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Brainstorm: Lives of the Mind Bob Zemsky

June 10, 2008

Lessons From the Cost-Quality Curve

The subject is the interplay between cost and quality. Richard Vedder’s work, both before he joined and as a member of the Spellings Commission, focused on how American colleges and universities spend their monies and on the cost drivers that make American higher education so expensive without returning a commensurate quality premium. It’s the research that made Vedder among the best known and widely read of the nation’s efficiency pundits. Charles Miller, the chairman of the commission, regularly points out that American colleges and universities really don’t have a bottom line, and hence productivity and efficiency gains constantly elude them — though that observation is more true of the highly selective, most costly institutions than of the bulk of the colleges and universities responsible for educating most undergraduates. Taken together these arguments suggest that as a nation, we are spending more and getting less from our system of higher education.

Two aspects of that system are of particular importance here. First, the nation’s high cost, highly selective institutions have almost no incentive to be either more efficient or more productive. Rather, their success depends directly on their ability to raise ever more funds — through more research contracts, through bigger gifts and campaigns, through larger yields on their endowments and other investments, and through escalating tuition revenues, which are as often the product of new programs as of increased prices. Internally realized savings are rare — in part because they are so difficult to achieve, and in part because it has proved so much easier to raise additional revenues than to squeeze current operations. As a result, the kind of productivity-centered changes that came to characterize much of American industry and commerce in the 1990s largely skipped over higher education’s most-elite institutions.

The second aspect of the American system of higher education worth noting here is that most of the institutions in the middle of the cost-quality curve still seek to emulate those institutions at the top of the heap despite the fact that they have substantially less resources and are fundamentally more dependent on tuition revenues and/or state appropriations. To be sure, these institutions have compelling reasons to be more efficient; but they achieve their savings largely by squeezing salaries, hiring adjuncts rather than full-time instructors, and eliminating most of the perks associated with current expense budgets. What has not changed despite more than two decades of economic pressure in these institutions is their basic production function. In terms of the organization of the curriculum and the specifics of the academic calendar, what transpires in these institutions still duplicates the calendars and curricula of the nation’s best-endowed colleges and universities. The only real difference is the teaching loads of the faculty.

The growth of a for-profit higher-education segment further highlights how little traditional higher education has changed. What for-profit higher education realized was that the traditional higher-education production function was not sacrosanct — that alternative calendars that create savings could be successfully adopted, that the institution rather than individual faculty could own the curriculum, that it was possible to use a largely contingent work force whose benefits were vested elsewhere, and that some curricula would be far more profitable than others. The other lesson that for-profit higher education is teaching nonselective institutions in the middle of the cost-quality curve — those institutions most directly threatened — is that quality pays when it responds directly to student needs. For-profit higher education is winning an increasing share of the market, not by competing on price, but by emphasizing responsiveness, flexibility, and convenience.

Comment [2]

June 6, 2008

Quality -- Reform's Fourth Horseman

The country bumpkin among the four horsemen of reform is quality — a term so bereft of practical meaning today that it is now commonplace to talk about high quality, higher quality, and highest quality as a means of distinguishing among nearly equal claims to excellence.

No one is against quality. Almost everyone is ready to concede that American higher education, whatever its faults and shortcomings, is the envy of the rest of the world and in that sense truly world class, perhaps even in a class by itself. Not so fast, says Jonathan Grayer, the former Newsweek marketing executive Washington Post picked to run its Kaplan subsidiary and who was in many ways the most interesting as well as the most unusual member of the Spellings Commission. Grayer’s role was principally to explain and where necessary defend the interests of the growing for-proftit educational sector. But periodically the Harvard graduate (Harvard College then Harvard Business School) would let loose, challenging the rest of us to think differently. At one point he suggested an alternative way to think about quality. Having been reminded by a recent declaration in The Economist that American universities were the best in the world, Jonathan said he thought such statements did not apply to the bulk of American higher education but only to its most selective institutions.

Instead, Grayer suggested that American colleges and universities are like the little girl with the curl in the middle of her forehead. When they are good, they are very, very good — and when they are not, well, they are just sort of mediocre. It is an observation that, among other things, helps explain why the U.S. ranks in the middle rather than at the top of so many international comparisons focusing on the quality of national systems of higher education.

The comparative scale on which American higher education clearly ranks at the top is expenditures. In American higher education, those institutions with the highest expenditures per student are the same institutions with the most selective admissions and hence the most competitive students. Whether these students rise to the top because they are among the “best and brightest” to begin with or because the institutions in which they enroll have more resources to invest in their educations is a question worth pondering, particularly if the question before the house is whether or not money buys quality. Most observers of American higher education would argue that the quality of student inputs remains more important than the quality of the educational process — in part, at least, because the educational processes employed vary so little across the range of baccalaureate institutions.

To be continued …

Comment [4]

June 3, 2008

Access to Success

The numbers that trouble me the most are those that document how educational access has not translated into educational success. While the percent of Americans with a college education has increased for all groups, the gap between minority and majority experiences has persisted largely unchanged. Given that a college degree is now the principal portal to middle-class status it is not acceptable that one’s ethnicity, in particular, remains a tag predicting likely success at reaching that destination. The problem, however, is not one of access — or at least the kind of access that is achieved by the removing of barriers be they legal, cultural, psychological, or financial. Providing equal educational opportunity — what I have taken to calling “access to success” — requires a different mind set and a willingness to invest public funds in programs other than federal student aid.

I have written before to summarize The Learning Alliances’ study of higher education access and participation in the Commonwealth of Pennsylvania. Two of the lessons we drew from that effort are old chestnuts. First, income matters. To no one’s surprise, we noted that high-school seniors from communities whose families on average have higher incomes are more likely to attend college than students from communities with lower family incomes.

Second, higher levels of unemployment translate into increased college enrollments. When jobs become scarce, young people are more likely to stay in school.

Our three remaining lessons changed our understanding of the dynamics of college enrollments.

Third, the quality of primary and secondary education in the county had a direct and measurable impact on how likely graduates from that county’s high schools would proceed directly to college. The most powerful measure in The Learning Alliance’s study was how well students did on the standard reading test that was part of the Commonwealth’s 11th-grade assessment test; school districts whose rising juniors performed poorly on this exam sent far fewer students on to college. Students who can’t read for comprehension at a 9th-grade level are not going to succeed in college and they know it. Without ia substantial increase in the number of high-school seniors who graduate genuinely college ready, there will not be substantial increases in college participation rates.

Fourth, familiarity engenders interest. The more colleges that are nearby, the more likely students from those same communities will plan to attend college.

Fifth, the absence of a low-risk higher education portal is in itself a of predictor of non-participation. Here the lever most readily available to policy makers is an old one: increasing the spread of community colleges will likely increase college participation rates — though not necessarily college success rates.

The Pennsylvania study offers a powerful explanation as to why neither federal nor state programs of student aid have closed the participation gap. What Pennsylvania requires is not more money for student financial aid, but heftier appropriations designed to improve middle and secondary schools along with more uniform access to the low-risk educational alternatives represented by community colleges.

Advocates for the nation’s underrepresented populations will not like this conclusion, in part because it appears to let the nation’s colleges and universities off the hook. Hardly. Higher education bears significant responsibility for the state of America’s middle and secondary schools. Higher education sets the standards, trains the teachers, and determines how K-12 education aligns with postsecondary education. Given that perspective, improving participation and access is everyone’s responsibility.

Charlie Reed, Chancellor of the California State University (CSU) knows that and has committed his 23 campuses to building sustaining, mutually reinforcing partnerships with their feeder high schools. The goal is to cut in half the proportion of first time freshman entering CSU who fail one or more placement exams while at the same time increasing the number of high school students who are prepared to succeed in higher education.

Comment [2]

May 30, 2008

Is Access Still the Question?

For more than 50 years unfettered access to a college education has been the stated goal of most higher-education policy. Everyone who wanted a college education, who had prepared themselves to earn the degree and had exhibited the discipline and stick-to-it-ness necessary to succeed deserved a chance. A person’s race or ethnicity or gender, his or her financial circumstances, political or religious beliefs, or physical incapacities could not be allowed to matter.

The term itself — access — reflected a deeply held belief that unfettered participation in the nation’s higher-education system required the elimination of those very real barriers that had historically limited participation to the advantaged few.

The first barriers to fall were products of racial and religious discrimination — outright legislated segregation in the one case and, in the other, a more subtle but no less discriminating set of quotas and understandings used to limit the educational participation of first Catholics and later Jews.

Through the 1950s the relatively meager supply of colleges and universities represented a second major barrier to full educational participation in the United States. We tend to forget just how limited the supply of college places was in the decade following World War II. So complete has been the integration of community colleges into the nation’s higher-education system we tend to forget as well that almost all of those institutions didn’t exist 50 years ago — and none were the kind of mega-institutions that Miami-Dade and Maricopa County Community Colleges have become. And back then the nation’s normal schools and colleges had not yet morphed into statewide systems of comprehensive universities.

What helped fuel this extraordinary expansion was the lowering of yet a third set of barriers — mostly psychological and cultural — that had once taught most Americans that “a college education is not for me — it’s for them.” Amidst the hurly-burly of today’s admission’s arms race it is important to remember that as late as 1950 Harvard College had just 1.3 applicants for each place in its freshman class.

The final barriers to be attacked were financial. Through the 1970s the growth of public systems of higher education and the rapid expansion of community colleges kept the price of a college education within the reach of most middle-class Americans. But prices were rising then as now, particularly at those institutions, both public and private with selective admissions. At the institutional level private colleges and universities, in particular, began practicing what would come to be known as need-blind admissions by backing up their offers of admission with financial aid awards to students whose families could not pay the full freight of sending a son or daughter to the college of their choice. On the federal level a Nixon administration not remembered for its social conscience introduced a series of federal programs providing grants directly to students allowing them to attend the institution of their choice. From that beginning grew federal student aid with its Pell Grants and Stafford loans that today dispense more than $100-billion annually in the name of providing access to a college education to every American regardless of personal financial circumstances.

Let me finally note the story in today’s online Chronicle summarizing the Department of Education’s just released study, “The Condition of Education 2008.” The first change in the demographics of higher education that The Chronicle’s writer noted was that “women and minority students accounted for a large proportion of enrollment growth at colleges and universities in the decade leading up to the 2005-6 academic year.”

It’s not access or barriers, per se, that should concern us now, but the larger question of whether substantially greater access has produced educational equity.

More on Tuesday.

Comment [3]

May 27, 2008

Affordability: Devil in the Details

Exactly how to make a college education more affordable is among the most intractable of the dilemmas facing higher education. Initially those who worried most about a college education’s affordability focused on public institutions and the fact that their increasing prices were directly related to per-student reductions in public appropriations by the nation’s 50 states. It seems unlikely, however, that the states will dramatically increase their support for higher education. What the states have discovered, in good times and bad, is that students and their families will pay more for their college educations, thus allowing the states to promote other spending priorities including the lowering of taxes.

More recently its has been the outrageousness of the tuitions of the nation’s most selective institutions that has drawn the media’s and policy makers’ ire. The problem is that these critics have no better answers to higher education’s 50-year cost-price spiral than do the college and university presidents whose inaction they so vociferously decry. Those who call for greater efficiency sooner or later stumble over the fact that most of the costs they find wasteful — climbing walls is one favorite target — are in fact responses to student and family demands for better service and additional amenities. Those who study the shifting allocation of funds within the academy regularly point out that instructional costs are already a shrinking proportion of the average college or university’s budget. Were calls for lower prices to succeed while the costs imposed by regulation and the need to supply ever more amenities increased, the result would be institutions less able to fulfill their educational missions. The alternative, of course, would be to pay the faculty and everyone else in the institution lower salaries which, ironically, is the strategy most often employed by underfunded elementary and secondary schools.

Sooner or later the price spiral in higher education will have to be addressed. My guess is that breaking the gridlock on costs will require some kind of dislodging event that leads to a substantial reduction in the going price of an undergraduate degree. What won’t reduce costs or lower prices are tough or inflammatory speeches demanding that colleges and universities cut out the frills, make their faculty work harder, and learn from businesses the discipline of outsourcing.

Comment [2]

May 16, 2008

Defining Affordability

One of my stranger assignments as a member of the Spellings Commission was to co-chair, with Rich Vedder, the Affordability Task Force. Here truly was a punishment to fit the crime, since I had already made clear that I was finding the Commission’s discussion of affordability both linguistically confusing and politically risky.

To begin with, the argument that an American college education was becoming more unaffordable rested on the assumption that students and families were still expected to pay for college out of current earnings and savings. In fact, a college education had long since become something that one purchased over time, most often at interest rates that were sufficiently attractive that even families that could afford to pay their “parental contribution” out of pocket chose instead to borrow. Savvy middle-class families had long since discovered that it was smarter to take out a PLUS loan while investing their savings at a more attractive interest rate. Only families culturally or ideologically adverse to debt were missing out on this modest opportunity at arbitrage. Students with demonstrated need substantial enough to qualify for a Pell Grant were also able to secure long-term financing at advantageous (i.e., subsidized) rates. The average indebtedness of students upon graduation from college was less than $20,000 — roughly the price of a low-end new car. Students and their families who wanted a more upscale product took on more debt, but again debt that was in line with their other longer-term purchases.

A second mistake made by those who pushed the affordability agenda was to apply an absolute standard to the problem. If a college education cost more than X, then by definition it was unaffordable even though students and their families continued to purchase it in ever-greater numbers. Had the affordability lobby chosen instead to ask higher education’s potential customers whether a college education remained affordable, a much different argument would have resulted.

I know, because we did just that in the fall of 2004 at the behest of the Rendell administration in Pennsylvania. As part of a general review of the state of higher education in Pennsylvania, The Learning Alliance commissioned a survey of young adults across the Commonwealth focusing on their attitudes toward higher education in general and its costs in particular. The survey was designed and administered by Berwood Yost of the Floyd Institute for Public Policy at Franklin and Marshall College, in collaboration with his colleague, Terry Madonna, the Director of the Keystone Poll, the standard benchmark for political polling in Pennsylvania.

What the survey found attests to the confusions that had already become an integral part of the affordability discussion. Eighty-six percent of the sample agreed with the statement “Regardless of the cost, tuition at Pennsylvania’s public universities is a worthwhile investment.” Just 9 percent disagreed. Sixty-three percent agreed with the statement “The cost to get an education at one of Pennsylvania’s public universities is affordable.” Twenty-five percent disagreed, and 12 percent said they didn’t know.

Yost and Madonna summed up their findings as follows: “The responses of young adults who wanted to attend college, but who did not, do not suggest that cost is a problem for a large majority of young adults. Cost (33 percent) was the most frequently mentioned problem among those who planned to attend college but did not; however, they mentioned many other reasons, too. Starting families (23 percent), having a job that did not require a degree (10 percent), a lack of motivation (8 percent), and planning to attend at a later time (5 percent) were other reasons that interested students never attended college. When these responses are calculated to reflect the total sample, it turns out that fewer than one in 20 (4 percent) of 18 to 30-year-olds in Pennsylvania did not attend a higher education institution because of concerns about cost, which is nearly the same proportion (3 percent) who did not attend because they were starting families.”

My own reading of the same data says the number of young people being excluded from higher education in Pennsylvania because it cost too could be as high as 8 percent. Two characteristics of this excluded population are worth noting. First, the respondents who said that costs were a primary reason for not attending college were more likely to report much higher tuitions for both public community colleges and state universities than those institutions actually charged. Second, they were twice as likely to be African-American or Hispanic or come from the largely rural part of the state.

Make no mistake — 8 percent is a substantial number. Its import, however, lies in telling us that making a higher education more affordable requires very targeted investments designed to assist the 8 percent who need immediate help rather than the 92 percent for whom a college education is expensive but still affordable.

Comment [4]

May 13, 2008

What Does 'College Affordability' Mean?

The second of my four horsemen of reform — the quest for an affordable higher education — is for me the most problematic. This much is clear, however: an American college education has become ever more expensive. Some would say, with fair justification, paying for a college education in this country is now obscenely expensive. But ever-higher prices in higher education are nothing new. For more than a half century the average price, even the average net price, of a year in college has been increasing faster than the underlying rate of inflation, except during the decade of the 1970s when the average prices colleges and universities charged merely kept pace with double-digit inflation.

Those who push the affordability agenda parse the problem differently, having concluded that an American higher education is either now or about to become unaffordable. As Measuring Up 2004 boldly declared, “The vast majority of states have failed to keep college affordable for most families.”

Not exactly. When something is unaffordable it means it won’t be purchased. Health insurance — and with it access to health care — is now truly unaffordable for a frighteningly large and growing number of American families. We know that to be the case because of the increasing number of American families who do not have health insurance. That seemingly is not the case for American higher education, given that in most years enrollments have continued to rise even as have the prices students are expected to pay.

Market researchers often talk about affordability in terms of the would-be customer’s “willingness to pay” for a specific product and that same customer’s “ability to pay.” Thus far most American families and most students have shown both an ability and a willingness to pay the prices colleges and universities charge. Indeed, most purchasers of higher education have, over the last decade, been shopping up, consistently choosing higher-priced over lower-priced options. The baccalaureate institutions that are hurting for enrollments are, for the most part, those with the lowest tuitions.

It is a curious conundrum. Take, for example, the case of the Commonwealth of Pennsylvania, which Measuring Up awarded a C for affordability in 2000, a D in 2002, and an F in 2004. On the other hand, Pennsylvania earned an A in completion, meaning that Pennsylvania institutions do very well in terms of retention and their capacity to graduate students within six years of matriculation — and a B for participation, indicating that “compared with other states, the likelihood of Pennsylvania ninth-graders enrolling in college within four years is high.”

Sorting through this thicket is going to take a while — or at least my next several postings.

Comment [10]

May 8, 2008

In Praise of Karen Arenson

I am often surprised and occasionally dismayed by the comments our Brainstorm postings generate. But I never respond, knowing that to do so only invites more of the same. Some of the comments occasioned by Stan Katz’s celebration of Karen Arenson, however, need a response. What and how Arenson accomplished what she did are too important to be marginalized by nonsense.

What ever her background and personal proclivities, Arenson is no elitist. Her best work was devoted to the educational landscape of New York City, with its mélange of institutions of every stripe and persuasion. Her stories informed as well entertained, shocked as well as moved us. Collectively they formed a tapestry whose warp and woof were the accomplishments, failures, and inanities of the institutions to which she paid such exquisite attention.

Like every really good journalists she covered stories rather than being part of them. At the same time she was always available to provide background and context, always in the hope that people like me wouldn’t make more of a mess of things. There was, to be sure, a quid pro quo. We had to tell her what we were thinking and why. Often without quoting us, she wove those aspects into her stories. Hers was an art that was prescient as well as gracious.

Karen, you owe us a book. I have no doubt it will prove painful to read, but we will do so because we trust your observing eye.

Thanks.

Comment [8]

May 6, 2008

What Would a Higher- Ed FDA Look Like?

Discussions of the need for increased accountability in higher education are mostly mindless. There is a presumption on the part of what I have come to call the “accountability police” that colleges and universities today are not accountable — paired with a reluctance to specify by whom and for what colleges and universities ought to be held accountable. There is just a sense that a college education today is too expensive and not worth the money given that college students are not learning enough. Finally there is the assumption that if the public had more data, accrediting agencies more power, and state governments more gumption the nation’s colleges and universities could finally be held accountable.

I keep trying to make sense of this argument. My current gambit is to imagine an accountability process that actually tests the quality of higher educational products — both courses and degree programs. What would happen if there were something like a U.S. Higher Education Administration modeled after the U.S. Food and Drug Administration (FDA) — a federal agency that currently promotes itself as the consumer protection agency of the U.S. government? To insure safe and effective pharmaceuticals, the FDA conducts clinical tests of new drugs before they are released to the market and then insists that their manufacturers continue to test and report on their safety and efficacy. A higher education look-alike would be expected to do the same thing — test products and monitor their continued efficacy. This proposal differs from other calls for increased accountability by focusing specifically on educational products, by insisting that they be rigorously tested, and by establishing an external mechanism for post-test monitoring. Thinking about the problem of accountability from this perspective makes clear that simply having more data and tests won’t work unless there is an external agency doing the testing and monitoring the data collection.

If nothing else, I hope my imaginary, admittedly impractical proposal makes clear that a search for accountability ought to be about more than sloganeering. Those who think colleges and universities need to be more accountable, or accountable to something other than a fickle market, have an obligation to specify in considerable detail how products are to be tested and monitored, how data is to be collected and used, and how the process is to be paid for.

My further hope is that those currently pushing the accountability agenda would, if actually called upon to provide the details of a practical accountability system, soon conclude that there are other, less disruptive, less expensive ways to improve the nation’s colleges and universities. What won’t work are more helter-skelter calls for increased accountability that tar all institutions by implication.

Comment [2]

May 2, 2008

Does Higher Ed Need to Be More Accountable?

Being accountable ranks right up there with being nice and responsible. Not being accountable is the same as being selfish or out-of-control or irresponsible. Simply raising the subject is enough to put higher education on the defensive and its principal institutions on edge.

The implication is that higher education is not accountable to anything or anybody outside the academy itself — a charge that simply won’t hold water. What the critics who pursue the accountability agenda really mean is “higher education is not accountable to me!” What they don’t like is that colleges and universities are instead accountable to a market that favors selectivity, brand names, national visibility, winning sports teams, and, in the case of the nation’s medallion universities, major research portfolios.

Professional programs are also accountable to their cognizant accrediting agencies. In the fields of law, medicine, dental medicine, veterinary medicine, business, and engineering, in particular, those agencies regularly exercise the real power they know they have. On the other hand, for undergraduate education writ large accreditation remains a hodgepodge of regional agencies that talk tough but in the end don’t make enough of a difference. The inevitable result is that the kind of accountability the market exacts becomes ever more important.

Given these circumstances, there remain just two avenues for making undergraduate education accountable to someone else or something other than those attributes the market currently rewards. One could join with Lloyd Thacker and his Educational Conservancy to create a consumer movement that understands and has the means and stamina to make educational values more of a factor in the college-choice process. Such a movement would be akin to the kind of consumers’ movement that changed the cars Americans bought and, in the process, made Consumer Reports a national buying guide. That kind of process, however, takes time and so frustrates the reformers who expect to change higher education now and forever.

Product regulation represents the other path to a different kind of accountability. Governments do have the power to regulate products whether they help pay the cost of acquiring them or not. Here it helps to imagine what a higher education FDA might look like — a subject I will take up on Tuesday.

Comment [8]

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