Memo to Art Rothkopf: Charles Murray Is Right

By Richard Vedder

In Going Broke By Degree, published in 2004, I argued that the rise in college costs is unsustainable and would lead to lower price alternatives, including new ways of certifying competence --such as vocational examinations. Charles Murray pushes that argument further in his great book Real Education.

Unquestionably the largest single reason for the excessive demand for higher education in the U.S. is the information cost factor. Costs to employers of learning about the skills of potential employees is potentially quite high, particularly given the declining quality of American education occasioned by mediocre secondary school standards, and given the fact that employer testing for cognitive skills has been reduced dramatically by Griggs v. Duke Power and other judicial and legislative mandates. A college diploma denotes that a potential worker probably has at least minimal levels of cognitive abilities, has some degree of motivation and responsibility, etc. The costs to the diploma to employers are zero (in a direct sense), but are very high to the potential employee. But the diploma serves as a decent if highly imperfect screening device, separating the highly competent from the clearly incompetent.

As Murray points out, those information costs can decrease dramatically by developing certification tests -- measures of of competence-- applicable to most vocations. Just as the CPA exam tells who understands accounting concepts, and Microsoft and others have tests on skill in using certain software they produce (reducing sharply the number of computer science majors at one time), so other tests can be developed: a hotel management examination, for example, or a general managerial skills test that includes some basic math and other foundational questions along with some questions that a good manager should be able to answer. Murray estimates that a large majority -maybe 70 percent --of jobs that current require college degrees are amenable to this approach (much learning, of course, occurs on the job). Employers, of course, would still need to interview candidates to get a sense of some interpersonal skills not easily measured by written testing. Job interviews are merely a form of oral examination.

Students with a good high school education in terms of basic math and written communication skills could take specific courses designed to meet vocational needs prior to taking the certifying tests. Organizations like the Educational Testing Service, the ACT, or others would devise tests. Kaplan, Princeton Review and other for profit providers would rush to develop cram courses designed to help pass the exams. As that great proponent of free choice, Chairman Mao, used to say: let a thousand flowers bloom. And they will.

This brings in my friend Art Rothkopf, senior executive at the U.S. Chamber of Commerce in charge of higher education matters, and a former president of Lafayette College and Spellings Commission member. Art could convene groups of business executives and sell them on the advantages of the approach.

The big question: what is in it for the businesses? They are not the ones paying the college bills, although they indirectly pay more than they think through their taxes and charitable contributions. By moving towards an examination approach, potentially employers can greatly increase the pool of competent persons, potentially lowering the costs of hiring workers. They also will get a better screening device, ending up with employees more clearly competent to meet their needs. This approach would impact on the type of instruction and learning workers get --a common complaint is "we have to spend a fortune training these college grads after they come to work for us." Etc. etc. It really is to their advantage. Everyone gains --except some colleges with great prestige but doing little instruction in anything practical, and some truly mediocre students attending the upscale schools whose graduates command high wages.

Maybe I should have another big conference at the American Enterprise Institute on "New Ways of Certifying Employee Competence," with Charles, myself, Art, and maybe one or two other industry people and academics. Any thoughts?

King Alexander's Lament

By Richard Vedder

F. King Alexander is a dynamic, articulate young university president (I think he was born in the year I received my Ph.D. and began teaching) who, I would predict, in 10 years or less will be considered a major name in American higher education. Currently president of Cal State University at Long Beach, King previously headed Murray State University.

King, who I met several years ago at a National Academies of Science event, called yesterday to chat. Calls these days from university leaders are always interesting. I feel a little like a rather famous criminal I once met (and actually signed his criminal indictment), Billy Milligan, who suffered from multiple personality disorder (a good read: Daniel Keyes's The Minds of Billy Milligan). Some people think I am the devil incarnate, a disagreeable person who went into the college rankings business to get rich and torment many great and distinguished universities (all untrue, by the way). Others think I am a selfless visionary --the successor to Mother Theresa --who is righting terrible institutional wrongs (these are the schools that ranked high in the Forbes rankings which I engineered.)

Back to King. He made two very good points. The payscale.com lists show that the median income of college graduates of many lesser ranked colleges is quite high, particularly in relation to the costs of attending college. We ought to look at the earnings of college graduates in relation to the cost of attending school --sort of an earnings-cost ratio. Amen. We need more data to do it comprehensively, and I suggested that King get the Cal State system to try to partner with payscale.com to allow it to happen. My Who's Who approach is a good first step to getting post-graduate occupational information (much better than Patricia McGuire notes in her quasi-hysterical attack on the Forbes rankings yesterday in INSIDE HIGHER ED), but King has the right idea where we should ultimately be moving in college evaluations.

King's second point was one that his boss Charlie Reed had previously made to me earlier: schools that have lots of poor kids have a harder time looking spiffy on the standard measures of academic success, and rankings need to be, roughly speaking, "Pell Grant adjusted" --take into account the diverse backgrounds of the incoming student body. I agree, and plan on doing some analysis of the Forbes vs. US News (and maybe Princeton Review) rankings with respect to this factor. Whether rankings should be truly "Pell Grant neutral", showing no discrimination against schools with lots of low income students is debatable, but it is at least a defensible position.

My one huge reservation to a lot of what I just said is the same as that of Charles Murray, whose latest great book Real Education I have about finished. Too many persons of marginal academic ability (and, sometimes, motivation) attend college, too few attend good trade schools, and too few are certified for work by external examination (like the CPA exam). Maybe rather than adjusting rankings to take account the less-than-great academic background of many students attending the Cal States of the world, perhaps there should be fewer Cal States in the first place --fewer people attending college. But that is a discussion for another day. Rankings probably should look at the academic world as it is, rather than the way it should be.

King has convinced me we need to have a broader national conversation on the whole business of college assessment (and rankings) and I have decided to put on a conference on the topic at the American Enterprise Institute (where I work). King will get the first invitation to speak. And my colleague Charles Murray will probably get the second, and Kevin Carey, who has written thoughtfully on rankings, will get the third.

The Economics of Big Lectures

by Andrew Gillen

Brad DeLong asks a very good question Why Are We Here? (In a Big Lecture, That Is)

He notes that the origins of big lectures were the enormous cost of books pre-Gutenberg, estimating that students would have needed the equivalent of $1.6 million (yes million, and I thought a couple hundred bucks a year was bad!) to buy all the books for a college education. Thus, they had one book which was read to a big audience.

But after the printing press, and the resulting "cheap" books, the rationale for big lectures is gone... DeLong:

Yet the Lecture Remains: Why? Four Possible Reasons:

* Budget stringency: lectures are cheap for the university relative to seminars, and even if they are markedly less effective they do soak up students' time
* Alternative information channel: The ears are wired to the brain differently than the eyes, and there is value in not only reading something but also hearing something in producing the synaptic changes that we want to see happen in college.
* A self-discipline device: if people have to show up at a certain place at a certain time to accomplish a task or be disciplined, they are more likely to do so. Lecture is a way of solving our self-command and self-control problems.
o But why not then just have a study hall? Everyone reads the book, and the monitor circulates and answers quetions?
* A sociological event: East African Plains Apes like to do things in groups that involve language--that is just who we are--and the lecture is just another example of this

All four of these surely play some role. But I have no idea of the relative balance between them--and neither, it seems, does anybody else I can find...

Of the four he lists, I think the first has the most weight, but I might also add that as a teacher, lectures may be easier then seminars, at least in the early stages of a discipline - upper level and grad seminars perhaps not so much.

What other education practices that have long been obsolete (or changed rationales) are there? The 9-month school year comes immediately to mind, but what else?

Externalities in Higher Education

by Andrew Gillen

Arnold Kling reviews the positive externality argument of education and isn't buying it:

the positive externality is the benefits that accrue to me from your education. I think that those benefits tend to be pretty small. You get a higher income, and most of those benefits flow to you. I get some of the benefits, because you are more likely to pay taxes and less likely to require government transfers, so that my tax obligations can be correspondingly reduced.

In other words, he's arguing that the externalities associated with a college degree are pretty small, implying that the subsidy should be pretty small as well. But he goes on to note that the externalities may be negative, which would imply that higher ed should be taxed, not subsidized:

If the higher income that you get from education is due to its signaling effects, then that is a classic negative externality. The investment in the signal is wasteful, and your investment forces others to make a wasteful investment.
On the whole, the case for taxing education rather than subsidizing it is really quite plausible.

For those of you not familiar with "signaling," it is the idea that a degree is useful because it signals that you have a set of desirable characteristics (good work ethic, punctuality, creativity etc.) that are not learned in school, as opposed to being useful because it certifies that you learned X, Y and Z in school. Since people with these characteristics are more likely to get a degree, the value of a degree comes primarily from signaling, and because signaling is costly (tuition, usually subsidized as well), and encourages others to spend resources signaling, higher education has negative externalities. If that is the case it should be taxed.

Grade Inflation

By Jim Coleman

Among some of the criticisms levied against higher ed. today are allegations of grade inflation. Students receive the same diplomas and grades as there predecessors while actually accomplishing less. CCAP recently reviewed data in the National Postsecondary Student Aid Study to see if such claims could be substantiated. We look specifically at public and private doctorial institutions between the years 1990 and 2004

There is no doubt that the grades of undergrads have been creeping up over the last 14 years. Initially, however, it is not clear if the higher grades are a result of better performing students or grade inflation. In order to see if the higher grades are the result of student’s abilities we compare their average GPAs with their Average SAT and ACT scores (see figures below). The results are mixed.






SAT score generally do not correlate well with GPAs (.39) at public institutions and inversely (-.29) at private. This suggests that student grades have little relationship with the students’ aptitude, grades increase regardless of the students’ abilities. There is a stronger but still unimpressive relationship between GPAs and ACT scores. The correlation between ACT scores and GPA is only .60 at public schools and .20 at private ones. The ACT Scores suggest that student grade increases, particularly at private schools, have little to do with the knowledge accumulated by students in high school, again suggesting grade inflation may be at work.

Obviously, a small scattering of data points over 3 year intervals isn’t going to settle the question of whether or not there is grade inflation, but the lack of a strong positive relationship between SAT and ACT scores vis-à-vis GPA should give one pause. As it suggests that current student grades are being cheapend by the watering down of academic standards.

Rising Community College Enrollments

By Richard Vedder

The papers are full of news that community college enrollments are booming, suggesting this is a byproduct of an economic downturn. When times are tough, people go to Wal-Mart instead of Sak's Fifth Avenue, and to community college instead of four year universities.

The data suggest, however, that the trend to two year schools is more long-lived. Today's USA TODAY features a graph that shows that a majority of the increase in college enrollments since 1995 has occurred at the two year schools. This is in marked contrast to the picture from, say, 1975 to 1995, when the market share of community colleges was actually declining. Those schools were viewed as inferior, and as an increasingly affluent American population chose schools, they mostly wanted the qualitatively superior four year option. Community college market share fell for the same reason bus transportation was losing its market share --there were qualitatively better alternatives.

Why, then, the change since 1995? Two factors are relevant. First, while the cost of college has been rising generally, the increases are particularly profound at the four year schools, in my judgment because universities typically are deemphasizing undergraduate instruction and using incremental tuition funds to finance lower teaching loads, more administrative hires, more luxurious student facilities, etc. As the cost differential between two and four year schools grows, more are selecting the lower cost alternative.

Second, the dirty little secret in higher education is that the gains from going to college have stopped increasing altogether for women, and have slowed and arguably stopped for men, particularly when one considers the time to get a bachelor's degree today is more often five rather than four years --and many do not graduate at all. In short, the gains from going to college are not growing, and maybe even declining, while the costs of college continue to increase. The rate of return on private college investment is falling. More people, faced with the college decision, are compromising, going to two year schools knowing they have the option of switching to the more expensive four year alternative for the last two years (one of my Whiz Kids, Bob Villwock, has done precisely that, and very successfully).

When I was on the Spellings Commission, I argued that you could dramatically slow the growth in average college costs simply by increasing the proportion of students attending community colleges, finding myself often in agreement with the commission's sole community college member, Charlene Nunley. My support for non-traditional post-high school training has been enhanced by recent research that Gordy Ruchti has done for Andy Gillen and me for a new book, research that shows that an awful lot of the new jobs being created DO NOT NEED college level training. Further convincing me is Charles Murray's great new book, Real Education, which my friend Ben Wildavsky gave a lukewarm review of in yesterday's Wall Street Journal but which I think is brilliant, like such previous Murray books as Losing Ground and, with Richard Herrnstein, The Bell Curve.

Community colleges are not perfect. They have extremely high attrition rates, they often have qualitatively suspect offerings, etc. But on the whole they are very much oriented towards undergraduate instruction, are relatively inexpensive, and lack the elitist superiority attitudes that dominate the four year selective universities. While I suspect the four year public schools on balance these days are anti-egalitarian and on net reduce equal economic opportunity in this country, that is clearly not the case with the community colleges.

Colleges are screening devices --separating the bright and motivated from the less bright and lazy. They are damnably expensive screening devices. The two year schools can help reduce the cost of screening, just as can alternative approaches, such as vocational certification/testing, on the job training programs, etc. Harvard may be number one in US NEWS's book, but I equally admire the Montgomery Community Colleges (the school my friend Charlene used to head) of the world --schools that make a difference in more people's lives --at less cost.

Model Trustee: David Baldacci, Unionizing PostDocs, and Bobby Jindal

By Richard Vedder

Giving away degrees to powerful people or their relatives seems to be in fashion at third tier universities, a form of academic corruption that hurts all of higher education. Today's INSIDE HIGHER ED reports that David Baldacci, a great novelist, has very strongly and privately complained about the way his alma mater, Virginia Commonwealth University (VCU) has handled the giving of a degree to the former police chief of Richmond.

I know nothing about the merits of this issue, other than strong internal action should have been taken by VCU to maintain the integrity of the institution. But I like the fact that Baldacci, a trustee of the school, is engaged in the issue, doing what trustees should do --comment on the university's handling of an important matter. The fact that his letter was leaked to the press may be regrettable, but at least he views the trustee role as more than attending a few meetings a year and rubber stamping the administration's recommendations. To be sure, trustees that get involved in day-to-day operations and try to micro manage are exceeding their authority and exercising poor judgment, but on balance trustees need to become more engaged, as my friend Anne Neal constantly tells me.

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I read that the United Auto Workers wants to organize post-doctoral students into a union at the University of California. The whole concept of "post docs" is somewhat dubious to me. I think there is a case to be made for researchers to actively engage themselves in their field on an intensive basis after graduation, but the idea that they have an entitlement to a certain type of stipend as a God given right is absurd, and if I were Mark Yudof and running the University of California, I would consider the ramifications of eliminating postdocs as a category of employees. A fellowship should not be related to employment, and, as such, not subject to labor laws, state or federal. If it now comes under those laws, I would eliminate post-docs, period. I would find other ways to encourage intensive research, for example more research leaves for faculty members.
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Bobby Jindal is a very unusual governor. First, he is in his thirties. Second, he is an Indian-American, the first one to assume high political office. And third, he appears to be doing a pretty good job of running that political cesspool, the State of Louisiana, a state that once had a governor who boasted that he would have to be caught in bed with a dead girl or live boy to be ousted from office (he did go to prison). Gov. Jindal told LSU he doesn't want the 10 free football tickets offered him. It is, after all, a form of bribery, albeit one that is commonplace in American higher education and one that may be legal in most states. It was a small gesture, but I think a rather nice touch. It also says that there may be more important things in higher education than football, and that maybe LSU should concentrate on being a top public academic university more than a university known for having a few dozen guys good at throwing a ball around.

Third Parties Pay for College

By Richard Vedder

The new survey on how college is financed done by the Gallup organization and Sallie Mae reinforces a point I often make --the individuals attending college pay a minority of the costs. In "How America Pays for College" it is indicated that roughly 40 percent of the net cost of college is paid for by the consumer --the student. Using the net price (including grants and scholarships), the student pays barely one-third of the total.

Moreover, the student borrows most (about 70 percent) of his/her costs, so in the short run roughly only a tenth of the cost is paid directly by the student. Moreover, this grossly OVERSTATES student payments, since the costs that students are expected to pay are reduced because of institutional income received from government subsidies or private gifts and investment income.

To be sure, a majority of the student provided financing comes from parents and other relatives, and students cannot view those funds as pretty "free" gifts unencumbered by any obligations. Perhaps students view themselves as part of a family, and that the family income is part of "their" income. Nonetheless, I think most students are somewhat less price-sensitive because of the receipt of interfamily financial transfers to pay for college.

It is also interesting to note that the wealthy pay more for college than the poor, but that the income elasticity of payments is rather low --that is students from families with $100,000 in income pay far less than double the amount to college as the students from families with $50,000 income, which is what public policy wants to happen. We need to look more at this study, but it is a welcome addition to the literature on financing college.

The fact remains that consumers tend to overconsume things that others pay for, and that they are less price sensitive because of third party payments. This is probably the most important single reason why college costs are high-- and rising rapidly over time.

BCS Conference Academic Battles

By: Matthew Denhart

College football’s Bowl Championship Series (BCS) annually frustrates and infuriates much of sports nation when it announces which NCAA football teams have secured spots in each of the five coveted BCS bowls. While the BCS system may or may not be the best method of determining championship caliber football teams (we’ll leave that debate to the sports journalists at ESPN and the like), perhaps it can help shed some light on which athletic conferences house some of the best colleges and universities.

Collegiate athletic conferences group schools into categories based on things such as region, school type and size. This lends well for making comparisons, and it is an interesting exercise to examine which of the six major BCS conferences (the ACC, Big East, Big 10, Big 12, Pac 10 and SEC) ranks highest in the recently released CCAP/Forbes.com rankings of America’s best colleges.

Taking the average overall ranking of colleges by conference it is clear that the Atlantic Coast Conference (ACC) does the best with an average ranking of 257. Next is the Pac 10 at 264, followed by the Big 10, SEC, Big East and finally the Big 12. The ACC likely does so well as it harbors two highly ranked private institutions in Wake Forest University (ranking 69th overall) and Duke University (at number 80). The University of Virginia and the University of North Carolina at Chapel Hill are also members of the ACC and boast rankings of 43rd and 66th best overall respectively.

However, since some of the other conferences do not have as many private schools (which on average perform better than their public counterparts in our ranking), comparing conferences based on the average ranking of a conference’s public colleges probably provides a better basis for comparison. Thus, when taking the average ranking of public colleges/universities by BCS conference, the SEC takes home top marks with an average ranking of 43. The table below lists each of the conferences and its average public ranking:

1. SEC (43)
2. PAC 10 (47.1)
3. Big 10 (47.8)
4. ACC (56)
5. Big 12 (66)
6. Big East (73)

Within the SEC such schools as the Universities of Florida, Georgia, Mississippi and Mississippi State all rank in the top 20 public schools in the country, helping boost the conference’s average. The Big 10 actually has the most overall schools ranking in the top 50 public schools—they have 7 out of the 10. However, low scores from Purdue University (which suffers from low graduation rates and poor student ratings of professors) and the University of Minnesota (suffering from the same factors as Purdue) place the conference third on the list and behind the SEC, a place Big 10 fans can relate all too well with after having lost to SEC powerhouses Florida and LSU the past two years in the national championship football bowl game. Within the Big East, the University of Pittsburgh and West Virginia University are bright spots, but overall the conference is plagued by low rankings resulting generally from low graduation rates and poorly rated professors. In addition, some highly ranked Big East schools—Georgetown and Notre Dame come to mind—are excluded from this measure as they are both private schools.


Most students likely do not choose a college on the basis of that institution’s athletic conference affiliation. However, these findings do show that among many of America’s most recognizable public universities, New England and the coasts do not have a monopoly on quality institutions. In fact, the opposite seems to be the case to a certain extent, with the southern schools of the SEC and Midwestern schools of the Big 10 ranking competitively. Perhaps many of these “jock schools” provide a quality undergraduate experience in addition to thrilling and exciting football teams.

Matthew Denhart is an undergraduate student at Ohio University and "chief whiz kid" (student research associate) with the Center of College Affordability and Productivity.

I will drink to that!!

By Richard Vedder

I read in the local (Olympia, Washington) paper an AP story that announces that the presidents of over 100 American institutions of higher education have called for a lowering of the legalized drinking age to 18. For once, I agree with the prez.

The movement was organized by Middlebury College, and supported by presidents of other good liberal arts colleges like Kenyon and Colgate. But also, joining the movement were some heavyweight private (Duke and Dartmouth) and public (Ohio State) universities.

Ordinarily I do not like university presidents speaking up on matters of public policy. I think the academy should stay out of politics. But this is an issue that impacts importantly on campus life. I agree with the presidents that binge drinking has probably been enhanced by the prohibition of drinking below 21. It is ironic that we can send our kids to fight wars for us all over the world --but then say to them, "you are too immature to drink."

Whenever I travel in Europe, where kids drink at much younger ages, I note the youth are a tad more responsible. Sure I have seen drunken German university students, but I think the incidence of binge drinking is somewhat less, even though the overall quantity of alcohol drunk is perhaps close to U.S. norms. It is distributed more evenly however, and that is highly desirable. Prohibition did not work in the U.S., nor is the pseudo prohibition we now have.

My major objection, however, is that the drinking age should be established at the state and local level, according to the norms of the locality.

By the way, the CCAP staff is highly biased towards those affiliated with so-called party schools, with Jim, Andy, and myself all teaching or studying at schools like Ohio University and Florida State that are high on the party school list. We all think partying is part of the socialization process that happens when children turn into adults, and, in moderation, it is probably a good thing. It improves interpersonal skills.

The lack of moderation in contemporary American universities has actually expanded in the era of the 21 year drinking age. Telling kids that they can't drink or have sex is like King Canute decreeing that the waves must stop. To be sure, as my wife notes, the Asian students do far less drinking, because they take their studies more seriously. An end to grade inflation would do more to make American students serious about their studies than any national drinking law.

A Tale of Two Washingtons

By Richard Vedder

I have had two trips recently that show the geographic differnces in perspectives on higher education. Last week, I visited with some folks at the Department of Education in Washington, D.C. where I sensed most people believed that they were important in deciding the pace and pattern of higher education change in America. I believe all participants came from East of the Mississippi River. This week, I am on a road show in one of our states --Washington--where higher education is actually conducted. They think THEY will determine the pace and pattern of higher education change, and I think it is at least barely possible they will be right. To them, Washington, D.C. is a place 3,000 miles away that is largely irrevelant but meddlesome in determining the conduct of their schools.

The good folks at the Evergreen Freedom Foundation have me speaking with legislators, civic activists, etc., about the future of Washington higher education, occasioned by a report Andy Gillen and I did on the topic. Washington, for all its high level eminence in high technology, has some fairly good but not world class universities, where costs have been rising significantly in recent years. Only one school in the state made the top 100 on our new rankings with Forbes.com, namely little Whitman College.

The head of the Higher Education Committee in the House, Deb Wallace, seems moderately reformist, willing to think of a scholarship approach that involves moving funding from institutions to students. She is a hawk on easing the transfer of credit from one institution to another, an issue fraught with some peril but nonetheless one worth exploring.

A hugh problem in Washington is the opposition of reactionary labor unions to any and all meaningful change --even in higher education, where they represent many workers. That type of oppositon probably is keeping Washington from having truly first rate schools. The University of Washington, typical of flagship state schools, is relentlessly pushing graduate education and research --but has undergraduates sitting in classes in the triple digits even in the senior year, often taught by graduate students with limited English comprehension. No wonder that institution ranked only fourth in the state in the Forbes rankings --below Whitman, Whitworth and the University of Puget Sound, schools where undergraduate teaching is taken seriously, not merely an inconvenience needed to secure state funding.

I talked to some of my friends from Oregon like Bill Connerly and Steve Buckstein and learn the situation is similar there. Special interests, including the university administrations themselves, block meaningful reform --even full disclosure of information of what is going on --what are the kids learning? how are staff and physical plant being deployed? How are resources being used? In Washington, the state auditor wants to learn more what is going on in the colleges fiscally, and that is good. But on the whole, American higher education is on a collusion course with reality, and when it comes it will not be pretty.

Harvard on the Prairie: The University of Nebraska at Omaha

By Richard Vedder

I am high on the University of Nebraska at Omaha this morning. It is on no one's list of America's great universities. Its students are relatively undistinguished, as is its faculty. Within NEBRASKA, it is not viewed as the local Harvard. Yet it had the guts to do something, albeit for its own self-interest, that I have been waiting to see: it bragged about the learning of its students --a radical, unacceptable idea amongst the cartels like the American Council of Education or the National Association of Independent Colleges and Universities that define, informally to be sure, the standards of conduct among American schools.

UNO, as it styles itself, was one of 178 schools administering the Collegiate Learning Assessment last year, giving it to a purportedly random group of freshman and seniors. It reports that the CLA folks have informed it that it is first amongst all the schools in the improvement in test scores between the freshman and senior years --first in "value added" at the college level by the institution.

I very much doubt that UNO leads the nation in learning, if for no other reason only a small percentage of schools administered the CLA test --and it is possible to manipulate the results if it is administered in a non-random fashion. But I think it is high time that colleges measure learning and report on it, and if UNO gets a competitive advantage from this, good for them. The test may be flawed, it may be given at only a small sample of America's colleges and universities, but it does measure something positive, and, according to UNO, it was given at such institutions as Duke, the University of Texas at Austin, the Universiy of Michigan, and the University of North Carolina at Chapel Hill --all allegedly good schools.

This gets me to my second point du jour. The "good" schools in reality are probably quite different than the ones that US NEWS or university presidents claim are good. We at CCAP, in conjunction with Forbes, have published our own college rankings (see http://www.collegeaffordability.net or http://forbes.com) that emphasize student satisfaction with instruction, post-graduate success, etc. --outcomes more than "reputation" or inputs. We find that Cornell College in Iowa is really better than Cornell University, or that Wabash College is better than Dartmouth, Stanford, Penn, or Washington University in St. Louis. Cornell and Wabash colleges seem to care about their undergraduate students, and have a good environment in which to learn.

We may be wrong in our assessment of schools, but I bet we are closer to right than the reputational type surveys that dominate the discussion. And UNO's action puts the heat on other schools to PROVE that their kids are learning. If the school doesn't like the CLA, give some other test showing students gained in some dimension: knowledge, critical thinking, civic engagement --SOMETHING valuable. Universities are about knowledge --lets gets some knowlege about universities themselves.

Wabash vs. Wash U --Dartmouth (or Duke, or Cornell, or Penn) vs. Centre Cellege

By Richard Vedder

Ask any top academician --what is a better school, Washington University in Saint Louis or Wabash College? They will say, "Wash U, of course." They will point out that Wash U ranks much higher in US News' rankings (the new ones come out in another week or so), although US News confuses the issue by having different lists for liberal arts colleges and for research universities.

Yet if you ask a professor at one of the high ranked schools --where are you sending your own children? Often, the answer will be one of the better liberal arts colleges. I once talked to a friend, the chair of the economics department at Stanford at the time, and asked why he was sending his kid to one of the Claremont colleges (where I was teaching at the time). He said "undergraduates get a much better education at Claremont than at Stanford, where we emphasize graduate training." In the new Forbes/CCAP rankings, Pomona (one of the Claremont colleges and ranked 20th) outdistances Stanford (rank 23).

Wabash (rank 12) and Centre (rank 13) colleges are small, dedicated to undergraduate teaching -as are other relatively hidden gems like Knox (rank 46) and Kenyon (rank 34) colleges. There are no graduate students who barely speak English teaching mathematics badly. Professors spend a lot of time with students --helping them transition from adolescence to adulthood in a responsible fashion. Everyone knows everyone else. It is a great environment to learn. Moreover, the schools are not paying huge amounts to superstar professors, football coaches or university presidents, so student debt loans, while not real low, are reasonable. The absence of debt, plus high student regard for instruction, is a major reason that West Point and the other service academies do so well in our rankings.

While the private schools dominate our top rankings (44 of 50 schools), the main reason is not that they are private, but rather that liberal arts college tend to be private. Public liberal arts New College (rank 29) did very well --and is probably one of the best bargains in American higher education. As mentioned before, only one of our top 50 schools has as many as 10,000 undergraduates.

But, as Forbes editor Michael Noer and I roughly said in introducing the Forbes/CCAP rankings: different strokes for different folks. For some, a large school emphasizing graduate training does just fine, and several of the mainstay large flagship state universities are in our top 100 schools (Virgina, the University of North Carolina at Chapel Hill, and Cal/Berkeley come immediately to mind). Sophisticated intellectually inclined kids are likely to be happier at the University of Chicago than at Centre College. A good not brilliantly academically talented kid might find Lake Forest College (rank 160) a better match than nearby Northwestern (ranked 11), even if she could get into Northwestern. And poorer kids worried about debt might consider Copper Union (rank 42) if they like an urban environment, or Berea College (rank 204) if they want a rural one.

Speaking of Northwestern (full disclosure --it is my alma mater), it handily beat (ranks in parentheses) Stanford (23), Chicago (18), Duke (80!), Penn (61), Cornell (121!), Dartmouth (127) and especially Wash U (146) in our rankings, but is below all of them in the US News assessment (although a new US News ranking is due out in another week). Northwestern is a school that I thought, thank God, never quite got over being predominantly an undergraduate institution --graduate programs there, while very important, are not quite as dominating as they are at the other research oriented schools. Taking undergraduates very seriously should be a quality that students and their parents look for in virtually any institution they evaluate.

Enough college counseling. I promise to get back to higher education policy matters shortly.

End the Arms Race

By Richard Vedder

Precisely one century ago, Germany was trying to catch up with Britain's navy, and started building "dreadnoughts", great battleships. Britain, of course, retaliated by building more of its own. Hence began a naval arms race that culminated in the most senseless war in human history (arguably), World War I.

A similar arms race has been going on in higher education. In the eyes of many university presidents, their schools achieve victory if they move up in the US News and World Report rankings. By increasing "faculty resources" or by getting a lot of alums to donate, the school improves. By taking students with high SAT scores, the school improves. By impressing fellow college presidents and admissions officers, the college can move up in the rankings. The rankings are largely resource and reputation based.

The new Forbes/CCAP rankings, released late Wednesday, are largely based on outcomes --are the students satisfied with their instruction? Are there any signs of significant occupational success amongst the graduates? Do students graduate in four years --and how does the school do on that score given the quality of incoming applicants and their resource base? Do a significant number of students and faculty reach academic distinction as recognized externally? This is not inherently a resource based ranking system. Indeed, schools are hurt in our rankings if they try to achieve distinction by spending a lot and financing it by having high fees that force students into a significant amount of debt.

Accordingly, we have statistically analyzed the determinants of high Forbes/CCAP rankings. While a number of demographic and selectivity variables are included in the analysis and are worth talking about (e.g., schools with more women rank significantly higher, other things equal), the important thing to me is that there is no statistically significant relationship between per student expenditures by the institution and the school's ranking. In other words, our rankings are spending-neutral.

That should be slightly qualified. It does make some difference HOW you spend your money. It would appear that schools that lavish high salaries on "superstar" professors actually do poorer in our rankings, but ones that keep the student-faculty ratio relatively low fare better. In other words, having many competent but not research-dazzling professors teach small classes is better than having fewer high paid (and presumably more research oriented) faculty teach bigger classes, no doubt with the help of graduate students. This latter conclusion is somewhat provisional, and much more research needs to be done.

Having college presidents, trustees and other leaders move towards evaluating success based on an expenditure-neutral rankings system would reduce the incentives for the academic arms race --victory comes not by building more academic battleships, but by making the student the center of attention, not the cash cow, and by being more efficient. To be sure, a big endowment helps, even in our rankings --but a big endowment can be used to lower the cost burden on students --a plus in our way of thinking and evaluating schools.

College Rankings

CCAP has partnered with Forbes.com to create a new ranking of schools and the results have just been released. Their special report America's Best Colleges, has the rankings and methodology.

Rankings Commentary

by Richard Vedder

With the possible exception of buying a home, choosing a college is the biggest non-financial investment a typical family makes. Because colleges usually do not provide good information on their success in educating students, and because even the cost of college is a bit hard to calculate given the vast array of scholarships, loan options, tax credits and the like available, organizations help consumers by ranking colleges and universities. Forbes, working with the Center for College Affordability and Productivity (CCAP) now offers its rankings of 569 institutions to give students and their parents additional assistance.

Other rankings rely partly on the judgments of high level university officials or even students. They also consider whether the school provides lots of instructional resources, or how selective it is. We put ourselves in students’ shoes. In picking a school, we believe students ask several questions: how good is the instruction –will I like and learn from my professors? Will I have a good chance at becoming successful after graduation in my chosen career? If I have to borrow to pay for college, how deeply will I likely go in debt? What are the chances I will graduate in four years? Does the school I choose have many students and faculty who demonstrate academic excellence that is recognized nationally or globally?

The CCAP staff (mostly college students themselves) gathered information that helps answer these questions. We based 25 percent of our ranking on averages of literally millions of student evaluations of courses and instructors from the ratemyprofessors.com website, and another 25 percent of it on enrollment-adjusted entries in Who’s Who in America. The other half of the ranking was based equally on three factors: the average amount of student debt at graduation held by those who borrowed; the percent of students graduating within four years; and the enrollment-adjusted number of students or faculty winning nationally competitive academic awards like Rhodes Scholarships or Nobel Prizes (see the link for a detailed discussion of methodology).

Looking at our rankings, we find:

• Students strongly prefer smaller schools to larger ones; the median undergraduate enrollment in the top 50 ranked schools was 2,285, and only one school (the University of Virginia) had more than 10,000 undergraduate students;

• Strongly related to that, only six of the top 50 schools were public institutions, and three of them were the major military academies, and one (New College in Florida) a really unique public liberal arts college;

• Even looking only at national research universities, only four of the top 25 ranked are public schools. Among public research universities, Virginia and California do especially well, with the top two schools being in Virginia (the University of Virginia and William and Mary), while six of the University of California campuses are in the top 25 (Berkeley, UCLA, Santa Barbara, Riverside, Santa Cruz and San Diego);

• Several relatively unknown schools (e.g., Wabash and Centre colleges) do exceedingly well in our rankings, while some well known schools do much poorer than in the popular US News & World Report rankings, with three Ivy League schools not making the top 50 (Cornell, Dartmouth and Pennsylvania), along with such other prestigious schools as Duke and Washington University in St. Louis;

• Among the top 130 national research universities, the geographic center of our ranked schools is near Rolla, Missouri, only 72 miles from the national center of population; for the US News rankings, that center is in southern Indiana, some 300 miles more north and east;

• Nonetheless, nine of our top 10 schools are within 150 miles of the Atlantic Ocean; at the very highest ranks, the East Coast schools are still disproportionately represented;

• Schools with a distinctive orientation do well; four of the top dozen schools are either relatively small schools with an engineering (Cal Tech) and/or military (U.S. Military Academy) emphasis, or are single gender (Wellesley is female, Wabash is male).

• Both Boston (Harvard and MIT) and Chicago (Northwestern and the University of Chicago) have two of the top 20 institutions. Over half of the top 25 institutions are in three states: Massachusetts (six), New York (four), and California (three).

Why did some schools do very well compared with other rankings? Wabash College did very well on both the student course satisfaction and post-graduate employment distinction factors; Centre College was in the top 10 percent of schools on all criteria. Cooper Union in New York (ranked 42) far outdistanced schools like Penn and Duke by having low student debt along with many winning nationally competitive awards. Students at West Point loved their classes and, of course, incurred no debt. Students at Duke, Penn, Cornell and Dartmouth ran up large debts; additionally at most of those schools (notably Dartmouth), they were not particularly happy with the quality of the instruction (we did take some account of perceived course rigor in determining student assessment of instructors and courses).

There were some interesting regional surprises. In the State of North Carolina, Duke ranked third –behind both the University of North Carolina at Chapel Hill and Wake Forest. Northwestern was the top school in the Midwest, beating such regional powerhouses as the University of Chicago, Notre Dame, and, easily, Washington University in St. Louis. The South did extremely well among public national research universities, capturing five of the top 10 ranks, compared with one in the North East (SUNY Binghamton), two in the Midwest (University of Illinois, University of Michigan) and two in California (Berkeley and UCLA). The Big Ten Athletic Conference probably was the premier academic conference in the country after the Ivy League, placing seven schools in the top 50 public universities and a eighth, Northwestern, that ranked sixth among all universities.

Some other schools doing much better than in the US News rankings include: Samford, George Fox, Pacific and Biola universities, the University of Mississippi, and Westminster, St. John’s (Maryland), Hampden-Sydney, Doane, Hampshire, and Knox colleges. Some other schools doing worse than in the US News rankings include New York, Purdue and Carnegie Mellon universities, the University of Southern California, and Grinnell, Davidson, Occidental, Rhodes, Gettysburg and Carleton colleges.

How were schools selected? A majority of schools were in the top three tiers of the 2007 US News & World Report rankings of liberal arts colleges and national research universities. We added 121 schools offering masters or bachelor’s degrees termed regional institutions by US News. We took a few schools that were not in the US News rankings (e.g, Sarah Lawrence College), perhaps because of their failure to provide data (all of our data were obtained from external sources). And we selected the 50 largest schools that otherwise were unranked. To be sure, there are still hundreds of institutions we did not select.

We believe our rankings offer good information to those making college choices, and further think the emphasis on student instructional satisfaction and post-graduate success should please most potential future students and their parents. At the same time, we readily acknowledge data limitations. We need better data on post-graduate vocational success, and earnings data collected by payscale.com is a great potential future source, but is currently available for only some of our schools. Likewise, I would hope colleges would start voluntarily publishing data from sources such as the National Survey of Student Engagement, as well as information on the “value added” to learning over the college career from instruments like the Collegiate Learning Assessment. Still, this should assist those needing a good assessment of colleges and universities.

Clemson: Why Spending Does Not Equal Quality

by Luke Myers

This past Monday, the Greenville News website ran an article reporting the increasing expenditures and tuition of South Carolina’s public universities. They reported that Clemson University has more than doubled its spending since 1998. This past year, it increased its expenditures by 10 percent, over double the expected inflation. And where does the money come from? Well, the 5.5%increase in students’ tuition for the next academic year will certainly help cover the bills.

What is Clemson buying that makes such an increase in spending necessary? The president of Clemson University, James Barker, implied that the increase in tuition will help them reach their goal of a place in the top 20 of the nation’s public universities. Currently, the university stands 27th among public universities in the U.S. News & World Report (USNWR) “Best Colleges” ranking. According to Barker, Clemson will “maintain focus” on accomplishing its goal as it pockets $10.9 million more of its students’ money next year.

In response, a Clemson student, Daniel Lewis, asked the necessary question: “Is the state really served by a Top 20 [USNWR] university and what it costs to get there?” Would a top twenty ranking in U.S. News mean that Clemson was producing superior graduates in South Carolina? Such a result is doubtful in light of the new rankings recently released by the Center for College Affordability and Productivity (CCAP), in partnership with Forbes.com. These rankings, which evaluate colleges based on the outcomes they produce, such as students’ postgraduate success and satisfaction with educational instruction, place Clemson at a mediocre 83rd out of 134 public national universities.

Some may now be wondering how a university that has made a commitment to becoming a “top-tier public university,” and increased its spending toward this end, could do so poorly in the new rankings. The answer is that they may be spending money where it will increase their U.S. News & World Report ranking, but they aren’t actually producing superior educational results.

Among CCAP’s 134 public national universities, Clemson is 95th in our measure of students’ postgraduate success and 99th in our measure of students’ satisfaction with their instructors. The students of Clemson win nationally competitive awards at a per-student rate that places them 86th in the field. And yet, even with these less-than-top-tier results, students continue to pay top-tier prices: 91 public national universities graduate their students with less average debt per borrower than Clemson University.

However, it is likely that increased spending will in fact help Clemson pursue a top twenty spot in USNWR. That’s because over half of the latter’s ranking system relies on input factors whose uses may not actually improve educational effectiveness. Clemson’s plan to use the tuition increases for faculty hiring will no doubt help boost their U.S. News ranking (which weighs faculty salaries, the number of instructors who have the highest degree in their field, and the percentage of full-time faculty) but will not in itself guarantee the improvement of or students’ satisfaction with professors.

In the USNWR list of all national universities (public and private), Clemson’s best rank is in “Alumni Giving,” where they stand 27th (their overall rank is 67 out of 130). However, while Clemson may be raking in donations at a great rate, there is no assurance that the donations actually improve educational outcomes of current students. It’s possible the strong giving rate is the result of pumping money into development rather than student services.

When viewed from the position of students and taxpayers, public universities shouldn’t be rewarded simply for paying their faculty more, being more selective about who they let in, or attracting bigger lumps of cash from their alumni. All of these inputs are important resources, but their mere existence does not guarantee that they will be put to uses that will actually improve educational quality. Comparing Clemson’s rank in the inputs-based USNWR system to its rank in the outputs-based CCAP system demonstrates this fact.

In light of the 5.5% tuition hike this fall and Clemson’s mediocre CCAP rank, one has to wonder what all this spending is accomplishing. Perhaps it is being used to purchase a spot closer to number 20 in this fall’s U.S. News & World Report public universities ranking. Maybe if they raise tuition a couple thousand dollars higher they will reach their goal.

Luke Myers is a research assistant at the Center for College Affordability and Productivity and a senior political science major at Ohio University.

Time to Measure what matters

By Jim Coleman

Do current college ranking really measure the quality of schools? There’s reason to think not. Currently the most widely used college ranking is published by U.S. News and World Report (USNWR). Purportedly, these rankings aim to identify the “best” colleges in the country. However, there likely is a large gap between how USNWR defines “best” and what consumers take “best” to mean.

It’s reasonable to assume that typical high school seniors and their parents regard a good college as being, among other things, reasonably affordable and offering a quality education. Most students are looking for schools that will increase their human capital (in the form of knowledge and skills), while not breaking the bank. In essence, consumers define schools as good if they have a degree of value added (the benefit gained minus the cost).

This differs markedly from how USNWR seems to define a “good” school. USNWR derives 50% of a school's score from characteristics of the students as graduating high school seniors, selectivity, and other school inputs (i.e. spending). More importantly USNWR rankings take into account no final outcomes of students. Without any measurement of final outcomes it is impossible for USNWR to compare schools on a value added basis.

So what do the USNWR rankings really measure? Two things: how much the school spends on stuff, and second, where the school stands in the sorting hierarchy. I’ll address both of these in turn.

Spending is important to education; obviously some resources must be used in order to create value, but high spending in and of itself does not indicate a quality education. All too often, a school’s financial resources are directed to creating a country club atmosphere with luxury dorms and climbing walls, and even when the money is put into educational activities such as classrooms and faculty hiring it may have a marginal impact. World class faculty are of little value to students if they are overly occupied with research and classes are taught mainly by grad students.

By “sorting hierarchy,” I mean what type of students does the school identify and admit. For example, Harvard is extremely selective and admits only students with outstanding academic records. By doing this, it sorts out talented individuals from the rest of the population. USNWR tells consumers what caliber of student a school sorts out of the population by focusing on things like student selectivity and student demographics (SAT score, class rank, etc.). This may be useful information to some, but does little to tell us about the actual quality of the school. True, a lot of very successful people come out of Harvard, but when the incoming class is intellectually in the top percentile of the population we should expect them to do well regardless of what school they attend. What really matters to the consumers is how much the school, not students’ individual characteristics, had to do with their success. On this issue USNWR is silent.

All things considered USNWR provides some interesting, but ultimately not very useful information to consumers. What is really needed is a more consumer oriented method of evaluating colleges, and that is what we are trying to provide at CCAP with our new rankings. We are taking the first step in creating a dialogue and a movement away from the current outdated methods of evaluating colleges, and moving towards a system that emphasizes value added. For too long have USNWR and other publications just measured what was easy. It’s time to start measuring what really matters.

Spellings-Tucker on Financial Aid

By Richard Vedder

The Department of Education is not an organization people tend to love. No one is writing poems about it, singing hymns of praise to it, or even saying many nice things about it. Over most of its existence, I have favored its abolition. America's education system ran better before the Feds got seriously in the act.

Nonetheless, I think the current Secretary of Education Margaret Spellings and her sidekick Sara Martinez Tucker are doing a pretty good job. I admire their grit and determination in trying, unsuccessfully to be sure, to radically reform the broke accreditation system. The forces of Evil have triumphed over Good, but I give the folks on Maryland Avenue high marks for trying hard. Whenever it looked like Spellings would succeed, the accreditation people and/or the colleges would run to their chief apologists on the Hill, people like Senator Lamar Alexander or others of his ilk, and demand legislative protection, and they largely succeeded.

Yet, Spellings-Tucker are not lying dead and waiting for their term to end so that they can return to the Real World outside the Beltway. Sara Tucker outlined a bold plan in Chicago to reform financial aid, and discussions are continuing in Washington and beyond on the specifics of a proposal to Congress --lame duck administration or not. Good for them.

I am worried that the educrats will trump the visionaries during these discussions. The educrats worry about offending the "stakeholders" like the colleges and universities, ignoring the fact that there is only ONE stakeholder (I hate that word), the students themselves, or, possibly two, the students and the taxpayers. Universities are a means to an end, not an end in itself.

Specifically, if you are going to propose FAFSA simplification, either propose total elimination of FAFSA or an EXTREMELY SIMPLE postcard form that just asks basics: name, family income, and family size --and permission to mine other federal records for any more needed data. The single biggest obstacle for many poor people for applying for financial aid is the complexity of the process.

Second, use this as an opportunity to chuck a dozen or so tangential federal aid programs and go to a super voucher system, which, if you insist, we can still call a Pell Grant. Take the universities out of the process of administering that aid, which, to my mind represents a fundamental conflict of interest and in many other economic endeavors would be considered unethical or illegal. Colleges use information they become privy to to negate the impact of federal aid and to mold it to their institutional purposes. They should lose that right --period. Recent financial aid scandals should have been mightily exposed on Capitol Hill and formed the basis for a restructuring of financial aid, and a decoupling of the financial and educational functions.
In a perfect world, of course, we would start to get the feds getting out of the student federal financial aid business, perhaps eliminating federal loan programs over a five year period, In a perfect world, we would realize we send too many, not too few, students to college. In a perfect world, we would have colleges that measure what they teach and report on it to the public if they want public support. In a perfect world, we would not allow colleges to choose students and faculty on the basis of skin color or gender.

Alas, the world is not perfect, and the efforts of Spellings-Tucker is to be commended, and even if it proves futile in the short run, it may inspire longer term reform.

Massachusetts and the Student Loan Mess

By Richard Vedder

I made the mistake of ruining a nice weekend by reading Lila Gueteman's piece in the Chronicle of Higher Education which indicated Massachusetts Governor Deval Patrick is pressuring state institutions to help bail out the state's student lending agency, the Massachusetts Educational Finance Authority. The schools seem torn as to what to do. They don't want to annoy the governor, but they really do not want to drop money into the student loan rat hole.

Terry Hartle, of the American Council of Education, in his typical diplomatic and suave fashion, nicely said he thought it would be wise for the schools to avoid doing this, given the real potential conflict of interest issues that arise when colleges are involved on both sides of a transaction. They are telling students to get student loans --and then they have a financial interest in one of the major providers. Only last year, the New York Attorney General suggested such behavior was more than ethically dubious, it was illegal.

The whole thing is a monumental example of government irresponsibility and failure. The whole student loan problem arose as a consequence of overly expansionary Federal Reserve policies that fed a boom in real estate that led to all sorts of imprudent loans --that the bank regulators (including the Fed) did not try to stop. The contagion in the real estate lending market spread to student loans. Lenders had an epiphany: lending buckets of money to teen-agers with no credit or stable earnings history may not always be smart. Congress aggravated the problem by mandating smaller fees on student loans for private providers, leading to an exodus of private lenders from the market. State agencies suffered as loan defaults and a new inability to borrow has stifled them. In typical Massachusetts fashion, the Governor wants to deal with one government failure by having more government bailouts --this time an indirect government bailout financed by state universities.

The universities should nicely tell Governor Patrick to go to hell. In fact, I think universities should get completely, totally out of the student loan business --period. They are in the education business, not the finance business. The scandals associated with kickbacks, etc., to colleges and officials who deal with private lenders should have led heads to roll, but, being higher education, it did not to a big extent. No one suffers much from incompetence or error.

I was in a conversation about loans yesterday with some government bureaucrat types, and one said "we should not try to tell colleges how to spend their money." This was in the context of government funds provided universities to assist students. Colleges should have NONE of this type of money --period (I was so upset I simply hung up to avoid a huge blow up that might be health endangering to me). Government money belongs to the people who provide it, or, at least to the people for which it is intended, in this case students. We are worried about making institutions happy, not helping students.

Give poor kids super Pell grants in a voucher, and let the rest go to the bank like anyone else needing a loan --and stay away from this morass that diverts colleges from their real purposes and contributes to corruption and deceit, not to mention higher college tuition fees, a subject for another blog.

The Rise of China and Higher Education

By Richard Vedder

Anyone watching the Olympic Opening Ceremony from Beijing could not help but be awed by the extraordinary spectacle, a significant achievement in combining modern technology with ancient artistic skills. It is easy to believe that many will say this symbolizes China's rise in the world to a position of leadership if not preeminence.

It is extremely important to realize that this Olympic ceremony would never have happened except for the silent but profoundly important economic revolution that happened in China that was entirely caused by the opening up of the economy to private property rights, competitive markets,international competition, and the creation of a rule of law and government stability (more needs to be done in these last two areas, to be sure). People were empowered economically, and government retreated somewhat in people's economic lives and allowed a thousand flowers to bloom and with that, let the good times roll. That gave China the resources and international respect that allowed this magnificent artistic/technological achievement to occur.

In the process of having government retreat to something closer to its optimum (smaller) relative size and role in the economy, China's economic capacity grew so fast that it allowed the nation to greatly improve its system of higher education, its research capabilities, etc. A byproduct of the triumph of competitive free market capitalism is a major strengthening of China's colleges and universities.

I suspect some higher education types will start saying something like this: "Just as Sputnik was a 'wake-up call' to end America's complacency in science and engineering a half a century ago, so the Olympic ceremony should point out our need to make a greater public commitment to our higher education system, to prevent us from being taken over academically and economically by the Chinese."

In other words, people will say, China is getting rich, so lets us spend more taxpayer money on education as a tool for economic growth. The Chinese triumph was one of competitive capitalism, not of monopoly governments. Our reaction should be to make our system leaner, meaner, more efficient and more competitive. The lesson should be: let our free enterprise system compete by minimizing taxes, regulations, tariffs, and other impediments to growth. The opening ceremony is not a lesson in the need for more government, but in the need to learn from the lessons of free market capitallism.

Indeed, higher education in America has many attributes of the pre-modern Chinese economic model --pre-1978, the Age of Mao. That model gave primacy to one producer --government --muted competitive forces, and provided few incentives for managers and leaders to seek efficiency and innovation. It was a not-for-profit economy. That comes close to describing American higher education today. We can learn far more about revitalizing American higher education by looking at the dynamics of capitalism --either in the U.S. or China --then by increasing resource uses to support a medieval institution --the University --that has changed little in its basics for generations, if not centuries.

Faculty Happiness

By Richard Vedder

Scott Jaschik has a nice article in INSIDE HIGHER ED that shows that on average professors are more satisfied with their jobs than non-academic workers in the same fields --the overall average satisfaction for professors was 3.58, above the 3.44 for non-academic professionals. The authors of the study, two sociologists, apparently felt rising budgetary pressures and the increased "corporatization" of universities had reduced their relative job appeal --but the evidence does not show that.

And why shouldn't professors be more satisfied? They are reasonably well paid, they have great job security after obtaining tenure, they work when they want to on projects largely of their own choosing, and they can basically ignore their bosses when they want to. They have no worries about downsizing, outsourcing, or other factors that the discipline of the market forces on mere mortals outside of academe.

When people claim that university people are mistreated or poorly paid, they seldom consider the value of all of these fringe benefits along with other traditional ones, such as great retirement and health care plans. I "retired" a few years ago, started teaching part-time instead of full-time --and my paycheck rose significantly. That is common in higher education, but in few other places in the economy. Some Department of Education data, self reported by professors, claims professors typically work 50 or so hours a week. I know some that do (yours truly among them) --but I know more who likely average 35 hours of work a week for maybe 45 weeks a year, a total of less than 1,600 hours --less than most professionals work by a good deal. I know some who work far less than even that --and get away with it. No wonder the faculty tends to be more satisfied --they are insulated from the economic realities of the real world.

The CountryClubization of Public Universities

By Richard Vedder

State-funded universities exist for at least three reasons. First, they are to be instruments in achieving the American egalitarian ideal -- everyone should have a good chance to succeed on their merits, independent of their financial condition or station in life. Second, state universities allegedly help create "human capital" that furthers prosperity and development (I say "allegedly", because I believe the return on the investment in human capital is, in fact, pretty low). Third, state universities perform certain broad public service functions, such as agricultural extension services provided by land grant institutions.

Modern day state universities, however, are losing sight of their core missions, and are becoming more elitist and research-oriented. They want to be public Harvards. But, to achieve that, they still want good undergraduate students -- if, for no other reason, than to bolster their US News & World Report rankings. One way of doing this is to create luxury facilities for students.

This all came back to me when a friend and co-conspirator in the cultural wars and in college reform, Candace de Russy (of Phi Beta Cons blog fame, and former SUNY Board of Regents member) forwarded me an email from a friend who lives in Binghamton, New York, home of one of the better SUNY (State University of New York) campuses. The letter told about multiple new luxury apartment projects for students underway. Then the correspondent said a local talk show caller recently claimed that the SUNY Foundation was buying a luxury golf course nearby as well (whether that, in fact, is true I have no idea).

If the golf course is being bought to promote university recreational purposes, SUNY Binghamton truly is pursuing "countryclubization" to its ultimate. If it is being bought as an investment, it still strikes me as a bit odd (a somewhat speculative use of funds for a modest sized endowment). Perhaps the rumor is unfounded. But the fact that the rumor exists at all suggests that the public increasingly looks at public universities as havens for relatively affluent kids to spend some pleasant R and R time for a few years between their adolescence and adulthood. The notion of colleges as noble institutions, engaged in public service while carefully husbanding the limited resources at their disposal, is vanishing fast, and, I suspect, as a consequence, public political support for colleges may take a tumble in the future as well.

I am not trying to pick on SUNY Binghamton --I teach at a university where upscale housing is being constructed all over, where the institution has a golf course and a fair-to-middling climbing wall, a school that made no. 5 on the new Princeton Review list of America's party schools. What is increasingly missing in today's state university is either a zeal to help the children of citizens of below average means to succeed, or a passion for pushing intellectual and academic excellence on students from all walks of life. Increasingly, the emphasis is on amenities, on non-academic frills, on having fun. Grade point averages rise while student work effort falls. We are spending more on our public higher education but demanding less of the students, who increasingly use governmentally subsidized loans to support increasingly upscale living. The taxpayer has to ask: why should I be subsidizing this?

Memo to Legislators: Stop Being Clueless

By Richard Vedder

The folks of the American Legislative Exchange Council (ALEC), an organization of thousands of legislators and private sector supporters, nicely gave me an award this past week. In my acceptance remarks, I urged state legislators to learn more what their universities are doing, and not take everything at face value.

I was powerfully supported in this appeal by Hank Brown, a remarkable man who has been the president of both the University of Northern Colorado and the University of Colorado --but also served for years as a legislator himself, including many years in the U.S. Senate. In a panel over which I presided, Hank very civilly told the lawmakers the same thing I did with less tact --pay attention. He told the story of how, when running the University of Colorado, he asked units about classroom utilization on Fridays. The Business school said every classroom was occupied 100 percent of the time --contrary to campus rumors. He went into the classrooms himself and found them empty --the college had done what is all together too common these days --it out and out lied to its own president (to be sure claiming the classrooms were available to students for working on class projects). Some legislators told me they were going to make surprise Friday classroom visits to their nearby state university, and I urged them to do so --and not tell the college president about it until AFTER the visit. And if classroom utilization is low --just say NO to any new capital funds requests.

Even neater would be if a bipartisan group of legislators could plan a clandestine Friday raid on multiple university campuses simultaneously --armed with a few newspaper reporters. After the evidence of empty classrooms comes in, announce at a big press conference that they (the legislators) would be opposed to any further capital appropriations to state universities until existing space is better utilized, and invite other legislators to join in future unannounced clandestine visits to campuses.

At an ALEC higher education workshop over which I presided, Jane Wellman, far more of an establishment figure then I am, presented some great graphs (as she had a week earlier to the National Council of State Legislators) from her Delta Project research showing the declining emphasis on instructional spending over time.

I think colleges are losing sight of their main mission, and, regretfully, need more policing by those who disperse public largess. Fortunately, more and more legislators, I think, are beginning to agree.

Don't Shoot the Messenger

By Richard Vedder

Friday's USA TODAY had an editorial that suggested that, despite good intentions, the Spellings Commission did few positive things: "the effort floundered." That was accompanied by a second editorial by John Strassburger that raised the false argument that the Spellings Commission was trying to wring diversity out of colleges, forcing them to follow a one-size-fits-all testing program. He claimed the Spellings Commission ignored "both the transparency and the accountability built into higher education." Strassburger, a college president (naturally) is downright wrong, in my judgment.

If it is true little has happened in higher education over the past couple of years, it is not the fault of the Spellings Commission, but rather that of an over sensitive, anti-competitive, arrogant and elitist higher education community that thinks the role of the public is to give it money and then let it alone, consistent with sacred notions of "academic freedom," "institutional autonomy," and "diversity." And they have been pretty effective in opposing big change, for example, fighting meaningful accreditation standards being enacted either by the Department of Education or through the newly approved extension of the Higher Education Act, that drops more money out of airplanes over campuses or student homes but does little to alter the basic equation as to how schools operate.

The galling thing about the USA TODAY editorial is that it implied that the Commission was too confrontational with the colleges, not bowing and scrapping to them or even very gently chiding them. If it were not for the shock value of the report, groups like NASULGC (National Association of State Universities and Land Grant Colleges) and others would not start voluntary accounting standards that, while inadequate, are a step in the right direction. The Commission success to date is modest, but American higher education is a bit better off because of it, an accomplishment considering its very modest cost.

I am more convinced then ever that fundamental reform will have to come from outside the academy, and that we are building up to a threshold of public irritation that will unleash such a torrent of public criticism of universities that even the higher education lobbies cannot overcome. We are not there yet --and some politically savvy leaders of the higher education scene (like Peter McPherson of NASULGC) are trying to prevent that time from happening by meeting the growing public demand for reform. But I do not think the colleges are quite ready to respond. It may take a combination of brutal competition from emerging for profit schools, the forthcoming decline in the 18 to 24 year old age cohort, and an emerging stagnation in the college/high school earnings differential to force real change. A dozen forms of real cost savings change would include:

1) Sharp reductions in university administrative staffs
2) Higher teaching loads and reduced research expectations at all but about 100 top research oriented institutions.
3) More aggressive use of technology as a cost saving tool.
4) Better utilization of physical plants.
5) Colleges decoupling "auxiliary enterprises" and maybe even research from the teaching function.
6) Full disclosure of student learning gains, utilization of university funds, etc.
7) Accreditation that is meaningful, quality and outcomes oriented, and pro rather than anti-competitive.
8) More ease of transfer of credit between institutions.
9) Better coordination of high school and college curricular expectations.
10) Giving public funding to students not institutions, or at least tying institutional funding to demonstrated learning improvements.
11) Getting the federal government out of the student lending business and rationalize the federal financial aid process.
12) Reducing public participation in higher education and making it more of a market-based private enterprise like the bulk of the rest of society.

The list could go on, but the point is made.