Change

Our new students have been on campus for about 6 weeks but we are already entering prime season in recruiting new students.  I already have had the pleasure of talking to the first fall open house group of the season and potential students and their families were very clearly focused on the decision they likely would be making in the next 6 months.  In thinking about my talk to these students and their loved ones, I focused on what I have heard from parents and new/potential students last year as well as what I have heard from talking with students and parents in the school district where I live. 

There seems to be, up to the last few weeks when the ill conceived effort to defund Obamacare threatened to undermine the slowly progressing economic recovery, a greater sense of optimism permeating our country.  Hopefully, that sense of optimism will reappear in the weeks ahead.  Optimism works to shift some attention from the sticker price of higher education to the value inherent in the education.  In a weak economy, price often trumps all; when the economy improves, class size, personal attention, and support services all take on greater prominence.  Scholarships, however, remain an important part of the currency of higher education; parents clearly feel they have been more successful, along with the son or daughter, when a scholarship is part of the attraction.

Even with the economy improving, students and their families seem to be maintaining their focus on the job or graduate school opportunity at the end of the baccalaureate degree studies.  Thankfully our increased attention to outcomes assessment provides us with reliable information on what recent graduates are doing and that information is very reassuring.  Students and their parents also seem to be maintaining their interest in and enthusiasm for an internship along the way. I strongly agree that an internship can provide that important bridge between school and a career and provide the student with added sophistication that increases the chances for success.  Dual degree programs also seem to be more and more attractive to potential students.  The opportunity to earn both a bachelor’s degree and a master’s degree in an overall shorter period of time enhances the value proposition.  Think about it, even five years ago and certainly a decade ago, there was much less concern about the job at the end of the degree, much less emphasis on internships, and much less emphasis on dual degrees.  I believe the new priorities have strengthened higher education but there certainly has been a price to be paid.

The price has been the declining appreciation for the importance of a well rounded liberal arts education as the foundation for higher education.  A dual major, a minor along with a major, more time for internships, a chance at a dual degree, all are often made possible by a reduction on the number of foundational liberal arts courses that are the critical source of the common body of knowledge that higher education should provide.  The appreciation for the liberal arts is often overshadowed now by the desire to have more professional experiences, certifications and credentials.  Graduates are often expected to be more specialists and less generalists, more sophisticated in the imediate needs of the chosen profession but less able to understand world issues and challenges.

We all work hard to provide incoming students and their families with the quality education they want in their chosen field.  We change with the changing times and here there is no choice.  But along with the changes, there also has to be an ongoing commitment to the liberal arts.  Higher education should never be confused with a trade school education.

The $10,000 Degree

I am a huge fan of Consumer Reports and consider them the most objective source of product information available anywhere. Rarely do I ever purchase a product without first checking their evaluation. So when it comes to buying or leasing a car, I look in detail at the ratings of the type of car I am interested in and able to afford. But since I am also a car person, I can’t resist looking at the ratings in general. On a scale of 0-100, there are cars in the 90s, which are top rated, and there are cars in the 30s, which are little more than basic transportation. The cars with the higher ratings often, though not exclusively, are more expensive; the cars with the lower ratings are often, but not exclusively, lower priced. I am tempted to give actual examples but I am certain that Consumer Reports is familiar enough to the Inside Higher Education readership that no specifics are necessary.

A highly ranked car or a poorly ranked car will get you to the same place often at the same time (assuming everyone follows legal speed limits). Likewise, a highly priced car and a low priced car will also get you to the same place at the same time. The same analogy holds for the $10,000 degree and the $30,000 a year tuition charge. Offering a bachelor’s degree for $10,000 is certainly doable and I feel confident that on standardized objective tests, the results could be very similar and possibly identical to higher cost degree programs. But is the product really the same?

What will the $10,000 degree look like? A MOOC tied to recitation sections at another college is one likely alternative. You can get thousands of students into the MOOC and recitation sections could perhaps reach up to a hundred students each. The lead faculty could be a well known expert and a fascinating lecturer. The recitation section could be taught by a person whose qualifications are much less high powered. MOOCs are typically free, at least up to now, so the cost incurred by the credit granting institutions (which may just consist of the recitation leaders’ compensation) could be minimal. Please understand, this is not what I advocate but it is a workable model for a low priced degree.

Large lecture sections provide another alternative for a lower cost degree. Five hundred students in a lecture class certainly moderates the cost equation. But is this the same education that a student receives in a 30 student class? Are the important extras also there? Would there be advisement, counseling, career services, other support services, sports, faculty with sufficient time to meet with students, co-curricular activities, an attractive campus, etc.? Not likely – there is just so much you can do for a very low price.

What is better? The value proposition of a $10,000 degree or the much more personalized education which a $30,000 annual tuition charge is likely to deliver? For some students, it may not matter. Their skill set and their comprehension of the material is such that to a significant degree they can teach themselves. But there are many other students that need guidance and support to succeed. They have the potential to succeed beyond expectations but not without the safety net of individualized attention and support services. As college continues to be the economic ticket to success for so many of our students we need to work to both not lose accessibility while at the same time making sure we meet the diverse and not insubstantial needs of many of our students. As attractive as a $10,000 price tag may be for higher education, it is fairly certain to not meet the needs of many in our society. Think about it; who is likely to gravitate toward this minimal cost degree? Will it be those who don’t have the economic resources to pursue a more enriched education? How will their support service needs be met? And if this minimalist degree doesn’t meet those needs what happens to their chance to succeed?

Undermatching

The phrase was new to me but the concept and the consequences are very familiar.  William G. Bowen, in giving the keynote address at the recent TIAA-CREF Higher Education Leadership Conference, talked about students and their families underinvesting in higher education. Given the important economic and social benefits of higher education, why would there be underinvestment and how does this work? The reason for the underinvestment is simple—many families are looking for a bargain. They are looking to get the degree at a lower cost or possibly at the lowest cost possible. The bargain priority skews the decision making process; instead of going to the best college or university that you can get into, students are going to the schools that offer the most attractive financial aid packages. Until the 2008 economic meltdown, my impression is that the decision making worked as it had for many years – families and their college bound children attended the (academically or academically and socially) best school they could get into assuming the finances could be worked out.

Now college-bound kids and their families are consciously rejecting the best schools for the best offer.  President Bowen gave the example of a young woman who had gotten into Princeton but without a scholarship.  This college bound student had gotten scholarship offers from all 10 other institutions she had applied to, and the family expected the same response from Princeton.  Princeton’s response was to ask the young women to decide what she wanted—did she want Princeton or did she want a scholarship?  Did she want a Princeton or a school with a lower (or no) net tuition?

There is nothing wrong is seeking out a bargain if the bargain provides the same quality education as the alternatives.  But is that what is happening in higher education?  Much of private higher education is engaged in an escalating tuition discounting (increasing scholarship) race.  Scholarships are increased so as to make one institution more attractive than another.  And the other institution typically responds by increasing its scholarships.  As more money is allocated to scholarships, less money is available for the others costs involved in providing higher education.  As this continues for an extended period of time, what is the end result?

For public higher education, more and more colleges are being asked to educate more students with fewer resources. Educate more but spend less?  Initially there are likely efficiencies to be realized. But when this has happened and the number of students still increases or the budget continues to decline something has to give. And when this happens for an extended period of time, what is the end result?

Those of us in higher education need to more forcefully make the compelling case for higher education.  At the same time we need to make sure we are operating as efficiently as possible.  Our students and their families expect and deserve no less.  We need to also draw the line on excessive tuition discounting or else we will begin to see a strong correlation between tuition discounting and quality discounting.  We need to remind public officials that doing more with less, can ultimately result in doing less with less.  And we need to be forthright in indicating to students, that one danger in undermatching is that if the quality has not remained constant, what appears to be a bargain is really second best.

A Tuition Rate Only an Economist Could Love

A major story in last Tuesday’s Inside Higher Education was that Middlebury College “will plan its budgets each year by capping its ‘comprehensive fee’ – the equivalent of tuition, room and board at other private colleges—at an upward limit of 1 percentage point above the Consumer Price Index.”  Certainly this move makes good sense in terms of positive publicity for Middlebury and it also provides a valuable fiscal restraint framework to operate under.  But would I, as an economist, advocate this framework and does it make sense for higher education in general?

Ragtime

On September 15th, I purchased tickets for my wife and me to go see the new Broadway production of Ragtime.  I had seen and very much liked the previous Broadway production and also a Hofstra production.  I think Ragtime’s music is excellent and the story very powerful.  In addition, the show serves as a helpful educational and historical vehicle.  The show opened in the middle of November and my tickets were for Saturday night, January 9th.  Just after New Year, I received an email that the last performance for the current production would be the 5th.  A day later, I received a follow-up email that the last performance had been extended to the 10th.  My timing turned out well and on the 9th we went into the city for dinner and the show.