “Here’s why pursuing a liberal education gives you your best chance of finding your vocation.” But if the answer we get is “Thanks but no thanks, what I really want to do is study marketing and go to work,” that student needs options other than a four-year residential program that will leave him deep in debt and have wasted a lot of his time. What Richard Vedder’s stunning statistics about the jobs of college graduates tell us is an indictment of a system that has held up a false god, the BA, as something that is required for social respectability. It is a system that doesn’t even think about helping all young people find something they love to do and teaching them how to do it well.

Is It Fair to Call It a Scam?

Professor Richard Vedder is certainly one of the most knowledgeable — and wisest – commentators on American higher education. So his cautionary remarks should be taken very seriously.
I have one reservation about calling the push for more colleges a “scam.” It is true that some youngsters knew all through college that they wanted to be physicians or lawyers and consequently their first jobs reflected their career objectives. However, many college graduates graduate without a clear notion of what they want to do occupationally or even personally. Some work for a couple of years for Teach for America without planning a lifetime career as teachers. Some take jobs as waiters or waitresses while their career aspirations lie in acting or art, careers notoriously difficult to enter. Therefore I hesitate to interpret several years of low-paid jobs that college graduates as a disconnect between what is learned at college and what college graduates do occupationally in their first jobs. Getting back to teaching, it might be excellent for American education have primary- and secondary-school students taught for four or five years by college graduates who lack teaching experience but have the attractive enthusiasm of youth even though they and their colleagues know that they do not plan to be career teachers. If we keep in mind the difference between “jobs” and “careers,” the fact that college graduates take low-level jobs in the years immediately following graduation is not necessarily a failure of college education or of the graduates themselves.

What Happens When College Is Oversold

waiters.bmpAs I wrote here last week, newly compiled data shows that a great many college graduates have been settling into jobs that do not require higher education. The data, prepared and released by the Center for College Affordability and Productivity (CCAP), show that a majority of the increased number of college grads since 1992—some 60 percent– are “underemployed” or “overqualified” for the jobs they hold. Thus we have one-third of a million waiters and waitresses with college degrees. Some 17 percent of the nation’s bellhops and porters are college graduates. A new CCAP study From Wall Street to Wal-Mart: Why College Graduates Are Not Getting Good Jobs, released today along with this essay, carries even worse news: the proportion of college-educated Americans in lower-skilled jobs has more than tripled since the 1960s, going from 11 percent in 1967 to 34 percent today.
Why are more and more college graduates not entering the class of professional, technical and managerial workers that has been considered the main avenue of employment? Anyone who has read Charles Murray’s great book Real Education (New York: Crown Forum, 2008) has good insights into why this problem has arisen. Truly, Murray argues, only a modest proportion of the population has the cognitive skills (not to mention work discipline, drive, maturity, integrity, etc.) to master truly higher education, an education that goes well beyond the secondary schooling experience in terms of rigor of presentation. Reading and comprehending 200- to 400-year-old literature is useful for advanced leadership -but difficult. Educated persons should read and understand Locke’s “On Human Understanding” or Shakespeare’s King Lear -they are insightful in many ways, but the typical person of average intelligence typically lacks both the motivation and ability to do so. Mastering complex forms of mathematics is hard -but necessary to function in some areas of science and engineering.
Following up on Murray, the move to get more college degrees creates a huge problem. The number going to college exceeds the number capable of mastering higher levels of intellectual inquiry. This leads colleges to alter their mission, watering down the intellectual content of what they do. Rather than studying advanced mathematics, physics or –as I did– 18th century French literature in the native language, more students are studying business administration, communication skills, and doing vocational-school type work on the intricacies of health care provision or administration. Instead of five or 10 percent of students getting “A” grades, we give 40 percent or more. We have created a Potemkin Village -a few truly good universities that come close to meeting the former academic standards, but a vaster melange of institutions that are often neither “higher” nor even “education” in the classical sense, particularly since the typical student spends less than 30 hours a week on academics. Bottom line: too many people go to college.

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Do We Need More College Grads?

Richard Vedder calls it “the single most scandalous statistic in higher education,” an assessment that doesn’t sound overstated to us. Writing on the Chronicle of Higher Education site, Vedder says “a small army of researchers and associates” gathered by the Center for College Affordability and Productivity (CCAP) shows that “approximately 60 percent of the increase in the number of college graduates from 1992 to 2008 worked in jobs that the (Bureau of Labor Statistics) considers relatively low skilled—occupations where many participants have only high school diplomas and often even less.” This means that the great push to increase the number of college grads has apparently come to very little—only a minority of the additional grads are in occupations regarded as requiring a bachelor’s degree.
Of the nearly 50 million U.S. colleges graduates, 17.4 million are holding jobs for which college training is regarded as unnecessary. The number of waiters and waitresses with college degrees more than doubled from in the years 1992-2008, from 119,000 to 338,000, and cashiers with college degrees rose from 132,000 to 365,000. This makes the push for more college graduates very controversial. Vedder writes: “Some in higher education KNOW about all of this and are keeping quiet about it because of their own self-interest. We are deceiving our young population to mindlessly pursue college degrees when very often that is advice that is increasingly questionable.”
Four of our writers have weighed in on the CCAP report, Stefan Kanfer, Fred Siegel, Mark Bauerlein and Daphne Patai.

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Four Years of College to Become a Bellhop
Posted by Stephan Kanfer
Like the dollars that pay for them, degrees from U.S. colleges and universities are rapidly declining in value. The College Board, a consortium of 5,700 institutions of advanced education, would have us believe that “the pay premium for those with bachelor’s degrees has grown substantially in recent years.” But in the real world, where at least some of those board members live, a B.A. is hardly a guarantee of salary or success. The report from the Center for College Affordability and Productivity reveals that some 60 percent of college graduates from 1992 to 2008 worked in jobs that didn’t require the skills that sheepskins are supposed to guarantee—and that didn’t offer much in the way of big-league compensation, either.
Examples: Nearly 30% of flight attendants had BA’s. Some 24% of retail salespersons had similar degrees. So did more than 17% of baggage porters and bellhops. Taxi drivers: 15%; hotel, motel and resort desk clerks, 16%; manicurists and pedicurists, 11.5%. The list goes on to include locksmiths, shampooers and telecommunications installers.
Some of this situation can be ascribed to the perilous economy—college graduates have to take what they can get, even if it’s washing someone else’s hair or cutting someone else’s toenails. But the principal reason for the lack of high-grade employment lies with the colleges themselves. Anyone who inspects their catalogues will find a glut of courses designed to separate the student from his cash, without imparting anything that might be defined as wisdom. Core curricula that once discussed the great tradition in literature, art, and science, have been elbowed offstage by banal courses in feminism, black studies and queer theory. All too often, the powerful and useful contributions of Shakespeare, Dickens, Tolstoy, Mann, Joyce et al are dismissed as the work of “dead white males.”
The result: students who can spout a line of political correctness designed to dazzle their peers and professors. With that and $1.50 they can get a bus ride downtown to the unemployment offices. And when and if they do land a job, chances are that their abilities will be sorely tested because they come to work with an ignorance of history, economics and society.
The future is not hard to predict. If current conditions prevail, the deflation of a bachelor’s degree will soon be accompanied by a corresponding inflation in the value of advanced degrees. A B.A. will be considered the equivalent of a high school diploma, and candidates for fast-track jobs in business or the professions will have to enter the work force with at least a master’s degree. Colleges will grow richer and students poorer. And if matters go far enough, one day municipal workers will have Ph. D’s to qualify for a position in the sanitation department.

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The Downgraded Status of Our Colleges
Posted by Fred Siegel
Insipidly correct, painfully self-conscious guardians of their own status, “higher” “education”, as Richard Vedder’s piece makes clear is, to a considerable degree, just another bureaucratic interest group looking to keep its bubble – built on the assumption of an unlimited market and endlessly rising value – going. Like New York’s public sector workers who are guaranteed a Madoff-like eight percent return on their pensions come boom or bust, the typical institution start its annual budgeting with the assumption of a 7% tuition increase and goes on from there regardless of whether or not the people it credentials are actually educated.
In the wake of its transformation by the cataclysms of the late 1960s, the so-called humanities moved from reflecting on the great works of the western tradition to an academic parody of the class struggle. The upshot has been that the intellectual value of the credentials colleges bestow has moved inversely with the rise of tuition. What Mr Vedder has uncovered statistically is known, albeit inchoately, by much of the public, which having already implicitly downgraded the status of our colleges is coming to recognize that a college degree may not even carry earning power.
Academia has a ready response to all this. It will argue in its learned journals that the rise of cheaper means of credentialing such as on-line courses was all a part of the right-wing conspiracy, inspired, no doubt, by Sarah Palin.

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The Everyone-Should-Go-to-College Dogma
Posted by Mark Bauerlein
I have a friend who is unemployed and has been for the last few years. She left a clerical position at a magazine and has since scrounged around doing some Web consulting work here and there, picking up a temp job off and on, but never finding anything durable. I pushed and prodded her recently to check out a few for-profit online schools in the area that have short vocational programs of some kind along with a financial aid package (she has credit card bills). We went to Web sites, dug into various programs, and she promised she’d pursue it.
I had a note from her with an answer a few days later. She’d spoken to others who told her to drop the vocational approach and instead to investigate programs in the second largest university in the state. An online degree wouldn’t earn her sufficient “respect,” they told her, and she listened. It would cost more money and take longer and force more courses upon her, but that only made it appear to her a better long-term decision.
I shot back: “You need a job, not respect, and the employers who will hire you don’t care about the school you attended. They just want to know that you can do the job.”
No word since. The idea of the standard four-year diploma is too settled and firm. In this case, and, I suspect, thousands of others, a streamlined, job-oriented program can’t break the spell–and it’s frustrating. Perhaps more studies like this one will dislodge it, and all will benefit. The cover of this week’s issue of the Chronicle of Higher Education has this front page headline: “Graduation Rates Fall at One-Third of 4-Year Colleges.” Obviously, we have many, many young people who don’t fit the four-year mold for one reason or another, and when they arrive on campus they soon feel the mismatch and leave. They might have been spared the experience if the “everyone-should-go-to-college-right-out-of-high-school” dogma weren’t so universally broadcast.

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Why Are Students Doing So Badly?
Posted by Daphne Patai
Over several decades, I have observed students arrive at the large, public university at which I teach with ever deteriorating preparation. And then, four (increasingly, five) years and many thousands of dollars later, those who stick with it graduate, often with little to show for it except a diploma.
If we really believe that job preparation is the goal of higher education why not install a system rather like Huxley’s in Brave New World, in which children are born and bred to fulfill particular slots in society? Remember how Huxley’s castes are indoctrinated day and night into the belief that they are the best and most fortunate group in their society? We’re already moving part way there, with our absurd emphasis on “self-esteem” totally unrelated to actual efforts and accomplishments. If we do not want Huxley’s perfectly functioning society, surely it behooves us to note that higher education is not merely, or even primarily, a job-preparation issue.
So, in my view, the scandal isn’t that students don’t find lucrative jobs after college. No; the real scandal is that we’re doing so badly what we are supposed to be doing halfway decently: providing our students with preparation to lead lives as thoughtful and free citizens of a democracy. But this failure shouldn’t be laid at the feet merely of university professors. The majority of students reach us already poorly educated but well trained in making the least effort. To that, we then add further disincentives: higher grades for less work; fewer requirements, and more credits per course; shorter semesters, reading lists, and students’ attention spans.
If we actually demanded that students put in the time, effort, and work required to become proficient in an area, and were giving students the grades they deserved, at least we could be claiming to be fulfilling one of the implicit promises of higher education. But if we did those things, college admissions and enrollments would drastically drop, as young people not interested in or able to make the serious intellectual effort that ought to be the hallmark of higher education, would seek out other ways of achieving their job goals. Meanwhile, the notion that everybody has a right to higher education would be exploded for what it is: an unrealistic and probably pointless pretense. However, I doubt that my fellow faculty members support the endless expansion of higher education out of a desire to line their own coffers. Many seem genuinely to believe that this is akin to the right to primary and secondary school education — and so it’s no surprise that those levels are what higher education has come to resemble. In such a situation, graduates ought to be disgruntled: they end up without either adequate job skills or the education-for-life that in some way they were promised, which certainly does turn their diplomas into a mere piece of paper, a formal requirement easy to despise.
Of course young people should have options for job training suitable to different interests and abilities, and these may or may not involve university attendance. But reinterpreting a liberal arts education as a job-training program is quite a drastic step, not to taken lightly. Meanwhile, those of us who teach at the university level should find it increasingly difficult to live with our abject failures. And those, emphatically, do not include our inability to solve the nation’s economic or employment problems by rewriting our curricula. The lack of connection between attending college and becoming educated is what we should really be upset about. Can’t we at least get that right?

Alas, the Feds Take Over Student Loans

As an observer of the national political scene for over a half of a century, and as a former employee of the U.S. Senate, I have seen a lot of political sleaze and chicanery. But nothing tops what happened as the Congress, using a relatively arcane procedure designed to correct spending excesses in budget bills, radically changed a system of federal student loans, against the wishes of millions of users, against many colleges whose tuition fees necessitate the loans, and, most shamefully, against the wishes of probably a majority of the Congress itself.
The Obama Administration will be taking private providers, with one exception, out of the business for servicing federally subsidized student loans. I believe the reason for this is largely ideologically driven -a deep distrust and contempt for private business, and a belief in governmental control if not ownership of the means of production (which we used to call socialism). But the stated rationale is that this is to save money – over $60 billion over a decade -to fund needed expansion of Pell Grants, among other things.
I don’t like the student loan provisions of the new law for many reasons. First, as indicated above, it is an affront to the democratic process on which this nation was founded. Proponents of the student loan changes had come to realize that they very likely would not be able to get them through the House and the Senate, so they stuffed them into the health-care legislation. Members of Congress who supported the health-care bill but opposed the student loan changes were forced to vote contrary to their wishes on one or the other of those issues.
Second, the alleged $60 billion in savings under the bill are highly dubious in a narrow technical sense -and non-existent if a broader perspective of savings is used. It is true that the Feds do make payments to private providers servicing loans, and it may well be that ending the payments will reduce cash outflows from the Treasury, although even here there are good reasons to be suspicious of the $60 billion figure.

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Why Tuition Goes Up Every Year

Middlebury College is expected to announce a plan to hold the annual rise of tuition to one percentage point above the inflation rate. This announcement will likely be greeted with praise. But why? Costs may be held down in comparison with other colleges, but the bedrock assumption here is a familiar one: tuition must go up each year; it’s just a matter of how much. In hard times, other businesses cut costs and live within their means. Colleges and universities don’t? And now we hear more calls for government to do something about it.
Like most economists, I do not like attempts of politicians and government bureaucrats to interfere in decisions of buyers and sellers by limiting changes in market-determined prices –minimum wage laws, rent controls and other intrusions into market processes inevitably lead to unintended consequences: higher unemployment, less housing and housing of poorer quality, etc. Thus I start out predisposed to oppose tuition fee caps such as introduced in many states. But my opposition to these caps has been reduced by the fact that higher education markets are hardly free of interferences to begin with, and government has contributed to tuition price explosion through its numerous ways of increasing the demand and reducing the supply for higher education services. Tuition caps at least temporarily force some universities to slow down a bit their inexorable tendency to increase spending, much of it on things at best tangentially related to the true mission of universities—disseminating and creating knowledge (e.g., the number of sustainability coordinators, public relations specialists, associate provosts for international affairs, etc. has grown dramatically in recent years).
Even these legally imposed temporary restraints on university desires to raise prices are often thwarted by various strategies – requiring kids to eat and sleep in university facilities and then raising room and board rates dramatically, or creating new fees (technology fees, lab fees, recreational center fees, parking fees, even charging more to buy soft drinks out of campus machines, etc.) But a recent article on “Inside Higher Education” suggests that tuition caps themselves are at best temporary—-after periods of capping tuition, deals are cut to end the cap, and then fees tend to explode, reaching levels equal to what they would have been had there never been a tuition freeze. It is almost as if tuition fees are going to rise 3 percentage points more than the inflation rate, and nothing can change that. Call it the natural rate of higher education inflation.

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