On Forbes, Richard Vedder discusses the ever-increasing rise of tuition, and the possibility of liberal-arts colleges going bankrupt:
Colleges have so far gotten away with their price hikes by making it easy for students to borrow money. But now the customers are tapped out. They owe $1 trillion, and they are having a rough time repaying that debt with the kinds of jobs available in today’s economy. Vedder notes that 115,000 janitors have bachelor’s degrees.
Kiplinger’s focuses on college rankings and the best values from public college, and quotes Richard Vedder:
The outlook for new grads isn’t much better. Many recent graduates are swapping mortarboards for part-time or low-paying jobs, while tackling student debt. “The notion that college is a ticket to a good, middle-class life of prosperity is perceived to be less true today,” says Richard Vedder, of the Center for College Affordability and Productivity. Still, a typical college
grad can expect to make about $20,000 more per year than the typical high school graduate.
The Chronicle of Higher Education has an article on the number of administrtors necessary for a university (and whether “administrative bloat” actually exists). They quote Jonathan Robe and CCAP’s May study of the University of Nebraska system:
Even when academic programs aren’t in danger of elimination, “administrative bloat” can be an issue, says Jonathan Robe, a research associate at the Center for College Affordability and Productivity. “It takes away resources from the research, teaching, and public-service mission of the university and diverts them to other areas of spending that don’t have a direct relation to those core missions,” he says.
Mr. Vedder says he joked at the time of the report’s release that if he stretched all the system’s excess administrators end-to-end, they would extend from the steps of the state Capitol across the Cornhuskers’ Memorial Stadium football field. “Everybody laughed,” he says. “But no one disagreed with my calculations.”
Before the end of the year, Richard Vedder published an op-ed in Bloomberg on research universities and their overblown assumptions of benefits:
U.S. total research spending was estimated at $436 billion for 2012, in a forecast done by the Battelle Memorial Institute, absorbing $2.85 of every $100 of U.S. output. What may come as a surprise is how little of the work is directly financed by universities themselves — about 3 percent of the U.S. total, according to the National Science Foundation.
Nor are U.S. universities conducting most of this work, either. More than 80 percent of research dollars in the U.S. goes to applied research and development, very little of which
is financed or carried out in university facilities, but in corporate laboratories.
The Des Moines Register interviewed Jonathan Robe for an article on mandatory student fees:
Greater scrutiny of all college costs, including fees, will continue as long as the economy flounders, said Jonathan Robe, a research fellow at the Center for College Affordability and Productivity in Washington, D.C.
Universities can use fees as a way to raise revenue with less public scrutiny than tuition increases receive, or as a way around tuition caps instituted by legislatures in states such as Ohio, he said.
For the 2011-12 school year, Iowa’s universities publicized a 5 percent tuition increase for Iowa students. But at ISU, for example, combined tuition and fees increased 7 percent. The year before, average tuition costs increased 6 percent. But at the U of I, tuition and fees combined jumped nearly 9 percent.
“Public universities know they’ll suffer some sort of negative public perception for tuition increases, and they can avoid that by minimizing tuition increases if they can increase student fees,” Robe said.
* * *
The Fiscal Times also references a report by CCAP on student fees:
Fees assessed to students can include processing fees, technology fees, lab fees, student activity fees and athletic fees. In a report by the Center for College Affordability and Productivity (CCAP) conducted in January 2011, mandatory fees can add as much as 25 percent to the cost of tuition. Student fees at four-year public universities averaged more than $1,700 per year in 2008, the last year figures are available, according to the Department of Education. That’s up more than 36 percent, even after being adjusted for inflation, since 2000.
* * *
Richard Vedder wrote an opinion for Bloomberg that’s generated a considerable amount of buzz about colleges offering remedial education:
The bigger problem is that colleges admit students unlikely to succeed in the first place. Taking in subpar students leads to a “dumbing-down” of the curriculum for everyone. That may be why studies (such as “Academically Adrift” by Richard Arum and Josipa Roksa) found little evidence that students were learning a whole lot or mastering critical-thinking skills in their college years.
U.S. colleges should not take hundreds of thousands of ill- prepared students and put them through ineffective remedial- education programs only to see them fail to graduate while running up significant college-loan debt. Instead, they should be encouraged — through the tightening of federal loan policies and other accountability incentives — to become more selective in their admission practices and reject students who show on tests, such as the ACT readiness exams, that they are not ready for college work.
Many of these academically marginal students might excel in non-college-degree vocational programs that teach skills in relatively high-demand jobs, which pay reasonably well.
In today’s economy, why is a bachelor’s degree in marketing more valuable than training in high-tech manufacturing?
* * *
An opinion in the San Francisco Gate on President Obama’s education agenda heavily quotes Richard Vedder:
There is no reason a qualified poor kid cannot get into college in the United States simply because of money. Richard J. Vedder[sic], director of Ohio University’s Center for College Affordability and Productivity, told me that Obama is correct, “people might get an acceptance at a relatively expensive private school that they can’t afford to go to.” But if students are accepted into one college, they can get into another, more affordable college, such as a community college, where Pell Grants cover tuition.
“If he’s saying that not everyone can get into whatever college they want to get into, he’s probably right,” Vedder said. “I’m not sure that the American people would agree that every student should be able to get into the school they want.” As an example, he mentioned Harvard.
* * *
The Huffington Post aired a live segment on remedial education with Richard Vedder’s participation.
Richard Vedder contributed to a recent study published by the Texas Public Policy Foundation on higher-education reform in Texas. Toward Strengthening Texas Public Higher Education: 10 Areas of Reform by Thomas Lindsay, director of the Center for Higher Education at the Texas Public Policy Foundation, offers seven internal reforms and three external reforms for the state to lower costs and improve quality for students, educators, administrators, and taxpayers. As “the average cost of tuition at Texas public universities has increased five percent a year —every year— since 1994,” the higher-education system could greatly benefit from reform.
Among the suggested reforms, Lindsay advocates tying university funding to learning outcomes rather than enrollment figures; feasibility studies for a 10 percent reduction
in administrative staff budgets; feasibility studies for a
$10,000 degree in every institution’s four most popular degrees; more transparency from institutions in regards to tuition, retention rates, graduation rates, average student debt relative to other institutions, and other data that can help prospective students and parents make informed decisions; and reform Texas law that prevents other quality institutions from entering into competition.
It remains to be seen whether any reforms will be enacted, but recent efforts might provide an argument for optimism. Regardless, the study provides a blueprint for other states to examine weaknesses in their higher-education systems and a path to improvement.
I only just now came across this video that Peter Schiff posted
about a month ago. It is funny,
if nothing else:
H/T Nathan Harden
In a new article at Minding the Campus, Richard Vedder discusses college presidential pay and the recent news that 25 of the 50 highest-paid university presidents don’t pay income taxes; their institutions cover it as a perk:
[T]his is still another example of universities avoiding transparency —no, let’s use a better word- -honesty. It is dishonest to tell the world “we pay our university president $500,000 a year” when, in fact, that person is getting a hidden fringe benefit so exotically outrageous that it is virtually unknown to the American public. American corporations, facing withering criticism from stockholders, abandoned this practice years ago. But universities have no stockholders, and trustees ordered to jump off the top of the school’s 30 foot climbing wall by the president typically will do so. There is little constraint on college presidents from their ostensible “bosses.”
At the New York Times, Andrew Martin wrote a featured piece on colleges acquiring large amounts of debt to finance building projects and
its effect on rising college tuition and the academic arms race. He quotes Richard Vedder:
Despite a lull in construction after the financial crisis, borrowing has continued to grow, Moody’s data shows. “Schools are behaving like the Greeks, irresponsibly,” said Richard K. Vedder, an economics professor at Ohio University and director of the Center for College Affordability and Productivity. As an example, he cited his own employer, Ohio University, which has proposed spending $2.6 billion on construction projects in the next 20 years, half of it paid for by debt — an undertaking university officials said was necessary to update antiquated buildings.
“The Edifice Complex pervading higher education flies in the face of other trends that call for caution in capital spending,” Dr. Vedder said in an e-mail.
On National Review Online, Katrina Trinko quotes Richard Vedder when writing about efforts in Florida and Texas to offer a $10,000 degree:
Richard Vedder, director of the Center for College Affordability and Productivity and a professor at Ohio University, points to a variety of tools that colleges could use to reduce costs — including online education, reduction of administrative staff, and requiring professors to teach more hours. “There’s no reason a public-school education can’t
be offered for $10,000 a student,” he remarks.
For a blog at the Atlanta Journal-Constitution, Richard Vedder gets referenced on a post about differential pricing in colleges for majors:
I once was part of an interesting discussion with Emory President James Wagner — he was meeting with the AJC editorial board — on whether tuition should be calibrated so that an education major, for instance, pays less than an engineering major, whose education costs colleges more to provide. The issue came up during a broader discussion about rising college costs and possible solutions.
(Here is a good essay on this issue by Richard Vedder, who directs the Center for College Affordability and Productivity at Ohio University. If you read it, be sure to read the second comment in response to Vedder’s essay.)
Yesterday Richard Vedder appeared on
“InstaVision” on PJTV to chat with
host Glenn Reynolds about the high cost of college:
According to data provided by the College Board (see, specifically, the link for “Figure 2″), total student financial aid total
$237 billion in academic year 2011-12. As the chart below shows, however, there was wide variation in the amount of aid by source. Federal loans, the single largest
source of aid, totaled just over $105 billion that year, two-and-a-half times more than the next largest source of aid, institutional grants (which totaled $42 billion). Proportionately, federal loans accounted for 44 percent of all student financial aid dollars while institutions grants accounted for 18 percent. Pell Grants, which totaled $35 billion, were just 15 percent of all aid dollars.
A little while ago, the Los Angeles Times reported that Timothy P. White, who will soon become the chancellor of the Cal State System at the end of this month, has requested that the portion of his salary covered by state funds be cut by 10%, in light of the substantial budget
challenges the System is facing. Because the salary the System’s Board of Trustees was considering was around $451,000 or so (the same pay as outgoing Chancellor Charlie Reed), with $30,000 of the package coming from the Cal State University Foundation, the cut equates to about $42,000.
Obviously, one could dismiss this move as nothing more than crass symbolism because saving $42,000 on the president’s pay is somewhat akin to throwing a chair or two (or at most, three) off the Titanic in hopes of keeping it afloat. A savings of $42,000 in the Chancellor’s pay is, after all, a mere two tenths of a hundredth of a percent of the more than $2 billion in total state spending on the Cal State System. This savings won’t directly make much of an impact on any budget deficit the System has to overcome.
Nevertheless, I think this cynical take is wrong. True, this step may be (almost) entirely a symbolic one. But it is precisely in its symbolic meaning that this decision derives its force. There is no question that many higher education institutions (particularly in California) are facing significant fiscal hurdles in the near-turn (to mention nothing of the long-run), and in solving those problems, it is imperative that the leaders, the ones making the final decisions, actually show some leadership. It seems to me that a good leader, at the very least, is one who, when pain must happen, does not seek to divert the negative effects onto others. In this sense, Mssr. White has done the right thing. What is significant, though, is that this one act of leadership, while small in and of itself, may begin to put pressures on others to step up (indeed, as the Chronicle‘s “Ticker” has since reported, California Gov. Jerry Brown is pressuring UC-Berkeley to undo a
pay increase for new incoming head). Is this the first domino to fall? Only time will tell.
The chart below depicts the change in real state appropriations (per full-time equivalent enrollment) and the change in real public tuition and fees, with both indexed to 1980-81 levels. In academic year 1980-81, real state appropriations adjusted by public full-time equivalent enrollments were around $8600, nationally. In academic year 2011-12, however, real state appropriations were $6700 per student ($6600 per student, if one excludes federal stimulus funds), according to data compiled by the College Board. This equates roughly to a 23% decline in real per student appropriations over a three decade period, though, as can be seen from the chart below, looking at just the endpoints masks the fluctuations in the appropriations data during that period. Per student appropriations rose in real terms during the periods 1982-83 to 1986-87, 1992-93
to 1999-2000, and 2003-04 to 2007-08 but fell in real terms during periods 1988-89 to 1992-93, 2000-01 to 2003-04 and (a period which continues to the present) 2007-08 to 2011-12. It is also interesting to note that over this period, the absolute maximum for per student appropriations occurred in the late 1980s and subsequent peaks have always been lower in real terms. Prior to the recent financial crisis, though, in 2007-08, real per student appropriations were actually slightly above 1980-81 levels (by only 4% or so).
In contrast to the rather large and significant fluctuations in per student appropriations, over this same 31 year period, real tuition and fees has continued in an inexorable upward trajectory. Compared to inflation-adjusted public tuition and fees in 1980-81, public tuition and fees in academic year 2011-12 were 375%
higher. While these data do suggest that there may be something of an inverse relationship between appropriations and tuition (for example, the years which saw upward turns in the rate of tuition increases were generally years in which real appropriations per student were declining or not rising), overall perhaps the best description of the data is something along the lines of “sometimes state appropriations go up and sometimes they go down, but tuition always goes up.”
What with all of the recent news about the sudden expansion of the so-called “Big Ten” Conference in collegiate athletics, now to include 14 members, does this mean we must dispense with the notion that many of the institutions comprising that athletic conference are any longer “Public Ivies“? After all, they don’t appear to be able to perform basic arithmetic operations…