Arne Duncan's Got it All Wrong, Again

I'm just back from Washington DC and now unhappily certain that President Obama is headed in the wrong direction with his efforts to get a handle on college costs.  The winds have shifted and Arne Duncan has taken the lead on the planning-- and well, you know what that means.  We're going to get yet another quasi-market solution that fails to grapple with the real problems and destroys any hope for a good result.

Here's the thing:

The current financial system hinges on the actions of students, prioritizing their consumer choice in the hopes that those choices will be well made.  It assumes that any problems with schools will be resolved by students turning away from them.  But this assumption is deeply flawed, not only because students do not (and cannot, and will not) make informed choices, but also because a segment of selective schools (and states) have manipulated aid policy for so long that the incentives are now distorted and they can do whatever they wish. And what they want is to maximize their own interests, which are rarely aligned with those of their students. So the problem, in other words, is really the behavior of schools and states.  Yes, students and families are an issue too, but their lack of information is just a fraction of the overall college cost problem.

Creating a ratings system for all of the nation's colleges and universities will do absolutely nothing about institutional and state behavior because:

• Student choice is often highly constrained by finances, family, and geography -- you can declare a local community college "bad" but students have no choice but to attend it anyway, and if it closes nowhere else public to go (remember, there are far fewer community colleges than k-12 schools, and for-profit institutions who'd jump at the chance to fill in for the missing community college). We already have a ranking of community colleges, thanks to Kevin Carey, and no one is making use of them.

• Schools simply won't care -- good luck making ratings the elites will take more seriously than US News, and for the others, they know their consumers and count on the fact they have no other good options

• States won't view the ratings as their problem

Frankly, it is laughable to suggest that a college ratings system will be "consumer protection" from the college cost crisis we now face.  Instead, just like Arne's war on teachers (rather than poverty and segregation) it is an enormous waste of taxpayer resources and destined for failure. Just look at the Scorecard and the Navigator-- they aren't used or demonstrably effective at all.

This kind of nonsense has to stop. President Obama had it right when he said he'd tie Title IV financial aid to institutional performance. The next step was not to turn to Arne, but rather his experts who've crafted nuanced accountability systems with anti-creaming provisions. We've tried the voucher approach to financial aid-- it's time to get serious.  

When Title IV began, there were relatively few seats in higher education in the public sector and relatively few students. Today there's enormous capacity in the public sector and tons of students.   We can't afford to make every current institution Title IV eligible, and the ones that should re-compete for their eligibility are the ones who have created the current crisis: 

(a) the selective, elite private non-profits whose admissions criteria mean they do not serve any kind of public good while they establish "standards" for college quality that are conflated with great expense, and 

(b) the for-profit institutions that set their tuition according the availability of federal aid.  

If you reign in those two players, the rest will begin to fall in line.

President Obama needs a do-over. He made a mistake.  Pull back on the wasteful ratings plan, and instead say "let's do this thing right."  Prioritize putting public resources into public institutions of higher education.  Fund them and their students well, for once.  Time to degree will go down, and quality of instruction will rise.  Next, create accountability metrics intended to lower costs and open access at the private non-profits (else cut them out of Title IV), and to lower costs and increase completion rates at the for-profits (again, or else they're out).  

Such a plan will not require massive behavioral changes on the part of millions of college students or require big informational campaigns.  It will not leave students to attend colleges designated "bad" or have no local option at all-- the community colleges will remain and do their jobs better by having a decent amount of money to spend.  What it will do is focus squarely on the problem at hand, and go straight at it.

There, now get to work.

  *****

But really, who am I kidding?  Arne and his big money men in Congress (mainly grads of private colleges and universities) will never let this happen. They'll ensure we get a ratings system that protects no one,  least of all the students. There's simply too much money to be made.

Senator Warren, Director Cordray --- are you listening?

Rethinking Financial Aid's Role in Student Retention

The administration of federal student aid is a highly complex and bureaucratic job thanks to a great deal of program complexity and regulation. Financial aid offices are often overwhelmed with the tasks involved in that administrative process, with staff finding that little time for anything else remains at the end of the day.

Unfortunately, simply following the rules and norms associated with financial aid administration is demonstrably insufficient when it comes to meeting the needs of today's students.  With a far greater number of students entering higher education without the support of college-educated parents, and facing more significant financial constraints (and higher college costs), an effective financial aid office must do more than distribute financial aid and apply rules and regulations.  To ensure that the aid dollars are spent in a cost-effective manner, aid offices must also be part of a cross-campus effort focused on student retention.

Everyone who works on the campuses of colleges and universities today has a shared responsibility for supporting undergraduate retention. This responsibility is essential if they want to help higher education become an engine of equality and social mobility, rather than the engine of inequality that it currently is.  Many of the nation's financial aid officers are committed to this goal and eager to achieve it.

In today's context, a traditional aid office focused on regulation and personal responsibility is contributing to a crisis.  Across the country, students who have overcome enormous challenges to college access find their way onto campus but struggle to retain their financial aid due to rules surrounding the 'satisfactory academic progress' (SAP) standards.   SAP usually means that students must maintain a C average or risk losing their aid. When students fail to do this, there are significant institutional consequences (a loss of Pell dollars, lower graduation rates) and thus the school has failed as well.

Given the stakes, it is reasonable to ask: what role should financial aid offices play in ensuring students make SAP and keep their aid so that they have the financial support necessary to stay in school and reach graduation?

Recent conversations with aid officers suggest that the typical answer goes something like this:
"We want all students to succeed. We tell them that they must make SAP and what will happen if they don't. When they get in trouble, we let them know, and tell them to get help.  We have lots of students to support, and some do their job, and others don't."

I'm sympathetic to that answer, but research suggests it is woefully inadequate.  Here are three critical facts about first-generation college students to illustrate the problem:

1.  They do not know what actions to take to increase their grades.   Research across the educational spectrum shows that holding students responsible for outcomes they do not know how to achieve is ineffective and counterproductive.  Example #1: a student tries to improve her GPA decides to take fewer classes, which results in her becoming part-time, and losing her grants that require full-time enrollment.  Example #2: a student tries to improve her GPA by taking more courses, because she does not know how GPA is computed and she thinks more is better.

2. They are ill-equipped to sort out good advice from bad advice.   When they follow instructions and go seek advice from advisers, they do not know how to handle conflicting advice or determine when that advice is under-informed.  I have encountered academic advisers who do not know that student #1 above will lose some financial aid, or do not tell student #2 that taking more classes could put her at risk.

3. They have little external support, experience more family crises, work longer hours, and are often more averse to taking on loans.  While they might want to seek out help from others, that help is often offered only during daytime hours when their schedules are packed.  In addition, when told they they should take on loans, they feel alienated and misunderstood. 

The growing presence of such students in higher education and the consequences of failing to support them to make SAP as they work their way through college requires financial aid offices to rethink their role in student retention. The financial aid officer is often the first to know the student is in trouble.  This should trigger an early warning system.  In 2013, the implementation of an early warning system ought to be required at every Title IV institution.  The result of an early warning trigger should be proactive efforts (coordinated by multiple offices as needed) to reach the student for comprehensive advising that integrates academic, financial, and family support.  Proactive efforts must reach the student where they are-- email is notoriously ineffective for this purpose. Until the office is connected to the student and progress is occurring, contact should be by phone or in person.

Effective advising is be supportive, non-judgmental, and aligned with the realities of students' lives.  First generation students are more than willing to take responsibility for their academic performance and they are, at the same time, right to expect their colleges and universities to be responsible in return for serving them.    In this day and age, responsibility in financial aid office goes beyond using the same old practices for every student, irrespective of need. We will never increase equity in graduation rates or do our jobs in a cost-effective manner without this fundamental transformation.

The nation's colleges and universities are littered with dropouts who began college with support from financial aid, only to lose it because of an insufficiently supportive environment.  That is a tragedy we cannot afford.   It's time to act.


Data Note:

Some schools are open and honest about the extent of their SAP challenges.  It would be great if more schools published reports like this one from El Camino.

Three Radical Ideas for Improving (not Reforming) Higher Education

While watching the annual Gates Postsecondary Education Convening from afar via twitter, I am struck by the apparent absence of discussion about several core underlying issues keeping more students from succeeding in earning college degrees.

We cannot increase the success of undergraduates from disadvantaged backgrounds without ensuring that they are safe, healthy, and ready to learn. Food insecurity is a growing problem in higher education, as revealed by institutional surveys, and hopefully soon tracked by national data (I'm working on it).

Idea #1:  Institute a free/reduced price breakfast and lunch program at all public colleges and universities where at least 1 in 3 students receives a Pell Grant. 

Far too many of today's faculty are ill-equipped to teach the students of tomorrow.  The focus on research has trumped the emphasis on high-quality teaching even at institutions with no research mission.

Idea #2: Make teaching a priority in public higher education. 

a. Require that all new hires have teaching experience of some kind.

b. Require a pedagogical talk in the hiring process.

c. Require bi-annual professional development credits.

There is a well-known and very basic resource problem in higher education. The fewest dollars flow to the neediest students.  Per student spending of about $6000 in community colleges is a travesty.

Idea #3: Focus funding where it can do the most good. Require that all states receiving any Title IV financial aid maintain adequate per-student spending at their community colleges.  Based this on appropriate adequacy funding studies done by state.


None of these answers involve technology, I know. None speak to "quality" because I do not think the evidence on declining quality is solid-- the demographic changes in higher education have collided with the redefining process, and thus it is far from clear that reformers are saying anything more than "these students" aren't as good as yesterday's.

Without three these reforms in place, I don't think the technological solutions constitute anything more than tinkering towards utopia, and any efforts to cut costs could do more harm than good.

The Unintended Consequences of Ending Shared Governance

As I wrote in my last post, efficiency-minded legislators are raising questions about the role faculty play in decision-making on campuses across the University of Wisconsin System, and whether shared governance represents an expensive and wasteful practice.

I understand where these folks are coming from. Involving more people in decision-making is costly, in terms of time in particular.   But attending only to those costs without considering the benefits is short-sighted and will generate unintended consequences.  This is because economic evidence indicates that the costly process of shared governance generates cost-savings as well.  It seems that without the cost-savings generated by shared governance, college would be even more expensive for Wisconsin families.

Professor emeritus Robert Martin of Centre College explains this counter-intuitive process in a set of papers written over the last 15 years, and most recently summarizes his conclusions in a paper written for the American Enterprise Institute, titled "Higher education governance: a barrier to cost containment." That paper examines the hypothesis that former student Regent and current Representative Robin Vos expressed at the recent Regents meeting: that "facets of the governance structure push higher education toward higher costs, minimal transparency about outcomes, and a low level of quality control."

Martin finds that Vos is right in one sense-- the governance structure matters for college costs.  But his evidence points to the opposite conclusion that Vos and his colleagues reached-- the answer is increasing the faculty role in governance, not decreasing it. He describes this finding using clear and accessible prose in a piece authored for the Chronicle of Higher Education, "College costs too much because faculty lack power."  In it, he explains that "it is not the "shared" part of "shared governance" that has failed; quite the opposite. The fault lies in the withering away of the shared part. Reason and data alike suggest that the largest part of the problem is that it is administrators and members of governing boards who have too much influence over how resources are used."

In a recent email to me, Martin provided an analysis of the University of Wisconsin-Madison, where the trends mirror those described in his national work. In his words,

 I attach a Word file that contains a summary statistical table for University of Wisconsin-Madison (see below) that corresponds to Table 1 in my SSRN article with Carter Hill on "Measuring Baumol and Bowen Effects in Public Research Universities." There are several things to note. 

1) The dramatic increase in reported spending for instruction, research, and public service after 2008 [which supposedly] came out of overhead and into academics. See my SSRN article on "management" of financial reporting in higher education -- that article will be published this month in Challenge. [Note to readers: this paper concludes that while this apparent resource reallocation might be legitimate, they may also be indicative of a new "management" of financial reporting that simply reclassifies expenses, as frequently done by corporations.]

2) If you look at the pre- and post-2008 staffing patterns for academics versus administrative staffing you will see reductions in academic staffing and increases in administrative staffing after 2008. So, it is hard to explain where the supposed increases in academic spending and reductions in overhead spending could have come from.

3) Throughout the 1987 to 2008 period the university economized on the use of tenure track faculty while rapidly expanding the number of nonacademic professional employees.  If tenure track faculty are the primary cause of higher cost, it is clear they are not very good at looking after their own interest.  Clearly, tenure track faculty would want more of their own and fewer contract and part time faculty and would not prefer more administrative staff.

 
 
































While I appreciate Robin Vos's attention to college costs, on behalf of Wisconsin families I do hope he will take this information into account when deciding how to work on lowering them.  Relying on instinct rather than evidence could have disastrous consequences for the state's future workforce.

Wisconsin Republicans Rethinking Shared Governance in University of Wisconsin System

At a meeting of the Regents today, Representative Robin Vos suggested that the Wisconsin Legislature Republican caucus is rethinking the faculty's role in governance on UW System campuses, out of a sense that they are keeping the System from being "nimble."  I am concerned that Representative Vos may be unaware of economic research that indicates that faculty involvement in decision-making through shared governance appears to contribute to the containment of college costs.  Reducing faculty power in favor of increasing the administration's relative power could make college less affordable for Wisconsin students.  These unintended consequences of Vos's short-sighted idea deserve close examination, and I urge him to attend to these before pursuing it further.

Here is the document from the Republican working group.

Here is the video from the conference.  Vos begins speaking at the 1:17 minute mark on the first video, and these comments come just after the 1:18 minute mark. 

Reality Check: Obama is Standing for Students

Since when did an effort to ensure that students receive a high-quality affordable education in exchange for their financial aid become unconstitutional micromanagement of colleges and universities?

This is where the rubber hits the road, folks. Where the needs of a particularly elite form of academia comes into conflict with the average student's right to an affordable public education. And apparently it's about to get ugly. 

Don't believe the hype. President Obama is not attacking faculty, he is not seeking to destroy public colleges and universities which are the workhorses of higher education, and for pete's sake he is not proposing a pseudo-NCLB for higher education.

The President's main goal is simple:  After decades of hoping that students could hold institutions of higher education and states responsible for providing a high-quality, affordable college experience that leads to degrees, he's calling the nation's attention to the fact that the market isn't working on its own and some really serious regulation is needed.  The federal government is a major financial player in higher education, far more so than in k-12, and it has a responsibility to ensure that the schools it funds do right by their students.  

Despite their loud claims to the contrary, many schools are not currently doing right by their students. Some of them are setting prices so as to absorb all available financial aid and providing students with few supports and long-shots at completing degrees. Others are taking advantage of the availability of student loans to charge the middle-class sky high prices while hiding behind "admissions standards" to leave the majority of students from the 99% out in the cold.  In addition, there are a lot of federal dollars spent unnecessarily, supplanting resources from institutional endowments. Finally, there are plenty of childish states, pulling back on their investments when the federal government provides support. 

All of that should be stopped by holding colleges, universities, and states to the standards that we now hold students.  The problems we face in higher education today are largely due to the behaviors of those institutional actors--not students.  The federal government must use the strings associated with Title IV to ensure that college administrators, boards, and state legislatures behave themselves and let the students and faculty get back to the hard work of education.

That's the goal. It's where Obama is headed, if you'll just give him a chance to get there.

And when he does: NO, this will not make student aid more complicated.  Instead of rules for millions of students we can have a much smaller set of rules for the few thousand institutions. Done right, this will not punish students for the acts of their states and institutions. It will not further push education towards earnings and away from learning.  It should do the opposite-- it focuses on the actual problem-- schools that claim to educate students while merely sifting and winnowing out the ones it doesn't want, schools that recruit students only to leave them behind once checks are signed. It helps direct students towards the states and institutions where their aid will be used well.  It helps ensure that students get degrees--which is the very least they deserve (and come on, don't tell me that in your day you really earned your degree...).

Suggesting the opposite-- suggesting that this effort will hurt students-- is a red herring. It's a line tossed about by privileged elites who have claimed to serve America's middle class while restricting enrollment through selective admissions, and promoting rhetoric that allows some elite colleges to stand on high above their peers, endlessly wealthy and exerting strong influence, helping to push millions of Americans into debt. 

Beware of these scare tactics. The President isn't going to cut students' Pell dollars. He's never going to assign letters grades to each colleges and university.  He's not bringing in standardized tests or value-added modeling for professors, or giving colleges incentives to get rid of teacher tenure or privatize.

Unfortunately, he's also not about to make college--or at least community college-- free.  Now there's something worth critiquing him for.

Sure, the President did make some errors in his plans. He should never have likened this effort to the ridiculous College Scorecard or called them "ratings"-- that trivialized the approach.  He should have challenged schools to improve to certain standards before the move to link aid to institutional performance rolls out.  Race to the Top should never have been a part of this at all, since doing this fast has never been a good way to bring about quality change. He should never have mentioned MOOCs or other such untested approaches to cutting costs, and in fact, he needn't have mentioned specific practices for cost-cutting at all.  That can and should be left up to the institutions to deal with-- he simply needs to tell them what goal posts to aim for and what the rules of engagement are.   For example, he should have reiterated the importance of educators to education, and assured the faculty of their very real place in affordable higher education. He should have placed much more emphasis on the importance of public institutions and the role that states must play in adequately funding them if those states want to get any Title IV funds for their private or profit schools.   

Shoulda, woulda, coulda.  The fact is that the current financial aid system has benefitted colleges and universities-- and states-- far more than students for a very long time, and President Obama is finally going to try to do something about it.  Did he get the plan exactly right on this initial roll out?  Nope. Will it be accomplished in the next few years? No way.   But that isn't and wasn't the point.  He is standing up for students and families and telling higher education administrators and states that they must get some skin in the game-- or get out of Title IV.   It's about damn time. 

What We Need to Hear from the President

Reviewing the range of responses to President Obama's plan to reduce college costs, and the questions that are being raised on Twitter, it seems important that the Administration clarify a few things sooner rather than later.

1. This effort to reduce college costs is a first step and thus it is not intended to solve all problems.  The President should say something more specific about the ultimate goal and what it would look like in practice. Are we working towards a free community college education? Are we trying to close achievement gaps?  What is the intended outcome down the road?

2. This is not NCLB for higher education.  The President needs to assure the public that he is not calling for standardized testing, the end of professorial tenure, or a focus on specific fields or majors.  He is trying to help more Americans access the quality post secondary education they seek, not water down quality or redefine what matters.

3. This is an effort to protect public higher education, not destroy it.  This needs to be said loud and clear, and the President's commitment to community colleges in particular must be emphasized.  Too many community college leaders are distressed at the roll-out of these plans, and I did not think that was intended.

4. This is also not an attempt to end for-profit or private higher education.  The purpose is to ensure that Title IV is spent in ways that support national needs, not to define the entire range of opportunities that can exist.  It is certainly possible to support private and for-profit educational providers without insisting that the federal government should also subsidize them.

5.  The President is not insisting that everyone must go to college-- he is  trying to help make the American Dream a reality by decoupling family income from educational opportunities.

Now, if I'm correct that these are all statements the President and his Administration can agree with, let's move on to figuring out how to take aim at the underlying inefficiencies in the current financial aid system using institutional accountability.

I think it would be a mistake to subject all institutions to metrics anytime in the near future. Most colleges and universities are good actors, keeping college costs down as long as states do their part. What we need to do as a starting point is to get a handle on (a) the bad actors and (b) federal investments that are ineffective and unnecessary.

Which schools fall into those categories? Here's a start.

BAD ACTORS

1. Institutions whose primary revenue source is Title IV.  Let's say those who get at least 75% of funding from Pell and/or student loans, for example.  These schools aren't operating based on market demand but rather are propped up by federal aid.

2. Institutions with selective admissions (say less than 75% admitted) and low average graduation rates (less than 50% over 5 years).

INEFFECTIVE, UNNECESSARY INVESTMENTS

1. Institutions with large endowments per student.

2. Institutions serving very few Pell recipients (regardless of whether this is due to admissions practices, costs, or a decision to simply be small).


If we could ensure that federal student aid no longer supported these schools, we would see fewer students attend these schools, their prices would likely fall (or they would close), and/or at minimum we'd save money that could be spent elsewhere.

If that were the first stage, then the Department of Education could begin by publishing these lists of problematic schools, issuing a warning that they have three years to get off the list or lose Title IV.


The other big issue is how to get states back to the table.  There could be a separate list of states that are put on probation based on a failure to match federal investments in higher education with state investments.  All colleges and universities in those states should be put at risk of losing Title IV-- including the privates and for-profits-- and given 5 years to address the problems.

None of this is perfect, of course, but they get us thinking about a more targeted, incremental approach to reform.  What do you think? What would you include?