Monthly Archives: June 2017

One of the great debates in higher-education policy is the relationship between cuts in state subsidies for colleges and universities and increases in tuition. Over the past two decades states (including Virginia) have curtailed state support, and college tuitions have soared. The higher-ed lobby argues that the one is the direct and proximate cause of the other: Institutions raise tuition to compensate for state cuts.

The national debate has played out here in Virginia. Last year, House of Delegates fiscal analyst Tony Maggio estimated that between 1996 and 2015, for every dollar the state cut in college subsidies, public Virginia institutions raised tuition by two dollars — implying that half the tuition increases could be attributed to the cuts. In March, Heywood Fralin, a member of the State Council of Higher Education for Virginia (SCHEV) contended that using a 2001 starting date for the analysis would have shown a dollar-for-dollar correlation between reductions in state support and higher tuition — in effect blaming the cuts for 100% of tuition increases. (See “Deciphering Higher Ed Statistics.”)

Against the backdrop of the same debate playing out nationally, Preston Cooper, an American Enterprise Institute scholar, has published research that reaches a remarkable conclusion: There is almost no correlation between changes in state funding and changes in tuition. State budget cuts account for maybe 5% of the tuition increases.

Proponents of the “state disinvestment” hypothesis blaming state cuts for tuition hikes are correct that smaller state subsidies among the 50 states has coincided with aggressive tuition increases nationally. Between 2004 and 2015, state subsidies per student fell by $1,319, or 15%, while average tuition increased $3,488, or 56%. But there is little causal relationship between the two trends, Cooper argues.

To the statistically untutored, those numbers might appear to suggest that roughly 38% of the tuition increase can be explained by state cuts. But such a superficial reading fails to explain why tuition rises both during periods of increasing subsidies and declining subsidies.

In his paper, “Pennies on the Dollar: The Surprisingly Weak Relationship between State Subsidies and College Tuition,” Cooper delves deeper than broad aggregate numbers. He examines year-to-year changes for hundreds of public universities across the country.

Citing the work of economist Howard Bowen, Cooper suggests that colleges do not seek to minimize costs like corporations do. They are not profit-maximizing institutions. (They are, I would suggest, prestige-maximizing institutions, which drives them to spend money on projects to enhance their rankings.) Colleges and universities, he contends, seek to maximize all available revenue streams and then benchmark their costs to the revenue they are able to raise. “An institution finds a way to use each dollar it accesses.”

Institutions charge all the tuition they can all the time. Whether direct subsidies go up or down is irrelevant. Subsidies and tuition are independent of one another; the pass-through rate is zero.

Cooper’s data indicate that Virginia’s public four-year colleges and universities actually have a slightly negative pass-through rate — 6.1%. “Negative pass-through,” he explains, “does not mean that institutions respond to subsidy cuts by reducing tuition outright but that institutions reduce tuition relative to its (sic) underlying trend when subsidies fall.”

Cooper theorizes that universities, reflecting their core mission of teaching, do try to avoid slashing instructional spending. Cutbacks fall most heavily on research and administrative costs.

Bowen … predicts that institutions will raise more revenue than they need to provide education and then channel the excess funds into superfluous expenditures that may be tangential to the core educational mission. When revenue streams contract, this low-value spending will be the first to go.

A corollary of Bowen’s theory, suggests Cooper, is that increasing state support for higher education will lead to trivial reductions in tuition. Colleges and universities will seek to maximize tuition revenue in any case. But more generous state subsidies will fund increased spending. Rather than increase direct support to institutions, he argues, states should consider abolishing subsidies and using the money to fund grant aid to students.

Bacon’s bottom line: I find Cooper’s theory intriguing, and I think it provides a useful frame of reference for examining trends in state subsidies and college tuition in Virginia. But I would like to see how the numbers play out before accepting his findings. In particular, his theory suggests that institutional spending would increase or decrease (with a year delay) in response to changes in state support. While the task might be tedious, it should be easy enough to look up the numbers. If I have time, I will do so and report back to readers.

Source: Council for Aid to Education

The most important skill U.S. colleges and universities purport to teach is critical thinking. The higher-ed industry doesn’t have any tests analogous to Virginia’s Standards of Learning exams (SOLs) by which to measure the proficiency of students in this core aptitude, but it does have the voluntary Collegiate Learning Assessment (CLA). Dozens of universities around the country administer the test to freshmen and seniors to determine how far they have progressed in their abilities to manipulate information and reason analytically.

While the CLAs show that most college students do progress over their four years of study, they also demonstrate that results vary widely by institution. At a handful of institutions, students actually lose ground. The CLAs also show that a significant number of college seniors — 14% in the 2015-16 year — fell short of a “basic” mastery of critical thinking. Only half achieved a level higher than basic.

More students than ever are attending college in the U.S. and paying more than ever for the privilege, but it is less than clear how much they are learning. In an era of rampant grade inflation, grades are not a reliable indicator. Corporations carp that many graduates are unable to think analytically, communicate well or solve complex problems.

“At most schools in this country, students basically spend four years in college, and they don’t necessarily become better thinkers and problem solvers,” says Josipa Roksa, a University of Virginia sociology professor and co-author of “Academically Adrift,” told the Wall Street Journal. “Employers are going to hire the best they can get, and if we don’t have that, then what is at stake in the long run is our ability to compete.”

College students rely heavily upon an institution’s reputation when selecting where to attend. Reputations are heavily dependent upon the prestige and fame of faculty members, the size of research budgets, athletic prowess, the size of endowments and other factors entirely unrelated to educational value added. Likewise, boards of visitors have no objective criteria by which to judge how effectively colleges are executing their core mission of teaching.

Only two of Virginia’s public four-year colleges participated in the 2015-16 test: Radford University and Christopher Newport University (CNU). (Three private colleges did: Bridgewater, Lynchburg and Randolph-Macon.) Maybe other Virginia institutions should do so as well.

Here’s the rationale articulated by the Radford Faculty Senate Executive Council:

Students today can no longer rely solely on mastery of discipline-based information. They need to be able to analyze and evaluate information, solve problems, and communicate effectively. Beyond just accumulating facts, they must be able to access, structure, and use information. …

Radford University currently does not have a valid, reliable, widely accepted measure of critical learning outcomes that can be used to track our success in helping students improve on those outcomes over time or compare our students’ learning success with that of students at similar universities. Adopting the CLA+ would enable us to accomplish both those goals. Using such a measure should allow us to better demonstrate the value we add to students while they are at RU, more effectively test alternative core curriculum pedagogy and models, provide external constituencies a measure of student performance they view as valid and reliable, and reduce the amount of time faculty spend on assessment. It would also be invaluable in meeting the accreditation requirements for SACS and other accrediting bodies.

Radford has the right idea. Faculty members want to know if the institution is doing a good job or not. They want data to guide them as they shape the curriculum.

CNU learned from administering the test that it was doing something right. According to the May 2015 board minutes, CNU seniors scored in the 85th percentile. (It is not clear from the minutes whether that reflects the number who scored proficient or the improvement in the test scores between freshmen and juniors.)

Other institutions may be scared to know the results. Perhaps they don’t want board members asking too many questions — an understandable if regrettable attitude.

Or perhaps they think their students are so friggin’ smart that they don’t need to be tested. But how would they know unless they administer the test? (I remember some University of Virginia frat boys who had probably regressed during their four years in college. Excessive alcohol and cannabis consumption can do that.)

The cost is nominal — some $6,600 for 100 students plus $25 per additional student. If Virginia’s public institutions don’t voluntarily participate, then perhaps the Virginia legislature can find a way to encourage them.

Fall headcounts have plateaued among Virginia public higher-ed institutions. Data source: State Council for Higher Education in Virginia.

After peaking in 2011 at 20.6 million, college enrollments in the United States have declined every year since, falling to 19 million in 2016. While the fall-off has been most pronounced in community colleges and for-profit institutions, many traditional four-year institutions have been affected as well.

Why, ask Richard Vedder and Justin Strehle, is this happening? Because the cost of college attendance is rising while the financial benefits of a degree are falling, they argue in a Wall Street Journal op-ed.

Between 2000 and 2016, the tuition-and-fees component of the Consumer Price Index rose 74.5%, adjusted for overall inflation. But the earnings advantage of a college degree is no longer growing like it once did. Writer Vedder and Strehle:

The average annual earnings differential between high school and four-year college graduates rose sharply, to $32,900 in 2000 (expressed in 2015 dollars) from $19,776 in 1975 — only to fall to $29,867 by 2015. In the late 20th century rising higher-education costs were offset by the increasing financial benefits associated with a bachelor’s degree. Since 2000 those benefits have declined, while costs have continued to rise.

An indicator of this shifting return on investment is the high rate of underemployment — 40%, according to Vedder and Strehle — of recent college graduates. When college grads are taking jobs as Uber drivers and baristas, you know something is wrong.

Another factor undermining the advantage of a college degree: A degree no long provides the reliable signaling to the labor market that it once did. Traditionally, a sheepskin used to tell employers that a candidate possessed a certain level of intelligence, ambition and diligence. But when one third or more of adult Americans graduate from college, “being a college graduate no longer necessarily denotes exceptional vocational promise,” the authors write.

Bacon’s bottom line: There is a deeply rooted idea in American culture that everyone should have a chance to go to college. Embedded in that idea is the assumption that everyone can benefit from a college education. In an ideal world that might be true. But we live in the world we live in, and the K-12 educational pipeline is badly broken. High schools are spewing out graduates who are totally unprepared for college-level work. But many colleges, desperate to maintain their enrollments and support the vast infrastructure of buildings, departments, faculty, graduate students and administrators, are taking on these students anyway, even if they benefit little from the college experience. Here in Virginia, thousands of students drop out every year after loading up with college debt. Even for those who do graduate, thanks to relaxed academic standards, a college degree in many cases ain’t worth what it used to be.

Since the Top Jobs Act of 2011, in which it was the declared policy of Virginia to increase the number of degrees and certificates awarded by Virginia’s public colleges and universities by 100,000, enrollments have plateaued after years of increases. Virginia students are encountering the same hard choices as students nationally: Given what Virginia institutions are charging, is the cost of a degree really worth it?

More than half of Americans (51%) would change a major education decision if they had it to do over again, finds a new report by the Strada Educational Network in conjunction withe Gallup polling organization: 36% would choose a different major, 28% would choose a different institution, and 12% would pursue a different degree.

Graduates of vocational, trade or technical programs are more positive about their education decisions that those with an associate or bachelor’s degree. STEM graduates at all education levels were most satisfied with their decisions. Respondents who earned Associate degrees and B.A. degrees in liberal arts were more likely to express regret than those with business, STEM or public service degrees.

“In the United States, students often make the decision whether or not to pursue postsecondary education without being fully informed of the available educational opportunities or which are required to pursue their chosen career path,” says the report. “These decisions, whether students pursued postsecondary education or not, have long-standing implications for their careers, their finances and their well-being.” Continues the report:

Researchers widely agree that many of the current measures available to consumers to help determine the value of their education fall short, and they are not widely used. There is, for example, no national database that shows how much graduates of different colleges earn by major or how satisfied they are with their experience. When economic challenges are coupled with a lack of reliable information, it creates a situation ripe for education outcomes to fall short of consumer expectations, leading many consumers to have second thoughts about the choices they made.

Bacon’s bottom line: Looks to me like a massive mis-allocation of time (years of study) and financial resources. That might have been forgivable when higher education was the province of the elite. Now that 60% or more of the population pursues an advanced degree — often borrowing money to do so — the decision-making process needs to be more rational and better informed.