Recessions and CC Enrollment

by Todd Holbrook

During a recession, many consumers seek out products with the greatest value for the lowest cost. Much to the chagrin of many academics and cost-insensitive higher education pundits, education seems to be one of these very products. Community college enrollments have swelled to nearly nine times their 1963 levels, with over half of this increase (54%) seen during eleven recessionary years. The accompanying graph shows relative market share among two-year and four-year public institutions with special emphasis on recessionary periods. The growing importance of the 2-year sector is evident, reflected not only in recessionary phases, but also in the overall reduction in four-year market share over the past 44 years as well. Enrollment estimates for fall of 2009 are shaping up to be suspiciously consistent.

Proprietary Education Provides a Public Good

by Daniel L. Bennett

The Washington Post Company reported 2nd quarter earnings today, with revenues of nearly $1.13 Billion and a net income of $11.4 Million. Not surprisingly, more than half of WPO's revenues were generated by its education unit Kaplan, which happened to record net income of over $58 million. Along with WPO's cable TV unit (which generated $40 million in operating income), Kaplan essentially subsidized one of the America's favorite newspapers, the Washington Post. (WPO's newspaper division reported an operating loss of over $89 million). In a waning era of newspaper publishing that has produced an exodus of papers, this merits recognition as a public work, right?

Almost Fell Through the Cracks

by Andrew Gillen

These stories almost feel through the cracks.

Chad Aldeman:

Broward County, Fla., for instance, gives teachers an average raise of only $320 in their first 10 years on the job, but back-loads $20,000 in raises into a short time period between year 18 and 21 on the job… The money [for pensions, typically based on your highest earning years] comes from the state, after all.

AG: Add to this the new IBR loans that are forgiven after 10 years if you work in the public or non-profit sector. Here is a crazy idea; if you want people to go into teaching, public or non-profit sector work, how about just paying them more instead of coming up with all these crazy Rube Goldberg devices.

Annamaria Conti and Patrick Gaulé:

Is Europe lagging behind the US in university technology licensing?

Survey evidence reveals that US technology transfer offices tend to employ more staff with experience in industry and to have greater flexibility in managing their budget, which might allow them to offer better salary terms and attract personnel with higher human capital.

Tim Ranzetta details the lobbying blitz launched by Sallie Mae.


The Economist:

The CBO is a very limited institution in what it is able to say about the likely effects of various pieces of legislation. These limitations lead it to offer misleading analyses in some cases and to predictably err on costs and savings in others. The problem is that these analyses tend to cut both ways politically. That is, sometimes the errors benefit one party and sometimes they benefit the other. And so at various times, each party finds itself pointing to the CBO as the best and highest arbiter of truth.

And truthfully, it is one of the most rigorous and respected institutions in Washington. Ideally, the parties would approach each piece of analysis produced by the CBO as being informative but recognizing potential shortcomings. Instead, the side helped by a release trumpets it as unassailable and the side harmed by it says that this time the CBO blew it. So instead of having profitable debates about an agreed upon set of imperfect figures, we get unhelpful chaos.

This Does Not Compute

by Andrew Gillen

Lost in the shuffle yesterday was this interesting tidbit from SLA. The current plan is for "spending $24 million to allow students convicted of illegal drug possession while receiving financial aid to receive student aid exceeds the $21 million set aside to forgive federal loans for members of uniformed services who didn't receive academic credit because they had to withdraw from school due to military service."

Campus Irony

by Daniel L. Bennett

Campus leaders are apparently starting to get a bit of anxiety about the fact that 35 percent of facilities maintenance staff will be eligible for retirement in the next 5 to 7 years, according to a recent story in the Chronicle. The anxiety stems from the fact that there is a lack of qualified tradesmen in the pipeline to fill these roles as current employees begin to retire. The irony is that the same societal group which has contributed to the casting of tradespeople as somehow inferior to the college-educated bourgeois is now worried about who will maintain their facilities.

This attitude has propagated a decline in the number of people who seek training in the skilled trades, as parents have pushed their children into "higher" education for fear of embarrassment among their peers. A young man or woman who decides to become an electrician, plumber, mechanic, welder or hair stylist is not a failure. These workers are an integral part of our economy. The low supply of qualified workers in these fields has actually benefited those who chose to enter such fields, as they reap the rewards of high wages. A top notch mechanic surely earns more than a mediocre white collar manager, not to mention has greater job security and probably enjoys his work much more.

I strongly believe that pursuing a bachelor's degree has been the wrong choice for many young people and fear that the next generation will continue to follow this flawed trend that leaves many with cognitive dissonance about their educational choice, not to mention the mountain of debt to accompany it. The great social scientist Charles Murray would surely agree. Yet, the Obama Administration is convinced that more Americans need a college education. This is a misguided objective and a disservice to young people.

I concede that most Americans should have some post-secondary education, but it doesn't have to be in the liberal arts. Many young folks barely made it through a watered down high school curriculum and would be better served to learn a trade in a hands-on environment, such as that offered by the many career colleges in this country. By doing so, many people will increase their chances of achieving professional success and happiness in life, rather than being bogged down by student debt working in jobs they are not suited for or happy with. Not to mention the greater benefits to society of having more qualified skilled laborers to complete the tasks of the mechanically-challenged.

American society needs to de-stigmatize the notion that unless you go to college, you are a failure. Instead, it needs to embrace the fact that different people have different skills and each person and society is best served to pursue a vocation in which he/she has a comparative advantage.

Republicans Play with Numbers, Democrats Cook the Books

by Andrew Gillen

SLA summarizes the CBO score of SAFRA and some problems with it, as well as the response by Democrats.

Last Friday, the CBO scoring of SAFRA indicated savings of 86.8b over ten years from switching all FFEL loans to DL. However, part of this savings is imaginary. In a letter, CBO director Elmendorf notes that the 86.8b headline number in savings from killing FFEL includes the reduction in FFEL administrative costs, but does not account for the added administrative costs of DL (this wasn’t an error on CBOs part, administrative costs for DL are counted elsewhere). Thus to get an accurate estimate of the savings you need to subtract the additional DL administrative costs of 7.2b, leaving 79.6b.

(Note also that the switch from FFEL to DL will raise administrative costs by $200 million (from 7b to 7.2b). I only point this out because I was repeatedly attacked by folks not just claiming the opposite, but loudly insisting on it as a fact and questioning my integrity. Apologies can be posted in the comments.)

Moreover, Senator Gregg asked the CBO what the numbers would be if “adjusted for the cost of market risk”, which as I’ve noted before, is an appropriate thing to do. Director Elmendorf reports that this would further reduce the savings to 47b. (Recall that a few months ago, advocates were waiving around a figure of 94b, and that 47b is half of 94b.)

Democrats quickly responded that “It’s clear that Republicans didn’t like the truth – that our legislation generates almost $90 billion that could be used to help students, families, and taxpayers – so they shamelessly decided to have a little fun with the numbers”.

But Democrats are doing worse than playing here. You can cite either the 47b figure or the 79.6b figure with a clear conscience. While the 79.6b one is wrong in the sense it doesn’t take into account things that should be taken into account, it is not deliberately misleading once you understand that the CBO has been instructed to ignore these things.

But the 90b that Democrats are claiming (presumably the original 86.8b rounded up), is just plain disingenuous. It could be forgiven if out of ignorance, they were relying on the original CBO estimate. But they were replying to a letter that very explicitly noted that the 86.8 figure included 7b in savings from eliminating FFEL administrative costs, but not the 7.2b in additional administrative costs for DL. That they are aware of this and still insist on using the 90b figure is Enronesque.

By the way, I’ve figured out an ingenious way for all of us to strike it rich. Suppose you spend $6 a day on lunch at Subway. All you have to do is go to McDonald’s instead. By the Democrats logic, you’ve saved the $6 you would have spent at Subway, and you can just ignore the $6 you spent at McDonald’s. Not only did your savings make you $6 richer, but you got lunch too! And those stupid economists are always saying that there is no such thing as a free lunch. We showed them.

On second thought, perhaps that is not the way to do things. Such numerical illiteracy would rightly be considered fraud if companies did it, but I guess when Congress does it, it’s called leadership.

Some of you may be saying “whether the number is 47b or 79.6b doesn’t matter, as both indicate significant savings. We should therefore switch to DL.” To which my response is “and where are these savings coming from?” As I noted previously, the bulk of them come from

the fact that the government expects to borrow the money for DL at low rates (0.76 percent in 2010) and charge students 6.8 percent.

This substantial gain would be reported for any program that borrows at the Treasury rate, and lends at a higher one. But that doesn’t mean it’s a good idea. To understand why, note that the exact same logic -- that the government can borrow more cheaply than it lends -- could be used to argue that the government should take over all lending in any market.

Consider an analogy to mortgage lending. Just as with FFEL, there are private lenders that have received subsidies from the government (we’ve already provided Fannie Mae and Freddie Mac $200 billion, and are on the hook for losses on their $5.2 trillion combined portfolio). By the logic of the pro-DL advocates, this subsidization is much more expensive than if the government provided the mortgages in the first place, so why not have the government take over all mortgage lending? I don’t know of anyone who thinks the government should be the only provider of mortgages, but there seem to be quite a few who think such a policy is a good idea for student loans.

Republicans are indeed playing around with numbers, asking how all the things that CBO (which by law ignores) affect the numbers. But Democrats are just plain cooking the books here.

Mission Not to Accomplish

by Peter Neiger

Michael Rizzo wrote a great op-ed for Inside Higher Ed that asks (and answers) the question-- do we need more college graduates? President Obama’s educational goal is for the U.S. to have the highest proportion of college graduates in the world, but Rizzo points out two flaws with this plan.

First, the U.S. already has the highest proportion. The commonly reported OECD data limits the study to the 25-64 year old population, but when the data is analyzed to include all age ranges, the United States has a 30.3% college attainment rate. This is far and above other developed nations. Far behind in second place is South Korea with a 19.1% attainment rate. While the American growth rate lags that of its international peers, this is not necessarily a bad thing.

Second, if the U.S. were not already the world leader, would it want to be? After all, education is not excluded from the concept of diminishing returns. Education is not an end in itself for a society, but a means to an end. It is not going to be beneficial to dedicate resources to educating the population if the jobs we need for success don’t require an education. As Rizzo points out, growth is a complex recipe that involves more than education.

Education is but one of many ingredients in a mysterious growth recipe. Producing valuable goods and services requires the “right” mix of physical capital, labor skills, technological advances, institutions (such as secure property rights, the rule of law, customs and mores that promote trust, and so forth) and more than a sprinkle of luck. This mix differs across countries and over time and the recipe is wholly unknowable to any individual or group of individuals – in fact there is no recipe to follow.

Societies, like individuals, must make decisions on how to use their limited time and resources, and at some point additional benefits from a good no longer outweigh the costs. Rizzo notes

More education has to be a good thing. After all, receiving more schooling can’t make you less productive, right? Education is like exercise, reading, spending time with one’s children, and sleeping – each of these is good for you. It is obvious that dedicating more attention to each of these is good. It is obvious … and wrong – for both individuals and societies as a whole.

With a limited supply of capital and resources for colleges, it is highly probably that Obama's goal to increase the proportion of the population attending college will result in a decrease in educational quality. As the average quality of enrolled students declines, the quality of education is surely to follow. As more students receive watered down college credentials, the economic benefits of a degree will fall. With a higher portion of resources dedicate to higher education, society will be forced to devote less to other goals. The educational facilities that stand to benefit from such a plan are the private, elite universities who will be able to charge more and keep the door closed to the majority of the public. Does this makes us an better off than we are today? Likely not.

Lastly, Rizzo points out that the higher educational levels across the globe do not harm America. Wealth and growth are not zero-sum games. As importers of foreign goods and services, we all stand to benefit from other country's gains. We do not need to be #1 by some arbitrary figure to maintain growth and success. While it might not be politically popular, it is in the nation’s best interest to look elsewhere for growth by embracing educated immigrants and foreign trade while developing our own comparative advantage.

Scientist Politics

by Andrew Gillen

Robin Hanson finds this picture


The source survey is behind a subscription firewall, so I can't tell you anymore.

Nevertheless, this is pretty striking both in the real lopsidedness, as well as the public misconception.

Party Schools and Academic Excellence

By Richard Vedder

The rankings season is upon us, and we at CCAP are more than abundantly aware of that, as we have been busily preparing the second annual Forbes/CCAP rankings of colleges, out in less than two weeks. We believe rankings provide consumers information that lead to more intelligent college choices, and we therefore gladly participate in them. Moreover, we have devised a ranking system that is relatively expenditure-neutral, not dramatically favoring the nation's richest schools. By constructing such an index, we are doing our bit to moderate the "academic arms race" where schools try to outspend one another to gain ranking prestige.

The first of the rankings are out, by Princeton Review. Most academics have complete contempt for these rankings, and it is true that they are a bit less scientific than others, and cover somewhat fewer schools. Nonetheless, they are popular because they reflect the feelings of students, not academic administrators or aged scholars like myself. And they survey things others rankings do not.

Most famous, of course, are the party school rankings. Jordan Templeton and I took the top 20 schools on this year's new top party school list from Princeton Review, as well as the top 20 party schools on the latest Playboy list, which included 10 schools also on the Princeton Review list. We asked the question: are "party schools" ranked highly or lowly on their more traditional (academic) virtues?

Comparing the top party schools from both lists with the 2008 Forbes rankings, we found that top academic schools (in the top 100 of nearly 600 ranked) were underrepresented on the party lists --3 of 30 schools. There were exceptions --Union College, DePauw University, and Sewanee, for example, were ranked high academically and all made Princeton Review's Top 20 party schools.

On the whole, however, the party schools were a pretty undistinguished lot, with over half ranking below the median of all the schools surveyed (the picture using the still unreleased 2009 Forbes rankings would not be much different, nor would it be very different using the rankings of US News & World Report). Schools where students play hard do not necessarily work hard as well. This, more broadly, is a big problem for American higher education. Over 40 percent of students do not graduate within six years, a majority are doing academic pursuits less than 30 hours per week (if surveys are at all accurate), but they receive what historically are perceived to be good grades (B average or better) with little work. Should we be encouraging greater enrollments and participation in a system where the so little is expected of so many?

I teach at a school on both the Princeton Review and Playboy Party School lists, Ohio University (my sidekick Andy Gillen outdoes me, however, as he received his undergraduate degree at #5 Ohio University and his PhD from #9 Florida State University). Shortly before the Princeton Review rankings came out, Ohio University released a study claiming binge drinking is down among undergraduates --only 72.7 percent of students had engaged in binge drinking (five or more drinks) in the previous two weeks, down from a previous 78 percent. Since probably only 50 percent of students can drink legally, the survey reveals that roughly half, conservatively, of underage students engage in illegal drinking of massive proportions. And the University applauds itself on this result. Perhaps if professors gave C and D grades, demanded more work, and if block parties and other silliness were banned, we might get a more serious student body (the new Ohio University parking hang tags feature three football players in what appears to be party mode, a great way to downplay the party image!!). Maybe Chinese students are too up tight and serious, but Americans are too loose, hedonistic and frivolous about learning.

Links for 7/24/09

by Andrew Gillen

Gary Becker and Richard Posner on university endowments.

Catherine Rampell looks at payscale.com data on earnings by college.

Al Roth finds some price discrimination by universities.

Greg Mankiw and Felix Salmon on a really strange bet that cost Harvard a bundle.

Basically, Summers took a massive gamble with Harvard’s money, and lost — big.

Criticizing Governance and Calling for Accountability

by Daniel L. Bennett

Our friend Anne Neal of the American Council of Trustees and Alumni, has an excellent op-ed in IHE this morning discussing the need for reform of university governance. She criticizes a recent report by the AGB entitled "Survey of Higher Education Governance" for failing to survey a single university trustee. Neal's esteemed group advocates greater influence in governance issues by college alumni and trustees. She makes an excellent point about sound governance principles, stating that,

sound governance has trustees serving the interests of students, parents and alumni — not to mention taxpayers, in the case of state colleges and universities — not those of presidents. Sound governance is not about administrators finding “the new board members they want."

Neal continues with a comparison to the corporate world, in which some in the higher ed establishment often cite as a justification for ever-growing administrative salaries,

If the Enron debacle taught us one thing, it is that boards must be independent of management. While the corporate sector is turning handsprings to ensure independent trustees and independent nominating committees, apparently we are to believe that our colleges and universities should operate according to a different set of rules.

She then appropriately points out that

During the past decade, limited resources, rising costs, and mounting concerns about graduates’ lack of basic skills have prompted a demand for accountability. Taxpayers, students, and parents are being asked to foot increasingly higher bills, with no guarantee that their dollars are being well spent.

Concluding strongly that

The rising cost and declining quality that we see today in higher ed result, too often, from the belief that administrators are the real governance structure and that trustees exist to serve the institution first and the public interest second.

Market Forces Compel Career Colleges

by Daniel L. Bennett

There is an excellent op-ed in the WSJ today discussing the merits of for-profit education providers and questioning the black sheep portrayal by Democratic lawmakers and the Department of Education. The editorial describes for-profit schools as

"a pretty good deal for taxpayers, especially compared to the state-supported community colleges that they compete against for students. Ohioans have to fund community colleges twice—directly by financing most of their budgets and indirectly through tuition aid. The only state help for career colleges is through tuition assistance."

The author(s) provided several examples of better outcomes achieved at for-profits than community colleges:

For-profit schools also generally do a better job. In Ohio, Columbus State Community College has a 6% graduation rate while Kaplan College Columbus graduates 51%. In New Jersey, Passaic Community College has a 6% graduation rate, while at the nearby for-profit Berkeley College in West Paterson 40% of the students graduate.

Ohio's BOR Chancellor, Eric Fingerhut, was quoted as saying "it is simply untenable for . . . a publicly or privately held company, seeking the maximum return for their owners [to] set tuition in a manner that is designed to maximize the public dollars they receive." I'm certain that the majority of taxpayers hold the opposite opinion.

Not enough people realize that (1) the fastest growing segment of college student is not 18 to 22 year old fresh high school grads, but adults who likely have jobs and/or families and need the flexibility offered by career colleges;
(2) there is a great demand for vocational training that does not require a 4-year degree; and (3) consumers demand for educational services is driven by market forces and guess what, not all consumers want or need a liberal arts education

The WSJ editorial reiterates these points, stating that

"Students who attend career colleges are generally older and often have jobs and families. Taking the time to go to school is a sacrifice and they wouldn’t pay as much as $10,000 a year if they didn’t see a measurable benefit."

This beckons the question of why the current Democratic administration is perceived to be on a witch hunt for proprietary colleges when the market has obviously proclaimed demand for their services. The argument that for-profit educators are diploma mills is as anachronistic as bell-bottoms. So why the push for additional reporting requirements, such as employment placement rates, and regulations that the non-profit and public sectors appear to be exempt from? George Leef may be on to something, stating that

"I surmise that the hostility stems from the political calculation that for-profit schools are not part of the Democratic coalition, whereas non-profit education overwhelmingly is. Steering more students into government-provided education rewards a loyal constituency and helps build the feeling among people that they're dependent on government. That's why the Democrats want to herd everyone into government-run health care."

Education as Placebo

by Andrew Gillen

Ben Casnocha finds a thought provoking idea in a new book by Tyler Cowen. HT: MR

In his new book, which I review here, Tyler Cowen writes:

Placebo effects can be very powerful and many supposedly effective medicines do not in fact outperform the placebo. The sorry truth is that no one has compared modern education to a placebo. What if we just gave people lots of face-to-face contact and told them they were being educated?

He reluctantly provides the terrifying conclusion: Maybe that's what current methods of education already consist of.

Ranking the States in Higher Education

By Richard Vedder

Within the next month, US News & World Report and Forbes (in conjunction with CCAP) are going to release new rankings of America's colleges and universities. Besides the rankings of individual colleges, however, sometimes various organizations try to rank higher educations systems by state.

Most famous is the annual assessment of the Jim Hunt/Pat Callan organization, the National Center for Public Policy and Higher Education. The group is heavily interested in affordability and access. America's least appreciated researcher of higher education, our dear friend Dr. Harry Stille (Higher Education Research/Policy Center), has taken the NCPPHE data and assigned letter grades to each state on five different attributes --preparation, participation, affordability, completion and benefits. A sixth factor --student learning -- is not considered because of a lack of data.

I took Harry's numerical ranking and arbitrary curved everything around a "C" average, which I think, and I suspect Harry does as well, is generous given the current state of American higher education. The top ranked state, getting an "A", is Massachusetts, the lowest ranked state, getting an "F", is Nevada. Interestingly, Massachusetts is a state with a very LOW proportion of students attending public universities, and while it has a large number of highly ranked private schools (e.g., Harvard, MIT, Brandeis, Tufts, Boston College), its flagship public school, the University of Massachusetts, is usually considered to be in the second rank of public schools. By contrast, in bottom ranked Nevada, there are no significant private schools at all. It is interesting that in a grade system that includes affordability as a key component, the most private school intensive state in the Union excels.

Among major states, Harry's ranking based on the NCPPHE analysis would lead us to give Illinois a "B" and California a "B-", Pennsylvania a "C+", New York, Ohio and Michigan "C' grades, Florida a mediocre "C-" and Texas an even lower "D+."

Now, I am not sure about those grades. Indeed, some work we are doing would rank several states higher (e.g., Virginia and Florida) and others perhaps lower (Illinois) than what these results show. But the point is evaluating state higher education performance is a worthwhile thing to do. And the second point is that a very key ingredient in such evaluation --student learning -- is missing because of the unwillingness of schools to compile and publish what their students have learned during four or five years (and $100,000 or $200,000 in spending) at the schoool.

Where Profit is a Bad Word

by Daniel L. Bennett

Our friend at the JW Pope Center, Jane Shaw, has a nice summary of the recent session on proprietary education at the American Legislative Exchange Council meeting in Atlanta. Her subtitle is quite clever:

For-profit higher education is like the Rodney Dangerfield of academia—it gets little or no respect.

Meeting With State Legislators

By Richard Vedder

I have been spending a few days at the meeting of the American Legislative Exchange Council (ALEC) in Atlanta, a gathering of mostly conservative legislators from the 50 states. Several things struck me during the visit.

First, there are an extraordinary number of serious and unprecedented federal intrusions on state authority that threaten the very fabric of our federal system of government. The President and his team are making a huge power grab. I have always considered this President to be a socialist, firmly distrustful of private solutions to anything; one British visitor to ALEC, Lord Christopher Monckton, thinks he is closer to a Communist than a socialist. The Cap and Trade and Health Care bills are enormous intrusions on our private lives, while the GM and Chrysler bailouts have, among other things, meant that state laws dealing with dealer franchises have been abrogated. Similarly, I believe federal intrusion into the running of colleges and universities is threatened by a whole variety of new initiatives. Community colleges, for example, have not had much to do with the federal government other than the student loan programs, now will be involved in begging the Feds for construction money.

Daniel Hannen, brilliant British member of the European Parliament, argued that America is the leader in continuing the great institutions evolving out of the Enlightenment of the 18th century. They, however, believe our leadership is threatened by Obama's attempt to change the very nature of the American experiment.

As a consequence of this meeting, I also am becoming convinced that virtual learning using new technologies should play a possibly dominant role in higher education change in the coming generation, not only as a cost-saving device, but as a way of effectively educating some persons of the modern age who do not respond to traditional methods of teaching. Also increasingly constructive roles are being played by for profit institutions. Randy Best of Higher Education Holdings and Mark Pelesh of Corinthian Colleges made convincing arguments that state governments should not get in the way of these institutions that are increasingly important in educating Americans beyond high school.

Snakes Selling Oil

by Andrew Gillen

Jacques Steinberg writes about a ridiculous industry charging families an average of 185 an hour for help in applying to college. One such person is Michele Hernandez, who charges more than $40,000 and says "It’s annoying when people complain about the money".

In the words of Amy Gutmann, president of the University of Pennsylvania, "I guess there are snake oil salesman in every field... and they are preying on vulnerable and anxious people.”

The whole situation is disgusting. At best, the customers are victims of fraudsters who've come up with an elaborate con. At worst, they are actually getting what they think they are (a better chance of getting into top schools), and making a mockery of the supposed meritocracy of higher ed in the process.

Links for 7/16/09

by Andrew Gillen

Student Lending Analytics gives a good summary of the proposed changes in financial aid.

Inside Higher Ed brings us up to speed on the state of the debate of fin aid reform.

Edububble finds out that you have to pay tax on student loans that are forgiven under the new income based repayment program. Could be as high as 50% of the amount forgiven.

Keith Hampson interviews Jeff Shelstad of Flat World Knowledge, which has free online textbooks.

And last but not least, "China outlaws shock treatment for uncontrollable urge to blog." Two disturbing things about this. One, you're considered an addict if you spend more than 6 hours a day on the internet, and two, they used to think shock therapy would cure such an affliction.

Dr. Vedder on NPR

Yesterday on "All Things Considered," NPR aired a story on President Obama's recently announced community college plan. (For our take on the proposal see here and here.)

For the story, NPR interviewed both Richard Vedder, director of CCAP, and Jamie Merisotis, president of the Lumina Foundation.

The transcript and archived audio broadcast can be found here.

Tuition Rising...at Community Colleges?

by Daniel L. Bennett

Community colleges have traditionally served two primary roles:

(1) A low-cost gateway to a baccalaureate degree;
(2) Provide low-cost job training to help locals improve their personal economic circumstances

Did you notice the common theme in the two roles--low cost? CCAP advocates that more students, especially those on fence about going to college, begin their postsecondary education at a community college because it is a much more cost effective way to knock out some credits and explore whether more education is right for them. If the student decides that college is not for them and that they would rather pursue a vocation, then they are likely not burdened with an exorbitant financial loss (or crippling student debt) that would have otherwise been incurred at a 4-year school. This also saves the taxpayer some money, so it is a win-win situation.

However, tuition and fees at community colleges could soon be rapidly rising thanks in part to President Obama's higher education "reform", mainly an increase in the Federal Pell Grant maximum and the $12 billion community college initiative. The President's goals are well-intentioned-- to increase access and affordability, but misinformed, as perverse incentives and unintended consequences are likely to arise from this free flow of public money. "Dean Dad" over at IHE's Blog U spelled out the likely consequence of community college tuition with the Pell Grant increase, stating:

I was puzzled to see an increase in Pell grants in a discussion of increased aid to cc's. Most cc's tuition and fees come nowhere close to the maximum existing Pell grant. Raising the ceiling even higher won't help cc's one bit, unless we raise our tuition and fees pretty dramatically to capture some of the increase

The papers are already buzzing about CC's beginning to add "bells and whistles" to their college campuses in the likes of dormitories, student centers and student services. This will likely set-off a game of follow the leader in which cc's expand their campuses with new facilities in a fashion similar to that of 4-year schools. This in turn will drive up operating and maintenance costs, as well as propel labor costs as more administrative and support employees will be "required" to staff the new facilities and provide student services. This will induce a cost-revenue spiral at cc's that will lead to a sharp spike in tuition. Notice the striking resemblance of this scenario to what has occurred at 4-year colleges for the past several decades. Why are we setting foot down a path in which the result is predictably bad when so many families are already concerned with the high cost of college? This will likely eliminate the comparative advantage of community colleges as a low-cost provider.

No Holds Barred Attack on Journalism School

by Andrew Gillen

Richard Sine writes a brutal piece about journalism schools:

These kids are paying upwards of $70,000 (the cost of Columbia's J-School, including living expenses) for a ghost's chance of landing a job, at pitiful pay, in an industry that is rapidly collapsing. What's going to be the next hot field in graduate study? Blacksmithing? Bloodletting? Steamship design?...

Most J-school enrollees know this already: They go for the "contacts" thought to be essential in a competitive field. This made sense a few years ago. These days, it's like boarding the Titanic in hopes of meeting the captain...

If I asked you to pay $70,000 to get ahead in some other glamorous, extremely competitive, fairly non-technical profession — say, modeling — you might call me a charlatan. But journalism has become ensconced as an academic discipline at otherwise respectable institutions...

Do not charge so much money to walk through the door that the program is open only to the rich, the idle, or the financially illiterate. That's not a journalism school; that's a gold-plated welfare program for your old newsroom buddies, built on the backs of starry-eyed naïfs...

The pointer came from Felix Salmon who adds

If J-school graduates are almost by definition financially naive — if they weren’t financially naive they’d never have spent so much money on J-school — then maybe J-school is only serving to increase the number of innumerates working in journalism. Which is a sobering thought.

For another no holds barred take (this one on Goldman) see this piece by Matt Taibbi.

What Dilemma?

by Andrew Gillen

Kevin Carey thinks libertarians are in a bit of a dilemma. The basic idea is that libertarians are generally against

A. Government money for colleges
B. Government regulation of colleges

The implication is that once you have public funds going to colleges, you really need to determine what those funds are being used for and what effect they are having. But since colleges won’t give that info up voluntarily, it needs to be required in the form of some sort of reporting regulations. As Carey puts it "You really can't avoid both."

I’m not seeing why this puts libertarians in a dilemma. When you rule out their ideal world (neither A nor B) by imposing A, they are not necessarily ideologically inconsistent if they no longer support B.

Libertarians love contracts, so once you take it as a given that public funds are going to colleges (implicitly, realistically, and appropriately assumed in the post), there is nothing unlibertarian about structuring that “contract” in such a way that the government gives money to colleges, and in return, the colleges give information to the public so that their use of the money can be evaluated. As long as colleges are free to refuse the contract, there is no problem. The only thing that would be blatantly unlibertarian would be to subject colleges that don’t receive public funds to the reporting requirements.

While you might be able to find some libertarians that would still prefer no B when A is imposed, that doesn’t mean that those that no longer support B when A is imposed are somehow in a dilemma.

UPDATE: In a similar way, you could see the WSJ calling for "an FDIC-style bailout tax" as resulting from a dilemma. Alternatively, you could just see it as no longer opposing B (redefined as taxes) when A is imposed (redefined as guarantees for too big to fail financial institutions).

Kudos to Purdue U. and Williams College

by Andrew Gillen

The Chronicle reports that Purdue University and Williams College have developed calculators to help students predict the net price they'll have to pay to attend. Kudos to them.

In another 2 years, all colleges will have to do this, which is better than nothing, but what's with the 2 year wait? I understand that forecasting is difficult so I'll cut them a bit of slack. But why aren't schools releasing the actual net prices for current and past students. That's something they could be doing now (they should already be using this information internally, and unless their systems are terribly designed [in which case why are we trusting them with the much more complicated task of educating our children], it shouldn't take more than a day or two of a bean counter's time).

Are We Sending Too Many People to College?

Check out this short video on Reason TV featuring Charles Murray and Rep. Paul Ryan.

Additional Thoughts on Obama's Latest Proposals

By Richard Vedder

My colleague Daniel Bennett has given a rather thorough analysis of the Obama community college proposal (see associated blog). What he says is generally sensible. Some quick additional thoughts:

1) It sounds impressive, but the dollar amounts actually are not particularly large by Washington standards --a little over $1 billion a year --not peanuts, but not transformational in its impact. Remember, this is a 10 year program.

2) Much good non-traditional college work is done via for profit schools. Obama pretty much ignores them, although they are the fastest growing component of higher education.

3) I agree with Daniel: the real promising part of the proposal --free on-line courses-- gets the least emphasis.

4) The funding for the program is a complete fiction. Obama attacked the "special interests" in his speech, that is to say American private companies providing financial services to college kids. It really showed his strong socialist views. The notion of financing this from "savings" by moving to direct student loans is fantasy, if everything is taken into account. For starters, the assumptions of big savings are based in part on a view of the term structure of interest rates that may be inappropriate. Secondly, estimates fail to account for lost taxes paid by current private loan providers. My sidekick Andrew Gillen could probably rattle off a few more reasons.

5) The basic premise that the jobs of tomorrow nearly all require post-secondary education is completely wrong if you believe the projections of the highly respected Bureau of Labor Statistics in the U.S. Department of Labor. We should be unwinding federal involvement in higher education, not increasing it.

I agree that increasing emphasis on two year schools is good (Predictably, the Dr. No of Higher Education, David Warren of the National Association of Independent Colleges and Universities--NAICU--apparently disagrees). Moving to lower cost delivery systems is desirable, and the community colleges are under appreciated. Still, a nation with trillion dollar deficits should be going on a diet, not on a frenzy of "eating" --spending on new programs.

Obama's Community College Initiative

by Daniel L. Bennett

Yesterday, President Obama announced an initiative to bolster community colleges, a measure that will cost taxpayers $12 Billion. I believe that more students should take advantage of lower cost community and vocation-oriented colleges, especially students seeking job-related training to enhance their employability. With that being said, a community college initiative ought to be welcome news.

The first issue that ought to be addressed in a community college initiative is the abysmal success rate. I will define success here as either finishing with a degree or other certification, or going on to a 4-year college. The Obama Administration apparently recognizes this need, allocating $9 of the $12 billion to two grant programs for campuses and states to test programs and practices designed to "improve student learning and training, increase completion rates, and better track student progress," according to the CHE, which described the 2 programs:

(1)"challenge grant" program would award funds on a competitive basis to community colleges that planned to put in place new partnerships, training, student services, and other programs that have proved promising;

(2)"access and completion fund" that will give money to community colleges to test promising ideas, such as providing performance-based scholarships to reward students who make progress toward graduation. It will also make money available to states to, among other things, help them develop data systems to track student progress at community colleges and to measure campuses' graduation rates and the employment outcomes for their students.

In theory, these grant programs should help determine how to improve outcomes at the CC level. This assumes that there are proper evaluation mechanisms in place to determine which programs are successful, and that policy makers are willing to accept the results and implement proven programs, and kill unsuccessful ones. Experience with the DC school voucher program suggests that the current Administration is not as pragmatic in its decision making as it campaigned, so the probability of a positive outcome from these programs is questionable.

With an ambitious goal of graduating 5 million additional students from CC's, the other two major allocations puzzle me. Despite a recent DoE report that found online learning to be more effective than classroom learning, only $500 million is devoted to the development of online curriculum for CC students, whereas $2.5 Billion is aimed towards campus construction and renovations. This is fiscal irresponsibility at its finest. With staggeringly destructive budget deficits, scarce resources ought to be allocated where we can get the most bang for the buck. Online education can be offered on a scale that will improve access at a significantly lower cost per student than bricks and mortar. Once developed, the marginal cost of providing educational services approaches zero.

So why are we spending nearly $2.2 million for every 2-year public college in the U.S. for construction and repairs of physical facilities and investing so little in proven technology? I'm sure that the proprietary schools will have no problem continuing to absorb additional market share by responding to the demands of actual consumers who have jobs and need the flexibility offered by online classes.

Community colleges serve an important function in American higher education. They have a history of providing equality of opportunity for the less fortunate in society. I'm skeptical about this new effort due to the Obama Administration's brief history of decision-making procedures that parallels the strategy of Southpark's underpants gnomes. My fear is that this money will be expended superfluously in a fashion similar to that of the 4-year colleges that have bloated administrative and support staffs, a plethora of non-education related services and amenities and a dubious quality of education, and lead to spiraling tuition costs in CC's. In fact, one anonymous reader suggested in a recent email that the community college model is already oversold. We can only hope that things are different this time around, otherwise it will be just another $12 Billion of our money down the commode.

Uh Oh

by Andrew Gillen

I was enjoying a stress-free Monday afternoon when I read and watched some things by the Washington State Department of Financial Institutions at debtslapped.org, (HT: SLA) and then went over to Education Sector to get brought up to speed on student borrowing. Now, I am very worried.

University Bureaucracy Op-Ed

by Daniel L. Bennett

I have an op-ed on university bureaucracy in the July 13th edition of Forbes Magazine. Pick up a copy at your local newsstand or read it online here.

Is California a Trend Setter in Higher Ed?

by Daniel L. Bennett

Inside Higher Ed has a good piece today describing the effect that the abysmal California economy is having on public higher education in the state. The multi-billion dollar state deficit has preceded severe cuts in higher education subsidies, forcing the state's institutions to make decisions on where to make budget cuts in order to weather the storm.

Several UC administrators described a dysfunctional model as the underlying problem that has led to the current woes. Among them is UC Davis vice chancellor Stan Nosek, who recommends that his own position be eliminated and himself voted against a proposed tax hike referendum that would have provided continuity of a public revenue stream to the state's institutions, stating:

“I didn’t vote for any one of those propositions and didn’t intend to, because it would continue the dysfunction."

Nosek appears to support a waning of public higher ed subsidies, stating:

“I certainly believe we have been part of the problem as far as leadership in higher education at UC, because we have allowed the political process to have too much influence on what we do in operating the university"

Serious consideration is being given to reforming higher education in California, which has traditionally served as a trend setter in the United States. If the past is a good predictor of the future, then the dire situation in California could mean that serious reform is to come in the rest of the U.S. higher ed establishment. We should definitely keep a close watch on this saga as it unfolds.

Evaluating Stuff

by Andrew Gillen

At a discussion awhile back, Kevin Carey took some heat for suggesting that we should be trying to evaluate and measure teaching, with opponents saying that there is no way a system of evaluation could get at what's important. He responded something along the lines of (this is from memory)

Evaluating the potential of 18 year old kids is hard too. But because deciding who to admit is important to colleges, they've come up with ways to do so. These processes aren't perfect, but it's important to them, so they try. But when it comes to evaluating teaching, they don't even try.

This is a very good point.* Even an imperfect system of evaluating teaching could, and probably would, be much better than just assuming that every teacher is doing a terrific job. So I was pleased to stumble across a couple of interesting projects on evaluating things that typically haven't been evaluated.

1. A Human Capital Score calulator - tells you how much you can expect to earn based on SAT score, major, and college HT: EduBubble
2. Analyzing STEM candidates - "looks at roughly 200 variables to judge the likelihood a student will graduate with a degree in one of the "STEM" subjects"

Both of these will have issues, but it's cool that people are thinking of ways to measure these things, however imperfectly.

*Yes, I'm aware that not everything worth knowing is measurable, and not everything measurable is worth knowing.

NRC Releases Methodology for Rating Doctoral Programs

by Daniel L. Bennett

Three years after collecting the data to rate doctoral programs in the US, the National Research Council has finally released its methodology that will be used in its ratings. The statistical methods employed are quite technical in nature (Inside Higher Ed has a good summary). One very cool thing about the NRC methodology is the differential weighting of variables by discipline, according to faculty in the field's perception. This makes sense because different fields of study value different characteristics. The variables to be used in the ratings include:

Publications per Alloted Faculty (Non-Humanities)
Number of Published Books and Articles er Alloted Faculty (Humanities)
Average Citations per Publication (Non-Humanities)
Percent of Faculty with Grants
Percent Interdisciplinary
Percent Non-Asian Minority Faculty of Core and New Faculty
Percent Female Faculty of Core and New Faculty
Awards per Allocated Faculty
Average GRE
Percent Students Receiving Full Support in 1st Year
Percent 1st Year Students with External Funding
Percent Non-Asian Minority Students
Percent Female Students
Percent International Students
Average Annual PhD's Graduated
Average Completions (8-year for humanities, 6 years for other fields)
Time to Degree (Full and Part-Time)
Percent PhD's with a Definite Plan for an Academic Position
Student Work Space
Health Insurance
Student Activities

What is not cool about the rankings is the outdated data to be included in the rankings. Our friend Bob Morse at U.S. News expressed some valid concerns:

Are the data that will be used in the rankings losing their analytical validity since they will be from the 2005-2006 academic year?

Why wasn't the NRC able to produce its rankings more quickly, using more up-to-date information?

How many faculty members have switched institutions and departments since the NRC first started collecting data in fall 2006?

My other concern with the methodology is the inclusion of race and gender diversity as a factor of quality. I concede the fact that some applicants may consider the racial/ethnic community at a university in their decision of where to attend, but incentivizing programs to recruit and admit persons based on their skin color is a biased attempt at social engineering that will not improve the quality of a program (unless of course these happen to be the most promising scholars). One commenter over at IHE said it best:

diversity should be about ideas, not skin

Online Learning is Effective

by Daniel L. Bennett

The Department of Education recently released a meta-analysis of online learning. The study's main finding:

...on average, students in online learning conditions performed better than those receiving face-to-face instruction.

The authors screened more than 1,000 empirical studies on online learning for ones that:

(a) contrasted an online to a face-to-face condition,
(b) measured student learning outcomes,
(c) used a rigorous research design, and
(d) provided adequate information to calculate an effect size.

Other findings included:

(1) Instruction combining online and face-to-face elements had a larger advantage relative to purely face-to-face instruction than did purely online instruction;
(2) Studies in which learners in the online condition spent more time on task than students in the face-to-face condition found a greater benefit for online learning;
(3) Most of the variations in the way in which different studies implemented online learning did not affect student learning outcomes significantly. Of 13 learning practice variations, (a) the use of a blended rather than a purely online approach and (b) the expansion of time on task for online learners were the only statistically significant influences on effectiveness;
(4) The effectiveness of online learning approaches appears quite broad across different content and learner types. Online learning appeared to be an effective option for both undergraduates and and for graduate students and
professionals;
(5) Effect sizes were larger for studies in which the online and face-to-face conditions varied in terms of curriculum materials and aspects of instructional approach in addition to the medium of instruction. Of six methodological variables, only equivalence of curriculum and instruction emerged as a significant moderator variable;
(6) Blended and purely online learning conditions implemented within a single study
generally result in similar student learning outcomes;
(7) Elements such as video or online quizzes do not appear to influence the amount that students learn in online classes.
(8) Online learning can be enhanced by giving learners control of their interactions with media and prompting learner reflection;
(9) Providing guidance for learning for groups of students appears less successful than does using such mechanisms with individual learners.

The study concludes that:

blended instruction has been more
effective, providing a rationale for the effort required to design and implement blended approaches. Even when used by itself, online learning appears to offer a modest advantage over conventional classroom instruction

and noted some caveats:

Despite what appears to be strong support for online learning applications, the studies in this meta-analysis do not demonstrate that online learning is superior as a medium, In many of the studies showing an advantage for online learning, the online and classroom conditions differed in terms of time spent, curriculum and pedagogy. It was the combination of elements in the treatment conditions (which was likely to have included additional learning time and materials as well as additional opportunities for collaboration) that produced the observed learning advantages. At the same time, one should note that online learning is much more conducive to the expansion of learning time than is face-to-face instruction.

In other words, the consensus of empirical research suggests that online education is at least as effective, if not more, than face-to-face, especially if the two are blended.

The Student Loan Crisis

by Daniel L. Bennett

Our friends over at Education Sector unveiled an interesting report today, cleverly titled Drowning in Debt: The Emerging Student Loan Crisis. Its authors analyzed data from the US Dept. of Education's National Postsecondary Student Aid Survey in order to identify trends in student borrowing. The report contains a number of interesting charts and figures that collectively suggest that more students are borrowing more money today than they were 15 years ago and that grant aid (aside from federal grants) is increasingly based on merit as opposed to need, especially at the institutional level.

The report touches on a topic that I believe is central to understanding the underlying problem with upward spiraling tuition and consequentially, the rise in student debt, stating:

Universities also use a substantial amount of their discretionary aid dollars to attract students who do have academic merit, at least as measured by factors like class rank and SAT and ACT scores, both of which contribute to the influential U.S. News & World Report college rankings. Prestige in higher education is partly a function of attracting “better” students to enroll, and prestige has a price.

In other words, colleges seeking to boost their reputation do so by spending more money. My colleague, Andrew Gillen, introduced the concept of a "prestige curve" as a cost driver in his Financial Aid report, as well as providing evidence that government-provided financial aid has actually contributed to the decrease in college affordability -- the opposite of its intended effect.

Middle and high income students have access to highly subsidized loans, which has increased their ability to pay ever-increasing tuition fees. In turn, this has incentivized colleges to spend exorbitant amounts of money to improve their "prestige" in order to attract these students and the revenues that follow. This effect is described in Robert Martin's recent Pope Center report, The Revenue-to-Cost Spiral. Colleges will continue to exploit this system as long as university transparency remains absent and students are willing to shell out the tuition dollars.

Criminal Spending of Public Money

by Andrew Gillen

The papers are abuzz with the news that Philip Day, the head of the National Association of Student Financial Aid Administrators (NASFAA), is being charged with eight felonies. All I really know is what I've read in the papers, so I'll hold off on trying to comment on or prematurely make judgments, because really, who does that?

I would like to focus on the alleged crime, as a way of pointing out a bigger problem.

[Day is] accused of eight felonies for directing a conspiracy in which college money was diverted into campaigns promoting local and state bond measures to benefit community colleges.

State law bars spending public funds on political campaigns, and it also is illegal to "launder" political donations by concealing their true source.

Why is spending public funds on political campaigns wrong? Presumably, because we don't want the corrupt situation of public money being used to influence the decision of how much and where to spend public money, or how those who spend public money should be overseen.

Here's my question: If using public money in political campaigns is wrong, then shouldn't lobbying by institutions that receive public funds be wrong too? Many public universities have extensive lobbying operations (though they try to call it something else), which are essentially using public money to say that more public funds should be spent on themselves, and that they should be subject to less oversight in their spending of public money.

We only had to spend hundreds of billions of dollars in bailing out Fannie Mae and Freddie Mac to see the folly in allowing public money to be used for lobbying (much of their advantage came from their implicit, now explicit, guarantee, and they lobbied extensively and successfully to resist regulation, with disastrous consequences for the rest of us).

If I tried, I could come up with some differences between what Day allegedly did and what many public universities do (the whole laundering thing jumps to mind). But when you look at the big picture, both are basically spending public money to influence the political process with the goal of getting even more public money. Despite the similarities, the outcomes are dramatically different. If convicted Day faces "nine years in prison and fines of more than $300,000", while successful university lobbying is rewarded with bigger budgets, and likely raises for those involved.

My Experience with the Transfer Process Part II

by Peter Neiger

Read Part 1 here.

My first day of class at CofC went smoothly and I decided to run for one of the available Junior Senator spots in the Student Government Association. One of the requirements of this is to get your status approved by the Registrar’s office. I went back to that office and asked for verification. The nice student employee informed me I was registered as a freshman because I did not have any transfer credits. Growing frustrated I asked to speak with a representative and after a few minute wait I talked to one, this was a different person than I spoke to the first time. She told me that whoever entered my data gave me credit for the classes for pre-requisite purposes but never gave me credit for the hours, so I was still sitting at 0 hours even though I had classes completed on my transcript. She went through and fixed the problem and informed me that this happens all the time and it usually resolves itself because students don’t really like to cause waves. With that completed I turned in my paperwork for Student Government and continued on with my semester.

At the end of the semester I got my grade reports and was a bit surprised. I had transferred from HGTC with approximately 3.9 GPA but it said my average was equal to the grades I received that semester. I called around and was informed that when I transfer, the University was unwilling to recognize the grade, they would only recognize that I had passed the class. This was extremely frustrating because I was under the impression that my hard work during my first two years would work to my benefit and not be in vain. It would have been easy to maintain the required 2.6 GPA transfer requirement and spent more time on other things while at HGTC. This rejection of reciprocity irked me for my remaining time but I continued on, viewing it all as sunk costs. At the end of it all I graduated from CofC with a 3.4 GPA (it would have been approximately 3.7 and Cum Laude if my grades had been accepted).

I learned a lot from the experience, especially that I need to plan ahead and not trust the guidance given to me at either community colleges or universities. I am currently preparing to enter graduate school and I was not at all surprised to learn that a large number of the math and economics prerequisites for a PhD program were not mentioned or emphasized to me at any point. If I had to do it all again I would not have undergone a transfer strategy for my college education. The system is uncoordinated and lacks the transitional processes necessary to assist students in the process. The potential is there to make a difference and encourage educational growth and transition but right now the additional stress, confusion, running around and disorganization do not warrant the monetary savings, especially for students who can perform well enough to receive significant grants and scholarships.

My Experience with the Transfer Process Part I

by Peter Neiger

In Autumn of 2005 my student experience began. I was fresh out of a four-year contract with the military and I had had a lot of time to plan how I would manage the next four years. I researched schools and programs, weighed the pros and cons of different scenarios and basically put as much thought into the process as I could. After all was said and done I decided on the plan that seemed the smartest, at least on paper; I was going to enroll in a Community College, get my Associate’s Degree and then transfer to a University to get my Bachelors Degree. This path is not uncommon for military veterans who have often spent a lot of time mapping out the future. A little maturity and focus helped me pursue fiscal responsibility and independence instead of jumping into a program or school because of peer pressure or parental preference. Unfortunately, the process was not as smooth in real life as it was on paper.

I enrolled in the Fall Semester 2005 of Horry-Georgetown Technical College in Conway, South Carolina. After all the required placement exams and bureaucratic in-processing I sat down with an advisor to outline the next two years. I told my assigned advisor of my plan to transfer but I was unsure of what my preferred major would be. I was leaning towards Political Science at the time due to my interest in world affairs, and she quickly stated that an Associate in Arts degree would be the best option to help me glide into the four year school process. With a description like “The Associate in Arts Degree is designed for the student planning to transfer to a senior college/university program” in the course catalogue, it seemed perfect. The AA degree requirements were 63 credit hours.

I enrolled in my first set of classes and got started. After my first year I sat down again with my advisor who assured me that with the Associate Degree my Gen. Ed. Requirements at the College of Charleston, the university I chose to attend would basically be taken care of. I ended up graduating on time with a total of 70 hours; I took some extra courses essentially just to keep busy. With my time at HGTC completed, I set my eyes on CofC. The first step was to attend a mandatory express orientation session that was half the time of the normal first year orientation sessions. This sounded ideal in theory but in practice it worked against me, the transfer orientation session was at the end of the summer and I had to register for classes after everybody else. I was now a third year student who was one of the last to register making it extremely difficult to find classes within my major, Economics, or to fulfill the one General Ed requirement I had left, Foreign Language. Foreign Language was not a requirement for my AA degree but four semesters (two years) was required for graduation from CofC. I would later find out from other students that this requirement was one of the prime reasons students did not graduate on time. Many of the foreign languages were offered at very inconsistent times and missing one semester could put you back a full year. I was worried about this already so I ended up in a language I had little interest in due to lack of more desirable options. Once committed, I was stuck, to change languages would at best set me back one semester, at worst set me back a year.

I was a little worried because my advisor at the orientation session was not from the Economics department and I was told I would not be given an Econ advisor until I declared my major. Something I was not allowed to do until I completed two pre-requisites for all majors at the School of Business and Economics. Despite these minor glitches I felt ready to go… that is until the Registrar’s office informed me that I did not have any credits transfer over from HGTC. I knew I had filed all the paperwork and had transcripts sent, so I went to the Registrar’s office to find out what happened. I was informed by a student employee that the Registrar was out for lunch so I decided to wait, after two hours the same student employee informed me that the appropriate faculty may not be back that day so I should make an appointment. I agreed and made an appointment. I arrived for my scheduled time the next day and sat down with a representative from the Registrar’s office who had all my required paperwork. Seeing that I had 70 credits and only 60 credits would transfer he arbitrarily gave me transfer credit for the top 60 worth on the list, I voiced concern because that would mean I would be retaking a science class as well as a math class because I took them my final semester. He agreed and we went over the transfer credits again and figured out what worked best for my plan. Thinking that my battle was over I went home and got ready for class the next week.

Senate Anti-Trust Subcommittee to Discuss the BCS Football Championship

by Daniel Bennett

I read an essay by Senator Orrin Hatch in this week's Sport's Illustrated that described the inequity in the BCS Football Championship model. The Senate Anti-Trust Subcommittee is meeting this week to discuss the possible anti-trust implications of the BCS model. SI's Stuart Mandel previews the hearing, describing it as a waste of time and taxpayer money. I agree with Mr. Mandel-- this is a mere show and is not one of the serious issues with intercollegiate athletics that needs to be addressed.

Senatorial Priorities on Higher Education

Robert Villwock

Yesterday afternoon, the Senate Antitrust Committee met to discuss a huge problem in higher education, sort of. The hearing, titled "The Bowl Championship Series: Is it Fair and in Compliance with Antitrust Law," hit on exactly what is wrong with the priorities in higher education.

As a recent study done by CCAP shows, only 18 athletic departments in the NCAA Division 1 Football Bowl Subdivision made revenues in excess of expenses in the period 2004-2006.The other 100 athletic departments in the NCAA FBS were cross-subsidized by either cutting the budget of another part of the university, raising tuition to all students (some or most of which don't care about intercollegiate athletics), or adding institutional fees to the tuition of students.

The addition of institutional fees to tuition seems to be the innovative new way to rip students off since some state legislatures have initiated tuition freezes at public state schools.

The real question that Congress should be investigating is the NCAA in general. According to NCAA.org, its core purpose is to integrate intercollegiate athletics into higher education so that the educational experience of the student-athlete is paramount (defined as 'chief concern or importance').

With that in mind, is the NCAA fulfilling its core purpose to make its educational experience paramount:

- Lower admission standards for athletes
- Subsidize athletics at the cost of other academic ventures
- Hire coaches at a higher salary than the president of the university
- Awarding scholarships to student-athletes who cluster together in the easiest majors to stay eligible
- Red-shirt players, which means essentially putting them in marginal classes for a fifth year to be eligible
- Claim that athletes graduate at a much higher rate than the traditional student when graduation rates are calculated on a much different scale than a traditional student (When measured on the same scale, the graduation rate is nearly identical)
- Allow teams to travel across the country for a match during the school year and allow games to take place during finals week

There are several other instances in which the NCAA does not care whether its providing the best educational experience to its student-athletes.

If the NCAA wants to get real about providing an educational experience to student-athletes, why not let the athletes run the team as is the case in club sports?

A finance major who happens to play football could gain a great deal of educational experience by managing a modest budget given to him by the university. We suspect that a student-run athletics program would generate more school pride and accountability to intercollegiate athletics. A team that ran excess budget deficits would be cut and the deficits would be attributed to mismanagement of allocated funds (rather than given money from the English Department's budget, which is the current situation).

To be sure, I don't think Ohio State University football can be managed by undergraduate finance students, but we do believe that the current NCAA is unsustainable. There needs to be innovative new ways to fund athletics departments rather than figuring out ways to charge traditional students higher tuition.

For example, selling large stadiums to third party companies and leasing them for the 6 home football games would save money on maintenance and upkeep as well as generate revenue from the sale. To a lesser extent, even giving naming rights to the stadium would generate new cash flow.

All of these types of issues should be being discussed by Congress instead of ways to create a playoff system that increases the season by 2 or 3 games thus devaluing the educational purpose of the university even further.

Shock the Jocks

By Richard Vedder

A better than decent case can be made that the NCAA is a more invidious anti-competitive cartel than, say, the Standard Oil Trust of John D. Rockefeller, the Tobacco Trust of James B. Duke, the alleged (although in my judgment fictitious) Microsoft monopoly, etc. The NCAA monitors a system of exploiting thousands of workers (e.g., athletes); it has promoted a decline in emphasis on academics; its rules and regulations leads to graft, corruption and a decline in respect for higher education, etc., etc. I don't even like the NCAA telling teams that their mascots or nicknames are inappropriate. In short, the NCAA, by and large, sucks.

But worst of all, the NCAA presides over a crowding-out of academic activities by athletics in a way totally out of proportion with what is justified on any cost-benefit calculus. I will use my own university, Ohio University, as an example.

The core budget for the main campus for the coming year is about $400 million. The athletic budget is around $18 million, but the program loses $15 million since attendance is spotty and television revenues are all but non-existent. If the university spent just 1 percent of its budget of athletic subsidies, it could give 1,000 more students full-time scholarships annually --even allowing for the fact that some of the athletic subsidy provides scholarship assistance for athletics. In order to appease a few old alums whose contribution to the university outside of athletics is marginal at best, we engage in costly subsidization that does little to attract admissions, outside funds, etc. Although Ohio University is above average in its irrational fanaticism, it is by no means alone.

The Centennial Conference is begging the NCAA to delay implementation of a requirement that football officials have portable microphones, and that basketball shot clocks have tenth of seconds readings. For some schools, that means perhaps $10,000 in added expenses at a time where schools are furloughing workers and battling budget deficits. It is time for some schools to just say no to the NCAA and engage in what in national politics would be called nullification --a rejection of the NCAA mandates.

Liverpool: More Than Home of the Beatles

By Richard Vedder

When I think of Liverpool, I think either of a somewhat grimy British industrial town or of the Beatles, who started there. But Liverpool has produced a new higher education development: an attempt to make faculty work in their offices. The faculty of Liverpool Hope University are furious --what are they justified?

Liverpool Hope wants its employees to spend 35 hours a week on campus --in class, in their offices, in meetings, etc. Since I suspect the faculty work no more than a 40 week "year", the school is asking employees to spent 1,400 hours a year on campus for a year's pay. Since the typical American worker puts in at least 1,800 hours annually on the job, that does not seem unreasonable. But most faculty would view an edict such as that at Liverpool Hope with great alarm.

Why? Faculty say "professionals" should not have to account for their time. They often can and do work from home, particularly viable in this age of computerized information. However, this argument has only weak validity. Almost all professions have persons who do most of their work from a workplace --doctors, lawyers,accountants,architects, etc. Much of what faculty SHOULD be doing typically involves interaction with students and other faculty.

Interestingly, in the hard sciences where expensive equipment is needed to do research, a large portion of the faculty are at the office most of the time. But go into a building with faculty offices in the humanities, social sciences, education, journalism, business, etc., during most of the school year and the offices are likely to be perhaps 25 percent occupied. Some of the faculty are in class delivering lectures or delivering papers in other locations, etc., but some of them, are, well, doing God knows what. I know a lot of faculty who I doubt honestly work more than 30 hours a week for 40 weeks a year.

A compromise is possible on this issue. I think universities and liberal arts colleges can reasonably expect faculty to be on campus more than 20-25 hours a week, or at least three days weekly. This means more time spent in class, meetings, and three hours of formal office hours weekly, but sufficiently low to let faculty spend a day or even two each week working from home. Yet faculty would even view such a modest rule like this as a huge insult to their professionalism and freedom of expression. Tough.

For the record, on a typical week I am on campus the 35 hours weekly the Liverpool Hope requires --even in periods like now when I am not receiving a dime of pay. I just think that is what professionals do. I recognize that others have different work habits, and my 25 hour work rule would allow a fair amount of independence, including work at home a couple of days weekly, for those who actually work a full work week. But it would force faculty to spend a bit more time around campus, hopefully being available for students needing help.

Note to Self: Don't let anyone from Harvard handle my finances

by Andrew Gillen

Vanity Fair digs into what happened to Harvard's endowment (HT: FS). The last time blogged about this, back in January, I concluded

Perhaps the take away point is that if Harvard was forced to sell, they would see very large losses, but that's not very informative or useful given that they won't be forced to sell.

If I wasn't downright wrong, I was certainly way off the mark:

[Harvard] asked the hedge fund manager to look at Harvard’s finances and assess the extent to which its endowment will be able to keep pace with its immovable costs. The hedge fund manager’s conclusion: “They are completely f***ed.”

It's not clear if they've been forced to sell much, but they appear to have taken on a lot of debt to avoid it.

it’s pretty clear Harvard was desperate. In December, the university sold $2.5 billion worth of bonds, increasing its total debt to just over $6 billion. Servicing that debt alone will cost Harvard an average of $517 million a year through 2038

This sort of has the feel of Warren Buffet defaulting on his credit card - there's just no way this should've happened. But, as Scott Sumner said,

If you have a rich backstop it’s relatively easy to come up with investment strategies that will usually (not always) make you look like a genius.

Apparently, that's exactly what Harvard did, they just got caught by the "not always" clause.

SLA Strikes Again

by Andrew Gillen

My quest to free ride on the work of others continues, but it appears that Student Lending Analytics has replaced the Quick and the Ed as my most preferred blog to mooch off of.

Anyway, Tim Ranzetta puts together another dynamite post that tells you just about anything you'd want to know about the income based repayment program. It's too long and good to do justice to by excerpting, so just go read it.

Tenure and Job Success

By Richard Vedder and Matthew Denhart

To most students we know, the "bottom line" of a college education is mainly: "Does it help me get a good job?" While a "good job" incorporates many dimensions, none is more important than salary -- people go to college largely to get good paying jobs after graduation.

We (CCAP) are in the finishing stretch of a complex but rewarding process of compiling rankings of schools to be used by Forbes in the construction of the Forbes Best College Rankings for 2009. In the process of doing the rankings, we conduct a lot of research, and one component of that research this year is a multiple regression model where we try to explain variations between colleges in the average salary of graduates with 10 to 19 years of post-graduate work experience. For the 560 schools observed, the mean salary was $74,296.92. The data are taken from payscale.com, a marvelous tool for students to look at as they explore college choices (we excluded schools where payscale had fewer than five observations to use).

We used a variety of variables to explain variations. To cite one example, we observe that schools with a high proportion of students on Pell Grants tend to have graduates with lower salaries, a finding that might be very disturbing to those who view Pell Grants as a tool to promote equal economic opportunity (there are several possible reasons for this finding, but discussion of that will have to await another day).

One variable we used was the percentage of faculty that have tenure. We found a statistically significant negative relationship between post-graduate occupational financial success and the incidence of tenured faculty. Students studying at a university where no faculty are tenured will typically earn $5,815 more annually than at a school where all faculty are tenured. This is not a momentously large number but it is, as the lawyers say, material in magnitude. To be sure, the statistical model is not the last word, and further analysis might strengthen or weaken the observed finding. Nonetheless, we consider the result strong enough to report here.

Why might this be? Professors with tenure have complete job security and face less accountability. They do not feel that they have to please their students as much or help them in their quest for post-graduate employment. Some tenured faculty decide to teach courses of interest to themselves that have no applicability to the real world, lowering the employability of their students. Some become so enamored of their research to the point that they treat students indifferently, not nurturing them outside the classroom, not to mention inside it.

These results improve the case for moving increasingly to alternative ways of protecting academic freedom among faculty and reducing rigidities in the academic labor market.

Whoops

by Andrew Gillen

Inside Higher Ed sends us over to the UKs Times Higher Education, where they've got a record of a vice chancellor saying:

"We all know that education is a commodity that can be bought and sold, often at a very high price... So universities are busy doing that - charging students a large amount of money to study in England because it is a popular destination. Branding and marketing take the front seat, and education is in the back."

This was from a prematurely released transcript - something tells me the official transcript won't have this in it.

Has Mounting Debt Contributed Importantly to Rising Tuition Fees?

By Richard Vedder

Jussi Keppo is a professor at the University of Michigan with a nice research record, publishing in prestigious journals like the Journal of Economy Theory and the Review of Economic Studies. He has been dabbling in higher education finance of late, to good effect (see his piece at seeking alpha).

Keppo includes some of the conventional variables in his model explaining rising tuition costs --government support of higher education, for example, and the college-high school earnings differential. But he also includes some financial variables relating to output-adjusted debt levels. He finds that the rise in debt has importantly helped fuel the tuition explosion, and that the current and anticipated future move to more conservative personal and business financing (lower debt loads, more personal saving, etc.) should work to reduce tuition increases.

Keppo's model is pretty simple, and certainly subject to criticism. Some findings are debatable. For example, has the expansion of Pell Grants over the years raised tuition fees? Singell and Stone think so, at least with regards to private four year schools. Keppo apparently does not,although he does not explicitly examine that question. Whatever the resolution of that issue, it does make sense that the student debt explosion occurring because of subsidized student loans has had to have some impact on tuition fees, and that impact may have been powerfully positive.

Andy (who brought this work to my attention) and I are intensively looking at higher education for an anticipated new book, and we sense that the law of unintended consequences is powerfully vindicated with respect to federal student aid, especially loans. You make it easier for students to borrow, and, indeed, encourage that borrowing, you then increase the demand for education. Given the nature of higher education and its somewhat perverse incentives systems for suppliers based on non-profit principles, supply has grown less rapidly, so the net effect of the loan programs has been to raise tuition fees. It is even arguable that there is a secondary effect that all of these aid programs on balance have made colleges more elitist than they otherwise would be (a subject for another day).

In any case, we welcome Keppo to the ranks of researchers on higher education and hope he continues to explore the issue of rising college costs.

Concerns about the New Income Based Repayment plan

The new income based repayment (IBR) program for student loans makes loan forgiveness and payment reductions available to past, present and future borrowers whose earnings are below a certain threshold. Payments can be waived entirely. After 25 years of payments (or 10 if you work in the public or non-profit sector), any remaining balance is forgiven.

An anonymous reader emails us with some worries about the program.

• IBR will provide an incentive for low-income workers to quit their jobs and instead spend years pursuing sometimes valueless degrees. The downside risk of doing so is very low thanks to this program. If he or she can earn more money after college, only a small portion of the increased wages would go towards loan repayment. On the other hand, if he or she doesn't make more money after college, returning to the same low-paying job will essentially eliminate the debt. So it would seem that under the IBR program anyone working a low-wage job would have every incentive to head to campus for a few years on the taxpayer’s dime.
• The IBR program will also exacerbate the problem of superfluous graduate programs. Graduate students can easily run up six-figure student loan debts, often in academic subjects which have little or no economic return for society at large. For example, under IBR anyone could enroll to study art history, paleontology, 20th century lesbian literature, or any other topic de jour and spend an edifying six years accumulating a $150,000 debt. This hypothetical student could then go to work at a low-paying nonprofit organization and have a monthly loan payment not even sufficient to cover the interest on the amount borrowed. After 10 years of this "public service" work, the taxpayers would be left with the bill. And in a bad job market such as we currently have, thousands of unemployed college graduates flock to graduate schools simply because they can't find good jobs.
• Also objectionable is the huge distinction made by the IBR program between students who go to work in the private sector vs. those who don't. Private sector employees are required to work an incredible 15 years longer before loans are forgiven, irrespective of income. The implication is that private sector workers are somehow morally inferior.
  
• IBR will also be tuition-inflating, given that colleges and universities have historically set their tuition based on what the market will bear. So when university administrators realize that incoming students can now borrow recklessly with impunity, college administrators will have every incentive to further raise tuition.
  

Due to this program, students will be much less discerning about cost, and schools will raise tuition to exploit that. The only losers in this arrangement are taxpayers. For them, this program has the makings of a fiscal train wreck.