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University Of Texas at Austin President Saved By His Rolodex

Posted on July 22nd, 2014, by Leave a comment

First appears on Forbes.com on July 11, 2014 here.

As public university presidents never seem to leave their high-salaried positions, the University of Texas at Austin has agreed to keep their controversial leader for another 11 months. On Wednesday President William C. Powers Jr. and University of Texas System Chancellor, Francisco G. Cigarroa came to an agreement extending Powers’ tenure. A formal “resignation” will take effect June 2, 2015. According to the Chronicle of Higher Education, it was Powers’ supporters who helped him sidestep Cigarroa’s ultimatum, “resign by July 4, effective October 31, or be fired.”

Powers came under fire from Governor Rick Perry in 2008, challenging Texas Universities to decrease the cost of degrees by cutting waste. The Chronicle explains that Powers responded by seeking out Perry’s political supporters to in the University Development Board to destabilize the Governor’s political security. As he diminished the Governor’s position, he secured his own. Powers credits this support with having a big influence on the outcome.

Governor Perry, however, was slow to notice spending levels in Texas. In 2011, CCAP criticized the University of Texas system for its wasteful spending. From the executive summary:

Recently released preliminary data from the University of Texas strongly suggest that the State of Texas could move toward making college more affordable by moderately increasing faculty emphasis on teaching. Looking only at the UT Austin campus, if the 80 percent of faculty with the lowest teaching loads were to teach just half as much as the 20 percent with the highest loads, and if the savings were dedicated to tuition reductions, tuition costs could be cut by more than half.

On July 8th, Richard Vedder weighed in for Minding the Campus, speculating that Powers might receive a one-year extension as a face-saving alternative while the system searches for a replacement. Vedder said that if the school wants to enjoy autonomy from the board of regents and governor, it should consider becoming a private institution. Supporters of Powers’ spending practices claim that UT-Austin receives 12 percent of its money from the state; if public support is such a low percentage, perhaps it’s best for all parties involved for the university to privatize.

If Powers was able to override this first “coup” attempt with four days of the initial resignation demand, don’t be surprised if June 2nd, 2015 is not the last we see of President Powers in office. All the while, University of Texas students suffer from increasing costs that serve to protect the research prestige of the university, rather than promote academic advancement and learning.

Vedder, Robe on Right to Work

Posted on July 22nd, 2014, by Leave a comment

In a study for the Competitive Enterprise Institute, The High Cost of Big Labor: An Interstate Analysis of Right To Work Laws, CCAP Director, Richard Vedder, and former Research Associate, Jonathan Robe, analyze the effects of right to work laws on state economies. The Conclusion: “RTW (Right to Work) states tend to be vibrant and growing; non-RTW states tend to be stagnant and aging.” You can read CEI’s story on this publication here.

 

 

The One Percent: The Corporatizion of American Higher Education

Co-authors Andrew Erwin and Marjorie Wood discovered student debt and low-wage faculty labor rose faster at state schools with the highest paid presidents than the national average. Moreover, administrative spending surpassed scholarship spending by more than 2 to 1 as full-time faculty declined as a percentage of full-time equivalent (FTE) faculty.

Following the fall 2008 financial crisis we expect to see drastic reductions in overall pay – especially at the executive level. This is not the case. In the “top 25” presidential pay rose from $727,002 in 2009 to $974,006 in 2012 – an average inflation-adjusted increase of 34 percent in only 3 years. Comparatively, the American Association of University Professors reports full-time professorate pay at public and private research universities rose 2.2 percent and 7.2 percent, respectively, from 2007-08 to 2013-14.

Ohio State University Tops the list of the "One Percent" of Colleges

Ohio State University Tops the list of the “One Percent” of Colleges

The growing disparity between top 25 executive and faculty pay illustrates that universities are becoming more corporate. Accordingly, the AAUP opines:

Disproportionate salary increases at the top…reflect the abandonment of centuries-old models of shared campus governance, which have increasingly been replaced by more corporate managerial approaches that emphasize the “bottom line.”

Professional employees are now the largest group of non-instructional staff on campus. The Delta Cost Project estimates these positions (Business analyst, human resource officer, admissions officers among others) rose, on average, 2.5 to 5 percent per year between 2000 and 2012 and now comprise nearly one fourth of the on-campus workforce.

Administrative spending has similarly been disconcerting. Spending per student for administration had increased 61.2 percent between 1993 and 2007 according to a recent Goldwater report. CCAP backs this claim, showing that college administrative expenditures have grown faster than educational expenditures. Benjamin Ginsberg, professor of political science at Johns Hopkins University, griped that administrative spending between 1947 and 1995 had increased 235 percent, inflation adjusted.

These complaints have been overlooked while the growing rift between faculty and administration poses a threat to higher education. Faculty are upset seeing their universities increase administrative spending and power. Administrators respond by suggesting increasing enrollments and heavier federal mandates are to blame. Whatever the cause, higher education is no longer an institution – it’s an enterprise.

Richard Vedder and Alan Krueger Debate Minimum Wage

Dr. Richard Vedder and Dr. Alan Krueger of Princeton University’s and Former Council of Economic Advisers Chairman weigh in on the minimum wage debate on “Bloomberg Surveillance.”  Vedder claims “there will be some gainers to be sure, there will be some people who will make two or three or four dollars per hour more than they are currently making and they will benefit, but there are others that may go from employment, to unemployment.”  Dr. Krueger’s research shows “moderate increases in the minimum wage primarily help low wage workers.”  The question remains, what is moderate, and where is the inflection point at which increases in minimum wage in turn decrease the welfare of low wage workers. 

Watch the video from Bloomberg TV below:

Policies to Puncture the Student Loan Bubble

Richard Vedder participates in a panel discussion, moderated by the American Enterprise Institute’s Alex Pollock. Together with Andrew Kelly of AEI, Matt Chingos of Brookings Institute, and Jason Delisle of New America Foundation, Richard Vedder discusses how the current federal financial aid system has directly led to increased costs of college tuition.  Richard points out eight deficiencies with the current financial student assistance programs, which are discussed at length in the recent CCAP study: Dollars, Cents and Nonsense: The Harmful Effects of Federal Student Aid.

“What if that rate of tuition increases had continued after 1978 instead of the 3 to 4 percent increases actually observed? What would tuition fees be today? About 59 percent lower. State universities charging $10,000 in-state fees (a common fee today) would instead be charging a bit over $4,000.”

View the full discussion below.

Humanities Doctorates: High Risk, Low Reward

Posted on June 26th, 2014, by Leave a comment

To some, pursuing a degree in the humanities is a noble and laudable pursuit. Be it in English or comparative literature, the analysis of humanistic study can expand human knowledge and understanding. However, as the Modern Language Association (MLA) reports, doctoral programs in the discipline may prove more damaging than previously envisioned. With a median time-to-degree of nine years, sparse job market, and limited funding, the field has fallen into serious academic jeopardy.

Doctoral students in the humanities spend on average 9.2 years to complete coursework. Between 2006 and 2010,  nearly 44 percent spent more than ten. Delayed workforce entrance, family planning, and financial security have all come at the expense of the program, and compared to other advanced degrees – such as a MD, JD, and MBA – a nine-year crash course might seem particularly unattractive.

According to the National Science Foundation’s 2012 Doctorate Recipients from U.S. Universities and Colleges, roughly 1,928 of the 5,503 humanities doctorates surveyed – or 35 percent – are “seeking employment or study.” Additionally, the academic job market, which employs 82.8 percent of doctorates, is declining. According to the MLA’s Job Information List (JIL), tenure-track positions in the humanities have declined sharply since the 2008-09 academic year. Today, fewer than 30 percent of faculty hold tenure or are on the tenure track.

Federal support for the humanities has similarly been disconcerting. According to the Humanities Indicator Project, spending in the humanities equaled 0.48 percent of science and engineering expenditures while academic institutions covered more than 55 percent of expenses. Doctoral students now incur more than $20,000 in student debt.

Reforming the humanities doctorate by limiting degree completion and encouraging careers outside academia can ease uncertainty. Students can benefit by broadening the conventional job market and incurring more tenable debt. The future of humanistic study nonetheless rests on its vindication, and until more serious measures are taken, its legitimacy will remain in doubt.

New CCAP Study on the Harmful Effects of Federal Student Aid

Posted on June 25th, 2014, by Leave a comment

With Dollars, Sense, and Nonsense: The Harmful Effects of Federal Student Aid, CCAP provides an in-depth analysis of structural issues within higher education, the incentives produced by the federal student financial aid system, and offers reforms and solutions to improve college.

From the introduction:

The federal government was once almost nonexistent in higher education. Now, it plays an important role in financing attendance at America’s colleges and universities, and funds vast amounts of collegiate research. The intentions of those responsible for expanding federal involvement in higher education were admirable, although the Higher Education Act of 1965 was part of a Great Society effort to solidify  and expand the progressive wing of the Democratic Party in determining national public policy. Beyond politics, however, most advocates of an expanded federal role wanted to use higher education to improve educational opportunity for those of modest financial means, thereby increasing economic opportunities and narrowing differences between the affluent and the poor.

After reviewing the various federal programs that evolved to assist college students, we conclude that they have largely failed. For example, the proportion of lower-income recent college graduates is lower than when these programs were in their infancy. The programs are complex and Byzantine, leading to forms such as the FAFSA (Free Application for Federal Student Aid), whose very complexity has reduced participation by low-income students. The law of unintended consequences has reared its ugly head.

 

For more information and an overview of main points, see the study’s research page.

A New University Mantra: Publish or Perish

Posted on June 19th, 2014, by Leave a comment

With the advent of the student loan crisis and the inflationary cost of college, one would be hard-pressed to find a more opportune time to eliminate marginal research programs which have plagued higher education. As the federal government funds almost 60 percent of university research, universities and campus administrations have pushed faculty to produce an exorbitant amount of research.

To be sure, federal grants have led to significant advances in the health and sciences. From World War II to the Cold War, it can be argued that erudite scientific inquiry helped set the stage for American preeminence at the turn of the century. By 2005, more than half of all leading researchers and Nobel Prize laureates belonged to American university faculties.

Scholarly research, however, comes with a price tag. Lower teaching loads, increased discretionary time, and the de-emphasis of instruction have been unintended consequences. Between 1988 and 2004, for instance, it is estimated that teaching at loads at research universities dropped 42 percent. What’s more, faculty members, responding to incentives, succumbed to a “publish or perish” mentality where quantity beats quality. In the field of English and foreign literature, for example, scholarly publications rose from 13,757 in 1959 to around 70,000 in recent years.

The dilemma arises when paltry research is subsidized. According to Derek Bok in Higher Education in America, a remarkable 98 percent of all articles in the arts and 75 percent in the social sciences are never cited. What’s worse, departmental research tends to be highly specialized, bearing little relevance to undergraduate learning. Through nationwide emphasis of research over instruction, universities have fostered an environment which stresses scholarship over student.

The best way to combat the increasingly deleterious effects of trivial research might be to reexamine its purpose. If English professors, for instance, are more effective in the classroom than in the library, the impetus to publish should be reconsidered. Departments which systematically favor research to instruction should reassess the purpose of their mission to determine if departmental literature is the most salient route. In the meantime, however, the federal government should reevaluate how it finances academic inquiry. The most germane solution might be the simplest – namely, the reallocation of funds to more relevant disciplines. In doing so, the government might just make research – and college – more affordable.

 

 

 

 

A College Ratings Scheme Can’t Make the Grade

Posted on June 9th, 2014, by Leave a comment

The Obama administration plans to release a federal rating system of colleges with an unspecified launch date to measure the benefit of attending a specific college. They hope to use it to determine how much financial aid colleges receive. Regardless of the quality or accuracy of the system, tying financial aid to it is incredibly problematic.

The president argues that colleges often act in their own interest to improve their rankings, and that the federal rankings will ameliorate that effect. Tying financial aid to rankings, however, will exacerbate the problem. The huge financial incentives (the ability to attract more students) offered by financial aid will make colleges aim for high scores, even if they don’t improve any outcomes for students. Then, as students will have more money available due to higher financial aid, colleges will be able to increase their costs to students: financial aid actually increases costs since it increases the students’ ability to pay through scholarships or, more commonly, loans, and thus, colleges can charge more. Even if the rating system accounts for affordability —which it almost certainly will, as increasing affordability is the main goal of the system — it will always be possible to hide costs, such as having cheap and  low-quality housing in their price estimation but charging students more for higher-quality housing.

The administration’s overconfidence does not engender any hope for the quality of the system— Jamienne Studley, a Department of Education official, claimed that rating the higher-education system is “like rating a blender.”  As Reason’s Bobby Soave points out, the claim is absurd. Unlike blenders, colleges are expected to perform several tasks—house and feed students, teach them huge varieties of knowledge, help them get employment, etc. While a blender will blend the same regardless of the quality of fruit, the outcomes from college depend heavily on the characteristics of the student enrolling. If the administration thinks that a college can be rated as easily as a blender, their rating system will be oversimplified and offer no real information.

Rather than increasing college accessibility, the proposed system will encourage colleges to reach their metrics without actual improvement. Additionally, given the simplistic approach that seems to be taken on the ratings, the metrics it sets forth may not even be worthwhile goals. Most problematically, by tying financial aid to the ratings, the system will increase already overinflated college costs.

 

 

 

 

 

Senate Budget Committee on Student Financial Aid

Posted on June 6th, 2014, by Leave a comment

Last Wednesday, Richard Vedder testified at a Senate budget committee hearing concerning student financial aid, debt, federal loan interest rates, and related topics. Video of the hearing is on C-SPAN, but CCAP has Dr. Vedder’s unabridged testimony online. An excerpt follows:

I wish to make three key points this morning. First, the current student loan debt crisis would never have happened had college costs increased at the general rate of inflation. The major cause of the student debt problem is increased university fees –period. To deal long term with this issue, you must address the root cause, namely runaway college cost inflation.

Second, there are many reasons for this university price inflation, some of which are mentioned in this written statement that I submit for the record. But one relevant major contributor to the rise in tuition fees, in my judgment, is the federal student financial assistance program itself. No significant successful solution to the problem of rising college costs can occur without rethinking the magnitude and nature of the federal financing role.

Third, we are at or near a tipping point, where fundamental change will come to higher education. Early indications are that these changes are starting to happen. I will elaborate a bit on this. I will argue that many policy proposals gaining prominence these days do not fundamentally address the problems leading to big changes, and, indeed, they would likely worsen rather than improve the existing situation.