By Richard Vedder
I followed Sen. Lamar Alexander in speaking to the Council of Higher Education and Accreditation (CHEA) yesterday. Doug Lederman got it about right when he said this morning that I was warning the Higher Ed Establishment that they need to open up their financial books, increase their measure of learning, and provide the public with a ton more information --or face dire consequences --bad Congressionally mandated regulations.
But transparency is good for broader reasons. Informed consumers are more satisfied ones. Informed donors make better choices on providing universities with resources. Competition is greater if people have a better idea about what colleges do, how they do it, and what it costs to do it.
CHEA is working with Carol Schneider (who I explicitly praised yesterday) of the ACU group (Association of Colleges and Universities) in promoting transparency and the development of performance outcomes. Like Charles Miller, I think this is laudable, principled, and a big step in the right direction. But I share Charles's big concern: SOME uniformity needs to exist in the way colleges report learning outcomes, so parents are not comparing apples to oranges. There is a dilemma here --colleges want autonomy to choose the way they measure student outcomes, citing unique educational missions and the sacred principle of institutional autonomy. Parents and policymakers want comprehensible data that allows the comparison of school A with school B. The inevitable compromise is to let schools choose between a menu of alternative ways to report data --giving them some choice and autonomy --but limiting those choices so that comparing A and B becomes relatively non-cumbersome. It is a tricky compromise, but it is doable, and the schools should stop complaining and start working with people like Carol and Judith Eaton who know the alternative --doing nothing --will lead to all sorts of bureaucratic rules and regulations imposed by a Congress that doesn't have the foggiest idea how universities do or should work.
By the way, I have a minor quibble with Doug Lederman (who is a good reporter and, who indeed, I am buying dinner for tonight): my stand-up routine, as he called it (a fair shot) he termed off-color in places. It may have been offensive, it may have been provocative, it may have been muddled and irrelevant, but it was NOT off-color.
Interested in college endowments and the spending that is financed by them, and are in DC tomorrow? Come by the American Enterprise Institute at 9:30 a.m. for an AEI conference on the topic that I (and my CCAP colleagues) organized. 1150 17th St. N.W., 12th floor.
Thursday, January 31, 2008
Monday, January 28, 2008
Horizontal vs. Vertical Integration: Gordon Gee's Gospel
By Richard Vedder
Gordon Gee is probably the most interesting university president in America. He has been a president for 30 years, at schools such as West Virginia, Colorado, Ohio State, Brown, Vanderbilt and --again --Ohio State. I heard him speak at lunch at my small town Rotary Club today.
Gee uses humor extensively to make his points. But amidst the jokes he occasionally will say something substantive that is worth considering. Today he said he was something of an "academic terrorist," who thinks we organize universities all wrong. We opt for vertical integration, when we should seek horizontal integration.
It was not entirely clear what he meant by that, but he appears to have been decrying the excessive tendency of individual units to do their own thing, not integrating their efforts with sister units to create synergies that could propel learning, promote new research results, and enhance efficiency. Universities are not designed so that the chemists talk to the biologists --even though biochemistry, integrating efforts from both disciplines, is an important and hot field. While individuals occasionally reach across departmental divides to do collaborative work, the university organization typically impedes rather than encourages such endeavors.
Should reorganization go still further? When undergraduate and graduate students are taught at the same institution, many feel the undergraduates get neglected, and spending per student is vastly higher on the graduate students. Is this an argument to separate the teaching functions more? More fundamentally, should more research be conducted at research centers as opposed to universities? Should we revert to the very old system where the professors sell their services directly to the students, and the university merely serves as a coordinating and administrative service body? I don't know the answers to these questions, but Gee is right to question the status quo.
Gordon Gee is probably the most interesting university president in America. He has been a president for 30 years, at schools such as West Virginia, Colorado, Ohio State, Brown, Vanderbilt and --again --Ohio State. I heard him speak at lunch at my small town Rotary Club today.
Gee uses humor extensively to make his points. But amidst the jokes he occasionally will say something substantive that is worth considering. Today he said he was something of an "academic terrorist," who thinks we organize universities all wrong. We opt for vertical integration, when we should seek horizontal integration.
It was not entirely clear what he meant by that, but he appears to have been decrying the excessive tendency of individual units to do their own thing, not integrating their efforts with sister units to create synergies that could propel learning, promote new research results, and enhance efficiency. Universities are not designed so that the chemists talk to the biologists --even though biochemistry, integrating efforts from both disciplines, is an important and hot field. While individuals occasionally reach across departmental divides to do collaborative work, the university organization typically impedes rather than encourages such endeavors.
Should reorganization go still further? When undergraduate and graduate students are taught at the same institution, many feel the undergraduates get neglected, and spending per student is vastly higher on the graduate students. Is this an argument to separate the teaching functions more? More fundamentally, should more research be conducted at research centers as opposed to universities? Should we revert to the very old system where the professors sell their services directly to the students, and the university merely serves as a coordinating and administrative service body? I don't know the answers to these questions, but Gee is right to question the status quo.
Friday, January 25, 2008
Macroeconomic Stimulus and Universities
By Richard Vedder
Here is a contrarian view on the economy. We may be heading into a mild downturn --even a small recession --but no big deal. However, nervous politicans and new leaders at the Fed are going to screw things up. They are pushing for a huge stimulus package to get unemployment at acceptable levels by next November.
The economic experience of the 1970s is that stimulus packages do not work --period. If timing is bad, they can be worse than useless. They do nothing to deal with long run problems (e.g., inadequate capital investments). More importantly, they raise inflationary expectations. That raises interest rates, lowers stock prices. That lowers returns on endowments, leads to reduced university private giving, and does nothing to stimulate the economy in way leading to more state appropriations. The 1970s was generally a mediocre decade for universities relative to the golden days of the 1950s and 1960s --yet was accompanied by vigorous, high deficit fiscal policy and expansive monetary policy.
The university community --as the nation as a whole -- would be better off with a more relaxed, less panicky, "rules" approach that does not depend on the whims of the fed. Bernanke is no Greenspan or Volcker (I was against his appointment) --if for no other reason than he is an academic shielded his whole life from the consequences of adverse economic policies (unlike Greenspan). The CPI rose more last year than the year before, and the falling dollar shows that the world is losing confidence in this great standard of value. You heard it here first.
Here is a contrarian view on the economy. We may be heading into a mild downturn --even a small recession --but no big deal. However, nervous politicans and new leaders at the Fed are going to screw things up. They are pushing for a huge stimulus package to get unemployment at acceptable levels by next November.
The economic experience of the 1970s is that stimulus packages do not work --period. If timing is bad, they can be worse than useless. They do nothing to deal with long run problems (e.g., inadequate capital investments). More importantly, they raise inflationary expectations. That raises interest rates, lowers stock prices. That lowers returns on endowments, leads to reduced university private giving, and does nothing to stimulate the economy in way leading to more state appropriations. The 1970s was generally a mediocre decade for universities relative to the golden days of the 1950s and 1960s --yet was accompanied by vigorous, high deficit fiscal policy and expansive monetary policy.
The university community --as the nation as a whole -- would be better off with a more relaxed, less panicky, "rules" approach that does not depend on the whims of the fed. Bernanke is no Greenspan or Volcker (I was against his appointment) --if for no other reason than he is an academic shielded his whole life from the consequences of adverse economic policies (unlike Greenspan). The CPI rose more last year than the year before, and the falling dollar shows that the world is losing confidence in this great standard of value. You heard it here first.
State Appropriations Up 4.94% A Year Since 1997
By Richard Vedder
Illinois State University's annual survey of state appropriations for higher education reveal that the 2008 figure is the highest in the past 11 years (and perhaps longer --that is all the data included in INSIDE HIGHER ED's report). Legislators are dropping money out of airplanes again over campuses --with predictable effects, most not positive.
I calculated the annual compounded rate of increase in state appropriations since 1997 was 4.94 percent --above the rate of inflation and population growth in the same period. But to hear state university presidents tell it, the problem of soaring tuition costs is the cause of soaring tuition rates.
Tuition this year is up 7 percent --appropriations are up 7 percent --inflation is one half of that. The story of higher education in America today. Nothing has changed. Legislators don't demand accountability, transparency, evidence of student progress, rate of the return analysis of university research, etc., etc. We are throwing money down a rat hole --and the rats are loving it.
As long as money is dropped out of airplanes in increasing amounts over campuses with little accountability, there are no incentives for universities to grow up, to rationalize, to economize. The economic rents keep accumulating and the students keep paying out more and more --more a product that’s value derives largely from the information costs employers face in learning about the true capabilities of their applicants. The diploma is worth hundreds of thousands --but is the education behind it truly that valuable?
Illinois State University's annual survey of state appropriations for higher education reveal that the 2008 figure is the highest in the past 11 years (and perhaps longer --that is all the data included in INSIDE HIGHER ED's report). Legislators are dropping money out of airplanes again over campuses --with predictable effects, most not positive.
I calculated the annual compounded rate of increase in state appropriations since 1997 was 4.94 percent --above the rate of inflation and population growth in the same period. But to hear state university presidents tell it, the problem of soaring tuition costs is the cause of soaring tuition rates.
Tuition this year is up 7 percent --appropriations are up 7 percent --inflation is one half of that. The story of higher education in America today. Nothing has changed. Legislators don't demand accountability, transparency, evidence of student progress, rate of the return analysis of university research, etc., etc. We are throwing money down a rat hole --and the rats are loving it.
As long as money is dropped out of airplanes in increasing amounts over campuses with little accountability, there are no incentives for universities to grow up, to rationalize, to economize. The economic rents keep accumulating and the students keep paying out more and more --more a product that’s value derives largely from the information costs employers face in learning about the true capabilities of their applicants. The diploma is worth hundreds of thousands --but is the education behind it truly that valuable?
Thursday, January 24, 2008
Avoiding the Tuition Tax
By Richard Vedder
Studying public finance and taxes for several decades has some payoff when it comes to higher education finance. I have longed believed that America's personal savings rate is low for many reasons, but one is that colleges impose a huge "tax" on college savings --often 50 percent or more at the margin (Harvard explicitly set the marginal rate at 10 percent for many students recently, considered revolutionary).
Specifically, your tuition discount is determined by information on the FAFSA form, and bank assets, stocks, etc. are all counted against you. Suppose you save $100,000 for Johnny or Joanna to go to college. Chances are your tuition discount will be reduced by $10,000 or more a year --at least a 40 percent marginal tax rate (on already taxed income). Add on a 30 percent or more federal marginal tax rate. Why save at all?
A reader has pointed out that savvy investment advisers are often having clients buy retirement annuities --that do not count against you as assets on the FAFSA form. Then people cash in these annuities early to pay the tuition bills (or borrow against these assets). Investment decisions are distorted to evade, legally, the "tax" imposed by private universities.
Of course, instead of more vigorous discounting, top schools could simply drastically reduce or eliminate tuition payments--and get out of the discounting game. In this type of situation, the aforementioned investment strategy would no longer be relevant. In such a world, we might have higher national savings, lower interest rates, a stronger dollar, and a variety of other nice things. This is getting at one of the least recognized negative spillover effects of colleges as they operate today that I often talk about.
Studying public finance and taxes for several decades has some payoff when it comes to higher education finance. I have longed believed that America's personal savings rate is low for many reasons, but one is that colleges impose a huge "tax" on college savings --often 50 percent or more at the margin (Harvard explicitly set the marginal rate at 10 percent for many students recently, considered revolutionary).
Specifically, your tuition discount is determined by information on the FAFSA form, and bank assets, stocks, etc. are all counted against you. Suppose you save $100,000 for Johnny or Joanna to go to college. Chances are your tuition discount will be reduced by $10,000 or more a year --at least a 40 percent marginal tax rate (on already taxed income). Add on a 30 percent or more federal marginal tax rate. Why save at all?
A reader has pointed out that savvy investment advisers are often having clients buy retirement annuities --that do not count against you as assets on the FAFSA form. Then people cash in these annuities early to pay the tuition bills (or borrow against these assets). Investment decisions are distorted to evade, legally, the "tax" imposed by private universities.
Of course, instead of more vigorous discounting, top schools could simply drastically reduce or eliminate tuition payments--and get out of the discounting game. In this type of situation, the aforementioned investment strategy would no longer be relevant. In such a world, we might have higher national savings, lower interest rates, a stronger dollar, and a variety of other nice things. This is getting at one of the least recognized negative spillover effects of colleges as they operate today that I often talk about.
Here We Go Again
By Richard Vedder
The annual report from the National Association of College and University Business Officers (NACUBO) is in. More of the same -- colleges are getting richer.
Last year, American universities averaged a 17.2 percent rate of return on endowments. Endowments actually rose more than 20 percent ($71 billion), presumably reflecting new gifts and very limited spending from endowments. Over the last decade, the rate of return has averaged a respectable 8.6 percent. This is consistent with a five percent payout rate from principal and provision for inflation. Actual spending, however, is somewhat less, despite huge gains in new gifts with a generally prosperous economy.
To be sure, fiscal conservatism is desirable --but colleges may be going too far. However, I am somewhat dubious of a blanket one-size-fits-all spending rule imposed by the federal government. That would cause more harm than good.
However, I think the call for greater transparency is good. A reader, responding to a piece I had in the Washington Post last Sunday, said that the 990 forms submitted by universities should be posted on-line. The Senate Finance Committee is going to be asking colleges for more information than currently provided --what is your endowment size? How much is spent -- and on what? And other interesting questions. In return for privileged tax status, this is not too much to ask --or report to the public.
A week from now, on February 1, CCAP is working with the American Enterprise Institute to have a provocative little conference on endowment issues at the AEI conference center. If you are in Washington, come by (it starts at (9:30 a.m., at 1150th 17th Street N.W., 12th floor.) You can register by clicking here.
The annual report from the National Association of College and University Business Officers (NACUBO) is in. More of the same -- colleges are getting richer.
Last year, American universities averaged a 17.2 percent rate of return on endowments. Endowments actually rose more than 20 percent ($71 billion), presumably reflecting new gifts and very limited spending from endowments. Over the last decade, the rate of return has averaged a respectable 8.6 percent. This is consistent with a five percent payout rate from principal and provision for inflation. Actual spending, however, is somewhat less, despite huge gains in new gifts with a generally prosperous economy.
To be sure, fiscal conservatism is desirable --but colleges may be going too far. However, I am somewhat dubious of a blanket one-size-fits-all spending rule imposed by the federal government. That would cause more harm than good.
However, I think the call for greater transparency is good. A reader, responding to a piece I had in the Washington Post last Sunday, said that the 990 forms submitted by universities should be posted on-line. The Senate Finance Committee is going to be asking colleges for more information than currently provided --what is your endowment size? How much is spent -- and on what? And other interesting questions. In return for privileged tax status, this is not too much to ask --or report to the public.
A week from now, on February 1, CCAP is working with the American Enterprise Institute to have a provocative little conference on endowment issues at the AEI conference center. If you are in Washington, come by (it starts at (9:30 a.m., at 1150th 17th Street N.W., 12th floor.) You can register by clicking here.
Wednesday, January 23, 2008
Changing the Financing Requirements for College
By Richard Vedder
All the student loan problems of the past year lead me to raise the question again: why don't we move away from a system where students finance their college costs largely by borrowing altogether? Why don't students sell equity as well as debt? (By the way, this does not eliminate the big lenders from Sallie Mae, it merely changes the products they market).
Student X goes to a upscale liberal arts college that costs $180,000 for four years. The school gives this student from a lower income family $80,000 in aid, reducing costs to $100,000. The student finances $30,000 of that through work and small family contributions, leaving a $70,000 gap. This is not an unusual scenario today. Yet the student graduates, faces a $70,000 loan debt, but wants to teach in a public school where she will make $30,000 a year, maximum, at the beginning. The costs of serving the loan annually are, very conservatively, $7,000 or $8,000 a year. This is today's problem. For most students, the problem is less --the loans are smaller, the initial earnings are greater.
Suppose the student as an entering freshman is approached by Sallie Mae and told --"you can borrow from us or you can sell us equity in your future earnings, or you can do a combination of both." In effect, the student is asked to sell a hunk of her or his "human capital" (to use a phrase that helped Ted Schultz and Gary Becker win Nobel Prizes as economists).
There are a variety of different ways it could work. Under one approach, a student might sell, say, 10 percent of all earnings above a subsistence allowance of, say, $25,000 a year, payable for 10 or 15 years. Under a variant of that, the same terms would exist, except that if a student had failed to pay back an amount equal to the initial cash capitalizaiton after the stated period (say, 15 years), the period would be extended until the payoff occcurred (but in no case longer than 30 years). That approach reduces risks to lenders dramatically, maybe even too much.
All of these gimmicks offer some marginal improvements over existing debt only financing arrangements. But the real problem remains: it costs too much to go to college for some kids. We should be do all sorts of things to reduce costs. Besides the standards things, we should be reconsidering the number of years that colleges takes and consider promoting year round schools more.
The problem may be, temporarily at least, receding at some of the top liberal arts colleges and universities in the wake of Harvard's (and possibility Yale's) recent decisions. Already many prestigious schools have followed Princeton's lead and eliminated student loans from the aid package of student (I believe that the financing of college should be divorced from the colleges themselves, so I have some mixed feelings about this). If that movement grows, the need for new models of financing may be small. However, as long as colleges are largely not-for-profit and are financed largely by third parties, I think we are going to have a huge problem in controlling college costs to society and, ultimately, to the students themselves.
All the student loan problems of the past year lead me to raise the question again: why don't we move away from a system where students finance their college costs largely by borrowing altogether? Why don't students sell equity as well as debt? (By the way, this does not eliminate the big lenders from Sallie Mae, it merely changes the products they market).
Student X goes to a upscale liberal arts college that costs $180,000 for four years. The school gives this student from a lower income family $80,000 in aid, reducing costs to $100,000. The student finances $30,000 of that through work and small family contributions, leaving a $70,000 gap. This is not an unusual scenario today. Yet the student graduates, faces a $70,000 loan debt, but wants to teach in a public school where she will make $30,000 a year, maximum, at the beginning. The costs of serving the loan annually are, very conservatively, $7,000 or $8,000 a year. This is today's problem. For most students, the problem is less --the loans are smaller, the initial earnings are greater.
Suppose the student as an entering freshman is approached by Sallie Mae and told --"you can borrow from us or you can sell us equity in your future earnings, or you can do a combination of both." In effect, the student is asked to sell a hunk of her or his "human capital" (to use a phrase that helped Ted Schultz and Gary Becker win Nobel Prizes as economists).
There are a variety of different ways it could work. Under one approach, a student might sell, say, 10 percent of all earnings above a subsistence allowance of, say, $25,000 a year, payable for 10 or 15 years. Under a variant of that, the same terms would exist, except that if a student had failed to pay back an amount equal to the initial cash capitalizaiton after the stated period (say, 15 years), the period would be extended until the payoff occcurred (but in no case longer than 30 years). That approach reduces risks to lenders dramatically, maybe even too much.
All of these gimmicks offer some marginal improvements over existing debt only financing arrangements. But the real problem remains: it costs too much to go to college for some kids. We should be do all sorts of things to reduce costs. Besides the standards things, we should be reconsidering the number of years that colleges takes and consider promoting year round schools more.
The problem may be, temporarily at least, receding at some of the top liberal arts colleges and universities in the wake of Harvard's (and possibility Yale's) recent decisions. Already many prestigious schools have followed Princeton's lead and eliminated student loans from the aid package of student (I believe that the financing of college should be divorced from the colleges themselves, so I have some mixed feelings about this). If that movement grows, the need for new models of financing may be small. However, as long as colleges are largely not-for-profit and are financed largely by third parties, I think we are going to have a huge problem in controlling college costs to society and, ultimately, to the students themselves.
Biggest Rent Seekers: Rich Liberal Arts Colleges?
By Richard Vedder
Suppose you wanted to run an ultra-high quality liberal arts college for 1,000 students. You hire 125 faculty at an annual cost of $120,000. That allows for class of under 20 with fairly light teaching loads for a highly paid and presumably very good faculty. Then you spent twice as much as that on non-faculty expenses --deans, librarians, custodians, etc. Total per student costs? $45,000. Schools like Williams and Amherest, between tuition and endowment income alone, forgetting alumni gifts and grants, spend vastly more than that --nearly double that, in fact.
Where is all the money going? Over the last generation, salaries of faculty have risen a lot at these schools --vastly more than at the public schools of quality. The non-academic staff has grown faster at these schools as well, and they have more bloated bureaucracies than the typical state school.
As the demand for colleges of prestige have soared, the staffs at these places have taken advantage of it. Donations have soared, and endowment income is often one-third of total spending. So the staff has decided to give themselves the good life.
To be sure, there is a payoff. The probability of becoming famous or recognized in life is vastly higher for Harvard, Yale Princeton and a few Willherst (Amherst/Williams) type schools than at Six Pack U. Indeed, winning entry into these schools suggests a student is 10-20 times more likely to achieve fame later in life (based on analysis we are doing at CCAP you will be hearing a lot more about). Pay $45,000 and go to Harvard or Willherst --or $45,000 and go to a second tier private school (e.g., George Washington U.) --and your chances for success are far,far, greater at Willherst and Harvard. Hence the frenzy to get into Harvard. It is rational, in a sort of irrational way. Stay tuned.
Suppose you wanted to run an ultra-high quality liberal arts college for 1,000 students. You hire 125 faculty at an annual cost of $120,000. That allows for class of under 20 with fairly light teaching loads for a highly paid and presumably very good faculty. Then you spent twice as much as that on non-faculty expenses --deans, librarians, custodians, etc. Total per student costs? $45,000. Schools like Williams and Amherest, between tuition and endowment income alone, forgetting alumni gifts and grants, spend vastly more than that --nearly double that, in fact.
Where is all the money going? Over the last generation, salaries of faculty have risen a lot at these schools --vastly more than at the public schools of quality. The non-academic staff has grown faster at these schools as well, and they have more bloated bureaucracies than the typical state school.
As the demand for colleges of prestige have soared, the staffs at these places have taken advantage of it. Donations have soared, and endowment income is often one-third of total spending. So the staff has decided to give themselves the good life.
To be sure, there is a payoff. The probability of becoming famous or recognized in life is vastly higher for Harvard, Yale Princeton and a few Willherst (Amherst/Williams) type schools than at Six Pack U. Indeed, winning entry into these schools suggests a student is 10-20 times more likely to achieve fame later in life (based on analysis we are doing at CCAP you will be hearing a lot more about). Pay $45,000 and go to Harvard or Willherst --or $45,000 and go to a second tier private school (e.g., George Washington U.) --and your chances for success are far,far, greater at Willherst and Harvard. Hence the frenzy to get into Harvard. It is rational, in a sort of irrational way. Stay tuned.
Tuesday, January 22, 2008
Germany Does It Right
By Richard Vedder
Usually I complain a lot about Germany. They have screwed up their economy with a vastly excessive welfare state, for example. They have excessive taxes. They don't work hard enough.
But the Germans sometimes do something right, as I was reminded yesterday. While sitting on a cruise ship, I talked to a new friend, Chris, a German now working for an equity firm in Beijing. I asked this sharp young man where he went to college. In effect, he told me he did not attend a formal college, but underwent 4.5 years of rigorous training at a bank-run school (Deutsche Bank, I think). He earned the equivalent of a bachelors and masters degree, going to school in summer. The school now actually gives degrees.
A month or two ago, I wrote a blog commenting on a reader's prediction that in another generation, companies will run universities. That is starting to happen, particularly in Europe. Germany has had a long history with high quality vocational ed schools at the high school level, and now they are extending the concept to higher education. For those wanting a largely vocationally-enhancing post-secondary education, this is an appealing option. My friend Chris then went to work at the bank for some time, although finally left for a competitor. Offering low cost, high quality education in return for a few years of work for the company running the school seems to me an attractive option. Perhaps Citigroup, Bank of America and J.P Morgan Chase should be emulating the Germans.
Usually I complain a lot about Germany. They have screwed up their economy with a vastly excessive welfare state, for example. They have excessive taxes. They don't work hard enough.
But the Germans sometimes do something right, as I was reminded yesterday. While sitting on a cruise ship, I talked to a new friend, Chris, a German now working for an equity firm in Beijing. I asked this sharp young man where he went to college. In effect, he told me he did not attend a formal college, but underwent 4.5 years of rigorous training at a bank-run school (Deutsche Bank, I think). He earned the equivalent of a bachelors and masters degree, going to school in summer. The school now actually gives degrees.
A month or two ago, I wrote a blog commenting on a reader's prediction that in another generation, companies will run universities. That is starting to happen, particularly in Europe. Germany has had a long history with high quality vocational ed schools at the high school level, and now they are extending the concept to higher education. For those wanting a largely vocationally-enhancing post-secondary education, this is an appealing option. My friend Chris then went to work at the bank for some time, although finally left for a competitor. Offering low cost, high quality education in return for a few years of work for the company running the school seems to me an attractive option. Perhaps Citigroup, Bank of America and J.P Morgan Chase should be emulating the Germans.
Sunday, January 20, 2008
Endowments: The Washington Post, American Enterprise Institute, and Beyond!
By Bryan O'Keefe
As everyone who follows higher education policy knows, the issue of college endowments has become a hot topic over the last few months. Our colleague Lynne Munson has written and testified about it, Congress has held hearings, and even the schools themselves -- Harvard and Yale -- have responded to criticism and decided to use some of their endowment funds to increase financial aid.
CCAP is now talking about this issue even more, starting with a big op-ed in the Outlook section of today's Washington Post. You can read Dr. Vedder's entire piece -- which addresses higher education financing problems more generally but also spends a big portion of his time on endowments -- by clicking right here.
We will be following up on this subject on Friday Feb. 1st with a conference at the American Enterprise Institute. Scheduled to appear at that event include some heavy-hitters on the endowment issue like Terry Hartle from ACE, Dean Zerbe from Sen. Grassley's office, Lynne Munson, Charles Miller, Donald Frey, Sandy Baum, and Dr. Vedder too. It should be an interesting event and we hope that many of our loyal readers can join us. You can register for that event here.
Finally, Dr. Vedder has a long policy paper about federal taxes and higher education that is due out around Feb. 1st too (copies will probably be available at that aforementioned conference). The paper will address a lot of issues, including endowments. If you would like a copy of that paper, please contact CCAP and we will have one in your hands when they are hot off the presses.
All in all, this is an important issue and we are happy to have the opportunity to present our views on it.
As everyone who follows higher education policy knows, the issue of college endowments has become a hot topic over the last few months. Our colleague Lynne Munson has written and testified about it, Congress has held hearings, and even the schools themselves -- Harvard and Yale -- have responded to criticism and decided to use some of their endowment funds to increase financial aid.
CCAP is now talking about this issue even more, starting with a big op-ed in the Outlook section of today's Washington Post. You can read Dr. Vedder's entire piece -- which addresses higher education financing problems more generally but also spends a big portion of his time on endowments -- by clicking right here.
We will be following up on this subject on Friday Feb. 1st with a conference at the American Enterprise Institute. Scheduled to appear at that event include some heavy-hitters on the endowment issue like Terry Hartle from ACE, Dean Zerbe from Sen. Grassley's office, Lynne Munson, Charles Miller, Donald Frey, Sandy Baum, and Dr. Vedder too. It should be an interesting event and we hope that many of our loyal readers can join us. You can register for that event here.
Finally, Dr. Vedder has a long policy paper about federal taxes and higher education that is due out around Feb. 1st too (copies will probably be available at that aforementioned conference). The paper will address a lot of issues, including endowments. If you would like a copy of that paper, please contact CCAP and we will have one in your hands when they are hot off the presses.
All in all, this is an important issue and we are happy to have the opportunity to present our views on it.
Friday, January 18, 2008
Hamburger University
By Richard Vedder
When I was the Spellings Commission, I kept hearing from businessmen that they were having to do a lot of on the job training of workers who did not get adequate education at their universities. General Motors has run engineering programs and other subjects at schools for decades. McDonald's runs thousands of persons through its Hamburger University every year.
Some day, a company will say to bright 18 year olds --come to our corporate university, study real cheap --but agree to stay with us as an employee for five years after graduation (or some such arrangement). Companies will get the kind of employees they want, kids will get a good education taught in a cost effective manner (I suspect). In a sense, the approach will be a throw back to indentured servitude, when young people came to America and worked for someone for modest wages for several years --in return for passage. A reader raised that prospect to me in an email recently, which I made then into a much commented upon blog.
Even now among uneducated Americans, learning on the job is criticial. Workers in their 50s with less than a high school education make about double what 20 year old workers with that education make. The higher productivity of the older workers no doubt reflects allow of specialized knowledge workers accumulate on the job.
All of this raises the question: why isn't corporate America getting more into the education business? Do they think they can teach as much literally on the job as they could offering schools? Would a school and work combination program (much like some co-op engineering programs) run by Microsoft or Merck pay off? Work and learn for 5-7 years and then get a bachelor's degree. Why not? It is an intriguing question.
When I was the Spellings Commission, I kept hearing from businessmen that they were having to do a lot of on the job training of workers who did not get adequate education at their universities. General Motors has run engineering programs and other subjects at schools for decades. McDonald's runs thousands of persons through its Hamburger University every year.
Some day, a company will say to bright 18 year olds --come to our corporate university, study real cheap --but agree to stay with us as an employee for five years after graduation (or some such arrangement). Companies will get the kind of employees they want, kids will get a good education taught in a cost effective manner (I suspect). In a sense, the approach will be a throw back to indentured servitude, when young people came to America and worked for someone for modest wages for several years --in return for passage. A reader raised that prospect to me in an email recently, which I made then into a much commented upon blog.
Even now among uneducated Americans, learning on the job is criticial. Workers in their 50s with less than a high school education make about double what 20 year old workers with that education make. The higher productivity of the older workers no doubt reflects allow of specialized knowledge workers accumulate on the job.
All of this raises the question: why isn't corporate America getting more into the education business? Do they think they can teach as much literally on the job as they could offering schools? Would a school and work combination program (much like some co-op engineering programs) run by Microsoft or Merck pay off? Work and learn for 5-7 years and then get a bachelor's degree. Why not? It is an intriguing question.
College = High School: Doing Less With More
By Richard Vedder
As I read Alan Greenspan's book The Age of Turbulence, I am struck by the emphasis he places on education as a key to continued growth and prosperity. Greenspan thinks the problem is mainly in the K-`12 schools, repeating the opt-stated phrase that we have the best universities in the world, but he is worried about the universities becoming mired in mediocrity because of the low knowledge base of incoming college students.
Greenspan --whose commentary on the American economy is generally spot on in my judgement -- understates the problem, and overstates the success of universities, being blinded by the research successes and Nobel Prizes. Down in the trenches of the undergraduate classroom, things are not so pretty.
Colleges, perhaps deliberately, do not tell us how much kids learn while under their care. Nonetheless, isolated bits of data are not reassuring. Between 1992 and 2003, adult literacy on average in the U.S. stayed constant --that is the GOOD news. The bad news is that such literacy declined at every level of educational attainment, and declined THE MOST amongst college graduates. The constant average level of literacy was obtained only because Americans in 2003 went to school more --they were more likely to be college grads (who on average have higher levels of literacy than those with less education) for example. In other words, we were doing less with more, or, perhaps more accurately, doing the same with more. This suggests productivity decline in higher education as measured by inputs (more resources used per student) is only part of the story --productivity may be falling on the output or outcomes side as well.
Other data, albeit limited, support that conclusion. The Intercollegiate Studies Institute's American Civic Literacy Test has now been given to tens of thousands of students. Two conclusions emerge: first, college seniors on average know very little more than freshman, suggesting that the "value added" in this area by college is abysmally low. Second, the average level of civic literacy is embarrassingly low --with less than 60 percent of the 60 question test answered correctly (and less than 70 percent at the Ivy League schools that skim out the cream of our best high school graduates.
None of this is terribly surprising if you hang around American college campuses. The National Survey of Student Engagement suggests that it is a rare campus where students actually study 20 hours of week. A typical American student today is in the classroom maybe 16 hours a week, and studies another 14 hours --32 weeks a year. She or he "works" barely 1,000 hours a year. Younger people should be working longer hours, not shorter, than their less physically able senior brethren. I am three times the age of the typical college senior yet I work vastly more hours a year than the college kid. We are wasting resources, deliberately allowing a sort of "academic underemployment" among some of our best and brightest resources.
I know there are tons of exceptions to this characterization. The best of our students today are probably about as good as ever --and work just as hard. But why work when grade inflation lets you "succeed" with modest effort? Why work when you can get an A or at least a B and party four nights a week, instead of just one or two as the students of a generation ago did.
As I read Alan Greenspan's book The Age of Turbulence, I am struck by the emphasis he places on education as a key to continued growth and prosperity. Greenspan thinks the problem is mainly in the K-`12 schools, repeating the opt-stated phrase that we have the best universities in the world, but he is worried about the universities becoming mired in mediocrity because of the low knowledge base of incoming college students.
Greenspan --whose commentary on the American economy is generally spot on in my judgement -- understates the problem, and overstates the success of universities, being blinded by the research successes and Nobel Prizes. Down in the trenches of the undergraduate classroom, things are not so pretty.
Colleges, perhaps deliberately, do not tell us how much kids learn while under their care. Nonetheless, isolated bits of data are not reassuring. Between 1992 and 2003, adult literacy on average in the U.S. stayed constant --that is the GOOD news. The bad news is that such literacy declined at every level of educational attainment, and declined THE MOST amongst college graduates. The constant average level of literacy was obtained only because Americans in 2003 went to school more --they were more likely to be college grads (who on average have higher levels of literacy than those with less education) for example. In other words, we were doing less with more, or, perhaps more accurately, doing the same with more. This suggests productivity decline in higher education as measured by inputs (more resources used per student) is only part of the story --productivity may be falling on the output or outcomes side as well.
Other data, albeit limited, support that conclusion. The Intercollegiate Studies Institute's American Civic Literacy Test has now been given to tens of thousands of students. Two conclusions emerge: first, college seniors on average know very little more than freshman, suggesting that the "value added" in this area by college is abysmally low. Second, the average level of civic literacy is embarrassingly low --with less than 60 percent of the 60 question test answered correctly (and less than 70 percent at the Ivy League schools that skim out the cream of our best high school graduates.
None of this is terribly surprising if you hang around American college campuses. The National Survey of Student Engagement suggests that it is a rare campus where students actually study 20 hours of week. A typical American student today is in the classroom maybe 16 hours a week, and studies another 14 hours --32 weeks a year. She or he "works" barely 1,000 hours a year. Younger people should be working longer hours, not shorter, than their less physically able senior brethren. I am three times the age of the typical college senior yet I work vastly more hours a year than the college kid. We are wasting resources, deliberately allowing a sort of "academic underemployment" among some of our best and brightest resources.
I know there are tons of exceptions to this characterization. The best of our students today are probably about as good as ever --and work just as hard. But why work when grade inflation lets you "succeed" with modest effort? Why work when you can get an A or at least a B and party four nights a week, instead of just one or two as the students of a generation ago did.
Tuesday, January 15, 2008
A Libertarian's Lament
By Richard Vedder
Jeff Sandefer pointed out that tenured faculty draw big pay but low paid adjuncts and graduate students do the bulk of the teaching. Rep. Morrison of the Texas legislature outlined some sensible steps to cut costs (e.g., encouraging good high school students to take courses). And I pointed out the pernicious effects that accreditation might have on barriers to entry to teaching. I have just summarized a higher education panel at the annual policy conclave of the Texas Pubic Policy Foundation.
But then a fellow emblazoned with Ron Paul buttons got up and asked a question --a good one, in my judgment: Aren't most of the problems of higher education solvable simply by getting government out of our colleges and universities? He was saying "you (Morrison-Sandefer-Vedder) were talking about symptoms --the real disease is governmental involvement."
I think our libertarian questioner had a good point. Governments make massive third party payments that make customers and providers less sensitive to costs. The cool attitude of governments towards for profit institutions in some states has reduced competition and market-based efficient modes of service delivery. Massive research federal grants have had the impact of devaluing teaching. Etc. etc.
It is interesting that states with less government financial involvement in higher education (e.g., New Hampshire or Massachusetts) very often have higher proportions of college graduates than states with great governmental involvement (North Carolina). The question is: had governments not gotten involved in higher education, what would our colleges and universities have been like today? I am not altogether convinced that we would have inferior, fewer colleges or a less educated populace. And I am almost certain we would be spending a lot less of our resources on this sector of the economy.
Jeff Sandefer pointed out that tenured faculty draw big pay but low paid adjuncts and graduate students do the bulk of the teaching. Rep. Morrison of the Texas legislature outlined some sensible steps to cut costs (e.g., encouraging good high school students to take courses). And I pointed out the pernicious effects that accreditation might have on barriers to entry to teaching. I have just summarized a higher education panel at the annual policy conclave of the Texas Pubic Policy Foundation.
But then a fellow emblazoned with Ron Paul buttons got up and asked a question --a good one, in my judgment: Aren't most of the problems of higher education solvable simply by getting government out of our colleges and universities? He was saying "you (Morrison-Sandefer-Vedder) were talking about symptoms --the real disease is governmental involvement."
I think our libertarian questioner had a good point. Governments make massive third party payments that make customers and providers less sensitive to costs. The cool attitude of governments towards for profit institutions in some states has reduced competition and market-based efficient modes of service delivery. Massive research federal grants have had the impact of devaluing teaching. Etc. etc.
It is interesting that states with less government financial involvement in higher education (e.g., New Hampshire or Massachusetts) very often have higher proportions of college graduates than states with great governmental involvement (North Carolina). The question is: had governments not gotten involved in higher education, what would our colleges and universities have been like today? I am not altogether convinced that we would have inferior, fewer colleges or a less educated populace. And I am almost certain we would be spending a lot less of our resources on this sector of the economy.
The Boomerang Effect
By Jim Coleman
Richard M. Freeland, Distinguished Professor of Higher Education at Clark University, had an insightful piece in The Christian Science Monitor this past week. Freeland discusses the increasing tendency for students to go through 4 or 5 years of college with little or no preparation for entering the work force and real world:
Freeland explains that this “boomerang” effect is, among other things, due to curriculums that focus almost exclusively on academic interests while eschewing the more practical applications of knowledge and that most colleges under fund and marginalize their career planning offices.
Freeland makes a valid point. Colleges continue to ratchet up costs while the value added of attending college improves little—or in some cases decreases. Additionally, colleges have become overburdened with bureaucracy (university staff has ballooned 5% relative to student enrollment over the past decade) and shared governance, making them increasingly inept at responding to changes in our fact paced world.
What’s worse is that universities have little incentive to change things, because prestige—the thing universities desire most-- is currently determined by factors other than graduates’ success. For example, look at how the U.S. News and World Report rankings work. Over 50% of a school's final score is determined by student SAT/ACT scores, peer assessment, class size, and faculty salary. Since what happens to students after graduation bears little on a school rankings and prestige, colleges choose to pour money into things like recruiting kids from top boarding schools rather than making sure graduates actually have the requisite skills to get a job.
What’s needed is some sort of measure for examining what role individual colleges play in people’s success. That way when prospective student try to determine what value a college has to offer them they’ll have more to go on than scores derived from the number of rejected applicants and faculty salaries.
Unfortunately, colleges have proven notoriously bad at tracking post graduate success—with the exception of for-profit universities which live and die on their reputation for getting their graduates employed. Thus it’s up to third parties to devise a way of measuring post graduate success, and CCAP is currently working on just such a project. We’ve been collecting mounds of data on some of America’s most successful people to see if going to the country’s most prestigious—and expensive— schools actually correlates with a successful post graduate career. Is shelling out big bucks for an Ivy education actually a sound investment or is it just an over priced country club membership? In the coming weeks CCAP hopes to shed more light on the subject—stay tuned.
Jim Coleman is a research associate at The Center for College Affordability and Productivity
Richard M. Freeland, Distinguished Professor of Higher Education at Clark University, had an insightful piece in The Christian Science Monitor this past week. Freeland discusses the increasing tendency for students to go through 4 or 5 years of college with little or no preparation for entering the work force and real world:
One of the most striking recent phenomena about college graduates in America has been the ‘boomerang’ student: the young person who goes away to college, has a great experience, graduates, then moves back home for a year or two to figure out what to do with his or her life. This pattern has left many graduates – and their families – wondering whether it makes sense to spend four or more years at college, often at great expense, and finish with no clear sense of who they are or what they want to do next.
Freeland explains that this “boomerang” effect is, among other things, due to curriculums that focus almost exclusively on academic interests while eschewing the more practical applications of knowledge and that most colleges under fund and marginalize their career planning offices.
Freeland makes a valid point. Colleges continue to ratchet up costs while the value added of attending college improves little—or in some cases decreases. Additionally, colleges have become overburdened with bureaucracy (university staff has ballooned 5% relative to student enrollment over the past decade) and shared governance, making them increasingly inept at responding to changes in our fact paced world.
What’s worse is that universities have little incentive to change things, because prestige—the thing universities desire most-- is currently determined by factors other than graduates’ success. For example, look at how the U.S. News and World Report rankings work. Over 50% of a school's final score is determined by student SAT/ACT scores, peer assessment, class size, and faculty salary. Since what happens to students after graduation bears little on a school rankings and prestige, colleges choose to pour money into things like recruiting kids from top boarding schools rather than making sure graduates actually have the requisite skills to get a job.
What’s needed is some sort of measure for examining what role individual colleges play in people’s success. That way when prospective student try to determine what value a college has to offer them they’ll have more to go on than scores derived from the number of rejected applicants and faculty salaries.
Unfortunately, colleges have proven notoriously bad at tracking post graduate success—with the exception of for-profit universities which live and die on their reputation for getting their graduates employed. Thus it’s up to third parties to devise a way of measuring post graduate success, and CCAP is currently working on just such a project. We’ve been collecting mounds of data on some of America’s most successful people to see if going to the country’s most prestigious—and expensive— schools actually correlates with a successful post graduate career. Is shelling out big bucks for an Ivy education actually a sound investment or is it just an over priced country club membership? In the coming weeks CCAP hopes to shed more light on the subject—stay tuned.
Jim Coleman is a research associate at The Center for College Affordability and Productivity
Thursday, January 10, 2008
Do We Need Accreditation?
By Richard Vedder
When I was put on the Spellings Commission and the topic of college accreditation came up, I asked the question: "who needs it?" I was given many reasons why it was vital, most of them relating to federal funding of education.
My thoughts are turning to the topic again. Yesterday, I spoke some on the topic in Austin at a marvelous conference put on by the Texas Public Policy Foundation (TPPF). And in three weeks, I will no doubt be speaking of it again at the CHEA (Council on Higher Education Accreditation) conference. And I would submit that in a market-based higher education system with lots of information available to consumers, accreditation would be unnecessary.
As I told the TPPF audience, we don't accredit refrigerators. Millions of Americans annually purchase unaccredited refrigerators. We bought our unaccredited model in 1969 --and still have it. For almost four decades we have survived using an unaccredited product --and are pleased as can be with that purchase. Refrigerators are high in quality, typically last years, and have warranties against defect (do you know a college with a warranty on its product?) While organizations like Consumer Reports evaluate refrigerators, you do not need their approval to go into business. Why do we accredit colleges but not refrigerators?
The exact equivalent of accreditation is occupational licensing --you cannot perform some services without a license, which is a form of accreditation. Sam Peltzman, Harold Demsetz and others demonstrated a generation ago that occupational licensing most often does not lead to improved service quality --but does lead to higher prices. Unlicensed TV repairmen were as good as licensed ones --but cheaper, since licensing was a barrier to increased supply that served to raise prices. Similarly, in teaching, studies show that uncertified (licensed) teachers typically do about as well as certified ones, meaning vast resources are wasted meeting inane requirements for certification, including forcing students to take courses in the Intellectual Wasteland of most universities, the college of education.
If higher education institutions reported information on student outcomes, and on "value added", we would have consumer information needed to evaluate quality --much better information than accreditation provides. Do you know of a single important institution that lost accreditation because of shoddy academic performance? I think we should reduce barriers to entry into higher education --increasing opportunities for entrepreneurs to open for profit institutions that offer more meaningful competition of our nation's existing schools. I hope CHEA (and its great president, Judith Eaton) does not disinvite me from speaking at their annual conclave. Indeed, with greater transparency in higher education, accreditation could take on a new and exciting role, but I am wondering beyond the question posed for today.
When I was put on the Spellings Commission and the topic of college accreditation came up, I asked the question: "who needs it?" I was given many reasons why it was vital, most of them relating to federal funding of education.
My thoughts are turning to the topic again. Yesterday, I spoke some on the topic in Austin at a marvelous conference put on by the Texas Public Policy Foundation (TPPF). And in three weeks, I will no doubt be speaking of it again at the CHEA (Council on Higher Education Accreditation) conference. And I would submit that in a market-based higher education system with lots of information available to consumers, accreditation would be unnecessary.
As I told the TPPF audience, we don't accredit refrigerators. Millions of Americans annually purchase unaccredited refrigerators. We bought our unaccredited model in 1969 --and still have it. For almost four decades we have survived using an unaccredited product --and are pleased as can be with that purchase. Refrigerators are high in quality, typically last years, and have warranties against defect (do you know a college with a warranty on its product?) While organizations like Consumer Reports evaluate refrigerators, you do not need their approval to go into business. Why do we accredit colleges but not refrigerators?
The exact equivalent of accreditation is occupational licensing --you cannot perform some services without a license, which is a form of accreditation. Sam Peltzman, Harold Demsetz and others demonstrated a generation ago that occupational licensing most often does not lead to improved service quality --but does lead to higher prices. Unlicensed TV repairmen were as good as licensed ones --but cheaper, since licensing was a barrier to increased supply that served to raise prices. Similarly, in teaching, studies show that uncertified (licensed) teachers typically do about as well as certified ones, meaning vast resources are wasted meeting inane requirements for certification, including forcing students to take courses in the Intellectual Wasteland of most universities, the college of education.
If higher education institutions reported information on student outcomes, and on "value added", we would have consumer information needed to evaluate quality --much better information than accreditation provides. Do you know of a single important institution that lost accreditation because of shoddy academic performance? I think we should reduce barriers to entry into higher education --increasing opportunities for entrepreneurs to open for profit institutions that offer more meaningful competition of our nation's existing schools. I hope CHEA (and its great president, Judith Eaton) does not disinvite me from speaking at their annual conclave. Indeed, with greater transparency in higher education, accreditation could take on a new and exciting role, but I am wondering beyond the question posed for today.
Monday, January 07, 2008
More Revolutions in College Finance: Yale
By Richard Vedder
Our CCAP colleague Lynne Munson has been screaming at anyone who will listen: colleges should spend more out of their endowments. Now Yale is, effectively, adopting the spending rule that applies to private foundations, spending about 5 percent of endowment income instead of less than 4 percent at present. Yale announced that it was going to increase spending by $300 million, which I think is something like $30,000 for every student attending the institution (one option: eliminating tuition fees, is financially feasible but obviously not on the table).
My read of endowment spending is that universities have been extremely conservative. To some extent, that is good --it would be wrong to go on a spending splurge at the expense of future generations, like they are doing with fiscal policy in Washington, D.C. At the same time, when inflation-adjusted rates of return are in the double digits for a decade or more, and real endowment funds are growing obscenely large, it is time to make an adjustment, and this Yale has done. This is good news. A cynical person might say Yale is doing it because of pressure from people like Senator Grassley, Lynne and me, but whatever the reason, the move is welcomed.
At the same time, however, I worry about the Law of Unintended Consequences. It seems like most of the new spending is NOT going for reduced student costs, but to furnish and fund a spify new science campus. That could add to the academic arms race, where schools engage in massive capital spending to stay ahead of competitors in a world where competition is mostly of the non-price variety.
One thing Yale is considering would be good: expanding enrollment by adding two new residential colleges --600 students. If they did that, a good bit of the incremental spending legitimately would go to expanding the undergraduate experience. The inelasticity of supply of prestige higher education is causing all sorts of problems, not the least of which is rising costs. Let us hope Yale expands enrollment a bit.
Our CCAP colleague Lynne Munson has been screaming at anyone who will listen: colleges should spend more out of their endowments. Now Yale is, effectively, adopting the spending rule that applies to private foundations, spending about 5 percent of endowment income instead of less than 4 percent at present. Yale announced that it was going to increase spending by $300 million, which I think is something like $30,000 for every student attending the institution (one option: eliminating tuition fees, is financially feasible but obviously not on the table).
My read of endowment spending is that universities have been extremely conservative. To some extent, that is good --it would be wrong to go on a spending splurge at the expense of future generations, like they are doing with fiscal policy in Washington, D.C. At the same time, when inflation-adjusted rates of return are in the double digits for a decade or more, and real endowment funds are growing obscenely large, it is time to make an adjustment, and this Yale has done. This is good news. A cynical person might say Yale is doing it because of pressure from people like Senator Grassley, Lynne and me, but whatever the reason, the move is welcomed.
At the same time, however, I worry about the Law of Unintended Consequences. It seems like most of the new spending is NOT going for reduced student costs, but to furnish and fund a spify new science campus. That could add to the academic arms race, where schools engage in massive capital spending to stay ahead of competitors in a world where competition is mostly of the non-price variety.
One thing Yale is considering would be good: expanding enrollment by adding two new residential colleges --600 students. If they did that, a good bit of the incremental spending legitimately would go to expanding the undergraduate experience. The inelasticity of supply of prestige higher education is causing all sorts of problems, not the least of which is rising costs. Let us hope Yale expands enrollment a bit.
Illusions of Generosity
By Lynne Munson
Yale announced today that it is increasing its endowment payout to $1.15 billion this year, or just over 5% of the value of its $22.5 billion endowment, and that it will be spending some of these newly released monies on financial aid. Yale's is the second in what is expected to be a string of announcements by America's wealthiest schools that they've finally decided--after decades of hoarding endowment monies--to share a modicum of those tax-free riches with students and others they were always intended to help.
Harvard was the first to say it would be spending more. The university impressed many just before Christmas with a new financial aid program that promises to discount tuition for students whose families earn 180k or less. Harvard’s annual aid to undergraduates will now total $120 million.
Massive spending figures like these always wow and can sometimes appear more impressive than they actually are. Let's give Harvard's new aid program a closer look. Harvard is indeed spending more on aid even in comparison to other heavily-endowed institutions. Take the University of Michigan, for example. Though Michigan’s endowment ranks in the nation’s top 10, this multi-campus system plans to offer its 40,000 undergraduates only $61 million in aid next year, or half of what Harvard will give to just 6,600 undergraduates.
Yet within the context of Harvard’s wealth even its new outlay for aid is miserly. Harvard sits on the largest fortune amassed by any institution in the history of our nation. Its endowment increased 23% last year to $34.9 billion. It took just eight days last year for Harvard’s endowment to earn enough to cover its entire undergraduate aid budget. And this new $22 million increase in aid amounts to a mere day and a half of earnings.
So the real news out of Harvard and Yale isn't that they are spending a bit more on aid. It is the fact that, despite a paradigm shift in the wealth of our colleges and universities, even the wealthiest among them remain unwilling to freeze tuition or even to entertain the notion of making themselves truly accessible to every deserving student.
Harvard and Yale are trendsetters in many areas, including financial aid. So their refusal to go tuition-free will speak volumes to their peers. Yet it isn’t just that these schools could provide free tuition to all of their students and never feel a pinch. It is the fact that in not doing so it is ignoring the wishes of alumni who have donated billions in the hope that Harvard and Yale will truly throw open their doors.
Let's look closely at Harvard again. The university won’t reveal how much of it’s endowment is restricted or for what purpose. But it participated in the annual National Association of College and University Business Offers survey which found that, on average, donors to higher education institutions with endowments exceeding $1 billion restrict 56% of their gifts. According to the Council for Aid to Education's "Voluntary Support of Education" study more than a third of restricted donations to higher education are designated for financial aid. In fact aid is more favored than support for any other activity including research, faculty salaries, and athletics combined.
Based on these findings, we can estimate that Harvard’s endowment includes $7 billion that donors have told the school to spend on financial aid. If Harvard deducts its new $120 million undergraduate aid budget from these funds the school will still roll over and reinvest nearly $6.9 billion in aid-restricted monies. Conservatively estimating that next year Harvard’s endowment doesn’t increase the over 20% it has in recent years, but that it goes up just 13.3% (its average annual increase since inception) those aid-restricted funds will earn almost $800 million, or 6.6 times the amount Harvard is now spending on aid.
Even if Harvard gave all of their undergraduates a free ride the school wouldn’t come close to spending even half of the interest it is receiving on just the aid-restricted portion of endowment. The full cost of allowing all undergrads to attend without any tuition, fee, or room and board costs would be $306 million. After deducting that amount the remaining $6.7 billion will still earn at least $584 million.
Harvard, Yale, and dozens of their peers are hoarding funds they should have spent years ago. This stockpiling is an affront to the alumni who have given so much to make college more accessible. It is also an expensive habit that economist Jane Gravelle of the Congressional Research Service estimates costs taxpayers $15 billion annually.
The incredible wealth amassed by our colleges and universities should redefine our expectations for many things, including financial aid. Instead of trying to shape those new expectations, the richest schools of all are hoping to be hailed for what amounts to token gifts. But this is not the time of year when we should be celebrating Ebenezers.
Yale announced today that it is increasing its endowment payout to $1.15 billion this year, or just over 5% of the value of its $22.5 billion endowment, and that it will be spending some of these newly released monies on financial aid. Yale's is the second in what is expected to be a string of announcements by America's wealthiest schools that they've finally decided--after decades of hoarding endowment monies--to share a modicum of those tax-free riches with students and others they were always intended to help.
Harvard was the first to say it would be spending more. The university impressed many just before Christmas with a new financial aid program that promises to discount tuition for students whose families earn 180k or less. Harvard’s annual aid to undergraduates will now total $120 million.
Massive spending figures like these always wow and can sometimes appear more impressive than they actually are. Let's give Harvard's new aid program a closer look. Harvard is indeed spending more on aid even in comparison to other heavily-endowed institutions. Take the University of Michigan, for example. Though Michigan’s endowment ranks in the nation’s top 10, this multi-campus system plans to offer its 40,000 undergraduates only $61 million in aid next year, or half of what Harvard will give to just 6,600 undergraduates.
Yet within the context of Harvard’s wealth even its new outlay for aid is miserly. Harvard sits on the largest fortune amassed by any institution in the history of our nation. Its endowment increased 23% last year to $34.9 billion. It took just eight days last year for Harvard’s endowment to earn enough to cover its entire undergraduate aid budget. And this new $22 million increase in aid amounts to a mere day and a half of earnings.
So the real news out of Harvard and Yale isn't that they are spending a bit more on aid. It is the fact that, despite a paradigm shift in the wealth of our colleges and universities, even the wealthiest among them remain unwilling to freeze tuition or even to entertain the notion of making themselves truly accessible to every deserving student.
Harvard and Yale are trendsetters in many areas, including financial aid. So their refusal to go tuition-free will speak volumes to their peers. Yet it isn’t just that these schools could provide free tuition to all of their students and never feel a pinch. It is the fact that in not doing so it is ignoring the wishes of alumni who have donated billions in the hope that Harvard and Yale will truly throw open their doors.
Let's look closely at Harvard again. The university won’t reveal how much of it’s endowment is restricted or for what purpose. But it participated in the annual National Association of College and University Business Offers survey which found that, on average, donors to higher education institutions with endowments exceeding $1 billion restrict 56% of their gifts. According to the Council for Aid to Education's "Voluntary Support of Education" study more than a third of restricted donations to higher education are designated for financial aid. In fact aid is more favored than support for any other activity including research, faculty salaries, and athletics combined.
Based on these findings, we can estimate that Harvard’s endowment includes $7 billion that donors have told the school to spend on financial aid. If Harvard deducts its new $120 million undergraduate aid budget from these funds the school will still roll over and reinvest nearly $6.9 billion in aid-restricted monies. Conservatively estimating that next year Harvard’s endowment doesn’t increase the over 20% it has in recent years, but that it goes up just 13.3% (its average annual increase since inception) those aid-restricted funds will earn almost $800 million, or 6.6 times the amount Harvard is now spending on aid.
Even if Harvard gave all of their undergraduates a free ride the school wouldn’t come close to spending even half of the interest it is receiving on just the aid-restricted portion of endowment. The full cost of allowing all undergrads to attend without any tuition, fee, or room and board costs would be $306 million. After deducting that amount the remaining $6.7 billion will still earn at least $584 million.
Harvard, Yale, and dozens of their peers are hoarding funds they should have spent years ago. This stockpiling is an affront to the alumni who have given so much to make college more accessible. It is also an expensive habit that economist Jane Gravelle of the Congressional Research Service estimates costs taxpayers $15 billion annually.
The incredible wealth amassed by our colleges and universities should redefine our expectations for many things, including financial aid. Instead of trying to shape those new expectations, the richest schools of all are hoping to be hailed for what amounts to token gifts. But this is not the time of year when we should be celebrating Ebenezers.
Is the Student Loan Market Imploding?
By Richard Vedder
I was talking with one of America's finest business reporters the other day, Chris Farrell of Business Week and NPR. Chris was asking for my take on the student loan market, picking up on Andy Gillen's series of blogs on the possibility of a student loan "bubble."
A look at the evidence shows that top companies in this field may be sicker than the top companies burned by the subprime/private equity problems. Consider the following:
The price of common stock fell from July 3 to January 4 for the following companies:
J.P Morgan & Co. 16%
Bank of America 17%
Merrill Lynch 37%
Citicorp 44%
Bear Stearns 47%
Big declines --especially for companies like Citicorp and Bear Stearns. But what about Sallie Mae, by far the largest student loan participant? The price of SLM stock fell OVER 71 PERCENT in the same period, from $57.92 to $16.67 a share. A far more dramatic decline --well over two-thirds the company's capitalization.
What is the problem with student loans? There are both supply and demand factors at work.
First, the risk premium associated with student loans is apparently significantly greater than assumed by the lenders and investors in those companies. Evidence that defaults are far higher than the Department of Education lets on furthers the concern.
Second, the Democrats controlling Congress had a bad idea --lower interest rates on loans and finance the subsidization in part by cutting fees payable to private lenders. The "squeeze the lender" philosophy (similar to "squeeze the physician" with Medicare and Medicaid) can only have negative supply consequences.
Third, public awareness of the consequences of excessive borrowing are rising, as newspapers, TV, and the internet are filled with horror stories of students with huge debts.
Fourth, the student loans scandals unearthed by Andrew Cuomo and others have made some colleges leery of getting involved with student loan companies. Some heads have rolled, and we have perhaps not heard the end of this matter.
Fifth, maybe in part because of the previous point, some prestigious schools are ending loans as part of student financial aid packages --when Princeton and Harvard do that, others follow --and they are. Joe Six Pack U. cannot afford to do it, but more and more private schools are taking the plunge, using endowment monies more aggressively to support tuition discounting.
Sixth, the demand for higher education has risen sharply over time because of the rising college-high school earnings differential. Yet the evidence is, at least for women (who make up 57 percent of all students), that that differential has ceased widening over the past decade. As the cost of education rises, but the financial benefits remain roughly constant, the advantages of borrowing for college decline.
Hence, there already is a slowdown in loan growth --will it turn into an absolute decline? Stayed tuned.
I was talking with one of America's finest business reporters the other day, Chris Farrell of Business Week and NPR. Chris was asking for my take on the student loan market, picking up on Andy Gillen's series of blogs on the possibility of a student loan "bubble."
A look at the evidence shows that top companies in this field may be sicker than the top companies burned by the subprime/private equity problems. Consider the following:
The price of common stock fell from July 3 to January 4 for the following companies:
J.P Morgan & Co. 16%
Bank of America 17%
Merrill Lynch 37%
Citicorp 44%
Bear Stearns 47%
Big declines --especially for companies like Citicorp and Bear Stearns. But what about Sallie Mae, by far the largest student loan participant? The price of SLM stock fell OVER 71 PERCENT in the same period, from $57.92 to $16.67 a share. A far more dramatic decline --well over two-thirds the company's capitalization.
What is the problem with student loans? There are both supply and demand factors at work.
First, the risk premium associated with student loans is apparently significantly greater than assumed by the lenders and investors in those companies. Evidence that defaults are far higher than the Department of Education lets on furthers the concern.
Second, the Democrats controlling Congress had a bad idea --lower interest rates on loans and finance the subsidization in part by cutting fees payable to private lenders. The "squeeze the lender" philosophy (similar to "squeeze the physician" with Medicare and Medicaid) can only have negative supply consequences.
Third, public awareness of the consequences of excessive borrowing are rising, as newspapers, TV, and the internet are filled with horror stories of students with huge debts.
Fourth, the student loans scandals unearthed by Andrew Cuomo and others have made some colleges leery of getting involved with student loan companies. Some heads have rolled, and we have perhaps not heard the end of this matter.
Fifth, maybe in part because of the previous point, some prestigious schools are ending loans as part of student financial aid packages --when Princeton and Harvard do that, others follow --and they are. Joe Six Pack U. cannot afford to do it, but more and more private schools are taking the plunge, using endowment monies more aggressively to support tuition discounting.
Sixth, the demand for higher education has risen sharply over time because of the rising college-high school earnings differential. Yet the evidence is, at least for women (who make up 57 percent of all students), that that differential has ceased widening over the past decade. As the cost of education rises, but the financial benefits remain roughly constant, the advantages of borrowing for college decline.
Hence, there already is a slowdown in loan growth --will it turn into an absolute decline? Stayed tuned.
Friday, January 04, 2008
Crisis at Deep Springs College
By Richard Vedder
I read in INSIDE HIGHER ED that the president of Deep Springs College is out in a dispute over fundraising. With only 26 students, Deep Springs is one of the smallest, if not THE smallest school in the country, but its operation adds vibrance, competition and diversity to America's system of higher education.
Deep Springs is different --really different. It is located in the middle of nowhere. It takes no female students. Students work on the college farm while studying. The curriculum is traditional liberal arts in nature. Total enrollment is only 26. Classes are obviously very small, almost tutorial in nature. It certainly is not for everyone. It is only two years --and then students transfer, very often to prestigious liberal arts colleges or universities.
The strength of American higher education is that it allows for and nurtures schools like Deep Springs. It does not follow a one-size-fits-all mold administered by a national education ministry. There is true diversity with respect to curriculum and other dimensions of campus life. We need schools like Deep Springs, but also Antioch College (progressive liberal arts orientation), Hillsdale College (conservative school that takes no federal money), and Berea College (tuition free school catering to the poor).
Therein lies a dilemma. In our desire to push colleges to tell us more about what they do, to be more transparent, more accountable, there is a temptation to set "standards" of performance that simply do not fit all types of colleges and universities. National regulation is the antithesis of experimentation and diversity. For Deep Springs, the sign of success is that students keep coming, and they go on to successful careers at other schools of distinction. But those criteria do not fit very well for, say, Indiana University or Cuyahoga Community College.
I hope Deep Springs overcomes whatever problems it might have, and continues to flourish as an alternative means of education.
I read in INSIDE HIGHER ED that the president of Deep Springs College is out in a dispute over fundraising. With only 26 students, Deep Springs is one of the smallest, if not THE smallest school in the country, but its operation adds vibrance, competition and diversity to America's system of higher education.
Deep Springs is different --really different. It is located in the middle of nowhere. It takes no female students. Students work on the college farm while studying. The curriculum is traditional liberal arts in nature. Total enrollment is only 26. Classes are obviously very small, almost tutorial in nature. It certainly is not for everyone. It is only two years --and then students transfer, very often to prestigious liberal arts colleges or universities.
The strength of American higher education is that it allows for and nurtures schools like Deep Springs. It does not follow a one-size-fits-all mold administered by a national education ministry. There is true diversity with respect to curriculum and other dimensions of campus life. We need schools like Deep Springs, but also Antioch College (progressive liberal arts orientation), Hillsdale College (conservative school that takes no federal money), and Berea College (tuition free school catering to the poor).
Therein lies a dilemma. In our desire to push colleges to tell us more about what they do, to be more transparent, more accountable, there is a temptation to set "standards" of performance that simply do not fit all types of colleges and universities. National regulation is the antithesis of experimentation and diversity. For Deep Springs, the sign of success is that students keep coming, and they go on to successful careers at other schools of distinction. But those criteria do not fit very well for, say, Indiana University or Cuyahoga Community College.
I hope Deep Springs overcomes whatever problems it might have, and continues to flourish as an alternative means of education.
Historians of the World Unite! You Have Nothing to Lose But Your Chains
By Richard Vedder
I read that federal bureaucrats are trying to extend the power of Institutional Review Boards (IRBs) over oral history research. The historians are furious, and I am with them all the way.
IRBs are an abomination. They were mandated by federal legislation a generation or so ago and I fought their creation at my university on the grounds that they are an infringement of academic freedom, a violation of the First Amendment, an increase in the cost of doing research, and a general pain in the butt. I have not wavered in my views.
The idea is that sometimes researchers violate the rights of subjects they are investigating, so prior to the research being done an objective group of peers should pass judgment over the research design. Granted, abuses have occurred, but I have thought we have plenty of sanctions in place already to deal with unprofessional behavior. Aside from being hurt in terms of promotion, tenure, and salary increases, the professor who abuses the rights of individuals through research is subject to being sued, as is the university.
No one participates in an oral history project involuntarily, to my knowledge. No militant historians hold guns to famous people and say " I am going to make you an offer you cannot refuse: talk to me or die." The notion that some biologist or physicist on an IRB would try to establish rules to govern how the historians do oral history is repulsive, is bureaucratic, stifles inquiry, and assumes that professional historians are unethical or incompetent. The case against IRBs may be a tad weaker when the feds are funding the research, but even here, I think you have to trust the faculty.
Proposals to put bureaucratic rules restricting who historians can talk to (with their tape recorders going), or what they can ask, etc., violate not only the spirit if not the letter of the First Amendment, but materially threaten to reduce our knowledge about our past, our heritage, and some of the personages important in the advancement of western civilization.
I read that federal bureaucrats are trying to extend the power of Institutional Review Boards (IRBs) over oral history research. The historians are furious, and I am with them all the way.
IRBs are an abomination. They were mandated by federal legislation a generation or so ago and I fought their creation at my university on the grounds that they are an infringement of academic freedom, a violation of the First Amendment, an increase in the cost of doing research, and a general pain in the butt. I have not wavered in my views.
The idea is that sometimes researchers violate the rights of subjects they are investigating, so prior to the research being done an objective group of peers should pass judgment over the research design. Granted, abuses have occurred, but I have thought we have plenty of sanctions in place already to deal with unprofessional behavior. Aside from being hurt in terms of promotion, tenure, and salary increases, the professor who abuses the rights of individuals through research is subject to being sued, as is the university.
No one participates in an oral history project involuntarily, to my knowledge. No militant historians hold guns to famous people and say " I am going to make you an offer you cannot refuse: talk to me or die." The notion that some biologist or physicist on an IRB would try to establish rules to govern how the historians do oral history is repulsive, is bureaucratic, stifles inquiry, and assumes that professional historians are unethical or incompetent. The case against IRBs may be a tad weaker when the feds are funding the research, but even here, I think you have to trust the faculty.
Proposals to put bureaucratic rules restricting who historians can talk to (with their tape recorders going), or what they can ask, etc., violate not only the spirit if not the letter of the First Amendment, but materially threaten to reduce our knowledge about our past, our heritage, and some of the personages important in the advancement of western civilization.
Wednesday, January 02, 2008
Get Grants or Perish
By Richard Vedder
My good friend Patricia Smith has recently sent me a couple of letters, one from the Economist and one from the Columbus Dispatch, both picking up on themes often mentioned in this space.
It is argued that the emphasis on research is getting out of hand. We have moved from "publish or perish" to "get grants or perish." Areas where there is little opportunity for grants --the humanities in particular --are neglected and downsized, while money gets showered on the grant-receiving parts of the university. Perhaps that is justified --but perhaps it is not.
Some CCAP research supports the writer's laments. Salaries of professors rise more the more grant money there is. Wealth and job security are actually reduced by showing too much attention to students and their important transition from childhood to adulthood. Thus researchers make a ton more than teachers. What is interesting, though, that the share of university budgets being paid for by the students is not falling --it is actually rising in many schools. There is a growing disconnect between the sharply rising tuition charges --and the increasing neglect of the basic customer.
This disconnect is one reason why the traditional liberal arts colleges and the community colleges are flourishing despite repeated predictions of their ultimate demise. They take the role of teaching seriously and reward it (although salaries at the community colleges lag sharply those at the four year schools). The customer feels that his or her tuition funds are being used for the purpose intended. The ability of the research universities to raise tuition fees dramatically while increasingly neglecting the undergraduate students is almost certainly going to be imperiled at some point, except at the most elite and selective universities of the Harvard variety.
As I have said at least a dozen times, research distinction is recognized nationally and internationally while teaching distinction is recognized only locally for the most part (although I love to read what students think of my colleagues at other universities on rateyourprofessor.com). Information is readily available on good research, but not as clearly so on good teaching. Moreover, research prowess is being measured more and more not by outcomes --published research or patents --than by inputs (amount of money obtained in grants). Professors are becoming whores, and the universities are their pimps.
In short, universities are terribly money hungry --they share the basic human instinct of wanting more material things, even if they lack the incentives markets provide to pursue their material ambitions in an efficient fashion. Money talks at universities, and money says "do research." We might start rethinking the funding of some research efforts, especially the provision of overhead funds at an extremely high level.
I am not disparaging research. It is important, and our society has progressed enormously through the advance of knowledge. Both the quality and quantity of our lives has advanced because of research. But that does not mean, at the margin, we have got it right in terms of the relative emphasis placed on the two important aspects of university lives (and, for that matter, on the other things universities do -- like the fascination they have with throwing and kicking balls and other trivial acts of physical strength).
My good friend Patricia Smith has recently sent me a couple of letters, one from the Economist and one from the Columbus Dispatch, both picking up on themes often mentioned in this space.
It is argued that the emphasis on research is getting out of hand. We have moved from "publish or perish" to "get grants or perish." Areas where there is little opportunity for grants --the humanities in particular --are neglected and downsized, while money gets showered on the grant-receiving parts of the university. Perhaps that is justified --but perhaps it is not.
Some CCAP research supports the writer's laments. Salaries of professors rise more the more grant money there is. Wealth and job security are actually reduced by showing too much attention to students and their important transition from childhood to adulthood. Thus researchers make a ton more than teachers. What is interesting, though, that the share of university budgets being paid for by the students is not falling --it is actually rising in many schools. There is a growing disconnect between the sharply rising tuition charges --and the increasing neglect of the basic customer.
This disconnect is one reason why the traditional liberal arts colleges and the community colleges are flourishing despite repeated predictions of their ultimate demise. They take the role of teaching seriously and reward it (although salaries at the community colleges lag sharply those at the four year schools). The customer feels that his or her tuition funds are being used for the purpose intended. The ability of the research universities to raise tuition fees dramatically while increasingly neglecting the undergraduate students is almost certainly going to be imperiled at some point, except at the most elite and selective universities of the Harvard variety.
As I have said at least a dozen times, research distinction is recognized nationally and internationally while teaching distinction is recognized only locally for the most part (although I love to read what students think of my colleagues at other universities on rateyourprofessor.com). Information is readily available on good research, but not as clearly so on good teaching. Moreover, research prowess is being measured more and more not by outcomes --published research or patents --than by inputs (amount of money obtained in grants). Professors are becoming whores, and the universities are their pimps.
In short, universities are terribly money hungry --they share the basic human instinct of wanting more material things, even if they lack the incentives markets provide to pursue their material ambitions in an efficient fashion. Money talks at universities, and money says "do research." We might start rethinking the funding of some research efforts, especially the provision of overhead funds at an extremely high level.
I am not disparaging research. It is important, and our society has progressed enormously through the advance of knowledge. Both the quality and quantity of our lives has advanced because of research. But that does not mean, at the margin, we have got it right in terms of the relative emphasis placed on the two important aspects of university lives (and, for that matter, on the other things universities do -- like the fascination they have with throwing and kicking balls and other trivial acts of physical strength).
Tuesday, January 01, 2008
2007: More Rhetoric Than Substance
By Richard Vedder
2007 was a year with a lot of promising rhetoric in higher education. Several of the leading associations of universities indicated a desire to comply with the Spellings Commission recommendations regarding developing better measures of assessing student performance and providing greater transparency in operations. A number of schools froze tuition, sometimes under state government mandate, and Harvard announced its plan to significantly lower costs for a large portion of its students. So it would seem to have been a year of some promise, some beginnings of fundamental reform.
Yet I am skeptical that much really happened. Average tuition levels rose at double the inflation rate as usual. Schools did not do an awful lot in terms of actual actions to implement a transparent policy of reporting what students were learning. There were a lot of committees formed, but little action. Attempts to use accreditation as a club to force some reform were essentially unsuccessful, as the forces of reaction dominated over the forces of reform. That was deeply disappointing.
I feel that tangible, sustained, meaningful reform will not occur until some of the fundamentals are altered --third party payments are brought into check, the for profit sector grows enough to be a real force of reform of traditional schools, taxpayers start demanding accountability, etc. There were some signs in 2007 that those things were starting to happen, but not enough to instill confidence that a leaner, more efficient, more accountable, more transparent system of higher education delivery is coming.
Let us hope for more in 2008. CCAP will be pushing for change. We hope the presidential candidates will start taking an interest in the issue as well. Stay tuned.
2007 was a year with a lot of promising rhetoric in higher education. Several of the leading associations of universities indicated a desire to comply with the Spellings Commission recommendations regarding developing better measures of assessing student performance and providing greater transparency in operations. A number of schools froze tuition, sometimes under state government mandate, and Harvard announced its plan to significantly lower costs for a large portion of its students. So it would seem to have been a year of some promise, some beginnings of fundamental reform.
Yet I am skeptical that much really happened. Average tuition levels rose at double the inflation rate as usual. Schools did not do an awful lot in terms of actual actions to implement a transparent policy of reporting what students were learning. There were a lot of committees formed, but little action. Attempts to use accreditation as a club to force some reform were essentially unsuccessful, as the forces of reaction dominated over the forces of reform. That was deeply disappointing.
I feel that tangible, sustained, meaningful reform will not occur until some of the fundamentals are altered --third party payments are brought into check, the for profit sector grows enough to be a real force of reform of traditional schools, taxpayers start demanding accountability, etc. There were some signs in 2007 that those things were starting to happen, but not enough to instill confidence that a leaner, more efficient, more accountable, more transparent system of higher education delivery is coming.
Let us hope for more in 2008. CCAP will be pushing for change. We hope the presidential candidates will start taking an interest in the issue as well. Stay tuned.
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