Elites to 99%: Resistance is Futile

Today my Twitter feed brought a swan song for public higher education, sung by a chorus of elites.  It was accompanied in harmony by some   public higher education leaders who are surrendering and turning in their badges.

A few highlights:

• The co-founder and former chief executive officer of CarMax told a crowd attending the Association of Governing Boards of Colleges and Universities 2012 National Conference on Trusteeship that public universities should strive for major tuition increases. Reports the Chronicle of Higher Education, "Poor kids borrow money so that the rich kids can get a tuition discount," said Mr. Auston Ligon, now a member of the Board of Visitors at St. John's College in Annapolis, Md. "Quit subsidizing people like my kids."   
• Gordon Gee of The Ohio State (and buddy of Biddy Martin) is promoting a forthcoming book from Stanford University Press called "Public No More."  This little ditty plays a familiar tune, sung by two business school types. Again we are told, the current business model of higher education is broken (duh) and public higher ed's "longstanding dependence on state subsidies...is unsustainable...recent cuts are permanent...public universities either recognize this...or face decline....attempts to block competitive forces by resistance and delaying actions are self-defeating."  Apparently these dudes never heard of the need to present and evaluate without pre-judgement alternative models in policy prescriptions.
• According to Inside Higher Ed, some educators are full-on gung-ho about privatization and not even experiencing "angst" about it (sidenote to IHE--nice framing, making having reservations sound like neuroses). The chancellor of Maricopa Community College, a man in charge of guiding the futures of thousands of black and brown students, apparently has an oracle.  Rufus Glasper tells us "We have no choice. The state funds are gone forever."  There's no point in anything but his kind of "realism," and his so-called solution is a private for-profit model. 

Just a few questions. Why is the CarMax guy being invited to talk with AGBCU?  What's his expertise-- oh right, car sales. Discounting.  Clearly buying college is like buying a car--all about the transaction. And we all know that poor people with their complete information totally understand how discounting works, that's why high tuition-high aid is so successful...  Say it with me now: puhleese.

Second, when did smart people all start singing in unison about simplistic, singular solutions to complex problems?  Did they all attend a special dinner party together where primers were distributed, and the private monetary incentives for making the education "public no more" were explained?  Sure seems like it.  Because they are talking to highly educated people in a way that is utterly pedantic-- there is one solution and one solution only -- pass the buck onto the "consumer"? Can you imagine if instead they said, "Hey 5th graders, pay your own way through elementary school?" 

Third, how much longer are you people (yes you, our readers) going to take this?  For-profit leaders clearly worked this out quite well ages ago, using their massive profits paid for with your federal tax dollars to lobby legislators and university leaders into believing the future lies in private, for-profit education.  They're doing it from up high in the skyscrapers around the world, while many higher ed leaders are out there wittingly and unwittingly carrying their water and doing their bidding.  We mere "academics" and "students" who won't admit that really we are "obstacles" and "consumers" are simply in the way.

 PUBLIC NO MORE. WE HAVE NO CHOICE. RESISTANCE IS FUTILE. 

Where have we heard that before? 

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On Tuition Flexibility

This Wednesday the Wisconsin Special Task Force on UW Restructuring and Operational Flexibilities will hear from the chancellors of Madison and Milwaukee on several issues, including flexibility for tuition-setting.

I'm on the record as having numerous concerns about the unintended consequences of giving institutional administrators more say over tuition, since they operate under intense local and political pressures to generate more resources which lead them to raise tuition even when it comes at the expense of access commitments. The latter are far more difficult to uphold, since even when people feel strongly about supporting college opportunities for disadvantaged families, the fact is that those families are quite distant from the lives of decision-makers, and thus easy to neglect.

A new paper from the National Bureau of Economic Research by Columbia economist Judith Scott-Clayton offers important reminders for this task force and the chancellors.  The access commitment is easy to make in theory, and much harder to fulfill in practice.  Sure, we like to believe that we can simply meet it by redistributing tuition revenue from middle and upper-class families to poorer families via financial aid (discounting).  But this relies on a set of assumptions, including that (a) poorer families will know the discount is coming and ignore the sticker price, (b) they will know and believe this information early enough to ensure their kids are prepared for college (as researchers put it, “potential college students cannot respond to a price subsidy if they do not know it exists"), (c) that this redistribution strategy will survive significant political push-back from the middle and upper-class families, (d) that the unintended divisiveness of the policy won't cause many consequences to campus climate and educational opportunities for the poorer students, and (e) that the access commitment will last even as campus administrations change.

I'm skeptical that these assumptions will be met by the kinds of tuition flexibility proposals we've seen in this country.  Short of a flat-out widely advertised and legislated promise to all Wisconsin residents under $80,000 (or some other income cutoff) that the full costs of attending college will be FREE, I don't think (a) and/or (b) will actually happen.  I don't think anyone knows about (c) or (d) and as for (e), get real-- no one puts this stuff in writing like they ought to.

Back to the NBER paper by Scott- Clayton-- here are key takeaways:

1. The chances are good that the market failure known as incomplete information has become more consequential in recent years as pricing of college has become much more individualized.  Despite decades of informational interventions, misinformation remains widespread-- as Scott-Clayton puts it,  "while many students appear well aware of the benefits of postsecondary education—in some cases even overestimating expected earnings gains—they persistently overestimate costs and are uninformed about sources of potential aid."

2. Creating a more complex system in which costs are higher and more variable, and more discounting is utilized, is unlikely to be offset by purely informational amendments.  In other words, an awareness campaign like that proposed by Biddy Martin last year likely won't even partially solve the problem creating by more tuition complexity.

3.  Informational contraints "can potentially undermine the effectiveness of even very large investments in financial aid."  In other words, we could spend a lot of money without creating much access--and we have to keep that in mind. It's a subject deserving of widespread and thorough public debate.

The lesson from this National Bureau of Economic Research paper for Wisconsin is this:  it's imperative that whatever tuition policy we move towards, it should not exacerbate students’ confusion about cost.   In my estimation, tuition "flexibility" at the institutional rather than System level will create more harm than good from those already left out and left behind by Wisconsin and its universities.

Postscript:  I want to clarify that the hearing on Wednesday will include discussion of two different tuition issues. First, whether the legislature should have granted the Regents flexibility to set tuition and then capped tuition.  I concur with Chancellor Ward that this is inappropriate-- the Legislature has much on its plate, and should allow the UW System Board of Regents the opportunity to convene a full discussion of tuition issues and make its own policies.  There are many ways for various constituencies to make their case to the Regents for keeping tuition very reasonable for Wisconsin residents, and the outcome will have more political legitimacy if done this way. Second, I understand that some chancellors want to have the flexibility to set tuition devolved to their own campus-- rather than have the Regents set it. This is not something Chancellor Ward is arguing for-- in contrast to his predecessor, and to the chancellors of Milwaukee and Stevens Point, he concurs that tuition-setting is an important function of university systems.  Finally, one last point-- anyone who claims that an access agenda is antithetical to an educational quality agenda is caught in the old Iron Triangle rhetoric, and needs to get up to speed.  Access (including diversity) is a key element of quality, and providing quality without access is no way to secure our children's future.

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Is Higher Tuition What the Public Wants? And Who Cares?

In a blog over at the Washington Post today, Daniel de Vise raises an interesting question: Does the public want lower (or higher) tuition? He engages with this issue mainly in the context of private institutions, discussing anecdotal evidence from a recent meeting with college presidents.

In a nutshell, here are the highlights of his findings:

1. There is some evidence that the public wants a deep discount on a more expensive product. In other words, families are happier when they get a lot of merit-based financial aid at a high-priced college. Some colleges have found that when they cut tuition, applications drop too, and families complain they aren't getting much aid.

2. There is also some evidence that the public embraces -- even demands-- lower tuition, even thought it means getting less aid. At Sewanee, The University of South, which de Vise highlights, cut its (very high) tuition by 10% and focused efforts on need-based aid, resulting in an increase in applications. de Vise also notes that Sewanee took a key step, first done by George Washington University, freezing tuition for returning students. This prevents surprising hikes in cost from year to year, something that my own research (forthcoming) suggests can alarm students and even induce some to drop out of college.

So what's going on here? How can college presidents say that they must raise tuition because that's what the public wants, while others work to lower tuition, because it's what the public wants?

The answer is quite simple, actually. The "public" doesn't exist. It's an averaged American, comprised of heterogeneous individuals.

Some people equate the price of college with quality. Those are likely the same people who will buy a Lexus, thinking they're getting a better car, even though Lexus and Toyota use the same components. They're thrilled with a discounted Lexus, and have the cultural capital to know that if they go to a dealer and haggle, they might get one.

Other people have negative connotations associated with high prices. They see expensive things as "elitist", "snobby" and most importantly out-of-reach. They don't want to haggle for an affordable price, since they know that when people like them (who don't wear Banana Republic, look white, or speak formal English) walk into a dealership or admissions office, they aren't likely to get a deal. They want the price low, period. Discounting doesn't work for them.

Both types-- and there are nuanced versions of each-- are now part of higher education. But the pricing model, advocated by so many college presidents and backed by evidence produced by economists, is built for the first group-- the We Like Deep Discounts on Expensive Things group. Why? Because it suits the needs of institutions, who want to have more cash on hand, it seems "realistic" given budget cuts from governments and declining endowments, and it's said to be more efficient.

Ok. Let's say that's true (and I worry about the evidence, since much of it is based on studies of students from the 70's and 80s, before tuition went through the roof and disadvantaged students became a large part of enrollments). It doesn't necessarily make it effective policy. The relative effectiveness of the two strategies depends on who's in higher education (who dominates enrollment), what goals are sought, and whose outcomes are more affected by the pricing strategy. If first-generation students are in the I Want It Cheap camp, and they begin to comprise a sizable fraction of enrollment, if the primary outcomes measured are college graduation rates of at-risk students, and if first-generation students are most price-sensitive, then I'm sorry but hiking prices and discounting simply isn't effective.

Thus, the question we ought to be asking is not the one de Vise posed -- Is higher tuition what the public wants?-- but rather, Is higher tuition going to achieve the goals America has set for higher education? If we want to make progress, that's the one we have to get focused on answering.

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Update: Madison Initiative for Undergraduates

Todd Finkelmeyer at The Capital Times offers this update ("UW-Madison chancellor's proposed tuition hike elicits little pushback") on the Madison Initiative for Undergraduates.

At first glance, a key premise of Chancellor Biddy Martin's undergraduate initiative seems absurd. In an effort to make the University of Wisconsin-Madison "affordable to all," she is proposing a tuition increase.

Yet Martin's Madison Initiative for Undergraduates -- the first major proposal of her eight-month-old tenure -- has met with little organized resistance from students, who, in the past, have howled at any attempt to raise the cost of a college education.

"There is a lack of critical thought and a lack of sifting and winnowing, and I'm not sure why," says Noel Radomski, director of the Wisconsin Center for the Advancement of Postsecondary Education, a higher ed think tank based on campus. "Perhaps it's just a reflection, quite frankly, of the lack of true involvement by faculty, staff and students on significant issues on the Madison campus."

The UW System Board of Regents will vote on the proposal at its meeting later this week.

For background on the Madison Initiative from the Education Optimists, click here.

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What is the Evidence on High-Tuition High-Aid Models?

Inquiring minds want to know... and those of us optimistic about the future of education in this country, and the future of our children, are here to provide that service.

Given declining state support to higher education, it's not at all surprising that even the most "public" state flagship universities are considering high-tuition high-aid models-- ones that jack up tuition on all or a subset of students in order to provide more aid to students from lower-income backgrounds. Sounds good, right? Those who can will pay more, and those who can't will get more aid.

As with any policy, especially one so appealing on the face of it, it's worth turning to any available empirical evidence to assess whether it should be enacted. So let's do it.

1. University of Michigan- Ann Arbor began using this model back in 1997. UM is known as the most truly affordable college in the Big 10 by virtue of its gobs and gobs of financial aid. So, is it working? "In 2008, UM reported that tuition has increased 27 percent for incoming freshmen in the College of Literature, Science and the Arts since fall 2004. Tuition cost $10,447... University officials said they've increased financial aid by a greater percentage than the annual tuition increases." But since 1997, the number of low-income UM students has decreased by 10%, while the number of wealthy students has increased by 8%. What's going on? According to the financial aid director at UM “Our cost scares people away… it’s hard for [prospective students] to reconcile that, yes, we may be more expensive, but we give more financial aid."

2. Miami University of Ohio. With a president who understood that unfortunately "high tuition makes people think a school has a lot to offer" this institution raised in-state rates to match out-of-state ones, but also offered automatic grants up to nearly $13,000 to in-staters to offset the cost. The prez promised that net costs for Ohioans wouldn't go up-- that for them costs would remain the same. A year later, applications and enrollment immediately went up. Sounds great, right!? Except over the course of that same year there was an 8 percent decrease in applications from students with high amounts of financial need, and in-state enrollment dropped 13%.

These problems are recognized by the student body at the University of Washington, where a similar model is being considered. See here for an example.

3. Two important facts from financial aid research:

A. Low SES students are particularly price sensitive and have difficulty identifying the amount of aid they can expect to receive (hey, with a FAFSA like that who's surprised?). (See the work of Don Heller). We've never found a successful way to get low-income families accurate info on net cost, so as to influence their choices, early on, before they count themselves out of higher ed.

B. "A $1,000 increase in tuition decreases the attendance rate of low income youth by an estimated 5.2 percentage points more than middle- and high-income youth." (Thomas Kane) If the aid did not match the increases in tuition dollar-for-dollar, not only in theory but in reality, what follows is pretty clear.

Moreover, many of the biggest names in financial aid research and leaders of great public institutions tend to agree. Here are the voices of a few:

Edward St. John (U. Michigan): "The reality of high‐tuition/high‐aid [does] not match the vision advocated by progressives. Institutions leverage student aid to generate tuition revenue, replace tax dollars but adding to inequalities created by the shift in public finance. While rising tuition is a fact of life in public universities, student aid remains ambiguous and uncertain."

University of California System: In 2006, UC declined to go high-tuition/high-aid to protect access for low-income and minority students. UC reviewed the relevant research in advance, and its report declared: "Practically speaking, return-to-aid does not always compensate for the effect of tuition increases. In spite of efforts to increase financial aid in keeping with increase in tuition, high-tuition universities generally do not have student bodies as diverse as their less expensive public cousins....Thus in spite of the University’s excellent intentions and unusual efforts to offset the negative effects of fee hikes, the Compact moves the University toward a high tuition-high aid model that may not be able to prevent reduced access."

Brian Levin-Stankevich, President of Eastern-Washington University: He declined to go high-tuition, high-aid, noting that "the sticker price alone can be a deterrent to even considering college." But, he found an alternative, raising class size and using more technology. (Point of fact: there is no good evidence that smaller undergraduate classes are cost-effective, producing better outcomes worth the price. That said, they are politically popular!)

Patrick Callan: The Miami model, according to Callan, was a “poor execution of a poor idea.” “Everyone thought that high tuition, high aid programs worked well until we heard from privates about their issues with access for low-income students,” said Callan. “It would be a serious mistake for schools to look at the Miami situation and conclude that this is the best way to help low-income students.”

Bruce Johnstone notes that actually translating high tuition into high aid is operationally complex and hard to implement. It would also be hard to know if a university wasn't actually spending the money in that way. Other research, by Griswold and Marine supports this -- tuition pricing and aid allocations are often poorly coordinated.

And just for balance here are the voices of advocates of high-tuition/high-aid models...

James Garland, Miami University of Ohio. “Imagine if there were, in its place, a food subsidy program by which the government paid that $27 billion directly to supermarkets. Under such a program needy families would benefit little, because most of the savings would be passed on to customers who didn't need help. That would be an inefficient use of public money. But this is precisely what happens in public higher education. When states pay their universities to hold down tuition charges, they are indirectly subsidizing wealthy and poor students alike."

Ron Ehrenberg of Cornell University. A recent article about the Madison Initiative quoted Ehrenberg as saying "it’s to be expected that flagship institutions will have to borrow from the private model to maintain quality in an environment of diminishing resources. That said, there are potential pitfalls. “This [increase] is actually going to hit a relatively large fraction of the students, and the downside risk is that there may turn out to be a lot of political opposition to it,” said Ehrenberg, a professor of economics. “There’s always sort of the fear that if you raise tuition you’re going to lose public support, and that’s going to make state appropriations go away even faster,” he added."


Research by Jim Hearn and others has shown that time and again this model becomes popular under conditions of financial stress. But stressful times are times to get creative, to think harder about efficiencies, and to take unpopular stands. They are not the time to leave the poorest citizens among us out in the cold, while we "save" our own children, and our own behinds.

Postscript: I give tons of credit to the Economic Opportunity Institute for a very good brief on the topic.

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