By Richard Vedder
One way to reduce tuition hikes is to outlaw them. Ordinarily, I abhor price controls, noting that they lead to shortages and often a decline in the quality of the controlled good or service. Yet higher education markets are highly controlled and manipulated to begin with, with the government subsidizing major suppliers (state universities), providing financial assistance to demanders of their services, etc. Public policy has contributed, I think, to the tuition price explosion, so the attempts of politicians to freeze tuition fees or moderate their growth are not surprising, and perhaps even marginally useful in controlling the cost explosion.
Governors Charlie Crist in Florida and Ted Strickland in Ohio are polar opposites, one a pretty conservative Republican and one a rather liberal Democrat. Both, however, want to constrain tuition increases. In Florida, the University of Florida and Florida State want to be able to raise tuition fees a lot and "invest" in achieving national competitive status. That usually translates into taking incremental dollars from students and devoting it to enhancing research programs, paying big salaries to new research professors, etc. Crist has said "over my dead body." He seems to saying, "if they want state subsidies, those funds will be used to keep college affordable to all --not to engage in a costly academic arms race to increase one's national rankings." In Ohio, Strickland, a Democrat working in tandem with a Republican-controlled legislature, seems to have broad acceptance of a two year plan that will allow tuition rates to rise less than the overall rate of inflation, in returns for greater state subsidies.
I am of two minds about all of this. In general, I favor tuition fee price competition over price fixing, institutional autonomy over central direction, and students paying for their own education instead of third parties doing so. The prime beneficiaries of a college education are the students educated, and most of them should pay their own way, or at least a healthy proportion of it. Moreover, I have earlier argued that we are "over invested" in higher education, meaning we are overly obsessed with providing access to every student wanting to try to go to college, no matter what the social cost or risk of failure. These are all arguments against what Crist and Strickland are trying to do. On the other hand, in many ways, the colleges have brought on this strong-armed behavior themselves, by letting their hubris to lead them to engage in costly policies (big spending increases) that are highly dubious on cost-benefit grounds. In a perfect world in my opinion, these problems would not exist, because governments would largely exit the higher education enterprise, with private charity helping those of limited means attend school. But that ideal world does not exist.
Tuesday, May 29, 2007
Sunday, May 27, 2007
Is College a Waste of Time, Revisited
By Richard Vedder
I was struck by a headline in today's Columbus Dispatch: "College Graduates Now Turning to Trade School," written by H.J. Cummins of the Minneapolis Star Tribune. Cummins note that there is a growing tendency for college graduates with esoteric majors that have little vocational relevance to go back to schools to learn a trade --air traffic controller, heating and air-conditioning work, etc.
I have argued that the earnings differential that college grads command comes less from what they learn in school than from other attributes they have --intelligence, ambition, discipline, etc. Students sometimes leave college after spending thousands of dollars and four or five years of their life and find little in the way of satisfying employment --but learn that plumbers and heating specialists and air traffic controllers are making big bucks. So they go back to trade school and, after a year or two of training, get jobs often paying within a few years $75,000 or more a year. The statistics record these individuals as high earning college graduates, but I ask the question: would they have probably earned about as much if they simply skipped college and went to trade school in the first place?
Charles Murray argues that too many people go to college and too few go to trade school. If the story that Cummins is telling is true, and I suspect that it is, than we have overeducated trades persons who have often spending tens of thousands of dollars unproductively before getting training that is vocationally relevant. How much government subsidy goes to sustain these individuals as they go through college unnecessarily?
I was struck by a headline in today's Columbus Dispatch: "College Graduates Now Turning to Trade School," written by H.J. Cummins of the Minneapolis Star Tribune. Cummins note that there is a growing tendency for college graduates with esoteric majors that have little vocational relevance to go back to schools to learn a trade --air traffic controller, heating and air-conditioning work, etc.
I have argued that the earnings differential that college grads command comes less from what they learn in school than from other attributes they have --intelligence, ambition, discipline, etc. Students sometimes leave college after spending thousands of dollars and four or five years of their life and find little in the way of satisfying employment --but learn that plumbers and heating specialists and air traffic controllers are making big bucks. So they go back to trade school and, after a year or two of training, get jobs often paying within a few years $75,000 or more a year. The statistics record these individuals as high earning college graduates, but I ask the question: would they have probably earned about as much if they simply skipped college and went to trade school in the first place?
Charles Murray argues that too many people go to college and too few go to trade school. If the story that Cummins is telling is true, and I suspect that it is, than we have overeducated trades persons who have often spending tens of thousands of dollars unproductively before getting training that is vocationally relevant. How much government subsidy goes to sustain these individuals as they go through college unnecessarily?
Friday, May 25, 2007
Student Status and Graduation Rates?
By Matt Denhart
In a previous blog, I presented research based on faculty status and its relationship to student graduation rates. However, to truly tackle this issue perhaps the true story lies with the students themselves. This has been discussed briefly in the form of student quality evident in ACT scores. Yet, it seems other factors directly involving the students—namely tuition and financial aid—are key factors in this puzzle.
Interestingly enough, aside from ACT scores, the most consistently significant and relatively strong variable explaining graduation rates is tuition. What is truly interesting is that in all models, average in-state tuition had a positive correlation—i.e. higher tuition equals higher graduation rates. All models also control for student quality and the type of school, public vs. private and research extensive vs. intensive. Thus the argument that this finding is due to the link between tuition and student or school quality is not valid.
I would venture to guess that this positive relationship is due largely to incentives. As a student, if I have invested significant amounts of money into my education, I am going to be sure to obtain that diploma. Many students have accumulated significant debt to finance college and the only way to pay these bills is through a decent job—requiring a college degree.
The percentage of students receiving any type of financial aid likewise is inversely related to graduation rates. This seems to support the same hypothesis stated above. When students have made a greater investment in their education, they are more likely to succeed. Other research done this past summer by Jonathan Leirer supports this. He found that students receiving loans as opposed to grants in their financial aid package were also more likely to graduate. I think from all this it is safe to conclude that this notion of an investment in one’s own education plays an integral role in the eventual success of that student. There’s something to be said about the motivation of the individual student. I think it’s safe to assume that, on average, students paying higher tuition and receiving less aid are working at least part-time to finance these heavy expenses. While one may believe that this would negatively affect study time and school performance, it is these students who are graduating at the highest rates. Perhaps there’s something to be said for working one’s way through college.
Matt Denhart is an undergraduate student at Ohio University and a research assistant for CCAP.
In a previous blog, I presented research based on faculty status and its relationship to student graduation rates. However, to truly tackle this issue perhaps the true story lies with the students themselves. This has been discussed briefly in the form of student quality evident in ACT scores. Yet, it seems other factors directly involving the students—namely tuition and financial aid—are key factors in this puzzle.
Interestingly enough, aside from ACT scores, the most consistently significant and relatively strong variable explaining graduation rates is tuition. What is truly interesting is that in all models, average in-state tuition had a positive correlation—i.e. higher tuition equals higher graduation rates. All models also control for student quality and the type of school, public vs. private and research extensive vs. intensive. Thus the argument that this finding is due to the link between tuition and student or school quality is not valid.
I would venture to guess that this positive relationship is due largely to incentives. As a student, if I have invested significant amounts of money into my education, I am going to be sure to obtain that diploma. Many students have accumulated significant debt to finance college and the only way to pay these bills is through a decent job—requiring a college degree.
The percentage of students receiving any type of financial aid likewise is inversely related to graduation rates. This seems to support the same hypothesis stated above. When students have made a greater investment in their education, they are more likely to succeed. Other research done this past summer by Jonathan Leirer supports this. He found that students receiving loans as opposed to grants in their financial aid package were also more likely to graduate. I think from all this it is safe to conclude that this notion of an investment in one’s own education plays an integral role in the eventual success of that student. There’s something to be said about the motivation of the individual student. I think it’s safe to assume that, on average, students paying higher tuition and receiving less aid are working at least part-time to finance these heavy expenses. While one may believe that this would negatively affect study time and school performance, it is these students who are graduating at the highest rates. Perhaps there’s something to be said for working one’s way through college.
Matt Denhart is an undergraduate student at Ohio University and a research assistant for CCAP.
Faculty Status and Graduation Rates?
By Matt Denhart
In a world of few objective evaluation methods—higher ed—graduation rates are the key measurement for college student success. With alarmingly low average graduation rates, we find ourselves searching for solutions to this ultimate question—how do we get our kids to graduate? According to research here at CCAP, part-time faculty does appear to play a somewhat significant role, but tenure status does not seem to be a significant or strong variable.
Regressions for four and six year graduation rates at research extensive and intensive public and private colleges tell us much. Part-time to full-time and total faculty ratios generally show a significant and somewhat strong and negative relationship to graduation rates. By decreasing this ratio, i.e. hiring more faculty members on a full-time basis and fewer part-time, colleges could increase student success. While this may increase costs, perhaps it’s worth consideration for the students’ sake.
Tenure status is a less significant variable. The ratio of non-tenured faculty (and not on a tenure track) to tenured faculty does not significantly contribute either positively or negatively to graduation rates. This is not to say that tenured professors are not on average more experienced than their non-tenured colleagues or that tenure status plays no role in research output and other roles of faculty. However, strictly from an interest of graduating students, a university would be wise to not place such great emphasis on the extremely costly practice of tenure.
While I have discussed the previous two factors, it should be noted that average ACT scores are consistently a highly significant and positively strong factor. This should be expected as ACT scores are a good indicator of student quality, and the better the student the higher chance for success. This does much to explain why the Harvard’s and Princeton’s of the world are able to graduate over 95 percent of their students while other institutions—with less qualified students, continue to struggle. That said, in the interest of student success, universities would be wise to focus more strongly on full-time faculty and less on their tenure systems. Expect more on this issue in the coming future.
Matt Denhart is an undergraduate student at Ohio University and a research assistant for CCAP.
In a world of few objective evaluation methods—higher ed—graduation rates are the key measurement for college student success. With alarmingly low average graduation rates, we find ourselves searching for solutions to this ultimate question—how do we get our kids to graduate? According to research here at CCAP, part-time faculty does appear to play a somewhat significant role, but tenure status does not seem to be a significant or strong variable.
Regressions for four and six year graduation rates at research extensive and intensive public and private colleges tell us much. Part-time to full-time and total faculty ratios generally show a significant and somewhat strong and negative relationship to graduation rates. By decreasing this ratio, i.e. hiring more faculty members on a full-time basis and fewer part-time, colleges could increase student success. While this may increase costs, perhaps it’s worth consideration for the students’ sake.
Tenure status is a less significant variable. The ratio of non-tenured faculty (and not on a tenure track) to tenured faculty does not significantly contribute either positively or negatively to graduation rates. This is not to say that tenured professors are not on average more experienced than their non-tenured colleagues or that tenure status plays no role in research output and other roles of faculty. However, strictly from an interest of graduating students, a university would be wise to not place such great emphasis on the extremely costly practice of tenure.
While I have discussed the previous two factors, it should be noted that average ACT scores are consistently a highly significant and positively strong factor. This should be expected as ACT scores are a good indicator of student quality, and the better the student the higher chance for success. This does much to explain why the Harvard’s and Princeton’s of the world are able to graduate over 95 percent of their students while other institutions—with less qualified students, continue to struggle. That said, in the interest of student success, universities would be wise to focus more strongly on full-time faculty and less on their tenure systems. Expect more on this issue in the coming future.
Matt Denhart is an undergraduate student at Ohio University and a research assistant for CCAP.
A New Way of Ranking Colleges
By Richard Vedder
US News & World Report, in the best capitalistic tradition, has made some money while serving an important human need: an evaluation of the quality of colleges and universities. The USN&WR rankings are the closet thing to a bottom line in higher education today.
Yet the rankings are very badly flawed in that they are mostly input and opinion based, not based on outcomes and results. Variables relating to the revenues and spending of resources account for about 30 percent of the rankings, and "peer assessment" for another one-fourth. Denying student’s access, thus increasing exclusivity is worth at least 15 percent. The one reasonable component is the school's graduation rate compared with the predicted graduation rate given the resources (including student quality) available to it --but it counts for only 5 percent --less than average faculty salaries. Thus the rankings give schools enormous incentives to raise and spend money --increasing tuition fees in the process.
My student Bob Arnold reminded me of a great study that I have not promoted in this space, namely the College Rankings Reformed piece done for the Education Sector (at http://www.educationsector.org) last fall. Written by Kevin Carey, the study calls for putting a good deal of emphasis (35 percent in the rankings) on the National Survey of Student Engagement (NSSE) and the Collegiate Learning Assessment. These instruments deal us what students do in college, and whether their ability to think critically has improved (assuming the test is administered at the beginning and end of the college career). He proposes putting a 30 percent weight on post-graduate achievement and satisfaction --job earnings, alumni satisfaction with their lives, their job placement, etc. And he proposes a much higher weight on the actual vs. predicted graduation rate variable. I think Carey's proposal is excellent and some variant of it should be adopted. The Spellings Commission did not explicitly endorse this proposal, but it is certainly consistent with its recommendations of more outcomes-based assessment.
Persons with a conservative or libertarian bent are loathed to require colleges to meet a new federal mandate, and many in the liberal academic establishment do not want to report any more information than at present, because, frankly, some of the information is embarrassing. Yet colleges are up to their eyeballs in governmental involvement already, and a huge number of schools (over 1,000) already use the NSSE test and hundreds are using the CLA. Requiring schools wishing to have federal funds to use and report results on these tests would go a huge way toward building alternative rankings. The Social Security Administration has earnings histories on most American workers. The National Institutes of the Deaf have already reported how their students (collectively) do in terms of earnings. Minor changes in the law would allow (require?) the Social Security Administration to report average earnings for each class of graduates, and to relate that to some national average. A lot can be done to get an outcomes-based assessment system without a huge amount of interference in the ways colleges work. If a school like Hillsdale College wants to opt out because it takes no federal money, so be it, but if you want the federal dollars, you should have to show how those dollars serve students.
Other testing devices exist. I love the Intercollegiate Studies Institute (ISI) work on testing students on knowledge of civic institutions and history at the beginning and ending of their college careers. Some expansion and modification of that would be another good testing instrument --measuring actual knowledge, not just thinking skills and student engagement.
For a modest sum of money, we could have a rating system that enormously reduces incentives for colleges to raise costs -- and also incentives to pay more attention to the undergraduate instruction dimension which is still the bread and butter of most institutions of higher education in the United States.
US News & World Report, in the best capitalistic tradition, has made some money while serving an important human need: an evaluation of the quality of colleges and universities. The USN&WR rankings are the closet thing to a bottom line in higher education today.
Yet the rankings are very badly flawed in that they are mostly input and opinion based, not based on outcomes and results. Variables relating to the revenues and spending of resources account for about 30 percent of the rankings, and "peer assessment" for another one-fourth. Denying student’s access, thus increasing exclusivity is worth at least 15 percent. The one reasonable component is the school's graduation rate compared with the predicted graduation rate given the resources (including student quality) available to it --but it counts for only 5 percent --less than average faculty salaries. Thus the rankings give schools enormous incentives to raise and spend money --increasing tuition fees in the process.
My student Bob Arnold reminded me of a great study that I have not promoted in this space, namely the College Rankings Reformed piece done for the Education Sector (at http://www.educationsector.org) last fall. Written by Kevin Carey, the study calls for putting a good deal of emphasis (35 percent in the rankings) on the National Survey of Student Engagement (NSSE) and the Collegiate Learning Assessment. These instruments deal us what students do in college, and whether their ability to think critically has improved (assuming the test is administered at the beginning and end of the college career). He proposes putting a 30 percent weight on post-graduate achievement and satisfaction --job earnings, alumni satisfaction with their lives, their job placement, etc. And he proposes a much higher weight on the actual vs. predicted graduation rate variable. I think Carey's proposal is excellent and some variant of it should be adopted. The Spellings Commission did not explicitly endorse this proposal, but it is certainly consistent with its recommendations of more outcomes-based assessment.
Persons with a conservative or libertarian bent are loathed to require colleges to meet a new federal mandate, and many in the liberal academic establishment do not want to report any more information than at present, because, frankly, some of the information is embarrassing. Yet colleges are up to their eyeballs in governmental involvement already, and a huge number of schools (over 1,000) already use the NSSE test and hundreds are using the CLA. Requiring schools wishing to have federal funds to use and report results on these tests would go a huge way toward building alternative rankings. The Social Security Administration has earnings histories on most American workers. The National Institutes of the Deaf have already reported how their students (collectively) do in terms of earnings. Minor changes in the law would allow (require?) the Social Security Administration to report average earnings for each class of graduates, and to relate that to some national average. A lot can be done to get an outcomes-based assessment system without a huge amount of interference in the ways colleges work. If a school like Hillsdale College wants to opt out because it takes no federal money, so be it, but if you want the federal dollars, you should have to show how those dollars serve students.
Other testing devices exist. I love the Intercollegiate Studies Institute (ISI) work on testing students on knowledge of civic institutions and history at the beginning and ending of their college careers. Some expansion and modification of that would be another good testing instrument --measuring actual knowledge, not just thinking skills and student engagement.
For a modest sum of money, we could have a rating system that enormously reduces incentives for colleges to raise costs -- and also incentives to pay more attention to the undergraduate instruction dimension which is still the bread and butter of most institutions of higher education in the United States.
Thursday, May 24, 2007
The College Credentialing Fraud Revisted
By Richard Vedder
A growing number of people are asking, "Why go to college?" The costs are soaring. The one thing that leads people to go, of course, is that college graduates earn by far bigger bucks than non-graduates. Nonetheless, we have James Altucher of the Financial Times saying college is a waste of time. We learn that the Dean of Admissions at MIT was fired because she lied about being a college grad --an embarrassment, showing how a leading administer of a top school could function beautifully for decades without a college diploma. On the left, Barbara Ehrenrich asks "What good are educational credentials anyway?"
Another very accomplished and bright non-college graduate, James Taranto, one of my very favorite Wall Street Journal journalists, has taken up a cause we have long championed: the unintended consequences of the 1971 Duke v. Griggs Power decision in giving colleges more clout as a credentialing force, by forbidding alternative ways of testing potential employees to determine future success.
With the help of Fred Fransen, who distributes grants for a small number of prominent philanthropists, my colleague Bryan O'Keefe is doing a more extensive investigation of the Griggs decision, and, if the findings confirm my suspicions, we plan to carry the research even one step further. We have a situation where employers cannot test for aptitude, but colleges can -- and they use this advantage to make a college-education a more mandatory requirement for good employment, even when the skills learned in college are tangential to the needs of the job.
A growing number of people are asking, "Why go to college?" The costs are soaring. The one thing that leads people to go, of course, is that college graduates earn by far bigger bucks than non-graduates. Nonetheless, we have James Altucher of the Financial Times saying college is a waste of time. We learn that the Dean of Admissions at MIT was fired because she lied about being a college grad --an embarrassment, showing how a leading administer of a top school could function beautifully for decades without a college diploma. On the left, Barbara Ehrenrich asks "What good are educational credentials anyway?"
Another very accomplished and bright non-college graduate, James Taranto, one of my very favorite Wall Street Journal journalists, has taken up a cause we have long championed: the unintended consequences of the 1971 Duke v. Griggs Power decision in giving colleges more clout as a credentialing force, by forbidding alternative ways of testing potential employees to determine future success.
With the help of Fred Fransen, who distributes grants for a small number of prominent philanthropists, my colleague Bryan O'Keefe is doing a more extensive investigation of the Griggs decision, and, if the findings confirm my suspicions, we plan to carry the research even one step further. We have a situation where employers cannot test for aptitude, but colleges can -- and they use this advantage to make a college-education a more mandatory requirement for good employment, even when the skills learned in college are tangential to the needs of the job.
Tuesday, May 22, 2007
Dismissing Academic Personnel; 3 Case Studies
By Richard Vedder
I have been finding myself contemplating the question of when is it appropriate to get rid of academic personnel who somehow do not meet minimum standards. We know that tenure raises the costs of dismissing some faculty, and the rise in the importance of non-tenure faculty in modern times is in part an attempt to reduce these costs. Keeping poor tenured professors on both lowers the quality of the instructional mission and reduces the ability of institutions to reallocate academic resources as needed in a dynamic society.
Beyond that, however, three incidents recently have focused my attention on this issue. As mentioned earlier, Texas entrepreneur Jeff Sandefer runs a no-tenure business school, the Acton School of Business, that adopts one of Jack Welch's old ideas from General Electric: it drops, at least temporarily, from the faculty that professor each year that least measures up to standards, which I gather is largely determined by student evaluations. While arguably somewhat brutal, it no doubt stimulates faculty to be engaged, enthusiastic, prepared, relevant --all good things. On balance, I think it is a good idea.
Second, there is of course the student loan scandal, and the ousting of a significant number of directors of financial aid from major universities. In this case, ethical transgressions are involved, and it seems to me that the moves being made are fitting and proper, although I have no first hand knowledge of the individual circumstances. To be sure, if I had my way, there would be largely a divorcing of the act of education from the act of financing that education, and financial aid officers would lose much of their clout --and the ability to engage in nefarious activities to enrich themselves.
Along the same lines, I wonder about admission offices. At selective institutions, parents are willing to fork over big bucks to get their kids in, and occasionally the schools take "gifts" in return for preferential admissions. How often, however, do admission officers admit kids in return for some form of personal financial consideration? Often it is difficult to do, since committees make decisions, but given the stakes involved, I wouldn't be surprised if there are not some scandals lurking out there, particularly when schools use subjective criteria to differentiate between many near equally qualified students. I am not suggesting most admission directors are crooks, but rather that when non-market criteria are used, the temptations to stray from sound ethical principles increase, with predictable results owing to the frailties of human nature.
My third example is at my own university. By many objective criteria, Ohio University is floundering --endowments are stagnant, the quality of incoming students is not rising like at its competitors, and the retention rate of students is falling. The students (!!) in a campus-wide referendum overwhelmingly (78 percent) voted no confidence in the President, and in two votes not yet announced it appears the faculty will do likewise. Yet the trustees of the university have announced "full support for the president." This gets into issues of governance, the role of trustees, and the whole issue of "who owns the university?" If the trustees do not bend, the faculty probably will vote to unionize, trying to force greater consideration of its views. As an economist, I would simply spend a million dollars or so to induce the leadership of the institution to step down, but for some reason the trustees find that unacceptable. I find the whole thing sad and perplexing. While universities may be too important to be left to the whims of faculty opinion, overwhelming votes of no confidence amidst objective signs of big troubles is, to me at least, a sign that changes are needed. But the "optimal rate of dismissal" for incompetence or unethical behavior is hard to define with precision --it is more of an art than a science.
I have been finding myself contemplating the question of when is it appropriate to get rid of academic personnel who somehow do not meet minimum standards. We know that tenure raises the costs of dismissing some faculty, and the rise in the importance of non-tenure faculty in modern times is in part an attempt to reduce these costs. Keeping poor tenured professors on both lowers the quality of the instructional mission and reduces the ability of institutions to reallocate academic resources as needed in a dynamic society.
Beyond that, however, three incidents recently have focused my attention on this issue. As mentioned earlier, Texas entrepreneur Jeff Sandefer runs a no-tenure business school, the Acton School of Business, that adopts one of Jack Welch's old ideas from General Electric: it drops, at least temporarily, from the faculty that professor each year that least measures up to standards, which I gather is largely determined by student evaluations. While arguably somewhat brutal, it no doubt stimulates faculty to be engaged, enthusiastic, prepared, relevant --all good things. On balance, I think it is a good idea.
Second, there is of course the student loan scandal, and the ousting of a significant number of directors of financial aid from major universities. In this case, ethical transgressions are involved, and it seems to me that the moves being made are fitting and proper, although I have no first hand knowledge of the individual circumstances. To be sure, if I had my way, there would be largely a divorcing of the act of education from the act of financing that education, and financial aid officers would lose much of their clout --and the ability to engage in nefarious activities to enrich themselves.
Along the same lines, I wonder about admission offices. At selective institutions, parents are willing to fork over big bucks to get their kids in, and occasionally the schools take "gifts" in return for preferential admissions. How often, however, do admission officers admit kids in return for some form of personal financial consideration? Often it is difficult to do, since committees make decisions, but given the stakes involved, I wouldn't be surprised if there are not some scandals lurking out there, particularly when schools use subjective criteria to differentiate between many near equally qualified students. I am not suggesting most admission directors are crooks, but rather that when non-market criteria are used, the temptations to stray from sound ethical principles increase, with predictable results owing to the frailties of human nature.
My third example is at my own university. By many objective criteria, Ohio University is floundering --endowments are stagnant, the quality of incoming students is not rising like at its competitors, and the retention rate of students is falling. The students (!!) in a campus-wide referendum overwhelmingly (78 percent) voted no confidence in the President, and in two votes not yet announced it appears the faculty will do likewise. Yet the trustees of the university have announced "full support for the president." This gets into issues of governance, the role of trustees, and the whole issue of "who owns the university?" If the trustees do not bend, the faculty probably will vote to unionize, trying to force greater consideration of its views. As an economist, I would simply spend a million dollars or so to induce the leadership of the institution to step down, but for some reason the trustees find that unacceptable. I find the whole thing sad and perplexing. While universities may be too important to be left to the whims of faculty opinion, overwhelming votes of no confidence amidst objective signs of big troubles is, to me at least, a sign that changes are needed. But the "optimal rate of dismissal" for incompetence or unethical behavior is hard to define with precision --it is more of an art than a science.
Monday, May 14, 2007
Do Adjuncts/Contingent Faculty Lower Quality?
By Richard Vedder
At a conference my sidekick Bryan and I attend a few weeks ago in New York, I kept hearing that part-time "adjunct" faculty do a poorer job than full-time tenured faculty, largely because of a lack of institutional commitment, and, perhaps, because of inferior qualifications.
I have had one of the Whiz Kids, Matt Denhart, investigating this issue. It is difficult to evaluate. We lack good measures of student performance. The institutional data on adjunct faculty is imperfect. However, we can see to what extent increased concentration of adjunct faculty leads to higher student attrition. While our research is not complete, and further testing is possible, we do not obtain statistically significant differences in attrition rates because of variations in the proportion of part-time faculty on the staff (a pretty good proxy for adjunct status).
Even if adjunct faculty presence led to slightly higher attrition rates, the question would arise: given the vastly lower cost of hiring adjuncts, on cost-benefit grounds does it make sense to hire lots of expensive full-time faculty with lifetime employment contracts? The answer, of course, is no, but we persist in maintaining the current system with its high costs in order to provide economic rents to those fortunate enough to have tenured positions.
To be sure, many tenured faculty do significant amounts of research as well, and some provide good advising services to students. But it is highly dubious that any objective appraisal of tenured faculty positions would find that the costs of these positions are low in a quality and output adjusted sense relative to the alternative, adjunct faculty.
At a conference my sidekick Bryan and I attend a few weeks ago in New York, I kept hearing that part-time "adjunct" faculty do a poorer job than full-time tenured faculty, largely because of a lack of institutional commitment, and, perhaps, because of inferior qualifications.
I have had one of the Whiz Kids, Matt Denhart, investigating this issue. It is difficult to evaluate. We lack good measures of student performance. The institutional data on adjunct faculty is imperfect. However, we can see to what extent increased concentration of adjunct faculty leads to higher student attrition. While our research is not complete, and further testing is possible, we do not obtain statistically significant differences in attrition rates because of variations in the proportion of part-time faculty on the staff (a pretty good proxy for adjunct status).
Even if adjunct faculty presence led to slightly higher attrition rates, the question would arise: given the vastly lower cost of hiring adjuncts, on cost-benefit grounds does it make sense to hire lots of expensive full-time faculty with lifetime employment contracts? The answer, of course, is no, but we persist in maintaining the current system with its high costs in order to provide economic rents to those fortunate enough to have tenured positions.
To be sure, many tenured faculty do significant amounts of research as well, and some provide good advising services to students. But it is highly dubious that any objective appraisal of tenured faculty positions would find that the costs of these positions are low in a quality and output adjusted sense relative to the alternative, adjunct faculty.
Sunday, May 13, 2007
Is College A Waste of Time? The Altucher Hypothesis
By Richard Vedder
A few weeks ago, James Altucher of the Financial Times caused a bit of a stir when he declared college is a waste of time. (I would add, decidedly, and money). Gary Becker and other apologists for the higher education establishment rushed to the attack.
One major dimension of the question of the utility of college is: what do students learn? What is the "value added" by obtaining a college degree? Some data suggest that there is some value added, but it is either very small, or is declining markedly over time. The data are sketchy, incomplete, imperfect, precisely because the higher education establishment has fought mightily to prevent such "value added" measures, although there are some signs that some schools are changing their tune a bit, prodded by the Spellings Commission and others.
VALUED ADDED TO LITERACY OF ADULTS The National Assessment of Adult Literacy (NAAL) measures the literacy of adults in three areas: prose literacy, document literacyn, and quantitative understanding. Let us look at the difference between the average scores of college grads compared with high school grads for two years, 2003 and 1992.
Prose Literacy In 1992, college grads scored 57 points higher on the NAAL test of prose literacy than high school grads; by 2003, the differential narrowed by 5 points (9%) to 52 points.
Document Literacy
In 1992, the college/high school differential was 57 points; by 2003, it had fallen relatively sharply, 20 percent, to 46 points.
Quantitative Literacy
In 1992, the differential was 57 points; 11 years later, it was 5 percent smaller, 54 points.
In 2003, college grads scored better than high school grads on all measures of literacy, but the differential, which can be considered the "value added" by a college education, fell, a great deal in the case of document literacy.
VALUED ADDED IN COLLEGE IN KNOWLEDGE OF HISTORY AND AMERICAN INSTITUTIONS
The Intercollegiate Studies Institute administered a 60 question test to freshman and seniors at 50 U.S. institutions. The average score of seniors on the test was 53.2 percent, only slightly higher than the 51.7 percent average for freshman. At over 30 percent of the schools, knowledge for seniors was lower than for freshman. Among the schools with negative gains were Yale, Cornell, Duke, California at Berkeley, and Williams College. To be sure, these are imperfect tests and can be criticized on a number of methodological grounds. Nonetheless, the evidence suggests that there may not be not an awful lot of learning and acquisition of skills going on in college, and in fact, they may be in decline. I am the first to admit far better and more sophisticated tests are needed. But, for the moment, I see a good deal of evidence that says "Altucher may be right." College's one advantage -- its certification of skills is still valued by employers. When employers lose confidence in that, the gig is over, the demand for college will fall, and, out of necessity, colleges will enter into real reform.
While the evidence is that learning may be deteriorating, faculty evaluations of students have been rising -- grade inflation. Students may be learning less, but told, increasingly, that they are doing fine. This is the Revolution of Declining Expectations in higher education.
The Tax Status of University Contributions and Endowments
By Richard Vedder
My sidekick Bryan O'Keefe and I met with staffers of the Senate Finance Committee the other day. The most interesting thing about the meeting is that key staffers were there from both the Democratic and Republican side. We talked about many things, but one of them was endowments.
Lynne Munson, a former high level government official, has been chatting with me about endowments, and I think she is on to something. Colleges are typically very secretive about spending from endowments. While they provide information on the aggregate size of the endowments, many don't want you to know what percent of the endowment is spent. Since the corpus of the endowment arose in part because of favorable tax treatment, and because income from the endowment is not taxed, it is possible that a college endowment of, say $1 billion, brings in $50 million annually in dividends and capital gains income, but only spends $20 million of that endowment. Huge sums of money are being tax sheltered, but relatively little is going to financially support the cause for which tax-free funds were provided.
To deal with this problem, many years ago the Feds imposed a 5 percent rule on foundations – that they had to spend five percent of their endowment annually if they wished to avoid taxes. For some reason, universities were excluded from this requirement. Why? Why are universities treated differently than other charitable organizations? Using the 5 percent rule, endowment income per student at some schools is now over $75,000 a year. Are they spending that much? If not, why are we allowing universities to augment their huge endowments TAX FREE by new donations? If they are spending that much, why are they charging tuition at all, given the fact that they raise huge additional research funds and annual private charitable contributions for current expenses. In other words, the Harvard-Yale-Princeton type school has over $100,000 annually per student coming in independent of massive funds for research activity. Since high quality liberal arts colleges typically spend less than that amount per student, why is tuition charged at all? Or is all this tax-exempt money funding amenities at these schools of a non-educational nature, or lining the pockets of the staff via very high levels of compensation?
I don't like taxes, and think they are inimical to growth. But I don't like giving some people special tax status relative to others, particularly when the tax privileges are of dubious social value. Cutting tax exemptions to some of the uber rich schools and giving lower tax rates to all would probably be growth-enhancing. In any case, we need to learn more about how endowment incomes are used.
Friday, May 11, 2007
The Student Loan Scandal: A Disaster or an Opportunity?
By Richard Vedder
The more I think about it, I think the student loan scandal is a positive development for higher education, with one huge caveat. Universities, their financial aid officers and/or lenders have been exposed in sweetheart deals, for taking or giving overt bribes, and for misinforming consumers. While that is bad, it reveals to the public that universities are not saintly institutions, free from sin and human frailties. That is good. And it is good that people are increasingly critical about the providers of higher education services. The universities have largely been viewed as sacrosanct, not subject to criticism, and that has deterred meaningful reform.
When billions of dollars of loan money is sloshing around, it is inevitable that individuals will try to get their hands on some of it --by legal or illegal means. When student financial aid offices have full information on the economic status of the customer (via FAFSA financial disclosure forms), as well as control or influence over the funds available to meet student needs, they have the means to make decisions often not in the student's best interest.
The House of Representatives overwhelmingly passed a bill that tries to deal with the problems of kickbacks to colleges and college officials from loan providers. The Senate will approve it also. It is an understandable response to a problem, and might do some good. But I am not sure the best solution is government regulation. A better solution is to restructure financial aid. Perhaps the provision of education services needs to be separated from the financing of them. Maybe the federal government would be best served providing cash assistance to the poor for whom college access is truly problematic for financial reasons, done by giving students (not institutions) vouchers good to cover part (but not all) of tuition charges. Call it an expansion and modification of the Pell Grant program if that is what sells it. Beyond that, the government should exit the student financial assistance business, leaving it up to individuals, charitable organizations, private lenders, and, perhaps, state governments to fill the gap. Financial aid offices would largely disappear, except to dispense institutional provided aid (tuition discounts) and also lists of private providers of loans. The current loan system, as constituted, is a key factor in the tuition fee explosion, as colleges can charge whatever the traffic will bear, and the customers simply borrow whatever it takes to pay the bills. If you want to slow the tuition fee rise, you need to reduce the rate of growth of federal subsidized assistance.
The more I think about it, I think the student loan scandal is a positive development for higher education, with one huge caveat. Universities, their financial aid officers and/or lenders have been exposed in sweetheart deals, for taking or giving overt bribes, and for misinforming consumers. While that is bad, it reveals to the public that universities are not saintly institutions, free from sin and human frailties. That is good. And it is good that people are increasingly critical about the providers of higher education services. The universities have largely been viewed as sacrosanct, not subject to criticism, and that has deterred meaningful reform.
When billions of dollars of loan money is sloshing around, it is inevitable that individuals will try to get their hands on some of it --by legal or illegal means. When student financial aid offices have full information on the economic status of the customer (via FAFSA financial disclosure forms), as well as control or influence over the funds available to meet student needs, they have the means to make decisions often not in the student's best interest.
The House of Representatives overwhelmingly passed a bill that tries to deal with the problems of kickbacks to colleges and college officials from loan providers. The Senate will approve it also. It is an understandable response to a problem, and might do some good. But I am not sure the best solution is government regulation. A better solution is to restructure financial aid. Perhaps the provision of education services needs to be separated from the financing of them. Maybe the federal government would be best served providing cash assistance to the poor for whom college access is truly problematic for financial reasons, done by giving students (not institutions) vouchers good to cover part (but not all) of tuition charges. Call it an expansion and modification of the Pell Grant program if that is what sells it. Beyond that, the government should exit the student financial assistance business, leaving it up to individuals, charitable organizations, private lenders, and, perhaps, state governments to fill the gap. Financial aid offices would largely disappear, except to dispense institutional provided aid (tuition discounts) and also lists of private providers of loans. The current loan system, as constituted, is a key factor in the tuition fee explosion, as colleges can charge whatever the traffic will bear, and the customers simply borrow whatever it takes to pay the bills. If you want to slow the tuition fee rise, you need to reduce the rate of growth of federal subsidized assistance.
Monday, May 07, 2007
Over or Under Investment in Higher Education?
By Richard Vedder
I seldom agree with Tom Mortenson's interpretation of data, but I always admire the way he gathers and reports it, with unfailing accuracy. The last issue of Postsecondary Education Opportunity makes this point once again.
Tom shows that bachelor's degree attainment among young adults has risen sharply in other industrial democracies relative to the U.S. Looking at 25 to 29 year old adults, 37 percent of them in Norway have degrees, compared with 30 percent in the U.S. Korea, with substantially lower per capita income, has a slightly higher proportion of young adults with college degrees than the U.S.
This could be interpreted to say "the U.S. is falling behind its competitors, and needs to invest more in higher education." Yet the issue is whether additional college graduates means higher productivity and a decline in non-economic problems (like deaths related to smoking). I am skeptical. Alison Wolf and I have argued that the positive economic growth/university investment relationship is spurious at best. Charles Murray has argued that intelligence trumps formal education every time as an explanation for financial success. Moreover, incremental government subsidies, in the U.S. at least, seldom have much of an impact on actual graduation rates. Remember, a large proportion of those entering college do not finish in a timely fashion.
For example, from 2000 to 2004, France closed one-third of the gap between it and the U.S. in terms of the proportion of the young adult population with bachelor degrees. But this was not a happy period for that nation, and increased "human capital" was not associated with economic vitality. More systematic analysis is needed, but I am not going into panic mode over the relative decline in our leadership with respect to college graduates.
I seldom agree with Tom Mortenson's interpretation of data, but I always admire the way he gathers and reports it, with unfailing accuracy. The last issue of Postsecondary Education Opportunity makes this point once again.
Tom shows that bachelor's degree attainment among young adults has risen sharply in other industrial democracies relative to the U.S. Looking at 25 to 29 year old adults, 37 percent of them in Norway have degrees, compared with 30 percent in the U.S. Korea, with substantially lower per capita income, has a slightly higher proportion of young adults with college degrees than the U.S.
This could be interpreted to say "the U.S. is falling behind its competitors, and needs to invest more in higher education." Yet the issue is whether additional college graduates means higher productivity and a decline in non-economic problems (like deaths related to smoking). I am skeptical. Alison Wolf and I have argued that the positive economic growth/university investment relationship is spurious at best. Charles Murray has argued that intelligence trumps formal education every time as an explanation for financial success. Moreover, incremental government subsidies, in the U.S. at least, seldom have much of an impact on actual graduation rates. Remember, a large proportion of those entering college do not finish in a timely fashion.
For example, from 2000 to 2004, France closed one-third of the gap between it and the U.S. in terms of the proportion of the young adult population with bachelor degrees. But this was not a happy period for that nation, and increased "human capital" was not associated with economic vitality. More systematic analysis is needed, but I am not going into panic mode over the relative decline in our leadership with respect to college graduates.
Should the President Be Fired?
By Richard Vedder
I have often stated "there is no bottom line in higher education." It is very difficult to assess performance when there are few good "metrics" that make objective evaluation possible. Therefore, when people call for the head of a university president, usually it is difficult to reach an unambiguous conclusion about the merits of the case. Did Larry Summers do a good or bad job at Harvard? I suspect some evidence can be gathered on both sides of that issue.
All of this has come home to me in a very personal way, big time recently. I have been disturbed for some time about what appears to be signs of decline at my university, Ohio University. Along with several other of the university's most senior professors (measured primarily by research accomplishment), I wrote a letter calling for changing leadership in my institution, and, at his request, sent a copy to the Chairman of the Board of Trustees. The letter was then sent by the University to the press (!!), and now the school is embroiled in controversy.
In the letter, we noted that retention rates were down, that real per student endowments were faltering relative to peer institutions, and that the quality of incoming students was not rising like it was at our main competitors. All of this can be demonstrated empirically. We also made some more normative judgments about leadership style, handling of campus crises, etc. Our feelings are held by many others, and no less than 4 evaluations or non-confidence votes in the president are being held in the next 10 days, and the majority opinion is that these evaluations will be overwhelmingly negative.
Yet the President has his supporters. And, frankly, some of the critical information that would be useful in evaluating the state of the university under his leadership is simply unavailable. Do students graduate knowing more than when they entered? Are graduates of the university leading fulfilling lives five years after attending the school? Do new graduates feel their education was a good investment? And has the answers regarding any of these questions changed materially over the years the current president has run the institution? Honestly, I don't know the answers to these questions. Nor do the Trustees who hire the leaders of our institutions --they operate with far less information than is desirable. That is another reason why the Spellings Commission calls for more assessment and transparency in university operations is important.
I have often stated "there is no bottom line in higher education." It is very difficult to assess performance when there are few good "metrics" that make objective evaluation possible. Therefore, when people call for the head of a university president, usually it is difficult to reach an unambiguous conclusion about the merits of the case. Did Larry Summers do a good or bad job at Harvard? I suspect some evidence can be gathered on both sides of that issue.
All of this has come home to me in a very personal way, big time recently. I have been disturbed for some time about what appears to be signs of decline at my university, Ohio University. Along with several other of the university's most senior professors (measured primarily by research accomplishment), I wrote a letter calling for changing leadership in my institution, and, at his request, sent a copy to the Chairman of the Board of Trustees. The letter was then sent by the University to the press (!!), and now the school is embroiled in controversy.
In the letter, we noted that retention rates were down, that real per student endowments were faltering relative to peer institutions, and that the quality of incoming students was not rising like it was at our main competitors. All of this can be demonstrated empirically. We also made some more normative judgments about leadership style, handling of campus crises, etc. Our feelings are held by many others, and no less than 4 evaluations or non-confidence votes in the president are being held in the next 10 days, and the majority opinion is that these evaluations will be overwhelmingly negative.
Yet the President has his supporters. And, frankly, some of the critical information that would be useful in evaluating the state of the university under his leadership is simply unavailable. Do students graduate knowing more than when they entered? Are graduates of the university leading fulfilling lives five years after attending the school? Do new graduates feel their education was a good investment? And has the answers regarding any of these questions changed materially over the years the current president has run the institution? Honestly, I don't know the answers to these questions. Nor do the Trustees who hire the leaders of our institutions --they operate with far less information than is desirable. That is another reason why the Spellings Commission calls for more assessment and transparency in university operations is important.
Friday, May 04, 2007
Student Loan Scandal: Alumni Associations Now Involved
By Bryan O’Keefe
Well, newspapers and websites across the country have the latest revelations in the growing student loan scandal this morning. This time the alleged wrong-doers are not the financial aid offices, but, rather, alumni associations. The NY State Attorney General’s office is investigating whether several alumni associations gave Nelnet, a private student loan company in Nebraska, access to its membership and use of their logo in marketing letters in return for money.
There are several dimensions to this latest story, all of which are worth mentioning. First, the Nebraska State Attorney General recently investigated Nelnet for any wrong-doing and found that the company was basically above-board – which means that either the Nebraska AG missed something or the NY AG is making something out of nothing. Time will tell which one is true. Second, on its face, this scandal does not seem quite as bad as the more startling revelations about kickbacks in actual financial aid offices. Let’s be honest here: how many people are actively involved with their alumni associations? How many folks would get a letter in the mail from Nelnet, see that their alumni association logo on the promo letter and then pick Nelnet solely on that basis? Maybe I am underestimating the influence of alumni associations, based partly on my own experience, but I just can’t see this happening too often. What made the financial aid office scandal so terrible was that many students do take the advice of university financial aid administrators – I am not quite so sure that alumni association folks have the same sway.
That all being said, the issue should still be thoroughly investigated. We need more disclosure in higher education and that goes for alumni associations too. If the alumni associations were actually being paid off to promote Nelnet, then it should have said so somewhere in the Nelnet promotional letter. If that wasn’t being done, then alumni association members need to know about it and the NY AG’s office should pursue appropriate penalties. At this point, it’s much more a matter of principle than practical effect, but principles are important too.
Also, one small note – a reader of ours criticized my recent blog posting on the Hula Hut Happy Hour and said that we were not taking the student loan scandal seriously enough. I beg to differ. The student loan scandal is a huge deal, perhaps one of the biggest scandals to hit higher education in years (from what I have been told). The Hula Hut Happy Hour was an amusing, over-the-top event, but that should not detract from the seriousness of the charges being leveled against universities and private lenders.
Well, newspapers and websites across the country have the latest revelations in the growing student loan scandal this morning. This time the alleged wrong-doers are not the financial aid offices, but, rather, alumni associations. The NY State Attorney General’s office is investigating whether several alumni associations gave Nelnet, a private student loan company in Nebraska, access to its membership and use of their logo in marketing letters in return for money.
There are several dimensions to this latest story, all of which are worth mentioning. First, the Nebraska State Attorney General recently investigated Nelnet for any wrong-doing and found that the company was basically above-board – which means that either the Nebraska AG missed something or the NY AG is making something out of nothing. Time will tell which one is true. Second, on its face, this scandal does not seem quite as bad as the more startling revelations about kickbacks in actual financial aid offices. Let’s be honest here: how many people are actively involved with their alumni associations? How many folks would get a letter in the mail from Nelnet, see that their alumni association logo on the promo letter and then pick Nelnet solely on that basis? Maybe I am underestimating the influence of alumni associations, based partly on my own experience, but I just can’t see this happening too often. What made the financial aid office scandal so terrible was that many students do take the advice of university financial aid administrators – I am not quite so sure that alumni association folks have the same sway.
That all being said, the issue should still be thoroughly investigated. We need more disclosure in higher education and that goes for alumni associations too. If the alumni associations were actually being paid off to promote Nelnet, then it should have said so somewhere in the Nelnet promotional letter. If that wasn’t being done, then alumni association members need to know about it and the NY AG’s office should pursue appropriate penalties. At this point, it’s much more a matter of principle than practical effect, but principles are important too.
Also, one small note – a reader of ours criticized my recent blog posting on the Hula Hut Happy Hour and said that we were not taking the student loan scandal seriously enough. I beg to differ. The student loan scandal is a huge deal, perhaps one of the biggest scandals to hit higher education in years (from what I have been told). The Hula Hut Happy Hour was an amusing, over-the-top event, but that should not detract from the seriousness of the charges being leveled against universities and private lenders.
Tuesday, May 01, 2007
Hula Hut Happy Hour
By Bryan O'Keefe
No, CCAP is not sponsoring a "Hula Hut Happy Hour" despite how much fun an event like that surely would be. But, as the Wall Street Journal reports this morning, a "Hula Hut Happy Hour" was on the agenda of the Office of Student Financial Services at the University of Texas at Austin. The happy hour was, of course, sponsored by a private lender, and is now another chapter in the scandal over how such lenders influenced schools to gain a spot on their preferred lenders list.
What makes the most recent story outrageous isn't just the eccentric name of the happy hour, but rather that the financial aid office would actually rank lenders, "based on the number of lunches, breakfasts and extracurricular functions for entire OSFS staff. Lenders on the list were graded on the quality of their culinary largesse by metrics ranging from "very good" to "poor.""
This type of stuff is simply unfathomable -- an actual ranking system based on who gives out the best freebies? Students at UTexas at Austin should be up in arms over this (I imagine that they are.)
Meanwhile, the Washington Post has another salvo laying blame for the mess at the feet of the Department of Education, claiming that the Department was lax in its oversight role and that many Department officials have ties to the private student loan industry. Some folks quoted in the story however claim that proposed rules that would have clamped down on the private loan industry probably wouldn't have made much of a difference because lenders and schools would have found loopholes.
There is probably some truth to both sides of this. In hindsight, the Department should have probably regulated all of this activity better. But government regulation -- as is usually the case -- would probably not have stopped it completely. At some point, the lenders and schools themselves need to be responsible to the people they are supposed to be serving: the students.
I'd also note that the Post story is another blame-game type story. I don't doubt for one second that we need to get to the bottom of this, but, what about more comprehensive reform? Why can't we take this scandal and use it to propose something different from our current system?
No, CCAP is not sponsoring a "Hula Hut Happy Hour" despite how much fun an event like that surely would be. But, as the Wall Street Journal reports this morning, a "Hula Hut Happy Hour" was on the agenda of the Office of Student Financial Services at the University of Texas at Austin. The happy hour was, of course, sponsored by a private lender, and is now another chapter in the scandal over how such lenders influenced schools to gain a spot on their preferred lenders list.
What makes the most recent story outrageous isn't just the eccentric name of the happy hour, but rather that the financial aid office would actually rank lenders, "based on the number of lunches, breakfasts and extracurricular functions for entire OSFS staff. Lenders on the list were graded on the quality of their culinary largesse by metrics ranging from "very good" to "poor.""
This type of stuff is simply unfathomable -- an actual ranking system based on who gives out the best freebies? Students at UTexas at Austin should be up in arms over this (I imagine that they are.)
Meanwhile, the Washington Post has another salvo laying blame for the mess at the feet of the Department of Education, claiming that the Department was lax in its oversight role and that many Department officials have ties to the private student loan industry. Some folks quoted in the story however claim that proposed rules that would have clamped down on the private loan industry probably wouldn't have made much of a difference because lenders and schools would have found loopholes.
There is probably some truth to both sides of this. In hindsight, the Department should have probably regulated all of this activity better. But government regulation -- as is usually the case -- would probably not have stopped it completely. At some point, the lenders and schools themselves need to be responsible to the people they are supposed to be serving: the students.
I'd also note that the Post story is another blame-game type story. I don't doubt for one second that we need to get to the bottom of this, but, what about more comprehensive reform? Why can't we take this scandal and use it to propose something different from our current system?
The Accreditation War of 2007: The Anne Neal Appointment
By Richard Vedder
I am, by and large, on the side of Margaret Spellings and the Department of Education in the great war currently being fought in Washington over accreditation. The current system stinks, and accreditation is not being used to prod schools to demonstrate students are learning something. I do not like a lot of federal intrusion into the affairs of universities, and, indeed, want the feds to get out of the student loan business completely. But pressuring the accreditors to force the colleges to measure and report "value added" during the college experience is a good idea.
The appointment of Anne Neal to NACIQI (the "National Advisory Committee on Institutional Quality and Integrity) is the latest sign the Administration means business in trying to implement the Spellings Commission recommendations. Anne is a dear friend and ally, one that CCAP often works with. Ironically, I was the one who talked Charles Miller into letting her testify before the Commission. Anne is a believer in accountability, in measuring progress, and in having students be familiar with a series of general education courses including basics like American history. As head of ACTA --the Association of College Trustees and Alumni -- Anne has been indefatigable in her defense of teaching the corpus of knowledge that binds us together as a people, as well as urging trustees and alumni to be more assertive in university affairs. She also shares my opposition to grade inflation, and might push for accrediting agencies to demand grade distribution data from colleges, and to give lower marks to schools that show no interest in differentiating materially between the good and the bad, the excellent and the fair. Her appointment will drive the Higher Ed establishment crazy -- which is precisely the reason she belongs on NACIQI. The establishment has viewed accreditation as a minor annoyance, not an important instrument in assuring some quality is maintained.
Anne is bright (Harvard Law grad), opinionated, politically savvy (her husband is a congressman) and principled. All good qualifications for being on NACIQI. I see the hand of Vickie Schray, Charles Miller and Margaret Spellings in this appointment, and three cheers to all of them. It shows that they can appoint someone good outside the state of Texas.
I am, by and large, on the side of Margaret Spellings and the Department of Education in the great war currently being fought in Washington over accreditation. The current system stinks, and accreditation is not being used to prod schools to demonstrate students are learning something. I do not like a lot of federal intrusion into the affairs of universities, and, indeed, want the feds to get out of the student loan business completely. But pressuring the accreditors to force the colleges to measure and report "value added" during the college experience is a good idea.
The appointment of Anne Neal to NACIQI (the "National Advisory Committee on Institutional Quality and Integrity) is the latest sign the Administration means business in trying to implement the Spellings Commission recommendations. Anne is a dear friend and ally, one that CCAP often works with. Ironically, I was the one who talked Charles Miller into letting her testify before the Commission. Anne is a believer in accountability, in measuring progress, and in having students be familiar with a series of general education courses including basics like American history. As head of ACTA --the Association of College Trustees and Alumni -- Anne has been indefatigable in her defense of teaching the corpus of knowledge that binds us together as a people, as well as urging trustees and alumni to be more assertive in university affairs. She also shares my opposition to grade inflation, and might push for accrediting agencies to demand grade distribution data from colleges, and to give lower marks to schools that show no interest in differentiating materially between the good and the bad, the excellent and the fair. Her appointment will drive the Higher Ed establishment crazy -- which is precisely the reason she belongs on NACIQI. The establishment has viewed accreditation as a minor annoyance, not an important instrument in assuring some quality is maintained.
Anne is bright (Harvard Law grad), opinionated, politically savvy (her husband is a congressman) and principled. All good qualifications for being on NACIQI. I see the hand of Vickie Schray, Charles Miller and Margaret Spellings in this appointment, and three cheers to all of them. It shows that they can appoint someone good outside the state of Texas.
What State Legislatures Should Do Now: II
By Richard Vedder
My presentation before the American Legislative Exchange Council (ALEC) Higher Education Committee last weekend went well, and I mentioned some things I was going to tell them in the last blog. But that list of things for legislatures to do was not exhaustive. Additional ideas:
1. Incentizing tuition restraint. I tend to be lukewarm towards tuition caps, a form of price controls. However, when many colleges restrict supply through selective admissions, the shortages that arise from price controls already exist before the caps are in place, and also government already is messing up markets for higher ed in other ways, meaning tuition caps are not as clearly bad as they might otherwise be. One approach that is not a pure tuition cap approach is to tie state assistance to the amount of tuition increase. For example, give a school a 5 percent increase in subsidy payments if it keeps tuition increases to two percent or less, and 3 percent increase for tuition increases between 2 and 4 percent, a 1 percent increase for tuition hikes of 4 to 6 percent, and no subsidy increase for hikes of greater than 6 percent. This gives schools some flexibility, but encourages them to moderate increases. Governor Ted Strickland and the legislature in Ohio are proposing a scaled down version of this approach. More generally, give a 6 percent subsidy increase for schools enacting a tuition freeze, and a 1 percent reduction in subsidy for every one percent of tuition hike above that, and then a one percent reduction in subsidy for hikes greater than 6 percent in tuition (or some variant on that formula).
2. Tie subsidy payments instead to total spending per student (excluding commercial operations and federal government research grants). If total spending rises more than X percent, there is no subsidy increase, but subsidies rise by 1 percent a year for each 1 percent spending per student is held below the threshold amount.
3. Better yet, freeze all subsidy payments to schools, but use incremental funds that would have gone for subsidies for student vouchers (as discussed in the last blog). Allow vouchers to be used only at schools whose sticker price increases less than X percent a year (perhaps 4 percent).
My presentation before the American Legislative Exchange Council (ALEC) Higher Education Committee last weekend went well, and I mentioned some things I was going to tell them in the last blog. But that list of things for legislatures to do was not exhaustive. Additional ideas:
1. Incentizing tuition restraint. I tend to be lukewarm towards tuition caps, a form of price controls. However, when many colleges restrict supply through selective admissions, the shortages that arise from price controls already exist before the caps are in place, and also government already is messing up markets for higher ed in other ways, meaning tuition caps are not as clearly bad as they might otherwise be. One approach that is not a pure tuition cap approach is to tie state assistance to the amount of tuition increase. For example, give a school a 5 percent increase in subsidy payments if it keeps tuition increases to two percent or less, and 3 percent increase for tuition increases between 2 and 4 percent, a 1 percent increase for tuition hikes of 4 to 6 percent, and no subsidy increase for hikes of greater than 6 percent. This gives schools some flexibility, but encourages them to moderate increases. Governor Ted Strickland and the legislature in Ohio are proposing a scaled down version of this approach. More generally, give a 6 percent subsidy increase for schools enacting a tuition freeze, and a 1 percent reduction in subsidy for every one percent of tuition hike above that, and then a one percent reduction in subsidy for hikes greater than 6 percent in tuition (or some variant on that formula).
2. Tie subsidy payments instead to total spending per student (excluding commercial operations and federal government research grants). If total spending rises more than X percent, there is no subsidy increase, but subsidies rise by 1 percent a year for each 1 percent spending per student is held below the threshold amount.
3. Better yet, freeze all subsidy payments to schools, but use incremental funds that would have gone for subsidies for student vouchers (as discussed in the last blog). Allow vouchers to be used only at schools whose sticker price increases less than X percent a year (perhaps 4 percent).
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