Links for 9/1/10

Student Loan Debt Clock

Charles T. Clotfelter via Doug Lederman

In my view, American universities owe their current preeminence to four key factors: generous government support, the decentralized, highly competitive structure of the American higher education market, the country’s traditional openness to people and ideas, and what economists have dubbed the first-mover advantage…

Famed MIT economist Robert Solow has put forward the view that economics as a discipline contains three central ideas: equilibrium, rationality, and greed. Economists often apply these ideas in seemingly inappropriate contexts…

Economists may appear to be taking perverse pleasure in applying elements of their standard models in unaccustomed applications, but there is often value to be gained from comparing the model to the actual. As a “firm,” the modern research university differs from the modern corporation in at least three important respects: it is largely non-hierarchical, it usually has no overarching aim, except “to be the best,” and an important group of its employees are in effect semi-independent professionals. But these organizations still perform a service using inputs, and it must worry about how best to combine those inputs…

Forrest Hinton

how does Ultrinsic pose a threat to higher education institutions? It allows an external group to collect a ton of information about students’ academic performance at various institutions, in various departments, with various instructors. If Ultrinsic were able to collect enough academic data, it might give those data sets to other groups that could search for grade inflation, achievement gaps, and low performance among academic units and instructors, causing embarrassment for professors and increased awareness among policymakers…

Josh Keller

Pension costs are spiraling out of control at the University of California, which, unlike most college systems, runs its own pension plan…

In 1990, the system's retirement plan appeared enormously wealthy: It was estimated to have nearly double the money needed to cover future retirement benefits. In response, the system's Board of Regents started a "contribution holiday," stopping any new contributions to the plan from both colleges and employees…

Despite the lack of new money, the plan remained fully financed without receiving any new money for 19 years.

But the recession reduced the university's investment by $16-billion, or a third of the plan's value. Now, in order to keep the fund solvent, the system and its employees must contribute billions of dollars in the coming years…

Unless it makes changes, the system is on track to spend more on retiree pensions and health care than it does on instruction by 2014, says Peter J. Taylor, the system's chief financial officer. "There's no way on God's green earth we can look our public in the eye, whether it be parents writing a tuition check or a legislator in Sacramento, in four years and say give us more money," he says…