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Universities Win with Guaranteed Tuition

Recently, as attention focuses on the rising cost of college tuition, some colleges have been moving to some form of a guaranteed tuition model. It ensures that the nominal price a student (or a student’s parents) will pay for four years will not increase from year to year. Supporters say that it helps parents plan for the student’s financial needs.

A guaranteed tuition plan takes the expected tuition total for four years and divides by four to get the annual payment. It means students pay more in the first two years than they would under an unbounded tuition system, and less in their last two years.

Who does this help? In at least one significant way, universities. According to the National Center for Education Statistics almost 41 percent of students fail to graduate within six years. Of those, consider drop-outs or transfers during the first year. They will pay some percent more for the year that they are enrolled than they would under a traditional tuition system the schools capture a premium on those students. Under a guaranteed tuition system, the schools are not incentivized to push out students, but for students who drop-out or transfer, schools collect higher tuition revenues. Statistics show that failure to complete is higher for minority and low income students, exacerbating this problem.

For instance: Ohio University will be moving to a guaranteed tuition system in Fall 2014 for the class of 2018. Under the current system, the National Center for Education Statistics tuition calculator estimates a 2.8 percent annual tuition increase for a four-year in-state total of $44,845. A guaranteed tuition model would charge $11,211.25 per year rather than $10,744 the first year, $11,050 the second, $11,364 the third, and $11,688 the fourth. When we consider the full-time first-time enrollment and a first-year retention rate of 79 percent, the university will make an additional $500,000 with a guaranteed tuition model on the freshman year transfers and dropouts alone. This does not even include those that transfer or dropout after their sophomore year.



Source: U.S. Department of Education, author’s calculations.

*Ohio University

By guaranteeing tuition a university ensures that annual tuition payments will not increase. This allows for families to better plan their financing. These students will pay an above cost price the first two years, and below cost price the latter two. Each cohort of students faces a different price that reflects the average cost of attendance over the next four years. The University captures more on students that leave, drop out, or are awarded scholarships for later years in their first two than they do under a non guaranteed system, and this difference can be significant.

The Inherent Difficulty of Measuring Teacher Quality

Posted on May 20th, 2014, by 2 Comments

The primary purpose of colleges and universities is to educate their students, and it’s necessary for professors at these institutions to teach effectively. Evaluating the teaching quality of professors allows students to make better decisions about which classes to take and incentivizes good teaching. Schools usually evaluate teaching quality in three ways: standardized testing, the success of students after graduation, and student evaluations. However, no method can be objective, and although subjective reports can be useful for students, systematically incentivizing good teaching is next to impossible.

Standardized testing has been implemented at the K-12 levels of education to measure teaching quality, starting with the No Child Left Behind Act, but that has had mixed results at best.  There’s no evidence to think that it will have more success on the post-secondary level. However, there are compelling reasons to think that implementing it would have negative consequences. It will result in a higher homogeny of knowledge among students and narrow the possibilities for coursework down to the absolute necessities. Additionally, it will incentivize professors to teach for the test instead of comprehension of the material. Most significantly, it will impair the abilities of less privileged students to attend college, since the institutions will only want students that are certain to perform well.

Measuring teaching quality through graduate success poses problems, as it is institutional, not individual, feedback, and doesn’t account for the effect of the individual student on  outcomes. Additionally, good teaching does not always result in post-graduate success. Some courses do not correlate to material well-being, no matter how well they are taught.

Student evaluations are the least of the three evils, as they offer direct information about teachers. For potential students, knowing how other students view a professor helps them assess the value of a class. Yet one can already see the main complication from a website such as Rate My Professors: selection bias. Only students with strong opinions about the teacher will submit a rating. Mandating them won’t fix the problem either, as students who have no interest in providing feedback will not evaluate a professor accurately or fairly.

To resolve the issue, Rebecca Schuman at Slate suggests attaching names to student evaluations. Accountability might increase the amount of care put into evaluations, but it does not resolve the fundamental problem of student bias. Additionally, it will discourage negative feedback and constructive criticism. If a student is going to take a teacher again (which is fairly likely if they major or minor in the professor’s department), they do not want to stress their relationship with a critical evaluation.  If evaluations cannot be negative, they are pointless.

While student evaluations might help other students choose teachers and classes, none of the three methods are sufficient if we want to have objective measure of teaching quality. Although it’s very important for schools to be able to ensure that their professors are teaching effectively, more complex methods will have to be implemented to determine the quality of a teacher. Teaching quality is an essential part of a professor’s job, and one might think that they should have their teaching evaluated and be rewarded based on those results. Although the sentiment is sensible, the inherent bias precludes the use of teacher evaluations to incentivize better teaching in higher education.




The Over-Qualification Epidemic

Posted on April 30th, 2014, by 2 Comments

by Christopher Denhart and Joseph Hartge

Earlier this year, the Bureau of Labor Statistics released the 2012-2022 employment projections report, analyzing the employment landscape and its relation to education attainment.  It concludes that over half of United States workers over-qualify for their work.

Using the data, we can distinguish between the level of education “typically required for employment” in a particular occupation and the number of people at various levels of education who have that job. A total of 52.6 percent of employed people are overqualified for their job, meaning that their highest level of education exceeds the average requirements for that job. So don’t be surprised if your taxi driver is as educated as you are. One out of 20 holds a bachelor’s degree or higher, and 85 percent have at least a high-school education.  The BLS says that this education is unnecessary for the job.

Being overqualified for a job carries an opportunity cost. If a graduate waits tables at a restaurant, he forfeited four years of wages to pay tuition. But fear not: he should rest assured that he is in good company, with 354,330 other graduates.

Most people do not plan to take those jobs. The condition of the labor market plays a role in labor outcomes. Many who, out of desperation, take jobs that don’t require a degree search for better employment as they work. However, this phenomenon, known as frictional unemployment, does not seem to explain the pernicious underemployment problem.

Are college degrees still as strong of a signal for employers as colleges claim? Is the labor market flooded with degrees? If so, is it the specific degree’s fault or because companies are not hiring? Most importantly, why is this problem so persistent?

Most likely, it’s signaling. Regardless of whether a job requires a degree, an employer is likely to choose the more educated applicant. The degree conveys information to the employer which is otherwise costly to obtain. For example, a bachelor’s degree serves as an indication of work ethic, discipline, and general intelligence, while a high-school diploma might indicate laziness or a lack of ambition. Even if that is a misrepresentation of the applicants, or if the job does not require a degree, a college graduate is usually a safer hire than a high-school graduate. That reasoning crowds out qualified applicants who lack a degree, and they trickle down to jobs that they are overqualified for. When there is nowhere to trickle down, underemployment and unemployment rise.

The popular line is that unemployment rates decline and income increases with improved education. Therefore, college is the only way for a high-school graduate to prosper. But not necessarily.  No law of economics says a college degree is a ticket to success, nor should we treat it as one.

The fact that many graduates are in positions that don’t require a degree suggests that too many people attend college. Combine that with rising tuition costs, one trillion dollars in federal student loan debt, and a college incompletion rate of approximately 40 percent, and it’s an equation for an economic disaster in education.

How Not to Criticize College Rankings

Posted on April 15th, 2014, by 1 Comment

When a college ranking is released or updated, backlash inevitably follows. Usually, colleges who performed poorly lead the charge, but it’s also a reaction against a root issue. Higher education is so diverse that it’s impossible to objectively compare schools.

Which is great! Diversity gives students a wide swath to pursue their education. Universities can achieve different goals. Would the system be better if students were limited to Harvard or the local community college? Yet, as a result, any metric or ranking will be of limited use in comparing some schools. Community colleges, liberal arts colleges, and state research universities don’t expect the same from students, and it is tricky to measure them on an equal footing.

So, when  Jordan Weissmann at Slate noted a new return on investment (ROI) metric released by, criticism of using an ROI metric came swiftly. Unsurprisingly, Weissmann found many colleges with a negative ROI; that is, the graduate would be better off if he or she didn’t attend. Weissmann then wrote a rebuttal to the criticism.

On a certain level, not addressing the concept of college leaves those discussions fruitless. College falls into three categories: economic, hedonic, and intellectual. It’s used for job training, but it’s also viewed as a consumption good to enjoy, and a process of self-fulfillment in the pursuit of truth and knowledge.

Payscale’s ROI figure treats college as job training. Weissmann evaluates Payscale’s usefulness with that lens.  The best argument against that is not “college isn’t just about getting a job.” It’s to point out the limitations of one metric. In fact, a ROI metric is relatively weak due to data limitations. Colleges resist transparency, especially for information about graduate earnings, and Payscale uses self-reported data. That’s problematic, but more useful than anything legally available at this point until higher education institutions provide the information. Otherwise, we’ll remain standing on the quad surrounded by fog.

I’m not sure Payscale claims to present an all-encompassing ranking; criticisms of their rankings reveal more about the critics than the target.

The Political Decisions That Make or Break Unionization

Posted on April 10th, 2014, by 1 Comment

In 2004, the National Labor Relations Board ruled that graduate teaching assistants do not have the right to unionize, overturning a 2000 decision. Both rulings appear to be decisions of politics over pragmatism. During the earlier decision, Democrats comprised a majority on the board, but, by 2004, it swung to the Republicans.  Both rulings are consistent with the opinions of the majority at the time: the Republican Party has a far less sympathetic policy on unions than the Democratic Party. Unsurprisingly, in the 2004 decision, the two Democrats dissented, as did the Republican in 2000. The National Labor Relations Act, however, does not leave room for interpretations about what groups should be able to unionize. Rather, it necessitates a factual determination of whether those seeking to unionize are employees.

The question of whether graduate teaching assistants are employees is difficult to answer. The NLRB noted in their 2004 decision that graduate teaching assistants primarily hold an educational relationship with their schools, rather than an economic relationship as one might expect for someone to be considered an employee. That observation was the basis on which they ruled. In light of the 1999 decision on the Boston Medical Center Corporation, this contrast between the types of relationships is irrelevant to their determination. The board (Democratic at the time) ruled that although medical interns, residents, and fellows are students, they are nonetheless employees. By the same token, teaching assistants who have mainly academic relationships with a university does not prevent them from being employees.

The inconsistency of the 2004 case with the 1999 and 2000 decisions suggests that the change in rulings is not a product of difficulty in determining whether students can be employees. Instead, it seems that political opinions drive interpretations of the laws that govern the rulings. If the NLRB makes decisions about the legality of groups’ unionizations, they should rule on the basis of the law, not their political affiliations. Although it is absurd to expect the board members to make decisions completely free of bias, they should at least attempt to interpret the existing law rather than creating their own.

Students Unionizing within the NCAA and the University

Posted on April 1st, 2014, by Leave a comment

Last Wednesday, the National Labor Relations Board ruled that college scholarship football players at Northwestern University can unionize. This ruling stands in contrast with their 2004 decision that prevented graduate teaching assistants from doing the same. To justify the inconsistency, the NLRB listed several differences between scholarship athletes and graduate teaching students.

However, none of their claims held relevance to whether football players or graduate students should be allowed to unionize. If they work in exchange for compensation, then they should be able to negotiate together for better working conditions. If they do not, then the NLRB has no need to prohibit unionizing, as they wouldn’t have anything to hold against the universities.

Rather, the NLRB should leave both parties to negotiate as they wish to make an agreement. Instead, it drew arbitrary lines between graduate students and student athletes, harming the working conditions for graduate teaching assistants.  The decision might open the door for graduate teaching assistants to challenge the 2004 ruling and change the precedent, but the trouble will remain from NLRB meddling.

Finland: The Higher Education Model of the Future?

Posted on March 31st, 2014, by Leave a comment

The Nordic approach to education is in vogue. Numerous articles and blog posts have touted the benefits of Norwegian schooling, and the UK has implemented Swedish methods into its classrooms.

A recent article on The American Conservative asserts that Finland in particular sports a more conservative — and effective — educational model than the U.S., defying the standard of liberal support for Nordic methods. If that evaluation seems dubious, consider that Finland has earned high marks on the Programme for International Student Assessment (PISA) over the last decade. While Finland ranked 12 out of 65 countries in 2012, the U.S. ranked a more modest 36.

Foremost among the Finnish system’s unique traits is its lack of high-stakes standardized testing. Finnish students take a few national tests for assessment purposes, but none that holds a student back a grade or puts a teacher out of a job. The No Child Left Behind Act, a model of American educational orthodoxy, uses standardized testing to restructure and close low-scoring schools. Resistance to high-stakes testing is growing in the U.S. as budget cuts force schools to curtail extracurricular and advanced-learning options to focus on test preparation.

The suggested “conservatism” of Finland’s schools reveals itself in the nation’s focus on the individual. Finnish public educators are expected to create their own tests to assess their students’ performance, allowing better interaction between teacher and pupil. Students, schools, and regions don’t compete for subsidies. Teachers and principals perform inspections without federal oversight, and educators determine curricula locally.

Other aspects of Finnish education would seem fantastic to American schoolchildren. In Finland, students spend 300 fewer hours in school per year than the average American. Teachers assign little homework — less than any other industrialized nation — and recess lasts almost an hour. Contemporary psychology has suggested that individual expression through play provides the necessary skills to solve real-world problems better than hours behind a desk.

Teachers in Finland hold a similar social position to lawyers and doctors — and they have the earning potential to back it up. Incentives matter. However, earning a teaching position in Finland is far more competitive than in the U.S. While more than 1,500 teaching preparation programs exist in the U.S., only one is recognized in Finland for their 14 universities and 24 polytechnics. Only 15 percent of applicants are accepted, and they receive a free education and a living stipend.

Finnish higher education institutions have independence that American colleges can only dream of:

Thanks to the reformed Finnish Universities Act universities gained an independent legal status as corporations subject to public law or foundations subject to private law. This increased the autonomy of the universities further and gave them more latitude in the management of their finances.

The conservative label only goes so far in Finland. The state provides all schooling, including higher education. Even so, Finland administers public education more efficiently than the U.S. In 2012, the Nordic nation spent $7,500 per student to our $8,700.

Some caveats: Finland’s education model might not transfer well to America’s hulking university system. Finland is a much smaller, less populous nation than the U.S., and comparatively homogenous..Culture, tradition, and national policymaking in the U.S. could make implementation and sweeping change much more difficult, expensive, and ineffective.

Despite those differences, Finland can still school America in a few subjects. Raising the entry barrier for K-12 teachers ensures that our children learn from the best and addresses the glut of graduates vying for scarce teaching positions. Transferring administrative power from career politicians in state capitols to local educators encourages parents to interact with teachers and participate in decision-making.

Additionally, further research should be conducted to determine the efficacy of shorter class durations. Changes in class workload and conduct should also be considered.

Although the importance of Finland’s PISA score might be debated, the northern nation’s efforts to support the individual across all levels of its educational system offer a thoughtful alternative to the American method of teaching through standardization. If nothing else, America should notice Finland’s climb from educational mediocrity to excellence over the course of a decade.


The Underestimated Value of Liberal Arts Degrees

Posted on March 17th, 2014, by 1 Comment

The subject matters of arts and humanities, like philosophy and English, are often viewed as being too far removed from daily life to be useful outside of the academic world. Marc Andreessen, founder of Netscape, claims that a student not in a STEM field (Science, Technology, Engineering, and Mathematics) will likely “end up working a shoe store.” Hunter Baker, Dean of Instruction at Union University, however, argues that abilities to think critically and contextualize new information are necessary to long-term business success; according to Baker, arts and humanities cultivate such skills.

Melissa Korn at The Wall Street Journal lends some credence to Baker’s claims: liberal arts majors with post-graduate degrees make $2,000 more than their professional and pre-professional equivalents at the peak of their careers. The Huffington Post provides a list of successful arts and humanities students, all of whom work outside of academia. In addition, data from the Educational Testing Service show that liberal arts students score significantly higher than any other field in both the verbal and analytical writing sections of the GRE, and philosophy students outperform accounting students in the quantitative section.

Despite the academic and business success of liberal arts students, they earn on average far less than engineering students at any equivalent level of education and experience. They also earn less than physical science students at the peak of their respective careers. However, the value of STEM degrees might be overestimated. Robert Charette of IEEE Spectrum claims that the market does not need STEM-specific skills, as there are 11.4 million STEM degree holders working in non-STEM fields and only 277,000 vacancies in STEM-specific jobs. Rather, the critical thinking and problem solving skills taken from those fields provide value and can be acquired just as well—if not better—through a liberal arts education.

Liberal arts degrees such as English, philosophy, or history are not useless or esoteric. Although the knowledge gained through their study might not be directly applicable to any field or job, the frameworks for learning new skills and information obtained from them are useful in any context. Contrary to popular wisdom, degrees in arts and humanities can be used as practical tools for success outside of academia.

Law Schools Fiddle while Rome Burns

Posted on February 25th, 2014, by 1 Comment

Long seen as a path to success, law schools have taken a hit in enrollments and guarantees of success. As students notice the disconnect between the costs and benefits of more education, things continue to worsen for many law schools. Enter Thomas M. Cooley Law School, a low-ranked diploma mill (by most measures at least) with campuses in Michigan and Florida.

The National Jurist reports that Cooley’s enrollment decreased 40.6 percent from 2010-11 to 2013-14. While Cooley’s numbers are especially troubling, almost all law schools are hurting: the Wall Street Journal notes that enrollments fell 11 percent across the board in 2013. Many institutions have recognized flaws in their business model. A majority of schools have reduced class sizes. Some have cut faculty.

Cooley, however, doubled down on its controversial practices.  The law school has “not made any adjustments to curriculum or faculty.” Paul Zelenski, Cooley’s associate dean of enrollment and student services, states that “Cooley has been active on the recruitment scene by adding new programs and events to attract students when the market recovers.”

Zalenski admits that law schools must “[find] ways to reduce the cost of a legal education,” though some observers doubt administrators’ sincerity. For example, Staci Zaretsky at Above the Law criticizes the supposed commitment to affordability at Cooley: “[I]t currently costs $43,500 per year to attend this bastion of legal education. Gee, that’s only $9,160 more than what it cost to attend the school last year ($34,340), and $8,850 less than it costs to attend one of the other second-best law schools in the nation (Harvard, $52,350), so it seems like Cooley is doing a real bang-up job with this cost-control concept.”

While the situation is most dire at law schools, Cooley’s troubles may be a portent of things to come for many colleges and universities. Tuition and fees have been rising at staggering rates despite stagnating enrollments and disappointing graduate outcomes. Cooley and many struggling colleges and universities continue to ignore market realities. It seems unlikely that such practices will be viable in the long run.

What Colleges Can Learn from Twitter

Posted on February 12th, 2014, by 1 Comment

In recent news: Twitter is doing more for transparency than most universities.

In a company blog post, the social media giant unveiled Twitter Data Grants, which will “give a handful of research institutions access to [Twitter’s] public and historical data.”

According to The Chronicle of Higher Education, “Scholars mine Twitter to track how voters view politicians, how the public reacts to antismoking campaigns, even how people’s moods change through the day.” By providing researchers with access to its data sets, Twitter advances scholarly analysis through greater transparency. Many colleges and universities, unfortunately, continue to fall behind.

A recent press release by the Student Press Law Center (SPLC) points out that many institutions have failed to comply with federal and state disclosure laws in a timely fashion. Moreover, most schools fail to record, let alone disclose, important data regarding faculty, students, and alumni.

Lack of transparency has fueled a growing disconnect between universities’ claims and graduate outcomes, as Richard Vedder notes:

We know little about some fundamental questions. Are the students at the University of Colorado learning more than those at the University of Kansas? Are they learning more now than five or 10 years ago? These and other schools are either clueless as to the answer, or if somewhat knowledgeable, they typically keep the findings a secret. Public comparison with peer schools is considered bad form by the university presidents I know. Trustees are usually part-time cheerleaders for the institution, not hard-nosed representatives of the public demanding accountability, efficiency and transparency.

Until administrators are willing to collect and publish important data—including alumni debt loads and average salaries—we can expect continued overestimation of the value of higher education for many consumers. Perhaps colleges and universities can look to programs like Twitter Data Grants for inspiration.