By Richard Vedder
In my book Going Broke By Degree published a few years ago, I argued that the rapid growth in costs of universities was not substainable in the long run. I also argued that universities have been able to saddle people with higher tuition bills in part because of the rising premium associated with brain-related work as opposed to work dependent on physical skills.
Whiz Kid Matt Denhart and I have been looking very closely at the differential earnings between high school and college graduates, and we find something sobering to the colleges who have counted on a rising differential to validiate big tuition fee hikes. We observe that in 2005, the average earnings differential of male workers employed full-time year round were actually slightly smaller in percentage terms than in 2000. The same is true of females.
It is not crystal clear that a trend is beginning. Five years is a short period, and a drop in the differential from 2000 to 2003 was partly offset by a rising differential from 2003 to 2005. But throughout most if not all of the era from 1970 to 2000, at any date the observed differential was greater than it was five years earlier. This is consistent with some casual evidence showing that some occupations not requiring a college degree --plumber and electrician, for example --are paying very well indeed, and that disdain for these occupations has led to shortages of workers and thus high pay. As college costs rise, but the financial benefits stay constant or even decline, the perceived rate of return on college will fall.
That, in turn, will lead students to become more discerning about where and whether to go to college, making them a bit more price conscious. That is actually a good thing. The credentialling advantages of colleges is taking a bit of a hit as more employers realize that perhaps a college degree is pretty loosely correlated with worker productivity.
Friday, September 28, 2007
John Berthoud, R.I.P.
By Richard Vedder
The fight for higher education reform is tied into a bigger fight, for more rational and lower cost government. Efficient higher education can mean fewer government subsidies and lower taxes. It can mean using private resources and markets to do what public resources and the public process does now. I consider the work that CCAP does to be part of this broader reform effort.
A great fighter for lower cost government died quite unexpectedly yesterday, John Berthoud, President of the National Taxpayer Union. John was a close friend, and a great advocate of lowering taxes as a means of forcing governments to think and act more efficiently. John was a young man --under 50 -- and his loss is huge to the taxpayer movement and to our nation.
John was a bright, educated guy, with a Ph.D. from Yale, but he never bragged, never was trying to use his talents to promote himself. While other tax fighters loved to grab microphones and crave personal newspaper publicity, John worked quietly but very effectively to promote his cause (lower taxes, not John Berthoud). And, knowing that life is short (too short in his case) and we are just passing through, John liked to have some humor and fun while we fought for what we thought was right. Kim Dennis of the Searle Freedom Trust (and other groups) would throw marvelous Cosmos parties, and they were always more fun when John was there. At World Taxpayer Association meetings (the one in Saint Petersburg in 2003 particularly comes to mind), we would have long involved dinners laced with copious quanitities of libations, and John and all his many friends would spend most of the evening laughing --after a day of very serious business. John was very useful in bringing taxpayer groups around the world into harmony and common ground on a number of occasions.
In short, John was a lot of fun, both at the American Exchange Council (ALEC) where I first met him, and in his 11 years at NTU where I knew him in an official capacity as a board member. But above all, he was a very competent and effective champion of free markets, limited government, and individual liberty, and his loss weighs heavy on his friends and all of those wanting public sector reform.
The fight for higher education reform is tied into a bigger fight, for more rational and lower cost government. Efficient higher education can mean fewer government subsidies and lower taxes. It can mean using private resources and markets to do what public resources and the public process does now. I consider the work that CCAP does to be part of this broader reform effort.
A great fighter for lower cost government died quite unexpectedly yesterday, John Berthoud, President of the National Taxpayer Union. John was a close friend, and a great advocate of lowering taxes as a means of forcing governments to think and act more efficiently. John was a young man --under 50 -- and his loss is huge to the taxpayer movement and to our nation.
John was a bright, educated guy, with a Ph.D. from Yale, but he never bragged, never was trying to use his talents to promote himself. While other tax fighters loved to grab microphones and crave personal newspaper publicity, John worked quietly but very effectively to promote his cause (lower taxes, not John Berthoud). And, knowing that life is short (too short in his case) and we are just passing through, John liked to have some humor and fun while we fought for what we thought was right. Kim Dennis of the Searle Freedom Trust (and other groups) would throw marvelous Cosmos parties, and they were always more fun when John was there. At World Taxpayer Association meetings (the one in Saint Petersburg in 2003 particularly comes to mind), we would have long involved dinners laced with copious quanitities of libations, and John and all his many friends would spend most of the evening laughing --after a day of very serious business. John was very useful in bringing taxpayer groups around the world into harmony and common ground on a number of occasions.
In short, John was a lot of fun, both at the American Exchange Council (ALEC) where I first met him, and in his 11 years at NTU where I knew him in an official capacity as a board member. But above all, he was a very competent and effective champion of free markets, limited government, and individual liberty, and his loss weighs heavy on his friends and all of those wanting public sector reform.
Thursday, September 27, 2007
Who Is the Author?
By Richard Vedder
Thou shalt not steal. That is what most of us are told from early age. The epidemic of plagiarism cases, including one involving a university president is both shocking and sad. It strikes at the very integrity of universities’ research mission. If researchers can steal other people's ideas without attribution and get away with it, why not simply fabricate research results?
Yet I am the first to admit that sometimes it is a bit ambiguous what the proper thing to do is. Does the graduate student who helps you a good deal on research for a paper or book properly get mentioned in a footnote, the acknowledgment section of the book, or listed as a coauthor? I have been told of a case of a senior scholar at a major research university who provided many of the most important ideas for a book published by a major university press, and was listed one place in the book as a coauthor, but not too prominently (that is, on the spine of the cover). The senior author is now very unhappy that this senior scholar considers himself a coauthor, as listed on his own resume. Some places in the world of books (e.g., Books in Print) list him as coauthor while others (e.g., Amazon.com) do not. Where do you draw the line?
Maybe it is time for the academic community to develop a suggested code of conduct that might help deal with some of these issues. Persons who make a significant intellectual contribution to a book --advance ideas of importance to the theme of the book --usually should be coauthors. Persons who merely toil at verifying ideas of the senior author through research are probably best not listed as authors. Alternatively, how about drawing a distinction between "by" and "with"? A book authored "by Professor ABC with XYZ" would mean --"ABC is the prime mover on the book, but XYZ did a lot to make it happen."
Thou shalt not steal. That is what most of us are told from early age. The epidemic of plagiarism cases, including one involving a university president is both shocking and sad. It strikes at the very integrity of universities’ research mission. If researchers can steal other people's ideas without attribution and get away with it, why not simply fabricate research results?
Yet I am the first to admit that sometimes it is a bit ambiguous what the proper thing to do is. Does the graduate student who helps you a good deal on research for a paper or book properly get mentioned in a footnote, the acknowledgment section of the book, or listed as a coauthor? I have been told of a case of a senior scholar at a major research university who provided many of the most important ideas for a book published by a major university press, and was listed one place in the book as a coauthor, but not too prominently (that is, on the spine of the cover). The senior author is now very unhappy that this senior scholar considers himself a coauthor, as listed on his own resume. Some places in the world of books (e.g., Books in Print) list him as coauthor while others (e.g., Amazon.com) do not. Where do you draw the line?
Maybe it is time for the academic community to develop a suggested code of conduct that might help deal with some of these issues. Persons who make a significant intellectual contribution to a book --advance ideas of importance to the theme of the book --usually should be coauthors. Persons who merely toil at verifying ideas of the senior author through research are probably best not listed as authors. Alternatively, how about drawing a distinction between "by" and "with"? A book authored "by Professor ABC with XYZ" would mean --"ABC is the prime mover on the book, but XYZ did a lot to make it happen."
A Good News Story: Sometimes the Establishment Listens
By Richard Vedder
There are many good, decent persons in higher education, people who want to perform their missions well. Some of them have responded to criticisms leveled by the Spellings Commission in a positive, not negative, way.
I have been generally pleased by the actions of three groups: the Association of American Colleges and Universities (AACU), the American Association of State Colleges and Universities (AACSU), and the National Association of State Universities and Land-Grant Colleges (NASULGC) to try and meet the challenges of finding ways to measure student performance, and devising metrics that answer the question: what do colleges do that are worth-while for their customers, other than give them a piece of paper worth seemingly hundreds of thousands of dollars?
The Department of Education has given these groups $2.4 million to help them evaluate the assessments already out (e.g., tests like the Collegiate Learning Assessment), and devise strategies to implement the Spellings Commission recommendations. I think it is better to have these groups do it rather than have some government mandate come down that the tenured professoriate and administrators will largely ignore, avoid, and fight in court.
At the same time, the cynical side of me says this could be a shrewd political move to deflect regulation in this area, and the finished product may be some watered down and meaningless ideas that do little to inform consumers of the value added by higher education. I hope the idealistic side of me is right, and the cynical side is wrong. However, I note that the independent colleges (NAICU) are on the sidelines in this new effort --surprise, surprise. Time will tell which perspective is correct, an optimistic or pessimistic one.
There are many good, decent persons in higher education, people who want to perform their missions well. Some of them have responded to criticisms leveled by the Spellings Commission in a positive, not negative, way.
I have been generally pleased by the actions of three groups: the Association of American Colleges and Universities (AACU), the American Association of State Colleges and Universities (AACSU), and the National Association of State Universities and Land-Grant Colleges (NASULGC) to try and meet the challenges of finding ways to measure student performance, and devising metrics that answer the question: what do colleges do that are worth-while for their customers, other than give them a piece of paper worth seemingly hundreds of thousands of dollars?
The Department of Education has given these groups $2.4 million to help them evaluate the assessments already out (e.g., tests like the Collegiate Learning Assessment), and devise strategies to implement the Spellings Commission recommendations. I think it is better to have these groups do it rather than have some government mandate come down that the tenured professoriate and administrators will largely ignore, avoid, and fight in court.
At the same time, the cynical side of me says this could be a shrewd political move to deflect regulation in this area, and the finished product may be some watered down and meaningless ideas that do little to inform consumers of the value added by higher education. I hope the idealistic side of me is right, and the cynical side is wrong. However, I note that the independent colleges (NAICU) are on the sidelines in this new effort --surprise, surprise. Time will tell which perspective is correct, an optimistic or pessimistic one.
Washington: Good News, Bad News
By Richard Vedder
It's official. The President has signed the new higher education budget bill. A signing ceremony (to which I was invited but did not attend because of obligations to my students at Ohio University) occurred this morning. The President and the Congressional leadership no doubt were all trying to take credit for what was termed a "historic" bill.
I have written a lot about it already, the bill is not historic, but rather a continuation of support for the same old, tired higher education delivery system that is bringing higher tuition bills to students, declining educational attainment compared to other nations (as documented in a new OECD report), and limited accountability. The teeth in this bill were removed, and the Democratic majority added a number of just plain bad provisions, including low interest loans and preferential terms for those going into saintly work ---working for government, rather than crass and greedy work --working in the private sector. I appreciated the invite to the party, but it is probably just as well that I did not attend.
****************
On a happier note, our CCAP colleague Lynne Munson gave interesting testimony over at the Senate Finance Committee yesterday, arguing that universities often fail to spend adequately from their endowments, preferring to amass huge investments. Given the tax exempt nature of all this giving, it is good that a bipartisan group of Senators, including chair Max Baccus and leading minority member Chuck Grassley, are showing real interest in the issue. Thanks Lynne for bringing this issue forward.
It's official. The President has signed the new higher education budget bill. A signing ceremony (to which I was invited but did not attend because of obligations to my students at Ohio University) occurred this morning. The President and the Congressional leadership no doubt were all trying to take credit for what was termed a "historic" bill.
I have written a lot about it already, the bill is not historic, but rather a continuation of support for the same old, tired higher education delivery system that is bringing higher tuition bills to students, declining educational attainment compared to other nations (as documented in a new OECD report), and limited accountability. The teeth in this bill were removed, and the Democratic majority added a number of just plain bad provisions, including low interest loans and preferential terms for those going into saintly work ---working for government, rather than crass and greedy work --working in the private sector. I appreciated the invite to the party, but it is probably just as well that I did not attend.
****************
On a happier note, our CCAP colleague Lynne Munson gave interesting testimony over at the Senate Finance Committee yesterday, arguing that universities often fail to spend adequately from their endowments, preferring to amass huge investments. Given the tax exempt nature of all this giving, it is good that a bipartisan group of Senators, including chair Max Baccus and leading minority member Chuck Grassley, are showing real interest in the issue. Thanks Lynne for bringing this issue forward.
Wednesday, September 26, 2007
Senators Discuss Endowment Hoarding
By Lynne Munson
CCAP took its message to Capitol Hill today. The Senate Finance Committee held a hearing at which I was invited to speak on the topic of higher education endowment hoarding. Senators Baucus, Grassley, Hatch, Bunning, Lott, Lincoln, Wyden, Roberts, and Salazar were among those in attendance. Many Senators seemed shocked to learn the sums colleges and universities had accumulated. They asked questions about whether the schools had the capacity to withstand a 5% payout requirement and whether such a requirement would make much of a difference. My impression is that we've got them thinking. My testimony follows. Dr. Gravelle, who is referred to twice, is an economist with the Congressional Research Service. She has written a report on the hoarding issue, at the request of the Senate.
Chairman Baucus, Ranking Member Grassley, and members of the committee, thank you for inviting me to testify on the topic of higher education endowments.
I am an Adjunct Fellow at the Center for College Affordability and Productivity, where we conduct research on issues of rising costs and stagnant efficiency in higher education. I served from 2001-2005 as Deputy Chairman of the National Endowment for the Humanities. And I’m also the mother of a one-year-old whose college education will cost a half million dollars if current tuition trends continue.
Senators, our colleges and universities are sitting on some of the largest fortunes amassed by any institutions in the history of our nation. These riches are proof of America’s economic strength and of the boundless generosity of its citizens. But I’m afraid to report that, in too many cases, this wealth is being hoarded instead of shared.
College and university endowment spending practices are stuck in a past when endowments were small, investment gains were marginal, and economic rainy days were frequent. Today higher education endowments are massive and—as we’ve heard today—aggressively invested. Returns often exceed 12% or more year after year. Yet endowment payouts are miserly—averaging just over 4% last year. The situation begs the question: Is the public benefiting enough? Research indicates the answer is “no.”
Dr. Gravelle points out that endowment wealth is concentrated in the upper ranks, much of it at 62 institutions with endowments larger than $1 billion. But just three years ago only 39 schools had billion-plus endowments. That’s a 38% increase in just a few years. In 2006, 125 schools had endowments over $500 million—a third more than in 2002. The number of schools that can count themselves as endowment-rich or super-rich is growing rapidly.
This wealth no longer resides solely or even primarily in the New England corridor. Twenty-six states including Tennessee, Kansas, Minnesota, and Iowa boast institutions with billion-plus endowments. The University of Pittsburgh, Purdue, Michigan State, and little 1500-student Grinnell College each have endowments larger than a billion. A third of the billion-plus endowments are at public institutions, including four of the ten largest endowments.
Some of the most outsized endowments are at elite institutions. Yale has $2.8 million in the bank per undergraduate. But, on average, independent schools with endowments larger than a billion have $432,422 in their endowment per full-time student. And plenty of public schools also have impressive endowment-to-student statistics. The University of Virginia and the University of Michigan bank $322,000 and $150,000 per undergraduate, respectively. And even though the 9-campus University of Texas system currently enrolls just under 150,000 undergraduates, its massive $13 billion endowment contains $90,000 for each student.
What the data shows is that endowment wealth is everywhere—except in the hands of the students who need it today. Last year endowments increased 17.7% on average—those larger than a billion increased 18.4%. Yet, despite double-digit increases stretching back a decade or more —endowment spending is at a nearly all-time low of 4.2%--down from 5.1% in 1994, 6.5% in 1982, and 5.2% in 1975.
Schools often blame low endowment spending on donor restrictions. But 45% of endowment funds are unrestricted at independent institutions—as are 20% at public schools. And financial aid is the number one restriction designated by donors—with 36% of gifts restricted for financial aid use in 2005. Yet spending on financial aid is shamefully small, with many schools putting just a fraction of a percentage of endowment value toward aid.
Dr. Gravelle has addressed the issue of how little additional endowment spending would be required to halt tuition hikes. I will not add to those remarks except to say that stopping tuition increases now is not enough.
Tuition has been going up so rapidly for so long it has reached nearly ungraspable levels. So let me put today’s tuition cost in concrete terms. Senators, what would your constituents say if gasoline cost $9.15 a gallon? Or if the price of milk was over $15? That is how much those items would cost if their price had gone up at the same rate that tuition has since 1980.
I believe that skyrocketing tuition is undoubtedly the biggest “access” problem in higher education. What can possibly be more discouraging to a capable student whose parents are not wealthy than a school with a $45,000 price tag on the door?
Here’s another concrete comparison. The total worth of the top 25 college and university endowments is $11 billion greater than the combined assets of the 25 largest private foundations — including the Gates Foundation, Ford, and Rockefeller.
Private foundations have fewer assets and, in part because they give away more of their money, are growing far less. Yet they are spending more—their payout averaged 7% in 2005 even though they are legally required to spend just 5%.
Yale law professor Henry Hansmann has said that “A stranger from Mars who looks at private universities would probably say they are institutions whose business is to manage large pools of investment assets and that they run educational institutions on the side…to act as buffers for the investment pools.”
Senators, our colleges and universities need to be reminded that they are education institutions first and foremost—and that that is why they receive the enormous tax breaks they do. Their practices, including their handling of endowment monies, should reflect their priorities as educators.
Payout information and other basic higher education endowment statistics must be brought out of hiding—made available, for example, via the Department of Education’s website in addition to making permanent the proposed endowment-related revisions to IRS Form 990. Should this sunshine prove insufficient motivation, Congress should not hesitate to consider a minimum payout requirement—and 5% should be considered a starting point. The 5% number is a dated one—even for private foundations. Many schools have been rolling over so much money for so long that they should easily be able to accommodate a higher rate of payout. Possibly the most significant challenge for policymakers will be to make sure that any newly directed monies actually go toward aid or tuition reduction and don’t become part of a shell game.
Again, thank you for inviting me to testify. I’ll be happy to answer any questions.
CCAP took its message to Capitol Hill today. The Senate Finance Committee held a hearing at which I was invited to speak on the topic of higher education endowment hoarding. Senators Baucus, Grassley, Hatch, Bunning, Lott, Lincoln, Wyden, Roberts, and Salazar were among those in attendance. Many Senators seemed shocked to learn the sums colleges and universities had accumulated. They asked questions about whether the schools had the capacity to withstand a 5% payout requirement and whether such a requirement would make much of a difference. My impression is that we've got them thinking. My testimony follows. Dr. Gravelle, who is referred to twice, is an economist with the Congressional Research Service. She has written a report on the hoarding issue, at the request of the Senate.
Chairman Baucus, Ranking Member Grassley, and members of the committee, thank you for inviting me to testify on the topic of higher education endowments.
I am an Adjunct Fellow at the Center for College Affordability and Productivity, where we conduct research on issues of rising costs and stagnant efficiency in higher education. I served from 2001-2005 as Deputy Chairman of the National Endowment for the Humanities. And I’m also the mother of a one-year-old whose college education will cost a half million dollars if current tuition trends continue.
Senators, our colleges and universities are sitting on some of the largest fortunes amassed by any institutions in the history of our nation. These riches are proof of America’s economic strength and of the boundless generosity of its citizens. But I’m afraid to report that, in too many cases, this wealth is being hoarded instead of shared.
College and university endowment spending practices are stuck in a past when endowments were small, investment gains were marginal, and economic rainy days were frequent. Today higher education endowments are massive and—as we’ve heard today—aggressively invested. Returns often exceed 12% or more year after year. Yet endowment payouts are miserly—averaging just over 4% last year. The situation begs the question: Is the public benefiting enough? Research indicates the answer is “no.”
Dr. Gravelle points out that endowment wealth is concentrated in the upper ranks, much of it at 62 institutions with endowments larger than $1 billion. But just three years ago only 39 schools had billion-plus endowments. That’s a 38% increase in just a few years. In 2006, 125 schools had endowments over $500 million—a third more than in 2002. The number of schools that can count themselves as endowment-rich or super-rich is growing rapidly.
This wealth no longer resides solely or even primarily in the New England corridor. Twenty-six states including Tennessee, Kansas, Minnesota, and Iowa boast institutions with billion-plus endowments. The University of Pittsburgh, Purdue, Michigan State, and little 1500-student Grinnell College each have endowments larger than a billion. A third of the billion-plus endowments are at public institutions, including four of the ten largest endowments.
Some of the most outsized endowments are at elite institutions. Yale has $2.8 million in the bank per undergraduate. But, on average, independent schools with endowments larger than a billion have $432,422 in their endowment per full-time student. And plenty of public schools also have impressive endowment-to-student statistics. The University of Virginia and the University of Michigan bank $322,000 and $150,000 per undergraduate, respectively. And even though the 9-campus University of Texas system currently enrolls just under 150,000 undergraduates, its massive $13 billion endowment contains $90,000 for each student.
What the data shows is that endowment wealth is everywhere—except in the hands of the students who need it today. Last year endowments increased 17.7% on average—those larger than a billion increased 18.4%. Yet, despite double-digit increases stretching back a decade or more —endowment spending is at a nearly all-time low of 4.2%--down from 5.1% in 1994, 6.5% in 1982, and 5.2% in 1975.
Schools often blame low endowment spending on donor restrictions. But 45% of endowment funds are unrestricted at independent institutions—as are 20% at public schools. And financial aid is the number one restriction designated by donors—with 36% of gifts restricted for financial aid use in 2005. Yet spending on financial aid is shamefully small, with many schools putting just a fraction of a percentage of endowment value toward aid.
Dr. Gravelle has addressed the issue of how little additional endowment spending would be required to halt tuition hikes. I will not add to those remarks except to say that stopping tuition increases now is not enough.
Tuition has been going up so rapidly for so long it has reached nearly ungraspable levels. So let me put today’s tuition cost in concrete terms. Senators, what would your constituents say if gasoline cost $9.15 a gallon? Or if the price of milk was over $15? That is how much those items would cost if their price had gone up at the same rate that tuition has since 1980.
I believe that skyrocketing tuition is undoubtedly the biggest “access” problem in higher education. What can possibly be more discouraging to a capable student whose parents are not wealthy than a school with a $45,000 price tag on the door?
Here’s another concrete comparison. The total worth of the top 25 college and university endowments is $11 billion greater than the combined assets of the 25 largest private foundations — including the Gates Foundation, Ford, and Rockefeller.
Private foundations have fewer assets and, in part because they give away more of their money, are growing far less. Yet they are spending more—their payout averaged 7% in 2005 even though they are legally required to spend just 5%.
Yale law professor Henry Hansmann has said that “A stranger from Mars who looks at private universities would probably say they are institutions whose business is to manage large pools of investment assets and that they run educational institutions on the side…to act as buffers for the investment pools.”
Senators, our colleges and universities need to be reminded that they are education institutions first and foremost—and that that is why they receive the enormous tax breaks they do. Their practices, including their handling of endowment monies, should reflect their priorities as educators.
Payout information and other basic higher education endowment statistics must be brought out of hiding—made available, for example, via the Department of Education’s website in addition to making permanent the proposed endowment-related revisions to IRS Form 990. Should this sunshine prove insufficient motivation, Congress should not hesitate to consider a minimum payout requirement—and 5% should be considered a starting point. The 5% number is a dated one—even for private foundations. Many schools have been rolling over so much money for so long that they should easily be able to accommodate a higher rate of payout. Possibly the most significant challenge for policymakers will be to make sure that any newly directed monies actually go toward aid or tuition reduction and don’t become part of a shell game.
Again, thank you for inviting me to testify. I’ll be happy to answer any questions.
Monday, September 24, 2007
The New ISI Study: The Good, The Bad, and the Ugly
By Richard Vedder
The Intercollegiate Studies Institute (ISI) has again administered its 60 question test of knowledge of civic institutions, history and economics to 14,000 college freshman and seniors at 50 institutions. The test is a reasonable, non-ideological multiple choice exam. It is interested in finding out: do college students know much about our collective selves --our heritage, our institutions, key knowledge of our economy? The testing was administered by veteran testing people at the Roper Center at the University of Connecticut.
THE GOOD NEWS
The good news is that ISI is getting more and more publicity for its "value added" approach --testing students as freshman and seniors. It is starting to offer alternatives to the input-based rankings like those of US News & World Report. And some relatively unknown schools show significant "value added" in terms of knowledge gains from the freshman to senior years.
THE BAD NEWS
The bad news is that at no school did seniors taking the test average above 70 percent. The knowledge of American college students about some core information useful in binding us together as a people is very low. Worse, at some of the greatest institutions (e.g., Princeton, Yale, Duke, Cornell, Cal-Berkeley), seniors did poorer on the test than freshmen. Those schools did nothing to improve knowledge of core facts and institutions.
THE UGLY NEWS
If the ISI results have any validity, Americans are behaving perversely. Per student government subsidies are much greater at schools doing nothing to advance knowledge --Yale and Princeton, for example, than at schools where knowledge is increasing significantly --Eastern Connecticut University being a great illustration. The schools in the bunch with the highest USN&WR rankings showed less than half the value added knowledge on average than the 25 schools with the lowest rankings. Cheaper schools showed more value added than expensive schools. The elite schools buy kids who are good students and bright --but don't instill as much new knowledge in them than the lesser, non-elite schools who take in less able or accomplished students. Americans are buying prestige but not knowledge as they crave the competitive schools.
The ISI results reinforce the need for more efforts to be made to come up with alternatives to the current rankings, rankings based on substance not reputation. And they show that there is reason to question the view that American colleges and universities are teaching the core type of knowledge that is usually part of any general education.
The Intercollegiate Studies Institute (ISI) has again administered its 60 question test of knowledge of civic institutions, history and economics to 14,000 college freshman and seniors at 50 institutions. The test is a reasonable, non-ideological multiple choice exam. It is interested in finding out: do college students know much about our collective selves --our heritage, our institutions, key knowledge of our economy? The testing was administered by veteran testing people at the Roper Center at the University of Connecticut.
THE GOOD NEWS
The good news is that ISI is getting more and more publicity for its "value added" approach --testing students as freshman and seniors. It is starting to offer alternatives to the input-based rankings like those of US News & World Report. And some relatively unknown schools show significant "value added" in terms of knowledge gains from the freshman to senior years.
THE BAD NEWS
The bad news is that at no school did seniors taking the test average above 70 percent. The knowledge of American college students about some core information useful in binding us together as a people is very low. Worse, at some of the greatest institutions (e.g., Princeton, Yale, Duke, Cornell, Cal-Berkeley), seniors did poorer on the test than freshmen. Those schools did nothing to improve knowledge of core facts and institutions.
THE UGLY NEWS
If the ISI results have any validity, Americans are behaving perversely. Per student government subsidies are much greater at schools doing nothing to advance knowledge --Yale and Princeton, for example, than at schools where knowledge is increasing significantly --Eastern Connecticut University being a great illustration. The schools in the bunch with the highest USN&WR rankings showed less than half the value added knowledge on average than the 25 schools with the lowest rankings. Cheaper schools showed more value added than expensive schools. The elite schools buy kids who are good students and bright --but don't instill as much new knowledge in them than the lesser, non-elite schools who take in less able or accomplished students. Americans are buying prestige but not knowledge as they crave the competitive schools.
The ISI results reinforce the need for more efforts to be made to come up with alternatives to the current rankings, rankings based on substance not reputation. And they show that there is reason to question the view that American colleges and universities are teaching the core type of knowledge that is usually part of any general education.
The Controversy at Columbia
By Richard Vedder
I have been a strong free speech advocate my entire life, and think it is good for campuses to expose students to all sorts of opinions, even unpopular ones out of the mainstream. It took a long time for me to come to the view that Ward Churchill should have been fired, for example (he deserved to go for reasons beyond his outrageous public statements). Therefore, I start with a bias towards defending Columbia University for inviting the president of Iran to campus, even though the man is a purveyor of hatred and violence.
Yet the issue goes beyond simple "free speech" or "freedom of expression," and what is particularly disturbing is Columbia's uneven application of freedom principles. It is one thing for a university to allow a speaker to talk on campus, invited by a student organization, for example. It is quite another thing to use scarce University resources to officially, on behalf of the University, invite a person to talk --those occasions are limited in nature, and must be rationed. Why, in that situation, would a University want to bring to campus a man who is both violent and flaky --who denies the Holocaust and despises Jews, who orders the execution of homosexuals, who hates America!!! Would the same university, with university funds, invite, say, Bill O'Reilly or Newt Gingrich? I very much doubt it. My suspicion is that only left wing intellectuals who share President Bolinger's views and radical American haters need apply for University sponsored campus visits. That is unbalanced, it is anti-free speech, it is hypocritical, it is bad.
What makes Lee Bolinger one of the least fair and most biased university presidents in America is his inconsistency. In the interest of free speech, he uses University resources to bring in the President of Iran. Maybe fair enough. But he denies the right of the U.S. military to offer an ROTC installation on campus --something several other Ivy League schools and most flagship state universities offer. And he does this despite the opinion of a majority of students and alums that the ROTC program should be allowed to operate. Why? Because he does not like the military's policies toward gays. So he invites a guy who executes gays and hates America to campus, but turns down a group that merely disapproves of open homosexual conduct among military personnel, a group that has as its main task the preservation of the very freedoms that Bolinger claims to support. I hope Columbia's alums impose a cost on that institution (in withheld alumni contributions) for continuing to allow such a hypocritical ideologue to lead the institution.
I have been a strong free speech advocate my entire life, and think it is good for campuses to expose students to all sorts of opinions, even unpopular ones out of the mainstream. It took a long time for me to come to the view that Ward Churchill should have been fired, for example (he deserved to go for reasons beyond his outrageous public statements). Therefore, I start with a bias towards defending Columbia University for inviting the president of Iran to campus, even though the man is a purveyor of hatred and violence.
Yet the issue goes beyond simple "free speech" or "freedom of expression," and what is particularly disturbing is Columbia's uneven application of freedom principles. It is one thing for a university to allow a speaker to talk on campus, invited by a student organization, for example. It is quite another thing to use scarce University resources to officially, on behalf of the University, invite a person to talk --those occasions are limited in nature, and must be rationed. Why, in that situation, would a University want to bring to campus a man who is both violent and flaky --who denies the Holocaust and despises Jews, who orders the execution of homosexuals, who hates America!!! Would the same university, with university funds, invite, say, Bill O'Reilly or Newt Gingrich? I very much doubt it. My suspicion is that only left wing intellectuals who share President Bolinger's views and radical American haters need apply for University sponsored campus visits. That is unbalanced, it is anti-free speech, it is hypocritical, it is bad.
What makes Lee Bolinger one of the least fair and most biased university presidents in America is his inconsistency. In the interest of free speech, he uses University resources to bring in the President of Iran. Maybe fair enough. But he denies the right of the U.S. military to offer an ROTC installation on campus --something several other Ivy League schools and most flagship state universities offer. And he does this despite the opinion of a majority of students and alums that the ROTC program should be allowed to operate. Why? Because he does not like the military's policies toward gays. So he invites a guy who executes gays and hates America to campus, but turns down a group that merely disapproves of open homosexual conduct among military personnel, a group that has as its main task the preservation of the very freedoms that Bolinger claims to support. I hope Columbia's alums impose a cost on that institution (in withheld alumni contributions) for continuing to allow such a hypocritical ideologue to lead the institution.
Friday, September 21, 2007
Charles Miller on Accreditation
By Richard Vedder
The American Enterprise Institute, assisted by CCAP, had what I consider a hugely successful conference on accreditation. (Admittedly, I am highly biased, since I largely picked the speakers.) A huge crowd attended, and every single speaker articulated his or her views quite well. In retrospect, I may have erred in not inviting an actual accreditor to speak, although Judith Eaton of the Council of Higher Education Accreditation did a fine job of representing the views of the accrediting community, as did several employees of accreditation agencies in the audience.
The keynote address by Spellings Commission chair Charles Miller was particularly strong in his criticism of the existing system. Let me quote a bit from his remarks, talking about accreditation agencies:
"These are self-regulatory bodies. They are fundamentally and inherently biased. They are biased by their structure. They are biased by their culture. They are biased by their limited experience of people from within the academy who return to the academy. And they are biased by the common effect of group thinking -- of going along to get along."
"Their organizations operate in secret. Their analysis and results are generally not available to the public and there is limited public input in the process or in their governance structure… this structure is ripe for abuse."
Elsewhere, Charles notes the conflicts of interest that accreditation brings about, the monopoly-like, anti-competitive nature of the system, and the huge barriers accreditation poses to entry into the field, a point made by others. Jeff Sandefer, Texas entrepreneur and teacher at the Acton Business School, went so far as to predict that traditional forms of higher education may start crumbling, in much the same way as the Soviet Union or the Berlin Wall -- even with high subsidies, the highly inefficient public schools are losing out to nimbler, more innovative, cheaper (in a broad social sense) new upstarts, including the for-profit universities.
Changing the current accreditation model is much needed, as Charles, Jeff and others (including Under Secretary Sara Martinez Tucker and Spellings Commission member Art Rothkopf) attested. My own thinking is that Sandefer might be right -- higher education may soon cross a threshold where the costs of traditional schools seem to exceed expected benefits, and growing numbers of consumers vote with their feet and seek alternatives.
The American Enterprise Institute, assisted by CCAP, had what I consider a hugely successful conference on accreditation. (Admittedly, I am highly biased, since I largely picked the speakers.) A huge crowd attended, and every single speaker articulated his or her views quite well. In retrospect, I may have erred in not inviting an actual accreditor to speak, although Judith Eaton of the Council of Higher Education Accreditation did a fine job of representing the views of the accrediting community, as did several employees of accreditation agencies in the audience.
The keynote address by Spellings Commission chair Charles Miller was particularly strong in his criticism of the existing system. Let me quote a bit from his remarks, talking about accreditation agencies:
"These are self-regulatory bodies. They are fundamentally and inherently biased. They are biased by their structure. They are biased by their culture. They are biased by their limited experience of people from within the academy who return to the academy. And they are biased by the common effect of group thinking -- of going along to get along."
"Their organizations operate in secret. Their analysis and results are generally not available to the public and there is limited public input in the process or in their governance structure… this structure is ripe for abuse."
Elsewhere, Charles notes the conflicts of interest that accreditation brings about, the monopoly-like, anti-competitive nature of the system, and the huge barriers accreditation poses to entry into the field, a point made by others. Jeff Sandefer, Texas entrepreneur and teacher at the Acton Business School, went so far as to predict that traditional forms of higher education may start crumbling, in much the same way as the Soviet Union or the Berlin Wall -- even with high subsidies, the highly inefficient public schools are losing out to nimbler, more innovative, cheaper (in a broad social sense) new upstarts, including the for-profit universities.
Changing the current accreditation model is much needed, as Charles, Jeff and others (including Under Secretary Sara Martinez Tucker and Spellings Commission member Art Rothkopf) attested. My own thinking is that Sandefer might be right -- higher education may soon cross a threshold where the costs of traditional schools seem to exceed expected benefits, and growing numbers of consumers vote with their feet and seek alternatives.
Thursday, September 20, 2007
We're Loyal to You Illinois: Maybe
By Richard Vedder
The title of this blog (minus the last word) is a line from the "Illinois Loyalty", a fight song of the University of Illinois. The U. of I. is in the news, and I am in a fighting mood about it.
Some donors at the U. of I. want to create a public university version of the Hoover Institution, the great think tank at Stanford (headed by a former student of ours at Ohio University). It would be dedicated to promoting Western civilization and free market economics. I think it is a wonderful idea, a fine gesture, and one wholly appropriate to the university. It is blessed by Joe White, Illinois's fine and dedicated president, as well as by leaders at the Urbana-Champaign campus. I have two degrees, including a Ph.D., from Illinois, and am proud of my Alma Mater, which has been battered in recent years by the Political Correctness Cartel at, of all places, the NCAA, which forbade the U of I to use its beloved mascot (I view this as a massive violation of both sanity and the anti-trust laws, and think Congress or the Department of Education should go after the NCAA in general and Myles Brand in particular, but that is another blog).
Enter the U of I faculty, particularly one Cary Nelson, an English professor who has made a name for himself as national AAUP prez who wants to radicalize somewhat that staid but venerable group of professors that has evolved into a labor union. We are told the new center would politicize the university and rob the faculty of their academic freedom.
Here is my interpretation. A bunch of leftish professors who have a near monopoly on thought on campus do not want competition, and want the right to control thought on campus. They want to thwart freedom of expression. Only they can determine what students study, read, and, almsot, what they believe, etc. They are the enemies of free speech, the First Amendment, and all the rest. The Illinois economics department is, I suspect, fairly typical, made up of technocrats and largely apolitical other faculty, with a couple of semi-conservatives around almost by accident, with most facultly probably voting for the Democratic candidate for president --but not too loud about it. The other social sciences and the humanities are probably more unabashedly "liberal." This move would redress a balance. Somehow, in the view of some faculty, the alumni are not allowed to promote their ideas, just the existing faculty. That is complete utter bull, and I hope Joe White has the requisite body parts needed to fight this outrageous attack on the freedom of expression. Under no circumstances should he accept the money if the Nelson types are allowed to control the curriculum.
There is a huge irony behind all of this. A half a century ago, the U of I had a first rate economics department with several scholars who went on to great reputations --Franco Modigliani (who won the Nobel Prize), Don Patinkin, Robert Eisner, etc. In a huge fight, the older, more conservative faculty ran out these Keynesian (left of center) firebrands. In retrospect, Illinois suffered reputationally for this (even though history now shows the Keynesians may have been less correct about economics than their conservative critics). Now someone wants to restore the university's reputation by bringing in some fine right of center scholars, and the Estalbishment, this time left of center, may stop them.
For whatever it is worth, as a proud Illini who has written numerous books in the tradition advocated by the donors to this center, I am willing to serve on the new center's advisory board, particularly since I am on the U of I campus occasionally visiting family.
The title of this blog (minus the last word) is a line from the "Illinois Loyalty", a fight song of the University of Illinois. The U. of I. is in the news, and I am in a fighting mood about it.
Some donors at the U. of I. want to create a public university version of the Hoover Institution, the great think tank at Stanford (headed by a former student of ours at Ohio University). It would be dedicated to promoting Western civilization and free market economics. I think it is a wonderful idea, a fine gesture, and one wholly appropriate to the university. It is blessed by Joe White, Illinois's fine and dedicated president, as well as by leaders at the Urbana-Champaign campus. I have two degrees, including a Ph.D., from Illinois, and am proud of my Alma Mater, which has been battered in recent years by the Political Correctness Cartel at, of all places, the NCAA, which forbade the U of I to use its beloved mascot (I view this as a massive violation of both sanity and the anti-trust laws, and think Congress or the Department of Education should go after the NCAA in general and Myles Brand in particular, but that is another blog).
Enter the U of I faculty, particularly one Cary Nelson, an English professor who has made a name for himself as national AAUP prez who wants to radicalize somewhat that staid but venerable group of professors that has evolved into a labor union. We are told the new center would politicize the university and rob the faculty of their academic freedom.
Here is my interpretation. A bunch of leftish professors who have a near monopoly on thought on campus do not want competition, and want the right to control thought on campus. They want to thwart freedom of expression. Only they can determine what students study, read, and, almsot, what they believe, etc. They are the enemies of free speech, the First Amendment, and all the rest. The Illinois economics department is, I suspect, fairly typical, made up of technocrats and largely apolitical other faculty, with a couple of semi-conservatives around almost by accident, with most facultly probably voting for the Democratic candidate for president --but not too loud about it. The other social sciences and the humanities are probably more unabashedly "liberal." This move would redress a balance. Somehow, in the view of some faculty, the alumni are not allowed to promote their ideas, just the existing faculty. That is complete utter bull, and I hope Joe White has the requisite body parts needed to fight this outrageous attack on the freedom of expression. Under no circumstances should he accept the money if the Nelson types are allowed to control the curriculum.
There is a huge irony behind all of this. A half a century ago, the U of I had a first rate economics department with several scholars who went on to great reputations --Franco Modigliani (who won the Nobel Prize), Don Patinkin, Robert Eisner, etc. In a huge fight, the older, more conservative faculty ran out these Keynesian (left of center) firebrands. In retrospect, Illinois suffered reputationally for this (even though history now shows the Keynesians may have been less correct about economics than their conservative critics). Now someone wants to restore the university's reputation by bringing in some fine right of center scholars, and the Estalbishment, this time left of center, may stop them.
For whatever it is worth, as a proud Illini who has written numerous books in the tradition advocated by the donors to this center, I am willing to serve on the new center's advisory board, particularly since I am on the U of I campus occasionally visiting family.
The Accreditation Infrastructure -- Must It Change?
By Richard Vedder
When Margaret Spellings and Sara Martinez Tucker pushed hard for real changes in what accreditation agencies asked of colleges and universities, they met a firestorm of protest, partly from colleges and universities, but also from the Accreditation Establishment, the people who administer accreditation in the U.S.
Part of the protest, typically from colleges themselves or their representatives in college associations, resulted from fear -- being forced to reveal what students learned, for example, might be extremely embarrassing and could contribute to a loss of enrollment and market share. But part of the protest was from those fearing a loss of power or, worse, their jobs. When Bob Dickenson did a fine study for the Spellings Commission that advocated going to a single national accreditation organization instead of seven regional accreditors, the level of protest was unbelievable -- you would have thought the world as we know it had come to an end.
It may be sad, but it is true: for accreditation reform to work, either the reformers have to be prepared for all out World War with the accreditation establishment, or they have to make accommodations with them. My guess is the reformers would lose an all out war -- Congress is susceptible to bribes (via lobbyist contributions to campaigns), and the accreditors have deeper pockets than the reformers. They will simply out-lobby (bribe) the reformers. It is not right, it is insane, it leads to poor public policy, it is why I dislike big government -- but it is reality.
If I am right, the "second best" strategy may be to make peace with the accreditors, if not the individual colleges and universities or their organizations (NAICU -- the National Association of Independent Colleges and Universities -- is a particularly outspoken group, for example). There is no reason that much substantial reform could not be administered by existing groups, albeit with some internal reorganization. SACS (the chief accreditor in the South), for example, could still exist, and shift perhaps to a more in house review of data and evidence rather than rely on external accreditation teams in making evaluations. The AACSB could still accredit business schools, and NCATE teacher education programs (although, as a separate issue, if I ran this country I would go to war to radically change teacher education and probably eliminate NCATE in the process).
There is, however, a strong case for going to national accreditation, which would eliminate the regionals. Randy Best, a great educational entrepreneur whose Early College, education training, and international schools are growing like crazy, has lamented time and time again to me that the regional accreditation system is just plain crazy, and leads to inconsistencies in regulation that have no rational basis. If that is right, and if national electronic based higher education is growing, the case for a national accreditation agency -- at least for the distance learning schools --is pretty compelling. Maybe "making love not war" is the wrong strategy.
All of this will be hashed out tomorrow at the American Enterprise Institute in Washington at 9:30 a.m. The registration for the conference has radically exceeded expectations, but there are still some spots left (register now though because if we exceed room capacity, we will have to start turning people away). The interest in the topic is heartening, and points to the seriousness of the issue and its importance in fashioning a better, more efficient and effective higher education system.
When Margaret Spellings and Sara Martinez Tucker pushed hard for real changes in what accreditation agencies asked of colleges and universities, they met a firestorm of protest, partly from colleges and universities, but also from the Accreditation Establishment, the people who administer accreditation in the U.S.
Part of the protest, typically from colleges themselves or their representatives in college associations, resulted from fear -- being forced to reveal what students learned, for example, might be extremely embarrassing and could contribute to a loss of enrollment and market share. But part of the protest was from those fearing a loss of power or, worse, their jobs. When Bob Dickenson did a fine study for the Spellings Commission that advocated going to a single national accreditation organization instead of seven regional accreditors, the level of protest was unbelievable -- you would have thought the world as we know it had come to an end.
It may be sad, but it is true: for accreditation reform to work, either the reformers have to be prepared for all out World War with the accreditation establishment, or they have to make accommodations with them. My guess is the reformers would lose an all out war -- Congress is susceptible to bribes (via lobbyist contributions to campaigns), and the accreditors have deeper pockets than the reformers. They will simply out-lobby (bribe) the reformers. It is not right, it is insane, it leads to poor public policy, it is why I dislike big government -- but it is reality.
If I am right, the "second best" strategy may be to make peace with the accreditors, if not the individual colleges and universities or their organizations (NAICU -- the National Association of Independent Colleges and Universities -- is a particularly outspoken group, for example). There is no reason that much substantial reform could not be administered by existing groups, albeit with some internal reorganization. SACS (the chief accreditor in the South), for example, could still exist, and shift perhaps to a more in house review of data and evidence rather than rely on external accreditation teams in making evaluations. The AACSB could still accredit business schools, and NCATE teacher education programs (although, as a separate issue, if I ran this country I would go to war to radically change teacher education and probably eliminate NCATE in the process).
There is, however, a strong case for going to national accreditation, which would eliminate the regionals. Randy Best, a great educational entrepreneur whose Early College, education training, and international schools are growing like crazy, has lamented time and time again to me that the regional accreditation system is just plain crazy, and leads to inconsistencies in regulation that have no rational basis. If that is right, and if national electronic based higher education is growing, the case for a national accreditation agency -- at least for the distance learning schools --is pretty compelling. Maybe "making love not war" is the wrong strategy.
All of this will be hashed out tomorrow at the American Enterprise Institute in Washington at 9:30 a.m. The registration for the conference has radically exceeded expectations, but there are still some spots left (register now though because if we exceed room capacity, we will have to start turning people away). The interest in the topic is heartening, and points to the seriousness of the issue and its importance in fashioning a better, more efficient and effective higher education system.
Wednesday, September 19, 2007
Three Cheers for the Center for Higher Education Excellence
By Richard Vedder
There was a great story in the Wall Street Journal recently about the Center for Higher Education Excellence, headed by our good friend Fred Fransen. In the interest of full disclosure, CCAP has received some grant money from CHEE, and I have worked closely with them on a couple of matters of mutual interest.
CHEE is not your ordinary charity. It is interested in seeing that philanthropic donations are well spent, and serve the interests of their donors. It is concerned about schools that take people's money and then spend it in ways different from that intended by donors. The huge pile of Robertson money at Princeton is the best example, with the family heirs arguing tht Princeton has directed vast resources to be spent in a fashion inconsistent with the wishes of the donor. Fred and his associates are helping wealthy donors reach iron-clad agreements with universities that prevent the money from being used for purposes other than intended.
I had a personal brush with this problem a few years ago. The Center for the Study of American Business (CSAB) at Washington University in St. Louis, run by Murray Weidenbaum, was a great free market think tank, and I had visited there as a professor and served on its advisory board. Murray decided to retire, so they renamed the center after Weidenbaum -- but then moved it considerably away from the orientation that Weidenbaum had given it and that donors expected. Foundations like the John M. Olin Foundation had donated millions to Wash U to support the free market research of CSAB, only to see the money diverted, I suspect, to fund its new orientation.
The AAUP has expressed concerns about groups like CHEE impeding academic freedom. In their view apparently, universities should be able to do whatever they want with money given them and any constraints are restrictions on academic freedom. Balderdash. What about the freedom of donors to use funds in a manner of their choosing? This notion that contractural arrangements can be broken to serve faculty interests is one reason why the proportion of alums contributing to colleges is in decline, as it well should be. The irony of it is that many of these privately funded efforts are designed to reduce the stifling intellectual conformity of many universities, and to introduce true diversity --intellectual diversity -- into the university community. We welcome CHEE to the community of those interested in true reform of the academy.
There was a great story in the Wall Street Journal recently about the Center for Higher Education Excellence, headed by our good friend Fred Fransen. In the interest of full disclosure, CCAP has received some grant money from CHEE, and I have worked closely with them on a couple of matters of mutual interest.
CHEE is not your ordinary charity. It is interested in seeing that philanthropic donations are well spent, and serve the interests of their donors. It is concerned about schools that take people's money and then spend it in ways different from that intended by donors. The huge pile of Robertson money at Princeton is the best example, with the family heirs arguing tht Princeton has directed vast resources to be spent in a fashion inconsistent with the wishes of the donor. Fred and his associates are helping wealthy donors reach iron-clad agreements with universities that prevent the money from being used for purposes other than intended.
I had a personal brush with this problem a few years ago. The Center for the Study of American Business (CSAB) at Washington University in St. Louis, run by Murray Weidenbaum, was a great free market think tank, and I had visited there as a professor and served on its advisory board. Murray decided to retire, so they renamed the center after Weidenbaum -- but then moved it considerably away from the orientation that Weidenbaum had given it and that donors expected. Foundations like the John M. Olin Foundation had donated millions to Wash U to support the free market research of CSAB, only to see the money diverted, I suspect, to fund its new orientation.
The AAUP has expressed concerns about groups like CHEE impeding academic freedom. In their view apparently, universities should be able to do whatever they want with money given them and any constraints are restrictions on academic freedom. Balderdash. What about the freedom of donors to use funds in a manner of their choosing? This notion that contractural arrangements can be broken to serve faculty interests is one reason why the proportion of alums contributing to colleges is in decline, as it well should be. The irony of it is that many of these privately funded efforts are designed to reduce the stifling intellectual conformity of many universities, and to introduce true diversity --intellectual diversity -- into the university community. We welcome CHEE to the community of those interested in true reform of the academy.
The Underwriters Laboratories/Consumer Report/Standard and Poors Approach to Accreditation
By Richard Vedder
This is the second of a series of three blogs on accreditation. I welcome comments, as I will probably read from the comments at the American Enterprise Institute conference being held Friday in DC in collaboration with CCAP.
When you buy a toaster, computer or television set, you can derive some comfort that the product will not injure you electrically, if the product has the UL label on it, standing for Underwriters Laboratories, an independent organization that, I believe, is funded by insurance companies. Should we turn college certification over to Underwriters Laboratories, or to a new independent organization funded by the people who make loans to students? Can we have something akin to the Good Housekeeping magazine Seal of Approval for education programs? The organization would be run by professionals who would use consistent standards to assure fairness in evaluating colleges. Emphasis would be on testing the product provided --by gathering information on student performance in school (what they learned), growth of critical learning facility (through devices such as the Collegiate Learning Assessment), their degree of involvement in their studies and community (through tests like the National Survey of Student Engagement), their post-graduation vocational success (and, with the cooperation of the Social Security Administration, their average S.S. earnings after graduation), etc. Receiving the approval of this organization would be required before students could take federally subsidized loans, or for the school to receive federal tax exempt status. There would be one national organization, not seven regional accrediting bodies. The standards in Illinois would be the same as they are in Florida or California.
A variant on this would be to move towards the way Consumer Union tests products and reports on results in Consumer Reports. An organization (profit or not-for-profit --it is not important in my way of thinking) could be created, again funded by those wanting to help finance higher education, that would issue reports on each school, how they rate on various criteria (graduation rates, costs, campus crime rates, gains in scores on a test like the Intercollegiate Studies Institute exam on civic knowledge), etc. The organization would list "best buys" "fewest dropouts" "largest percentage graduating in 4 years" "most satisfied students" etc. Colleges wanting students to be eligible for federal financial assistance would be required to participate in helping provide information, most of which would come from the students themselves. Again, the provisions of Social Security post-graduate earnings information would be a valuable piece of additional information. This approach would NOT have the "pass-fail" dimension of the UL approach above --the idea is simply to provide more and better information than the US News & World Report currently provides.
A third variant is to use some variant of the bond rating model. Standard and Poors, Moodys and Fitch rate bonds for the risks associated with holding them. Perhaps we could have student rating agencies that would give grades to the quality of the final product--from AAA to CCC, or some such evaluations. This could be done at the institutional level ---graduates of Grinnell College on average are BBB, or on an individual student basis, requiring student-specific as well as institutional specific information be submitted to the rating agency, along with probably the results of a national standardized exit exam administered to each student. I have a feeling such an approach would show employers some startling things, such as students graduating from so-called middle-quality institutions are often as good as those educated in the Ivy League (for that reason, of course, the elite schools would fight this idea to the death). Still, it is food for thought.
This is the second of a series of three blogs on accreditation. I welcome comments, as I will probably read from the comments at the American Enterprise Institute conference being held Friday in DC in collaboration with CCAP.
When you buy a toaster, computer or television set, you can derive some comfort that the product will not injure you electrically, if the product has the UL label on it, standing for Underwriters Laboratories, an independent organization that, I believe, is funded by insurance companies. Should we turn college certification over to Underwriters Laboratories, or to a new independent organization funded by the people who make loans to students? Can we have something akin to the Good Housekeeping magazine Seal of Approval for education programs? The organization would be run by professionals who would use consistent standards to assure fairness in evaluating colleges. Emphasis would be on testing the product provided --by gathering information on student performance in school (what they learned), growth of critical learning facility (through devices such as the Collegiate Learning Assessment), their degree of involvement in their studies and community (through tests like the National Survey of Student Engagement), their post-graduation vocational success (and, with the cooperation of the Social Security Administration, their average S.S. earnings after graduation), etc. Receiving the approval of this organization would be required before students could take federally subsidized loans, or for the school to receive federal tax exempt status. There would be one national organization, not seven regional accrediting bodies. The standards in Illinois would be the same as they are in Florida or California.
A variant on this would be to move towards the way Consumer Union tests products and reports on results in Consumer Reports. An organization (profit or not-for-profit --it is not important in my way of thinking) could be created, again funded by those wanting to help finance higher education, that would issue reports on each school, how they rate on various criteria (graduation rates, costs, campus crime rates, gains in scores on a test like the Intercollegiate Studies Institute exam on civic knowledge), etc. The organization would list "best buys" "fewest dropouts" "largest percentage graduating in 4 years" "most satisfied students" etc. Colleges wanting students to be eligible for federal financial assistance would be required to participate in helping provide information, most of which would come from the students themselves. Again, the provisions of Social Security post-graduate earnings information would be a valuable piece of additional information. This approach would NOT have the "pass-fail" dimension of the UL approach above --the idea is simply to provide more and better information than the US News & World Report currently provides.
A third variant is to use some variant of the bond rating model. Standard and Poors, Moodys and Fitch rate bonds for the risks associated with holding them. Perhaps we could have student rating agencies that would give grades to the quality of the final product--from AAA to CCC, or some such evaluations. This could be done at the institutional level ---graduates of Grinnell College on average are BBB, or on an individual student basis, requiring student-specific as well as institutional specific information be submitted to the rating agency, along with probably the results of a national standardized exit exam administered to each student. I have a feeling such an approach would show employers some startling things, such as students graduating from so-called middle-quality institutions are often as good as those educated in the Ivy League (for that reason, of course, the elite schools would fight this idea to the death). Still, it is food for thought.
Tuesday, September 18, 2007
Alternative Accreditation: The Financial Services Regulatory Approach
By Richard Vedder
When you go to a bank and give a complete stranger (the teller) money as a deposit, you are taking a risk -- the risk that the teller and/or his boss will take your money and run with it. Similarly, if you buy life insurance from a company, how do you know that the company will not simply pocket your premium payments and not pay off on the policy at death?
To deal with these concerns, we regulate financial service companies, and have an enforcement mechanism to root out fraud and theft. The same problem exists in academia: you pay a stranger tuition money assuming that you will be educated appropriately. Sometimes job applicants claim they have a bachelor's degree from XYZ University, and the employer wants assurance that XYZ offers a decent education that offers the equivalent of the instruction traditionally associated with a baccalaureate degree. Hence, the need for some regulation, some oversight.
Why not have the equivalent of the Comptroller of the Currency or Federal Deposit Insurance Corporation assure that colleges are not defrauding the public? And how would that differ from current accreditation practice?
First, bank examiners and regulators work for an independent agency, not for competing firms. Under current practice, accreditation teams come to campus made up of employees of competing institutions. It would be the equivalent of a bank examiner from JP Morgan Chase coming in to examine the books, cash reserves, etc., of Citibank or Bank of America. Bad idea. Yet that is what we do in higher education. Why not give the accreditor agency (the academic equivalent of the Comptroller of the Currency or FDIC) the power not only to say some institutions are acceptable ("accredited"), but that other institutions must go out of business because they are diploma mills? Bank examiners can threaten the revoking on charters of unsafe banks, or force them to merge with sound ones. Can accreditors do that?
Second, bank examiners spend relatively little time examining how things are done, but rather what is done -- what are the results? Are there a lot of overdue loans? Is the cash in the vault what the bank claims it to be? Bank examiners and insurance regulators are primarily interested in the safety of depositors and others with financial dealings with the bank. They don't care what the ratio of loan officers to deposits is, for example. In colleges, accreditors are worried about student-faculty ratios, the number of Ph.D.s on the faculty, etc., when they should be more worried about the end product -- did the students get a reasonably sound degree?
Third, bank examiners demand transparency. Banks must make available financial statements, not only to stockholders, but to examiners and depositors. Examiners demand to know the number of overdue loans, the amount of bonds the banks owns that are of sub-prime quality, etc. Yet do accreditors get equivalent information of colleges, and do they insist that it be reported to customers (to the students that are the equivalent of depositors)? What percent of students is unemployed one year after graduation? What did the students learn while in college? Where did the colleges spend their money -- what percent was spent on instruction? etc. Why don't they demand this information be collected and made available to customers?
The FDIC guarantees that if your bank goes broke, you will get your money back. Why don't colleges, perhaps as a condition of accreditation, guarantee that their graduates who successfully complete a degree can achieve their minimal post-graduate objectives -- a job, admission to a professional school, etc.? When a bank fails to give its customers their deposits plus promised interest upon demand, it is typically closed. What happens to universities that do not give their students promised benefits? Nothing, at the moment.
Maybe as we ponder our accreditation system, we can learn something from the financial services industry and its "accreditation" process. Tomorrow: the Underwriters Laboratories/Consumer Union model of accreditation.
When you go to a bank and give a complete stranger (the teller) money as a deposit, you are taking a risk -- the risk that the teller and/or his boss will take your money and run with it. Similarly, if you buy life insurance from a company, how do you know that the company will not simply pocket your premium payments and not pay off on the policy at death?
To deal with these concerns, we regulate financial service companies, and have an enforcement mechanism to root out fraud and theft. The same problem exists in academia: you pay a stranger tuition money assuming that you will be educated appropriately. Sometimes job applicants claim they have a bachelor's degree from XYZ University, and the employer wants assurance that XYZ offers a decent education that offers the equivalent of the instruction traditionally associated with a baccalaureate degree. Hence, the need for some regulation, some oversight.
Why not have the equivalent of the Comptroller of the Currency or Federal Deposit Insurance Corporation assure that colleges are not defrauding the public? And how would that differ from current accreditation practice?
First, bank examiners and regulators work for an independent agency, not for competing firms. Under current practice, accreditation teams come to campus made up of employees of competing institutions. It would be the equivalent of a bank examiner from JP Morgan Chase coming in to examine the books, cash reserves, etc., of Citibank or Bank of America. Bad idea. Yet that is what we do in higher education. Why not give the accreditor agency (the academic equivalent of the Comptroller of the Currency or FDIC) the power not only to say some institutions are acceptable ("accredited"), but that other institutions must go out of business because they are diploma mills? Bank examiners can threaten the revoking on charters of unsafe banks, or force them to merge with sound ones. Can accreditors do that?
Second, bank examiners spend relatively little time examining how things are done, but rather what is done -- what are the results? Are there a lot of overdue loans? Is the cash in the vault what the bank claims it to be? Bank examiners and insurance regulators are primarily interested in the safety of depositors and others with financial dealings with the bank. They don't care what the ratio of loan officers to deposits is, for example. In colleges, accreditors are worried about student-faculty ratios, the number of Ph.D.s on the faculty, etc., when they should be more worried about the end product -- did the students get a reasonably sound degree?
Third, bank examiners demand transparency. Banks must make available financial statements, not only to stockholders, but to examiners and depositors. Examiners demand to know the number of overdue loans, the amount of bonds the banks owns that are of sub-prime quality, etc. Yet do accreditors get equivalent information of colleges, and do they insist that it be reported to customers (to the students that are the equivalent of depositors)? What percent of students is unemployed one year after graduation? What did the students learn while in college? Where did the colleges spend their money -- what percent was spent on instruction? etc. Why don't they demand this information be collected and made available to customers?
The FDIC guarantees that if your bank goes broke, you will get your money back. Why don't colleges, perhaps as a condition of accreditation, guarantee that their graduates who successfully complete a degree can achieve their minimal post-graduate objectives -- a job, admission to a professional school, etc.? When a bank fails to give its customers their deposits plus promised interest upon demand, it is typically closed. What happens to universities that do not give their students promised benefits? Nothing, at the moment.
Maybe as we ponder our accreditation system, we can learn something from the financial services industry and its "accreditation" process. Tomorrow: the Underwriters Laboratories/Consumer Union model of accreditation.
Monday, September 17, 2007
Special Notice to Blog Readers
As mentioned in earlier blogs, the American Enterprise Institute, in cooperation with the Center for College Affordability and Productivity (CCAP), is planning an important conference on the topic of higher education accreditation this Friday, September 21, from 9:30 to 1:30 at the American Enterprise Institute, at 1150 17th Street N.W. in Washington ,D.C.(12th Floor). Call AEI at (202) 862-5800 to register to attend (no cost --even a free lunch!!)
In preparation for the conference, CCAP Director Richard Vedder will be releasing three blogs over the next three days on accreditation. The first, tomorrow, will suggest one alternative approach, what he terms "the financial services regulatory model." The second, on Wednesday, September 19, discusses a second alternative approach, what he terms the "Underwriters Laboratories/Consumer Union model." On Thursday, September 20, he will discuss "Administering Accreditation Reform --The Role of Existing Institutions."
Prof. Vedder welcomes comments on these blogs. Indeed, he hopes to read some of the blog comments to the audience at the conference (those remaining anonymous may do so), so that you can participate indirectly in its deliberations. We are anticipating a good attendance and a lively and worthwhile discussion.
In preparation for the conference, CCAP Director Richard Vedder will be releasing three blogs over the next three days on accreditation. The first, tomorrow, will suggest one alternative approach, what he terms "the financial services regulatory model." The second, on Wednesday, September 19, discusses a second alternative approach, what he terms the "Underwriters Laboratories/Consumer Union model." On Thursday, September 20, he will discuss "Administering Accreditation Reform --The Role of Existing Institutions."
Prof. Vedder welcomes comments on these blogs. Indeed, he hopes to read some of the blog comments to the audience at the conference (those remaining anonymous may do so), so that you can participate indirectly in its deliberations. We are anticipating a good attendance and a lively and worthwhile discussion.
Harvard's Dear John Letter
By Lynne Munson
Harvard and I both received Dear John letters last week. Harvard's was from its endowment manager--Mohamed El-Erian--who is bolting Cambridge after just one and a half years on the job. According to the New York Times many are "stunned" by El-Erian's decision. Apparently even $35 billion isn't enough of a toychest to keep some of these hedge-savvy investment managers put.
Coincidentally, I received a letter from El-Erian just last week. It was Harvard Management Company's [HMC] annual endowment status update that is sent to "the friends of Harvard" and has long been called the "John Harvard Letter." It literally begins "Dear John."
Allow me an admission: I love these "bragging" letters. The public rarely gets a peek inside college and university endowments. And when these investment managers rave about their performance they often drop in more than a few useful tidbits of infomation. El-Erian's August 21, 2007 "John Harvard" letter was no different.
He begins by celebrating Harvard's endowment gains--up 23% in just a year's time. That's a whopper of course but stay tuned because things get a little fuzzy. HMC makes a distinction between the funds in its endowment and those in what it calls its General Investment Account. The corporation tells John Harvard readers that the current size of its endowment is $34.9 billion. But explains in the next sentence that “the total value of the ‘General Investment Account’ (GIA), which constitutes the pooled assets managed by HMC that include the endowment and related accounts, grew from $33.7 billion to $41.0 billion.”
So—what’s the difference between the endowment and the GIA? Recipients of the John Harvard letter aren’t given a definitional distinction and I doubt the IRS would get one either. As readers of this blog now, the IRS is proposing to revise the form non-profits file to include endowment size and payout infomation. But unless the IRS clearly defines what they mean by endowment and polices reporting, the information colleges and universities supply will be unreliable and incomparable. Not only do many schools—Harvard is not alone here—already have an array of fuzzily defined accounts into which they pour and manage endowment funds, but the board of any institution can redefine what it means by endowment at any time.
Requiring institutions to follow—at least in their reporting to the IRS—a specific definition for endowment will affect the accuracy of all reporting in this area. But let's get back to that letter because El-Erian included a real gem of information that further makes the point. Page two contains a passing and completely unelaborated reference to the fact that Harvard distributed $1.1 billion out of its endowment in FY2007 to support teaching, research, and student aid. Now, this sounds like a lot. But $1.1 billion constitutes either a mere 3.15% or 2.7% of the size of Harvard’s endowment, depending on which account you use as the basis for the calculation. Either percentage is well below the already alarmingly low average rate (4%)of higher education endowment spending.
It costs more than $45,000 for an undergraduate to attend Harvard annually. The price rose 4.5% just last year. The school is spending $108 million on need-based financial aid this year. That amounts to either 1/3% or 1/4% of the value of its endowment, again depending on which figure you use. This isn't real money--it is a rounding error.
Interestingly HMC recently decided to suspend the John Harvard letter, citing a desire to be more “cognizant of the need to appropriately limit what we disclose about investment strategies and vehicles.” So we'll be deprived even the scant information we've been able to glean from this annual braggadoccio.
Harvard and I both received Dear John letters last week. Harvard's was from its endowment manager--Mohamed El-Erian--who is bolting Cambridge after just one and a half years on the job. According to the New York Times many are "stunned" by El-Erian's decision. Apparently even $35 billion isn't enough of a toychest to keep some of these hedge-savvy investment managers put.
Coincidentally, I received a letter from El-Erian just last week. It was Harvard Management Company's [HMC] annual endowment status update that is sent to "the friends of Harvard" and has long been called the "John Harvard Letter." It literally begins "Dear John."
Allow me an admission: I love these "bragging" letters. The public rarely gets a peek inside college and university endowments. And when these investment managers rave about their performance they often drop in more than a few useful tidbits of infomation. El-Erian's August 21, 2007 "John Harvard" letter was no different.
He begins by celebrating Harvard's endowment gains--up 23% in just a year's time. That's a whopper of course but stay tuned because things get a little fuzzy. HMC makes a distinction between the funds in its endowment and those in what it calls its General Investment Account. The corporation tells John Harvard readers that the current size of its endowment is $34.9 billion. But explains in the next sentence that “the total value of the ‘General Investment Account’ (GIA), which constitutes the pooled assets managed by HMC that include the endowment and related accounts, grew from $33.7 billion to $41.0 billion.”
So—what’s the difference between the endowment and the GIA? Recipients of the John Harvard letter aren’t given a definitional distinction and I doubt the IRS would get one either. As readers of this blog now, the IRS is proposing to revise the form non-profits file to include endowment size and payout infomation. But unless the IRS clearly defines what they mean by endowment and polices reporting, the information colleges and universities supply will be unreliable and incomparable. Not only do many schools—Harvard is not alone here—already have an array of fuzzily defined accounts into which they pour and manage endowment funds, but the board of any institution can redefine what it means by endowment at any time.
Requiring institutions to follow—at least in their reporting to the IRS—a specific definition for endowment will affect the accuracy of all reporting in this area. But let's get back to that letter because El-Erian included a real gem of information that further makes the point. Page two contains a passing and completely unelaborated reference to the fact that Harvard distributed $1.1 billion out of its endowment in FY2007 to support teaching, research, and student aid. Now, this sounds like a lot. But $1.1 billion constitutes either a mere 3.15% or 2.7% of the size of Harvard’s endowment, depending on which account you use as the basis for the calculation. Either percentage is well below the already alarmingly low average rate (4%)of higher education endowment spending.
It costs more than $45,000 for an undergraduate to attend Harvard annually. The price rose 4.5% just last year. The school is spending $108 million on need-based financial aid this year. That amounts to either 1/3% or 1/4% of the value of its endowment, again depending on which figure you use. This isn't real money--it is a rounding error.
Interestingly HMC recently decided to suspend the John Harvard letter, citing a desire to be more “cognizant of the need to appropriately limit what we disclose about investment strategies and vehicles.” So we'll be deprived even the scant information we've been able to glean from this annual braggadoccio.
Friday, September 14, 2007
Landmark Legislation In New Jersey
By Richard Vedder
My friend Douglass North won the Nobel Prize arguing for half a century that transactions costs matter. If you lower the cost of going from A to B, or of buying a good from C, you are likely to bring about a more efficient use of resources and ultimately a rise in the material quality of life.
One mammoth transaction cost in higher education that impedes competition and reduces the optimal use of resources is the cost of students migrating from college A to college B. Just as nations impose tariffs on imported goods, so universities "tax" incoming students by only giving them partial credit for work already completed at another institution. College A, an accredited two year institution, says Joan College has 50 percent of the work for a bachelor's degree completed, but College B says, "No, if you want your degree here, we will only give you 25 percent credit towards your degree for work done at College A." "Your freshman English course does not count, since it is a composition course, and we at Last Resort U want our freshman to study American literature" --and other such nonsense.
Enter the New Jersey legislature, hardly a group that I would expect to favor positive educational reform (although New Jersey was a pioneer in alternative certification of public school teachers). They passed a law decreeing that New Jersey four year universities (presumably public schools; institutions like Princeton or Fairleigh Dickinson are excluded) must accept as a full two years credit (50 percent of a four year degree) any transfer student who has an Associate's degree from a community college. The college has some choice -- it does not have to accept the student. But if it accepts her, it must give her credit for two full years. Part of the reasoning may be that it does not want to subsidize instruction twice for transfer students (which is the case when little prior credit is accepted).
New Jersey is responding to a key Spellings Commission concern -- the costly nature of the transfer process, impeding access for some students to good four year institutions, adding to costs, and restricting competition. It should be applauded. At the same time, I usually do not like legislatures mandating academic policy. There are mediocre two year schools whose credit perhaps should not fully transfer. There are, in short, some quality control issues. And a "one size fits all" approach is usually bad. But perhaps the Theory of the Second Best applies here. What we are doing now is unacceptably costly and self-serving, so this reform, imperfect as it may be at the margin, is an improvement over the status quo. Heavy handed legislative efforts are to be expected when colleges do not respond to public concerns. There is widespread agreement that we need to remove barriers to both entry and transfer, and this is a welcome development on balance.
The libertarian side of me (which is a big side) is always worried about coercive laws, but the fact that colleges can reject potential transfers still leaves the four year schools with a choice in the matter. And the measure is taxpayer friendly, maybe reducing, albeit very modestly, the incidence of five and six year college students, a national disgrace.
My friend Douglass North won the Nobel Prize arguing for half a century that transactions costs matter. If you lower the cost of going from A to B, or of buying a good from C, you are likely to bring about a more efficient use of resources and ultimately a rise in the material quality of life.
One mammoth transaction cost in higher education that impedes competition and reduces the optimal use of resources is the cost of students migrating from college A to college B. Just as nations impose tariffs on imported goods, so universities "tax" incoming students by only giving them partial credit for work already completed at another institution. College A, an accredited two year institution, says Joan College has 50 percent of the work for a bachelor's degree completed, but College B says, "No, if you want your degree here, we will only give you 25 percent credit towards your degree for work done at College A." "Your freshman English course does not count, since it is a composition course, and we at Last Resort U want our freshman to study American literature" --and other such nonsense.
Enter the New Jersey legislature, hardly a group that I would expect to favor positive educational reform (although New Jersey was a pioneer in alternative certification of public school teachers). They passed a law decreeing that New Jersey four year universities (presumably public schools; institutions like Princeton or Fairleigh Dickinson are excluded) must accept as a full two years credit (50 percent of a four year degree) any transfer student who has an Associate's degree from a community college. The college has some choice -- it does not have to accept the student. But if it accepts her, it must give her credit for two full years. Part of the reasoning may be that it does not want to subsidize instruction twice for transfer students (which is the case when little prior credit is accepted).
New Jersey is responding to a key Spellings Commission concern -- the costly nature of the transfer process, impeding access for some students to good four year institutions, adding to costs, and restricting competition. It should be applauded. At the same time, I usually do not like legislatures mandating academic policy. There are mediocre two year schools whose credit perhaps should not fully transfer. There are, in short, some quality control issues. And a "one size fits all" approach is usually bad. But perhaps the Theory of the Second Best applies here. What we are doing now is unacceptably costly and self-serving, so this reform, imperfect as it may be at the margin, is an improvement over the status quo. Heavy handed legislative efforts are to be expected when colleges do not respond to public concerns. There is widespread agreement that we need to remove barriers to both entry and transfer, and this is a welcome development on balance.
The libertarian side of me (which is a big side) is always worried about coercive laws, but the fact that colleges can reject potential transfers still leaves the four year schools with a choice in the matter. And the measure is taxpayer friendly, maybe reducing, albeit very modestly, the incidence of five and six year college students, a national disgrace.
Russ Poter's Lament
By Richard Vedder
From time to time, I get private comments on blogs or articles I have written, or radio or TV interviews I have done. A week ago, Russ Poter forwarded me a thoughtful and interesting epistle. I had complained about Ph.D. programs and raised questions about the effectiveness of much so-called university research.
Mr. Poter implied that much social science, education, etc., research is probably of dubious value. Implicitly, he made the important distinction between research in the hard sciences designed to improve our knowledge of the physical and biological world we live in, and research in the soft sciences, which often is harder to conduct because of non-laboratory conditions and where political agendas and normative perspectives often dominate objective searches for the truth.
I think this is a valuable distinction. If I were czar, I think I might eliminate social science grants by the National Science Foundation and use the savings to help fund permanent tax relief to long suffering taxpayers who most universities look at as ignorant cash cows whose major function in life is to provide them more funds. To be sure, some social science research reveals interesting things. I am reading a fascinating short account of Western economic history since 1200, A Farewell to Alms by economic historian Gregory Clark of Cal Davis. He has all sorts of interesting charts and speculations that help us get a good grasp of the answer to the question "where did we come from economically?" Or, why did we succeed economically to increase incomes and output after 1800 in the West when others had failed before then, and many have continued to fail since? And this research was NSF financed. Nonetheless, I know of a lot of research costing tons of money that made trivial additions to our knowledge. And I suspect a good deal of the research would have been done anyway if the NSF had not funded it.
Mr. Poter raises the issue of the growth of this type funding in the Clinton years and thinks Mr. Clinton should speak up and explain why it was done and what the benefits are. I prefer to ask the broader question: Why is the federal government funding this research at all?
I am not anti-research, not anti-social science research. Au contraire, I have several books and a couple hundred papers in social science (mostly economics, but occasionally overlapping into other disciplines) out there, and in the Medicare portion of my life I am writing one book and negotiating another. Research is a necessary but not sufficient ingredient in economic and cultural progress. I particularly deplore the lack of good research on what types of instructional delivery are effective in higher education. But I also think a lot of research is being done for the wrong reasons -- to get young persons tenure because of a "publish or perish" attitude which makes job security an issue, or in order to get summer stipend money to allow the family the ability to take a European vacation. There is a lot of rent-seeking, and a lot of second rate scholars doing third rate research on fourth rate topics of fifth rate interest to the broader world. (My favorite today: an article in a prestigious economics journal by two professors at top universities -- Stanford and Cal Tech -- on "The Effects of Surname Initials on Academic Success" that suggests I have been the victim of alphabetic discrimination).
From time to time, I get private comments on blogs or articles I have written, or radio or TV interviews I have done. A week ago, Russ Poter forwarded me a thoughtful and interesting epistle. I had complained about Ph.D. programs and raised questions about the effectiveness of much so-called university research.
Mr. Poter implied that much social science, education, etc., research is probably of dubious value. Implicitly, he made the important distinction between research in the hard sciences designed to improve our knowledge of the physical and biological world we live in, and research in the soft sciences, which often is harder to conduct because of non-laboratory conditions and where political agendas and normative perspectives often dominate objective searches for the truth.
I think this is a valuable distinction. If I were czar, I think I might eliminate social science grants by the National Science Foundation and use the savings to help fund permanent tax relief to long suffering taxpayers who most universities look at as ignorant cash cows whose major function in life is to provide them more funds. To be sure, some social science research reveals interesting things. I am reading a fascinating short account of Western economic history since 1200, A Farewell to Alms by economic historian Gregory Clark of Cal Davis. He has all sorts of interesting charts and speculations that help us get a good grasp of the answer to the question "where did we come from economically?" Or, why did we succeed economically to increase incomes and output after 1800 in the West when others had failed before then, and many have continued to fail since? And this research was NSF financed. Nonetheless, I know of a lot of research costing tons of money that made trivial additions to our knowledge. And I suspect a good deal of the research would have been done anyway if the NSF had not funded it.
Mr. Poter raises the issue of the growth of this type funding in the Clinton years and thinks Mr. Clinton should speak up and explain why it was done and what the benefits are. I prefer to ask the broader question: Why is the federal government funding this research at all?
I am not anti-research, not anti-social science research. Au contraire, I have several books and a couple hundred papers in social science (mostly economics, but occasionally overlapping into other disciplines) out there, and in the Medicare portion of my life I am writing one book and negotiating another. Research is a necessary but not sufficient ingredient in economic and cultural progress. I particularly deplore the lack of good research on what types of instructional delivery are effective in higher education. But I also think a lot of research is being done for the wrong reasons -- to get young persons tenure because of a "publish or perish" attitude which makes job security an issue, or in order to get summer stipend money to allow the family the ability to take a European vacation. There is a lot of rent-seeking, and a lot of second rate scholars doing third rate research on fourth rate topics of fifth rate interest to the broader world. (My favorite today: an article in a prestigious economics journal by two professors at top universities -- Stanford and Cal Tech -- on "The Effects of Surname Initials on Academic Success" that suggests I have been the victim of alphabetic discrimination).
Wednesday, September 12, 2007
Sorry Junior, You're On Your Own Now
By Bryan O'Keefe
The Pittsburgh Post-Gazette (which is turning into CCAP’s new favorite newspaper) has an interesting and disturbing story this morning about college costs. The gist of the piece is that a new study has found that most parents are not going to be able to help their children pay for college. 27 percent of the respondents have saved zero for college and another 27 percent have saved less than $5,000. The story points out that this paltry sum wouldn’t even be enough to foot the bill at small schools in the Keystone state like Slippery Rock or Indiana University of PA.
The survey’s findings are brutal but yet true. I think the real problem is that many baby boomers went to college when higher education was more reasonably priced. They took out modest loans, paid them back in 5 years or so, and have not given higher education much thought. The reality is that even at a state school like Indiana Univ. of PA college tuition – and when you add in the room, board, books, etc. – is going to run close to $30,000 for four years. If you go to the elite fancy pants school, it could cost triple that.
529 savings plans are a definite step in the right direction and more parents should be opening these and contributing to them. It’s probably cliché to say this, but if parents opened the 529 when Junior was born and then contributed $100 a paycheck or something close to that, the money would really pile up by the time Junior was ready to leave the nest.
While this sounds terrific in theory, there are two practical problems. First, Americans, on the whole, are saving less and less these days and that $100 commitment might just be too much in their own minds. People have a tendency now more than ever before to “live for today” and while I suppose that carpe diem attitude is great if we are talking about skydiving, it often times is not the best fiscal advice.
The second disadvantage though is that the schools themselves give parents very little incentive to save. If you have saved a modest amount of money – perhaps not enough to afford full tuition but yet enough to make a dent in it – then there is a very good chance that your Junior will not qualify for much of anything in the financial aid department. Irresponsible parents can indirectly be rewarded (this does not mean that the truly and profoundly poor should be punished; what we are talking about are people who make decent enough salaries but have just refused to save anything for their children’s education).
So because of these incentives – good and bad – and behavior – mostly bad – we have a situation where fewer parents can now help their children with their college bills. As a result, more students take out unreasonably high debt loads. But, then, again, what is new in the world of higher ed?
The Pittsburgh Post-Gazette (which is turning into CCAP’s new favorite newspaper) has an interesting and disturbing story this morning about college costs. The gist of the piece is that a new study has found that most parents are not going to be able to help their children pay for college. 27 percent of the respondents have saved zero for college and another 27 percent have saved less than $5,000. The story points out that this paltry sum wouldn’t even be enough to foot the bill at small schools in the Keystone state like Slippery Rock or Indiana University of PA.
The survey’s findings are brutal but yet true. I think the real problem is that many baby boomers went to college when higher education was more reasonably priced. They took out modest loans, paid them back in 5 years or so, and have not given higher education much thought. The reality is that even at a state school like Indiana Univ. of PA college tuition – and when you add in the room, board, books, etc. – is going to run close to $30,000 for four years. If you go to the elite fancy pants school, it could cost triple that.
529 savings plans are a definite step in the right direction and more parents should be opening these and contributing to them. It’s probably cliché to say this, but if parents opened the 529 when Junior was born and then contributed $100 a paycheck or something close to that, the money would really pile up by the time Junior was ready to leave the nest.
While this sounds terrific in theory, there are two practical problems. First, Americans, on the whole, are saving less and less these days and that $100 commitment might just be too much in their own minds. People have a tendency now more than ever before to “live for today” and while I suppose that carpe diem attitude is great if we are talking about skydiving, it often times is not the best fiscal advice.
The second disadvantage though is that the schools themselves give parents very little incentive to save. If you have saved a modest amount of money – perhaps not enough to afford full tuition but yet enough to make a dent in it – then there is a very good chance that your Junior will not qualify for much of anything in the financial aid department. Irresponsible parents can indirectly be rewarded (this does not mean that the truly and profoundly poor should be punished; what we are talking about are people who make decent enough salaries but have just refused to save anything for their children’s education).
So because of these incentives – good and bad – and behavior – mostly bad – we have a situation where fewer parents can now help their children with their college bills. As a result, more students take out unreasonably high debt loads. But, then, again, what is new in the world of higher ed?
Tuesday, September 11, 2007
More on Differential Pricing
By Richard Vedder
A very useful source of news about higher education is the Greentree Gazette, whose publisher, Jeff Wendt, recently interviewed me for an article in the November issue. There is a free on-line version weekly available by clicking here.
They have run an interesting two part story on the growth of differential tuition pricing, using examples such as the University of Wisconsin and Arizona State University. As I have said before, in principle it makes sense for different pricing for different majors, if for no other reason than the costs of instruction vary considerably across disciplines.
At the same time, however, a lot of these new differential fees are feeding, and disguising, some of the tuition inflation, and also enabling institutional hubris. We read that ASU has decided it wants to be a leading journalism school, has spent $71 million on a new building, and is hiring superstar faculty like Aaron Brown, formerly of CNN. Then, to partially finance this, it raises fees ($250 in this case) to consumers. The University of Wisconsin, noting that their overall ratings are slipping because they are inadequate in faculty resources (e.g., not paying faculty enough), is tacking on fees to enhance faculty pay.
Question: Is it efficient to educate students using Socrates-era technology, paying junior business school faculty well over $100,000 a year for perhaps 200 hours in the classroom? Rather than tacking on more fees, perhaps business schools should look for new ways to conserve their extremely high priced help. That is ostensibly what they train students to do who go out into the real world. The problem, of course, is it is easier to initiate new fees than to innovate, restructure, and rethink ways of doing things. That is academia today. Raise prices and our problems are solved. If General Motors tried to do that, they would be bankrupt within three years.
At a typical university, faculty salaries eat up only less than one-half of tuition fees. Why don't faculty band together, rent cheap buildings as classrooms, and offer a superior education for less money, cutting out most of the outrageous overhead and frills universities have? To some extent, that is what the for-profits are doing. Without state subsidies to their inefficient non-profit competitors, they would be taking over higher education.
A very useful source of news about higher education is the Greentree Gazette, whose publisher, Jeff Wendt, recently interviewed me for an article in the November issue. There is a free on-line version weekly available by clicking here.
They have run an interesting two part story on the growth of differential tuition pricing, using examples such as the University of Wisconsin and Arizona State University. As I have said before, in principle it makes sense for different pricing for different majors, if for no other reason than the costs of instruction vary considerably across disciplines.
At the same time, however, a lot of these new differential fees are feeding, and disguising, some of the tuition inflation, and also enabling institutional hubris. We read that ASU has decided it wants to be a leading journalism school, has spent $71 million on a new building, and is hiring superstar faculty like Aaron Brown, formerly of CNN. Then, to partially finance this, it raises fees ($250 in this case) to consumers. The University of Wisconsin, noting that their overall ratings are slipping because they are inadequate in faculty resources (e.g., not paying faculty enough), is tacking on fees to enhance faculty pay.
Question: Is it efficient to educate students using Socrates-era technology, paying junior business school faculty well over $100,000 a year for perhaps 200 hours in the classroom? Rather than tacking on more fees, perhaps business schools should look for new ways to conserve their extremely high priced help. That is ostensibly what they train students to do who go out into the real world. The problem, of course, is it is easier to initiate new fees than to innovate, restructure, and rethink ways of doing things. That is academia today. Raise prices and our problems are solved. If General Motors tried to do that, they would be bankrupt within three years.
At a typical university, faculty salaries eat up only less than one-half of tuition fees. Why don't faculty band together, rent cheap buildings as classrooms, and offer a superior education for less money, cutting out most of the outrageous overhead and frills universities have? To some extent, that is what the for-profits are doing. Without state subsidies to their inefficient non-profit competitors, they would be taking over higher education.
The Cheating Epidemic in Higher Education
By Richard Vedder
Over time, the moral absolutes that once governed human behavior in our nation have become diluted. Extramarital sexual activity is routinely condoned; more politicians and other respected persons simply lie about things (President Clinton's "I didn't have sex with that women" being only the most famous example), and people excuse those guilty of felonies on dubious grounds ("he had a rough childhood," "the family was desperate for money," etc.) Moral relativism is exacting a toll on America.
Higher education, which gets government subsidies partly because it allegedly promotes good values, is facing a cheating crisis of epic proportions, if Sunday's San Francisco Chronicle is to be believed. Most students cheat at one time or another. What is particularly discouraging is that my colleagues in the faculties and university administrations around the country seem relatively indifferent to this assault on the integrity of the academic process.
This is nowhere more apparent in the plagiarism scandal involving the President of Southern Illinois University, an ex-politician named Glenn Poshard. The Chicago Tribune has rightly called on Poshard's ouster, saying it is a travesty for an institution committed to truth and honesty to have as its leader someone who stole much of his dissertation from others. I don't know the facts, and maybe the allegations are wrong, but the feverish attempts of SIU to have only an in-house review done by persons beholden to Poshard himself is absolutely beyond the pale and is itself grounds for dismissal.
My own university was slow to move on a plagiarism case of sizable magnitude in our Engineering College, responding mainly after public disclosures of the scandal by a courageous graduate student. To this day the faculty have not seen fit to criticize the individuals who apparently allowed the plagiarism to occur. At Harvard, a star professor apparently was engaged in financial chicanery involving millions of dollars, and Harvard itself paid millions to the federal government to cover some losses, but the individual still is teaching. We are told, "He is very good." Good, but dishonest. Hitler had talents too, but that did not make him qualified to run Germany. It is time to address this scandal of growing proportions.
How? For one thing, we should get serious about punishing those who are guilty (after appropriate due process). A few heads should role -- students, faculty, administrators who cheat or deceive. I make it difficult to cheat in my classes, but when I know cheating has occurred, I go after the students with fervor -- forcing them to face disciplinary hearings, hire lawyers, and fight dismissal from the university -- which I demand. But I am in the minority, and most professors don't want to trouble themselves with the hassle involved in due process. This sort of casual attitude ultimately leads to real problems for higher education, either in a decline in the integrity of the academic evaluation system and resultant fall in academic reputation, or in public withdrawal of support of individuals who seem morally and ethically indifferent.
If universities cannot tell right from wrong, or continue to turn their heads when wrong is committed in their own midst, are they deserving of the public trust and public funds? Perhaps it is time to bring the Ten Commandments back to higher education. After all, plagiarism and cheating on exams violates the commandment "Thou shalt not steal."
Over time, the moral absolutes that once governed human behavior in our nation have become diluted. Extramarital sexual activity is routinely condoned; more politicians and other respected persons simply lie about things (President Clinton's "I didn't have sex with that women" being only the most famous example), and people excuse those guilty of felonies on dubious grounds ("he had a rough childhood," "the family was desperate for money," etc.) Moral relativism is exacting a toll on America.
Higher education, which gets government subsidies partly because it allegedly promotes good values, is facing a cheating crisis of epic proportions, if Sunday's San Francisco Chronicle is to be believed. Most students cheat at one time or another. What is particularly discouraging is that my colleagues in the faculties and university administrations around the country seem relatively indifferent to this assault on the integrity of the academic process.
This is nowhere more apparent in the plagiarism scandal involving the President of Southern Illinois University, an ex-politician named Glenn Poshard. The Chicago Tribune has rightly called on Poshard's ouster, saying it is a travesty for an institution committed to truth and honesty to have as its leader someone who stole much of his dissertation from others. I don't know the facts, and maybe the allegations are wrong, but the feverish attempts of SIU to have only an in-house review done by persons beholden to Poshard himself is absolutely beyond the pale and is itself grounds for dismissal.
My own university was slow to move on a plagiarism case of sizable magnitude in our Engineering College, responding mainly after public disclosures of the scandal by a courageous graduate student. To this day the faculty have not seen fit to criticize the individuals who apparently allowed the plagiarism to occur. At Harvard, a star professor apparently was engaged in financial chicanery involving millions of dollars, and Harvard itself paid millions to the federal government to cover some losses, but the individual still is teaching. We are told, "He is very good." Good, but dishonest. Hitler had talents too, but that did not make him qualified to run Germany. It is time to address this scandal of growing proportions.
How? For one thing, we should get serious about punishing those who are guilty (after appropriate due process). A few heads should role -- students, faculty, administrators who cheat or deceive. I make it difficult to cheat in my classes, but when I know cheating has occurred, I go after the students with fervor -- forcing them to face disciplinary hearings, hire lawyers, and fight dismissal from the university -- which I demand. But I am in the minority, and most professors don't want to trouble themselves with the hassle involved in due process. This sort of casual attitude ultimately leads to real problems for higher education, either in a decline in the integrity of the academic evaluation system and resultant fall in academic reputation, or in public withdrawal of support of individuals who seem morally and ethically indifferent.
If universities cannot tell right from wrong, or continue to turn their heads when wrong is committed in their own midst, are they deserving of the public trust and public funds? Perhaps it is time to bring the Ten Commandments back to higher education. After all, plagiarism and cheating on exams violates the commandment "Thou shalt not steal."
Monday, September 10, 2007
Dartmouth: A Last Observation
By Richard Vedder
Dartmouth College has done it, it has gone ahead with a plan to dilute alumni participation in university governance. The way they have done it is less egregious than some earlier efforts, but it still seems like it is an attempt by the administration to dilute the influence of an increasing number of troublesome people who want real accountability. They have decided to make the board larger than the current 18, arguing that 18 is too small. I happen to disagree, and believe truly effective boards of more than 15 are rare. My university functions with one of nine (who nonetheless fail to perform their fiduciary responsibilities to the public by truly evaluating administrative decisions).
I suspect that this move is going to cost Dartmouth some real significant amounts of alumni contributions --which is good in my mind. It is time that alumni and other philanthropists get smart and tough in the allocation of their largess --and demand real, meaningful accounting on the use of funds. The Robertson family lawsuit at Princeton is a great thing, in my mind, because finally people are challenging colleges that use gifts in a different fashion than intended without the approval of the donor or his/her heirs or representatives.
The whole issue ultimately boils down to "who owns the institution." The legal answer, usually, is that the Trustees are the owners. The issue of who the trustees are, then, is the equivalent of asking "who are the controlling stockholders" in for-profit private enterprises. Everyone thinks they own the institution --the alums who are loyal users and financiers of educational services --the administration who runs the place, the governments that increasingly finance activities even at the private schools, the faculty, who are the institution in terms of being the critical inputs used in providing services, the students and their parents, who pay much of the bills, etc.
In part the battle at Dartmouth is whether the governance should be done by the Administration jointly with the alumni, or by the administration alone. I tend to favor checks and balances and accountability, and I think the divided board as currently constituted is a better device for future success than the newly changed organization. Of course, the establishment trustees organization (Association of Governing Boards of Colleges and Universities) thinks the changes proposed are great, since this is an organization that, as far as I can tell believes, more or less, that boards of trustees should give money, act important, but do little of great substance (they would deny that of course). By contrast, the American Council of Trustees and Alumni (Anne Neal's group) has a better vision of university governance, believing in boards that actively challenge administrations and make them justify their actions.
I have said enough about Dartmouth College for a lifetime, so will move on to stories about other institutions. Dartmouth is a great school, and, as Daniel Webster so memorably said nearly two centuries ago, there are those who love it.
Dartmouth College has done it, it has gone ahead with a plan to dilute alumni participation in university governance. The way they have done it is less egregious than some earlier efforts, but it still seems like it is an attempt by the administration to dilute the influence of an increasing number of troublesome people who want real accountability. They have decided to make the board larger than the current 18, arguing that 18 is too small. I happen to disagree, and believe truly effective boards of more than 15 are rare. My university functions with one of nine (who nonetheless fail to perform their fiduciary responsibilities to the public by truly evaluating administrative decisions).
I suspect that this move is going to cost Dartmouth some real significant amounts of alumni contributions --which is good in my mind. It is time that alumni and other philanthropists get smart and tough in the allocation of their largess --and demand real, meaningful accounting on the use of funds. The Robertson family lawsuit at Princeton is a great thing, in my mind, because finally people are challenging colleges that use gifts in a different fashion than intended without the approval of the donor or his/her heirs or representatives.
The whole issue ultimately boils down to "who owns the institution." The legal answer, usually, is that the Trustees are the owners. The issue of who the trustees are, then, is the equivalent of asking "who are the controlling stockholders" in for-profit private enterprises. Everyone thinks they own the institution --the alums who are loyal users and financiers of educational services --the administration who runs the place, the governments that increasingly finance activities even at the private schools, the faculty, who are the institution in terms of being the critical inputs used in providing services, the students and their parents, who pay much of the bills, etc.
In part the battle at Dartmouth is whether the governance should be done by the Administration jointly with the alumni, or by the administration alone. I tend to favor checks and balances and accountability, and I think the divided board as currently constituted is a better device for future success than the newly changed organization. Of course, the establishment trustees organization (Association of Governing Boards of Colleges and Universities) thinks the changes proposed are great, since this is an organization that, as far as I can tell believes, more or less, that boards of trustees should give money, act important, but do little of great substance (they would deny that of course). By contrast, the American Council of Trustees and Alumni (Anne Neal's group) has a better vision of university governance, believing in boards that actively challenge administrations and make them justify their actions.
I have said enough about Dartmouth College for a lifetime, so will move on to stories about other institutions. Dartmouth is a great school, and, as Daniel Webster so memorably said nearly two centuries ago, there are those who love it.
Advice for Young Couples To Consider: Getting Pregnant in December
By Richard Vedder
You probably think I pontificate on enough things as it is, and now I am trying to offer family planning advice. But there are some utterly fascinating British data that cry for replication in the U.S., reported to us first by the ultimate numbers fanatics on student higher education participation issues, postsecondary.org, in their August newsletter-- which I read religiously.
English babies born in September-October-November are far more likely to progress to college than babies born in June-July-August. September babies have the highest progression rates. The difference between August and September babies is NOT minuscule --something exceeding 20 percent.
Of course, two big questions arise. First, why? What causes these differences? Second, is the American picture any different? And the answers to those questions lead to a third question: Even if such differences exist in America, can or should we try to do anything about it (e.g., subsidizing birth control methods in some months, taxing them in other months -- although I think I am joking about that option).
The expectation is that the differences relate to the ages of students. When kids begin school, the oldest kids who just missed the cut off date for being in the next older class are perhaps 20 percent older than the youngest kids who just missed the cut off date for being in the next younger class. The data suggest that a significant group of kids never overcome the deficiency of being young --arguably too young --at the beginning. Those decisions on entrance date impact enormously on future success.
We need to see if this is true in the U.S. The cutoff dates for, say, kindergarten or first grade vary by state. Do college participation and completion rates vary by the cutoff date selected? If so, what is the "optimal" date? Do we under use or overuse the holding back or advancing of students during their elementary and secondary years? Above all, why in a nation that knows the number of, say, Hispanic women under the age of 25 majoring in architecture, do we NOT know this very basic type of information with a high degree of assuredness? More generally, why does higher education --a sector that brags about the research it does on umpteen different subjects --do so little research on itself?
You probably think I pontificate on enough things as it is, and now I am trying to offer family planning advice. But there are some utterly fascinating British data that cry for replication in the U.S., reported to us first by the ultimate numbers fanatics on student higher education participation issues, postsecondary.org, in their August newsletter-- which I read religiously.
English babies born in September-October-November are far more likely to progress to college than babies born in June-July-August. September babies have the highest progression rates. The difference between August and September babies is NOT minuscule --something exceeding 20 percent.
Of course, two big questions arise. First, why? What causes these differences? Second, is the American picture any different? And the answers to those questions lead to a third question: Even if such differences exist in America, can or should we try to do anything about it (e.g., subsidizing birth control methods in some months, taxing them in other months -- although I think I am joking about that option).
The expectation is that the differences relate to the ages of students. When kids begin school, the oldest kids who just missed the cut off date for being in the next older class are perhaps 20 percent older than the youngest kids who just missed the cut off date for being in the next younger class. The data suggest that a significant group of kids never overcome the deficiency of being young --arguably too young --at the beginning. Those decisions on entrance date impact enormously on future success.
We need to see if this is true in the U.S. The cutoff dates for, say, kindergarten or first grade vary by state. Do college participation and completion rates vary by the cutoff date selected? If so, what is the "optimal" date? Do we under use or overuse the holding back or advancing of students during their elementary and secondary years? Above all, why in a nation that knows the number of, say, Hispanic women under the age of 25 majoring in architecture, do we NOT know this very basic type of information with a high degree of assuredness? More generally, why does higher education --a sector that brags about the research it does on umpteen different subjects --do so little research on itself?
Sunday, September 09, 2007
Evaluating Accreditation: An Important Event
By Richard Vedder
The gatekeepers to higher education are the accreditators. They play an important role. If you believe some, they insure quality control, and keep the bad guys and gals (e.g., diploma mills) from being a major force. They have helped develop and maintain the best system of higher education in the world. If you believe others, the accreditators are disguised cartels who thwart competition and innovation, keep prices high, and have failed to push for outcomes based measurement of higher education. Accreditation is part of the problem, not the solution.
Who is right? Should the system be changed? We at CCAP are keenly interested in these questions, and, working through our friends at the American Enterprise Institute (where I am a Visiting Scholar), we (AEI) are putting on a conference on Friday, September 21 at AEI, 1150 17th Street N.W., in Washington. The conference is from 9:30 a.m. to 1:30 p.m.
Important players regarding this issue will be in attendance, beginning with the Under Secretary of Education, Sara Martinez Tucker and ending with the Chair of the Spellings Commission, Charles Miller. In between, we have a number of lively and informative speakers, including Anne Neal of the American Council of Trustees and Alumni, Judith Eaton of the Council for Higher Education Accreditation (CHEA), Art Rothkopf, former president of Lafayette College, Spellings Commission member and now top executive at the U.S. Chamber of Commerce; Bill Henderson of the University of Indiana Law School, Jeff Sandefer, founder of the truly remarkable Acton Business School and Texas entrepreneur, and the formidable Candace de Russy, formerly of the Board of Trustees of the State University of New York and fellow blogger (Phi Beta Cons, mainly). I will more or less preside over the proceedings, and good times and lively discussion should ensue.
In DC and want to attend? Just call AEI at 202 862 5800 and make a reservation. We will even provide you a free lunch. Reservations to date are robust in number, so if you are planning on coming, register now. For still further information, call my sidekick at CCAP Bryan O'Keefe at 202-375-7831.
The gatekeepers to higher education are the accreditators. They play an important role. If you believe some, they insure quality control, and keep the bad guys and gals (e.g., diploma mills) from being a major force. They have helped develop and maintain the best system of higher education in the world. If you believe others, the accreditators are disguised cartels who thwart competition and innovation, keep prices high, and have failed to push for outcomes based measurement of higher education. Accreditation is part of the problem, not the solution.
Who is right? Should the system be changed? We at CCAP are keenly interested in these questions, and, working through our friends at the American Enterprise Institute (where I am a Visiting Scholar), we (AEI) are putting on a conference on Friday, September 21 at AEI, 1150 17th Street N.W., in Washington. The conference is from 9:30 a.m. to 1:30 p.m.
Important players regarding this issue will be in attendance, beginning with the Under Secretary of Education, Sara Martinez Tucker and ending with the Chair of the Spellings Commission, Charles Miller. In between, we have a number of lively and informative speakers, including Anne Neal of the American Council of Trustees and Alumni, Judith Eaton of the Council for Higher Education Accreditation (CHEA), Art Rothkopf, former president of Lafayette College, Spellings Commission member and now top executive at the U.S. Chamber of Commerce; Bill Henderson of the University of Indiana Law School, Jeff Sandefer, founder of the truly remarkable Acton Business School and Texas entrepreneur, and the formidable Candace de Russy, formerly of the Board of Trustees of the State University of New York and fellow blogger (Phi Beta Cons, mainly). I will more or less preside over the proceedings, and good times and lively discussion should ensue.
In DC and want to attend? Just call AEI at 202 862 5800 and make a reservation. We will even provide you a free lunch. Reservations to date are robust in number, so if you are planning on coming, register now. For still further information, call my sidekick at CCAP Bryan O'Keefe at 202-375-7831.
Saturday, September 08, 2007
Bush Caves Again
By Richard Vedder
I have always been amazed at how an American President can be so macho and threatening towards his foreign political enemies (the likes of Osama bin Laden or Saddam Hussein), but be so conciliatory and wimpy when confronted by his domestic political enemies like Nancy Pelosi or Teddy Kennedy. Whenever the Democrats start to pass something the President doesn't like, he starts out by threatening to veto, but ends up calling a French white flag factory to purchase their "I surrender" product.
This was repeated for the umpteenth time recently. The House passed a bad higher education budget bill. The Prez sensibly said "it better be changed or I will veto it." As the Senate seemed ready to pass a similar bill, Mr. Bush repeated his threat. The Senate went ahead anyway, both houses arrived at a blended bill with all the disagreeable things in it that the Administration does not like, and the President has announced he will sign. So much for American presidential leadership. Ronald Reagan is probably in Heaven asking God's forgiveness for inflicting the Bushes on the American people (because his making George the Elder veep in 1980 began their reign). It is all too bad because the President appointed a good Secretary of Education, Margaret Spellings, who is asking the right questions and trying to make progress in improving accreditation, reporting of information, simplification of the FAFSA form, etc., etc. She is being thwarted by her boss's indifference or unwillingness to help her fight the battle.
What does the bill do? It does increase Pell Grants measurably, a Spellings Commission recommendation that was widely accepted on both sides of the aisle. But it does nothing innovative to make them more effective. It still gives most Pell money to the schools to give to supplicants who go the monopolistic and, if news stories are to be believed, increasingly morally and ethically challenged financial aid offices. Better would be to give vouchers to kids to be usable for tuition at accredited institutions. This would empower students to shop more for the right school and cut the power of the individual colleges over students.
The bill engages in inane interest rate subsidies, and reduces interest rates on student loans. Government should not be setting interest rates or administrative fees. It is probably true that at the present financial situation institutions make above competitive rates of return on student loans, while after its passage they will make below competitive profits, which is not sustainable in the long run. In the long run, students will feel the squeeze in some fashion --fewer lenders available, less availability of individuals to talk about loan options, etc.
Then there is the idea that there are good majors and bad majors, good jobs and bad jobs. If you become a teacher, a good and noble job whose holders are selfless and humanitarian, you will pay less for your loan than if you become an accountant, engineer, or doctor, jobs whose holders are more selfish and greedy and thus should pay more. This is complete utter bull, and distorts market actions in highly inefficient ways. If you want more teachers, pay them more. Teachers are not underpaid in America, they are mispaid because of inane, viciously anti-market and anti-merit pay schedules inflicted on us by teacher unions. If you want better teachers, do something about that, rather than use loan forgiveness.
Moreover, provisions favored by persons like Buck McKeon of California, implementing some of the Spellings Commission recommendations on transparency and accountability, were thrown out. The colleges, for all their lip service to these concepts, are still fighting providing consumers and policymakers with information on what they do with the money that society showers on them. What do students learn? Who knows? Who cares? Certainly not the U.S. Congress or George W. Bush, because they took out of the bill any attempts to provide that information.
All in all, a bad bill. More of the same. Spend more money. Impose no penalties for inefficiencies or rewards for efficiency and innovation. Make no changes in the system. The Congress gets a second chance with the Higher Education Reauthorization bill, and maybe the President will get some spine and not allow George Miller and Teddy Kennedy to determine higher ed policy. But I am not optimistic. As Kelly Field of the Chronicle of Higher Education observed to me recently, GOP aspirants for president are saying almost nothing about higher ed, unlike the Democrats. They are missing out on a golden opportunity. Americans love higher education, but they are increasingly unhappy with the way it is delivered. It is time to stand up and effect change. The budget bill certainly does not do that.
I have always been amazed at how an American President can be so macho and threatening towards his foreign political enemies (the likes of Osama bin Laden or Saddam Hussein), but be so conciliatory and wimpy when confronted by his domestic political enemies like Nancy Pelosi or Teddy Kennedy. Whenever the Democrats start to pass something the President doesn't like, he starts out by threatening to veto, but ends up calling a French white flag factory to purchase their "I surrender" product.
This was repeated for the umpteenth time recently. The House passed a bad higher education budget bill. The Prez sensibly said "it better be changed or I will veto it." As the Senate seemed ready to pass a similar bill, Mr. Bush repeated his threat. The Senate went ahead anyway, both houses arrived at a blended bill with all the disagreeable things in it that the Administration does not like, and the President has announced he will sign. So much for American presidential leadership. Ronald Reagan is probably in Heaven asking God's forgiveness for inflicting the Bushes on the American people (because his making George the Elder veep in 1980 began their reign). It is all too bad because the President appointed a good Secretary of Education, Margaret Spellings, who is asking the right questions and trying to make progress in improving accreditation, reporting of information, simplification of the FAFSA form, etc., etc. She is being thwarted by her boss's indifference or unwillingness to help her fight the battle.
What does the bill do? It does increase Pell Grants measurably, a Spellings Commission recommendation that was widely accepted on both sides of the aisle. But it does nothing innovative to make them more effective. It still gives most Pell money to the schools to give to supplicants who go the monopolistic and, if news stories are to be believed, increasingly morally and ethically challenged financial aid offices. Better would be to give vouchers to kids to be usable for tuition at accredited institutions. This would empower students to shop more for the right school and cut the power of the individual colleges over students.
The bill engages in inane interest rate subsidies, and reduces interest rates on student loans. Government should not be setting interest rates or administrative fees. It is probably true that at the present financial situation institutions make above competitive rates of return on student loans, while after its passage they will make below competitive profits, which is not sustainable in the long run. In the long run, students will feel the squeeze in some fashion --fewer lenders available, less availability of individuals to talk about loan options, etc.
Then there is the idea that there are good majors and bad majors, good jobs and bad jobs. If you become a teacher, a good and noble job whose holders are selfless and humanitarian, you will pay less for your loan than if you become an accountant, engineer, or doctor, jobs whose holders are more selfish and greedy and thus should pay more. This is complete utter bull, and distorts market actions in highly inefficient ways. If you want more teachers, pay them more. Teachers are not underpaid in America, they are mispaid because of inane, viciously anti-market and anti-merit pay schedules inflicted on us by teacher unions. If you want better teachers, do something about that, rather than use loan forgiveness.
Moreover, provisions favored by persons like Buck McKeon of California, implementing some of the Spellings Commission recommendations on transparency and accountability, were thrown out. The colleges, for all their lip service to these concepts, are still fighting providing consumers and policymakers with information on what they do with the money that society showers on them. What do students learn? Who knows? Who cares? Certainly not the U.S. Congress or George W. Bush, because they took out of the bill any attempts to provide that information.
All in all, a bad bill. More of the same. Spend more money. Impose no penalties for inefficiencies or rewards for efficiency and innovation. Make no changes in the system. The Congress gets a second chance with the Higher Education Reauthorization bill, and maybe the President will get some spine and not allow George Miller and Teddy Kennedy to determine higher ed policy. But I am not optimistic. As Kelly Field of the Chronicle of Higher Education observed to me recently, GOP aspirants for president are saying almost nothing about higher ed, unlike the Democrats. They are missing out on a golden opportunity. Americans love higher education, but they are increasingly unhappy with the way it is delivered. It is time to stand up and effect change. The budget bill certainly does not do that.
Wednesday, September 05, 2007
Core and Hard Core
By Richard Vedder
My favorite newspaper, the Wall Street Journal, has two marvelous op-eds on higher education in today's issue, which, along with a magnum opus on the op-ed page of the Pittsburgh Post-Gazette on the nefarious Pennsyvlania Higher Education Assistance Agency done by Bryan O'Keefe and myself, makes this a banner day for higher ed commentary in American newspapers.(The gist of the piece by Bryan and me was incorporated into a blog on this site the other day that got a good deal of comments).
The "Core" in the title to this blog refers to Peter Berkowitz's superb plea for the institution of a liberal education core in American higher education. The headline says it all: "Our compassless colleges." Are there key kinds of knowledge that all informed citizens and future national leaders should have? Berkowitz says "yes" and I agree. While some schools like Harvard have made valiant attempts to revitalize the core, these efforts are typically little more than a menu of courses that students must choose from. No one must take a course in American history or Western Civilization (both musts in my book), or in political philosophy, great works of literature, or economics, not to mention a couple of the hard sciences (biology and physics). Berkowitz says these types of courses should dominate the first two years of study, and I am inclined to agree. If we don't know what binds us together as a people --our heritage--or the common issues and eternal questions that humankind has wrestled with over the ages, etc., we lose some of the cohesiveness and glue that make us part of both America and Western Civilization. I also agree with Berkowitz that a good curriculum would require students to have good familarity (two years) of a foreign language and some association with non-Western cultures and/or religions (e.g., a comparative religion course).
The major obstacles are two: one is an excessive vocationalism that is largely ill-formed. That is in part because most of the vocationally advantages of higher education are truly illusionary in a fundamental sense (not all: you need college training to be an engineer or accountant). The higher earnings of college grads comes in large part from the higher cognitive skills and determination of college students relative to their non-college counterparts. Besides, the vocational dimensions of higher ed, even where justified, can largely be satisfied within a major of 10 or at most 12 courses (with the possible exception of some of the sciences and engineering). That is plausible with a two year higher ed core.
The second obstacle: the faculty. Faculty teach what they want to teach. They hate to teach survey courses. They want to teach senior seminars and graduate workshops. They don't want to increase enrollments in Department X by mandatory courses, because it means smaller enrollment (and budgets) in Department Y that does not have a core course. They fight a common core for all the wrong reasons.
The "hard core" in the title refers to the great piece by Christian Sahner about Princeton's required sex-ed course. At Princeton, you have to attend a play that glorifies sexual activity, but don't have to study American history. Shame on this, going on at arguably our greatest undergraduate university (at least US News & World Report thinks so). At Princeton, probably 40 percent of entering freshman have not had sexual intercourse, yet the required play assumes sexual activity is the norm. At my own university, individuals who gain the ear of the Administration to push gay/lesbian issues have often shown marked intolerance and bigotry towards others who hate the glorification of these forms of sexual behavior. Instead of promoting tolerance to all legal forms of behavior, the university administration shows intolerance towards some. "Diversity" often does not extend to social, cultural and political views, but only to non-intellectual things like skin color. This is commonplace in American higher education. And it is a shame.
My favorite newspaper, the Wall Street Journal, has two marvelous op-eds on higher education in today's issue, which, along with a magnum opus on the op-ed page of the Pittsburgh Post-Gazette on the nefarious Pennsyvlania Higher Education Assistance Agency done by Bryan O'Keefe and myself, makes this a banner day for higher ed commentary in American newspapers.(The gist of the piece by Bryan and me was incorporated into a blog on this site the other day that got a good deal of comments).
The "Core" in the title to this blog refers to Peter Berkowitz's superb plea for the institution of a liberal education core in American higher education. The headline says it all: "Our compassless colleges." Are there key kinds of knowledge that all informed citizens and future national leaders should have? Berkowitz says "yes" and I agree. While some schools like Harvard have made valiant attempts to revitalize the core, these efforts are typically little more than a menu of courses that students must choose from. No one must take a course in American history or Western Civilization (both musts in my book), or in political philosophy, great works of literature, or economics, not to mention a couple of the hard sciences (biology and physics). Berkowitz says these types of courses should dominate the first two years of study, and I am inclined to agree. If we don't know what binds us together as a people --our heritage--or the common issues and eternal questions that humankind has wrestled with over the ages, etc., we lose some of the cohesiveness and glue that make us part of both America and Western Civilization. I also agree with Berkowitz that a good curriculum would require students to have good familarity (two years) of a foreign language and some association with non-Western cultures and/or religions (e.g., a comparative religion course).
The major obstacles are two: one is an excessive vocationalism that is largely ill-formed. That is in part because most of the vocationally advantages of higher education are truly illusionary in a fundamental sense (not all: you need college training to be an engineer or accountant). The higher earnings of college grads comes in large part from the higher cognitive skills and determination of college students relative to their non-college counterparts. Besides, the vocational dimensions of higher ed, even where justified, can largely be satisfied within a major of 10 or at most 12 courses (with the possible exception of some of the sciences and engineering). That is plausible with a two year higher ed core.
The second obstacle: the faculty. Faculty teach what they want to teach. They hate to teach survey courses. They want to teach senior seminars and graduate workshops. They don't want to increase enrollments in Department X by mandatory courses, because it means smaller enrollment (and budgets) in Department Y that does not have a core course. They fight a common core for all the wrong reasons.
The "hard core" in the title refers to the great piece by Christian Sahner about Princeton's required sex-ed course. At Princeton, you have to attend a play that glorifies sexual activity, but don't have to study American history. Shame on this, going on at arguably our greatest undergraduate university (at least US News & World Report thinks so). At Princeton, probably 40 percent of entering freshman have not had sexual intercourse, yet the required play assumes sexual activity is the norm. At my own university, individuals who gain the ear of the Administration to push gay/lesbian issues have often shown marked intolerance and bigotry towards others who hate the glorification of these forms of sexual behavior. Instead of promoting tolerance to all legal forms of behavior, the university administration shows intolerance towards some. "Diversity" often does not extend to social, cultural and political views, but only to non-intellectual things like skin color. This is commonplace in American higher education. And it is a shame.
Tuesday, September 04, 2007
The Alumni, Students and Faculty Be Damned
By Richard Vedder
I am furious over the story that Bryan O'Keefe called to my attention that appeared in the Wall Street Journal over the weekend. Dartmouth College is moving ahead with a plan to end democracy in the election of some of the Board of Trustees, and to stifle any trustee who does not agree to adhere to the party line --a line that is against transparency, accountability, and, arguably political pluralism. One elected alumni trustee is mad about the downgrading of emphasis on undergraduate instruction; others worry about political correctness and all its evil manifestations. All want more transparent information on what is going on. For this, abuse is being showered upon them for their service to the College and the fulfillment of their responsibilities as trustees.
Fortunately, Dartmouth is somewhat unique in that many of its trustees are elected under an arrangement that has existed since the late 19th century. Now, however, the president and some establishment trustees who believe a trustee’s job is to be seen and not heard are trying to ignore the alumni, who have a disturbing tendency to reject any attempts at increased accountability. They reject administration nominees for Trustees in favor of electing independently minded persons who believe their job is to oversee the way the university operates and approve major policy decisions. Why do we dump huge quantities of public funds on institutions that are anti-democratic, inefficient, and politically intolerant? Dartmouth can do what it wants, but if it is going to be so contemptible, must we keep subsidizing it?
The Dartmouth problem is a national problem. My own university, Ohio University, is having troubled times, and both the faculty and the students last year expressed overwhelming votes of non-confidence in the Administration. The Trustees, who in their rare visits to campus are wined and dined by the President and his puppets and supplicants, pay little attention to real issues --declining relative student quality, falling real per student endowment over time, swelling administrative bureaucracies, etc. They simply say "Yes sir, we will do what you want." They are abdicating their responsibilities, pure and simple.
To be sure, there are trustees that over-meddle, who try to pick football coaches and demand that Professor X be fired because he says something a little bit offensive. And presidents are hired to lead, to be the prime mover in determining the institutional direction and identity. That is for the good. But they should not be dictators, and boards of trustees should not be regarded as the academic equivalent of the old Soviet Politburo. Shame on Dartmouth's administration and majority trustees. Ditto Ohio University. And the same can be said of many universities. That is why we need to listen to groups like ACTA (American Council of Trustees and Alumni) who argue for greater aggressiveness on the part of university trustees in fulfilling their mission of responsibility.
I am furious over the story that Bryan O'Keefe called to my attention that appeared in the Wall Street Journal over the weekend. Dartmouth College is moving ahead with a plan to end democracy in the election of some of the Board of Trustees, and to stifle any trustee who does not agree to adhere to the party line --a line that is against transparency, accountability, and, arguably political pluralism. One elected alumni trustee is mad about the downgrading of emphasis on undergraduate instruction; others worry about political correctness and all its evil manifestations. All want more transparent information on what is going on. For this, abuse is being showered upon them for their service to the College and the fulfillment of their responsibilities as trustees.
Fortunately, Dartmouth is somewhat unique in that many of its trustees are elected under an arrangement that has existed since the late 19th century. Now, however, the president and some establishment trustees who believe a trustee’s job is to be seen and not heard are trying to ignore the alumni, who have a disturbing tendency to reject any attempts at increased accountability. They reject administration nominees for Trustees in favor of electing independently minded persons who believe their job is to oversee the way the university operates and approve major policy decisions. Why do we dump huge quantities of public funds on institutions that are anti-democratic, inefficient, and politically intolerant? Dartmouth can do what it wants, but if it is going to be so contemptible, must we keep subsidizing it?
The Dartmouth problem is a national problem. My own university, Ohio University, is having troubled times, and both the faculty and the students last year expressed overwhelming votes of non-confidence in the Administration. The Trustees, who in their rare visits to campus are wined and dined by the President and his puppets and supplicants, pay little attention to real issues --declining relative student quality, falling real per student endowment over time, swelling administrative bureaucracies, etc. They simply say "Yes sir, we will do what you want." They are abdicating their responsibilities, pure and simple.
To be sure, there are trustees that over-meddle, who try to pick football coaches and demand that Professor X be fired because he says something a little bit offensive. And presidents are hired to lead, to be the prime mover in determining the institutional direction and identity. That is for the good. But they should not be dictators, and boards of trustees should not be regarded as the academic equivalent of the old Soviet Politburo. Shame on Dartmouth's administration and majority trustees. Ditto Ohio University. And the same can be said of many universities. That is why we need to listen to groups like ACTA (American Council of Trustees and Alumni) who argue for greater aggressiveness on the part of university trustees in fulfilling their mission of responsibility.
Universities and the Rise of Moral Relativism
By Richard Vedder
Honestly, I increasingly believe universities don't know the difference between right and wrong, good and bad, just and unjust. This perhaps should not be surprising, given the rise in a culture of moral relativism that holds that the Ten Commandments are old fashioned or at least needing amending.
The latest incident to rekindle this issue in my mind is the plagiarism case at Southern Illinois University (SIU). I am a native Illinoisan with three degrees from two universities in that state (Northwestern and Illinois). SIU has always hustled hard to argue they are an emerging peer school to my alma maters (and the University of Chicago), but they have never quite made it. The current brouhaha reminds me why that is the case.
SIU has a president, Glenn Poshard, who has three degrees from that school, including a doctorate in education. He also has been a politician. Why a university would hire someone who never had any familiarity with one of the better universities in the United States is beyond me; why they would hire a marginally successful politician (he lost his race for Governor) is even more questionable. But I don't know the man and maybe there is something there.
Getting to moral relativism, our friends at the Chicago Tribune have written stories that makes it appear that Poshard plagiarized part of his dissertation. To me, plagiarism is a pretty serious academic crime, and for a university president to have engaged in it, even 24 years ago, is pretty devastating. Has the SIU Board of Trustees appointed a special committee to investigate, using non-SIU experts as resources? No. Have the faculty demanded that the President be fired for his dishonesty? No, at least not at the formal, official level. What has Poshard done? Asked the college that awarded him the degree to evaluate the charges. Aside from the obvious conflict of interest from the fact that the faculty work for Poshard, the faculty are also potentially guilty of improper conduct or at least professional negligence. No one seems to care much about this.
My own university, Ohio University, had a plagiarism scandal of its own recently, reported in this space and elsewhere, including the Chronicle of Higher Education and Inside Higher Education. Although my university was very slow in reacting, it finally did take some steps, including rescinding some degrees and punishing a couple of professors. I was mad because the faculty did not, and will not, take a principled stand against plagiarism and this particular behavior. It seems SIU may be following in the same path. We hear all the time of famous historians who stole parts of other persons work without attribution. What has happened to "thou shall not steal" in academia? Poshard is rightly innocent until proven guilty, but the general lackadaisical view of these transgressions shows that universities are increasingly losing their moral high ground, places where honesty and truth reign. In time people might say, "Why do we subsidize this behavior?" But again, maybe they won't --since the whole nation may be losing its way morally.
Honestly, I increasingly believe universities don't know the difference between right and wrong, good and bad, just and unjust. This perhaps should not be surprising, given the rise in a culture of moral relativism that holds that the Ten Commandments are old fashioned or at least needing amending.
The latest incident to rekindle this issue in my mind is the plagiarism case at Southern Illinois University (SIU). I am a native Illinoisan with three degrees from two universities in that state (Northwestern and Illinois). SIU has always hustled hard to argue they are an emerging peer school to my alma maters (and the University of Chicago), but they have never quite made it. The current brouhaha reminds me why that is the case.
SIU has a president, Glenn Poshard, who has three degrees from that school, including a doctorate in education. He also has been a politician. Why a university would hire someone who never had any familiarity with one of the better universities in the United States is beyond me; why they would hire a marginally successful politician (he lost his race for Governor) is even more questionable. But I don't know the man and maybe there is something there.
Getting to moral relativism, our friends at the Chicago Tribune have written stories that makes it appear that Poshard plagiarized part of his dissertation. To me, plagiarism is a pretty serious academic crime, and for a university president to have engaged in it, even 24 years ago, is pretty devastating. Has the SIU Board of Trustees appointed a special committee to investigate, using non-SIU experts as resources? No. Have the faculty demanded that the President be fired for his dishonesty? No, at least not at the formal, official level. What has Poshard done? Asked the college that awarded him the degree to evaluate the charges. Aside from the obvious conflict of interest from the fact that the faculty work for Poshard, the faculty are also potentially guilty of improper conduct or at least professional negligence. No one seems to care much about this.
My own university, Ohio University, had a plagiarism scandal of its own recently, reported in this space and elsewhere, including the Chronicle of Higher Education and Inside Higher Education. Although my university was very slow in reacting, it finally did take some steps, including rescinding some degrees and punishing a couple of professors. I was mad because the faculty did not, and will not, take a principled stand against plagiarism and this particular behavior. It seems SIU may be following in the same path. We hear all the time of famous historians who stole parts of other persons work without attribution. What has happened to "thou shall not steal" in academia? Poshard is rightly innocent until proven guilty, but the general lackadaisical view of these transgressions shows that universities are increasingly losing their moral high ground, places where honesty and truth reign. In time people might say, "Why do we subsidize this behavior?" But again, maybe they won't --since the whole nation may be losing its way morally.
Monday, September 03, 2007
Your Opinion Counts!
By Lynne Munson
Until September 14, anyone can weigh in on proposed changes to IRS Form 990. Why should you care about the form non-profits use to report their financial status to the government? Here are a few billion reasons: Because for the first time, the federal government is trying to get colleges and universities to tell the public how much (actually, how little--around 4%) they are spending from their endowments. That is if Congress and the IRS can withstand the pressures of the higher education lobby, emanating largely from the National Association of College and University Business Officers.
If the government does stick to its guns, this will, in a word, be huge. Institutions of higher education currently are not required to report the amount or proportion of their endowment spending to the public. And of course they don't have to divulge how they spend the few endowment funds they do cash in. Colleges and universities always have been allowed to keep this information secret despite the fact that they are hoarding billions in funds on which they pay absolutely no taxes. These are funds, of course, on which taxpayers already have taken a "hit" in the form of the deductions provided immediately to the alums and others whose donations contribute to these endowments.
So this would be a breakthrough--there's no doubt about that. Still, both the future tuition-paying mom and the policy wonk in me would be even happier if the IRS put some more thought into precisely how they are requesting this information. The draft form is so full of holes anyone could manipulate and massage the numbers to produce responses that make America's most miserly institutions appear downright charitable when it comes to endowment spending.
For example, the IRS makes no attempt to define what an endowment is. And since an institution can decide at any time what funds do or do not count as being in their "endowment," leaving the definition up to reportees would make responses incomparable and unreliable. I want to remain positive and put aside the thought that perhaps the IRS folks who drafted this are so resigned to the belief that the schools will manipulate any description of what an endowment is that they didn't even attempt to define the term. I understand their frustration. The higher education lobby is one of Washington's most powerful. They've protected colleges and universities' ability to keep this information secret for decades and neither they nor the experts who prepare 990s are going to part with these secrets without a very serious fight.
Still, there's reason to be hopeful. There isn't any obvious evidence of it yet, but low-spending, endowment-rich colleges and universities surely must realize they have a problem on their hands. Higher education endowment hoarding is a red hot issue right now. The 990 revisions were most likely a response to the urgings of Senators Baucus and Grassley of the Finance Committee who sent a letter to Treasury Secretary Hank Paulson last spring urging him to revise the 990 to increase transparency. NACUBO et al. are scrambling and met with IRS officials at least once this summer to argue that the new reporting requirements would put too much of a burden on colleges and universities. Really? The endowment reporting section consists of 7 lines of information. I mean, have these folks even seen a FAFSA? For years, these schools voluntarily have been providing NACUBO with vastly more information for their annual endowment study. There is no legitimate argument against sharing this information with the public. None.
Lynne Munson is an Adjunct Scholar at the Center for College Affordability and Productivity
Until September 14, anyone can weigh in on proposed changes to IRS Form 990. Why should you care about the form non-profits use to report their financial status to the government? Here are a few billion reasons: Because for the first time, the federal government is trying to get colleges and universities to tell the public how much (actually, how little--around 4%) they are spending from their endowments. That is if Congress and the IRS can withstand the pressures of the higher education lobby, emanating largely from the National Association of College and University Business Officers.
If the government does stick to its guns, this will, in a word, be huge. Institutions of higher education currently are not required to report the amount or proportion of their endowment spending to the public. And of course they don't have to divulge how they spend the few endowment funds they do cash in. Colleges and universities always have been allowed to keep this information secret despite the fact that they are hoarding billions in funds on which they pay absolutely no taxes. These are funds, of course, on which taxpayers already have taken a "hit" in the form of the deductions provided immediately to the alums and others whose donations contribute to these endowments.
So this would be a breakthrough--there's no doubt about that. Still, both the future tuition-paying mom and the policy wonk in me would be even happier if the IRS put some more thought into precisely how they are requesting this information. The draft form is so full of holes anyone could manipulate and massage the numbers to produce responses that make America's most miserly institutions appear downright charitable when it comes to endowment spending.
For example, the IRS makes no attempt to define what an endowment is. And since an institution can decide at any time what funds do or do not count as being in their "endowment," leaving the definition up to reportees would make responses incomparable and unreliable. I want to remain positive and put aside the thought that perhaps the IRS folks who drafted this are so resigned to the belief that the schools will manipulate any description of what an endowment is that they didn't even attempt to define the term. I understand their frustration. The higher education lobby is one of Washington's most powerful. They've protected colleges and universities' ability to keep this information secret for decades and neither they nor the experts who prepare 990s are going to part with these secrets without a very serious fight.
Still, there's reason to be hopeful. There isn't any obvious evidence of it yet, but low-spending, endowment-rich colleges and universities surely must realize they have a problem on their hands. Higher education endowment hoarding is a red hot issue right now. The 990 revisions were most likely a response to the urgings of Senators Baucus and Grassley of the Finance Committee who sent a letter to Treasury Secretary Hank Paulson last spring urging him to revise the 990 to increase transparency. NACUBO et al. are scrambling and met with IRS officials at least once this summer to argue that the new reporting requirements would put too much of a burden on colleges and universities. Really? The endowment reporting section consists of 7 lines of information. I mean, have these folks even seen a FAFSA? For years, these schools voluntarily have been providing NACUBO with vastly more information for their annual endowment study. There is no legitimate argument against sharing this information with the public. None.
Lynne Munson is an Adjunct Scholar at the Center for College Affordability and Productivity
The Higher Education Laffer Curve
By Richard Vedder
Happy Labor Day!!! If you are a bit bored, here is a little homework assignment. Take a piece of paper and draw a huge "L" --the coordinates for a graph. Under the horizontal axis, write the words "gross domestic product." On the vertical axis, write the words "public higher education spending." Then draw a big upside down U in the graph space. This suggests a society with little or no higher ed spending is likely to be poor, and spending on colleges raises GDP --to a point, after which further spending tends to have negative effects on GDP. If our investigations are correct, we are presently in the downward sloping portion of this curve, which mimics the famous Laffer Curve relating taxes to growth.
Why? Two reasons. First, too many people are going to college, many of them ill-prepared. High dropout rates abound. Many persons take jobs for which a college education is not truly a prerequisite. You don't need to go to college to be a plumber, but some plumbers have college degrees. Second, massive third party funding and a lack of a financial bottom line because of the non profit nature of most schools have made colleges terribly inefficient, and poring more resources into this relatively inefficient sector crowds out spending on parts of the economy that are more productive and which are disciplined by the forces of the market and the imperatives of having to make a profit.
I have been saying this for some time now, but it largely falls on deaf ears in the Higher Education Establishment. But we will plug on. Our latest work, consistent with the conclusions above, is that there is very little if any correlation between state spending on higher education and the actual proportion of the adult population who have college degrees. More spending does help, very modestly, to increase college enrollments, but getting in to college is a lot easier than getting out.
There are two types of policy implications. First, of course, we can simply reduce our public higher ed spending until we maximize our GDP or at least improve the rate of return on public investment in this area somewhat. Second, we can restructure the way we do higher ed --for example, introducing more market discipline, and imposing real accountability standards on those who spend university funds.
A little story on the lack of accountability is appropriate here. My university a couple of weeks ago ordered new lines painted between spaces in one of its parking lots, a some tangible expense. Within a week, the University closed the lot, permanently, and used a backhoe to tear up the asphalt in preparation for new building construction. The life of the newly painted lines was one week or less. What are the consequences of this waste of money for those responsible? I doubt there are any at all, and the person responsible for this expensive boo-boo is probably feasting this Labor Day secure in the knowledge that his job will continue in the weeks and months ahead. There is too much of this going on today in higher education.
Happy Labor Day!!! If you are a bit bored, here is a little homework assignment. Take a piece of paper and draw a huge "L" --the coordinates for a graph. Under the horizontal axis, write the words "gross domestic product." On the vertical axis, write the words "public higher education spending." Then draw a big upside down U in the graph space. This suggests a society with little or no higher ed spending is likely to be poor, and spending on colleges raises GDP --to a point, after which further spending tends to have negative effects on GDP. If our investigations are correct, we are presently in the downward sloping portion of this curve, which mimics the famous Laffer Curve relating taxes to growth.
Why? Two reasons. First, too many people are going to college, many of them ill-prepared. High dropout rates abound. Many persons take jobs for which a college education is not truly a prerequisite. You don't need to go to college to be a plumber, but some plumbers have college degrees. Second, massive third party funding and a lack of a financial bottom line because of the non profit nature of most schools have made colleges terribly inefficient, and poring more resources into this relatively inefficient sector crowds out spending on parts of the economy that are more productive and which are disciplined by the forces of the market and the imperatives of having to make a profit.
I have been saying this for some time now, but it largely falls on deaf ears in the Higher Education Establishment. But we will plug on. Our latest work, consistent with the conclusions above, is that there is very little if any correlation between state spending on higher education and the actual proportion of the adult population who have college degrees. More spending does help, very modestly, to increase college enrollments, but getting in to college is a lot easier than getting out.
There are two types of policy implications. First, of course, we can simply reduce our public higher ed spending until we maximize our GDP or at least improve the rate of return on public investment in this area somewhat. Second, we can restructure the way we do higher ed --for example, introducing more market discipline, and imposing real accountability standards on those who spend university funds.
A little story on the lack of accountability is appropriate here. My university a couple of weeks ago ordered new lines painted between spaces in one of its parking lots, a some tangible expense. Within a week, the University closed the lot, permanently, and used a backhoe to tear up the asphalt in preparation for new building construction. The life of the newly painted lines was one week or less. What are the consequences of this waste of money for those responsible? I doubt there are any at all, and the person responsible for this expensive boo-boo is probably feasting this Labor Day secure in the knowledge that his job will continue in the weeks and months ahead. There is too much of this going on today in higher education.
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