Many schools' move-days have come and gone, students are back, and classes have begun. In California the state's budget woes have resulted in fewer sections of high demand classes and larger enrollments in those sections that are still being offered. This is particularly troubling since CSU and UC students are having to pay tuition at a rate higher than the state contribution. According to the Los Angeles Times this is the first time in the history of the CSU and UC that this has ever happened and it appears that students will be paying higher rates indefinitely. The implications appear dire for low income, minority, and first generation students. If you don't believe me, then let's take a quick look at something really basic: textbooks.
From a student learning perspective, larger classes impair student learning by severely limiting the amount of contact between students and faculty. The physical and cognitive distance between students and faculty is a real barrier to student success. So much so, that Bill Tierney, director of the USC Center for Higher Education Policy Analysis, has quipped, "Distance education begins at the second row." Students need access to their faculty for myriad reasons. The most fundamental reason being self-monitoring of learning; students learn by actively engaging the content and their social and academic milieus (Astin, 1996; Baxter Magolda, 1992). So, if student learning is already challenged by large class sections, imagine the difficulties presented by not being able to obtain a textbook.
The San Francisco Chronicle recently reported that students are competing for seats in crowded classes, paying more than ever, and are not buying their required texts. Indeed, the Chronicle of Higher Education reported that 7 out of 10 students chose to not buy the required text for class. The Chronicle obtained this data from a research project run by Student PIRGs (political interest research group). According to the report, 13 schools were sampled and 1905 completed surveys were returned wherein students overwhelmingly responded that they did not buy a text because of cost. Moreover, these students also recognized that their in-class experience would be qualitatively worse without the textbook.
The problems for first generation, minority, and low SES students are magnified by the our current economic malaise. Whereas middle and upper-middle class families can move their students to less-impacted private schools, low SES families are less able to afford the higher costs of attendance. Our public universities belong to all citizens. Generations of taxpayers have paid in to a system of higher education regardless of whether they or their progeny actually enrolled. Our students (whether rich or poor, majority or minority, first, second, or third generation) deserve a quality learning experience. According to Labaree (2007), states "cannot afford to let public schools fail, even if their own children are gaining consumer benefits from education elsewhere" (p. 179). The costs of an unlettered and chronically poor underclass are felt throughout society. We know that education in general, and higher education in particular, produces significant lasting positive changes in students and in their communities. What happens when we let our schools deteriorate to such a degree that students do not or can not purchase the books required to set them on the path to learning?
Healing our social woes begins in public primary school and goes all the way to public postsecondary institutions. Whether families or even those without children use public education is not the issue. Rather, citizens must choose where they want to pay for the underdeveloped and unschooled. That is, we can invest more in our educational infrastructure to promote greater economic parity. Or, we can pay for more police, prisons, and welfare. Kids that are in school are not running with gangs. Young adults and emerging adults that are in school are on a path towards greater degrees of cognitive and affective development. These are positive outcomes that are relatively easy to see. Yet, it is difficult to persuade someone to go to class if they don't have access to the course content.
Learners first, students always!
Astin, A. (1996). Involvement in learning revisited: What we have learned. Journal of College Student Development, 37, 123-133.
Baxter Magolda, M. B. (1992). Knowing and reasoning in college: Gender related patterns in students' intellectual development. San Francisco, CA: Jossey Bass.
Labaree, D. F. (2007). No exit: Public education as an inescapably public good. In D. F. Labaree (Ed.), Education, markets, and the public good: The selected works of David Labaree. New York, NY: Routledge.
Sunday, August 28, 2011
Saturday, August 13, 2011
Volkswagen or Rolls Royce? Both do the same thing...
The Chronicle of Higher Education reported that rising college costs are negatively affecting public opinion of American higher education. These concerns are likely to be exacerbated by the volatile fluctuations of world securities and stock exchanges that rippled around the globe this past week. Parents and students are likely to question the value of a baccalaureate or graduate degree where the costs of attaining these qualifications are high and the markets do not seem to have settled at all since 2008. As costs continue to rise and families face uncertain economic times it is reasonable to ask whether colleges and universities can do more to reduce costs while improving learning outcomes and degree productivity. This weeks entry examines the college cost disease theory and asks whether anything can be done to promote broader and deeper student learning with greater access.
A pair of Bills (Baumol and Bowen) authored the theory of cost disease in an attempt to understand why certain industries are unable to achieve lower costs relative to other sectors of the economy. Baumol, Blackman, and Wolff (1985) found that technological innovations reduce production costs and consumer price points, but only insofar as the human element of production is either absent or held to a minimum. New technologies tend to have large upfront costs, but these costs also decrease over time. Thus, the savings from new technologies accrue over time as costs decrease relative to increased revenues. Think Henry Ford and the assembly line innovation. However, these cost savings can disappear over time and the activity becomes stagnant as human labor components hold steady or increase. "As the stagnant component must come to dominate the activity's budget, its output cost and price must approach those of its stagnant component, and therefore have to rise, succumbing to the cost disease, " explains Baumol, Blackman, and Wolff (p. 808).
In other words, technological advances that promote efficient use of resources are limited to the productivity of other components. For higher education a primary limiting factor is the very structure of instruction itself. Faculty are the primary "producers" of postsecondary instruction. Classrooms are temples wherein faculty impart their esoteric knowledge to students via lecture, powerpoint, research papers, and examinations. Faculty salaries are fixed costs. That is, you have to pay your faculty or you'll no longer be in business as a school. Thus, faculty are crucial to the formal activity of teaching at postsecondary institutions. The cost disease of higher education arises from 1) dependence upon faculty to produce instruction; and 2) the lack of technological innovations for producing equal or greater measures of instruction. According to Baumol (1993), "The services that have been infected by the cost disease are precisely those in which the human touch is crucial" (p. 19).
Part of the problem for higher education is that change occurs slowly in service industries. In production industries like automotive manufacturing, processes that can be automated have been automated. Except for a small handful of luxury automakers like Ferrari and Rolls Royce all mass producers have automated as many segments of their production lines for which technology provides an answer. The result of such automation is a mass produced product available for a lower price than the handmade luxury product. The problem for higher education is that world wide demand has skyrocketed since the 1970s, but the production techniques have changed very little. Baumol (1993) speculated that were "the pupil-teacher ratio [to remain] constant, so that crude productivity growth per teacher-hour is zero, then a 3 percent rise in nominal teacher salaries (or any growth at all in those salaries, for that matter) will lead to a commensurate rise in cost per pupil" (p. 21). This model suggests that as faculty salaries rise to adjust cost-of-living increases so to must the numbers of students in any given classroom. So, the cost disease of higher education arises from the human production component.
Combatting the cost disease requires institutions of higher education to meet product demands at a sustainable price point. Technological advances have long been touted as sources of efficiency for instruction and learning. Massy and Zemsky offer an optimistic outlook on how the internet and network computer technology can be harnessed to foster new levels of academic productivity at lower costs. Their assessment was recently echoed by Kamenetz (2010) who argues that the internet has unbundled learning from instruction by making information broadly available at fraction of the cost. As I argued last week, we need to change our assumptions of value in higher education. The scarcity of seats at a school is the current metric, but it is failing. We need to shift from an exchange value to a use value. Thus, leaner institutions will produce graduates that can do what the bigger, more expensive elite schools can do, but in larger numbers. Part of the strategy for public and smaller, less-selective private schools will be to increase the numbers of programs and courses offered online while also adapting current pedagogies or creating novel ones altogether.
Meyer's (2005) model for planning for cost-efficient online programs identifies three elements (development, delivery, administration) and seven factors (students, faculty, other staff, course design, content, infrastructure, and policy). The gist of Meyer's model is to get schools to design online programs that are efficient and produce learning consistent with a given educational mission. Meyer concedes that whatever efficiencies accrue from promoting online education hinges upon "all of the decisions an institution makes in each cell of the framework" (p. 29). In other words, schools will need to decide whether they want to make Volkswagens or Roll Royces. Reluctance to accept that change is necessary will be met with increased costs that students and their families will have to pay for. Online programs can be designed to facilitate student learning at less cost than brick-and-mortar. Does everyone need a Rolls Royce when a Volkswagen will do the job?
Baumol, W. J., Blackman, S. A. B., & Wolff, E. N. (1983). Unbalanced growth revisited: Asymptotic stagnancy and new evidence. The American Economic Review, 75(4), 806-817.
Baumol, W. J. (1993). Health care, education, and the cost disease: A looming crisis for public choice. Public Choice, 77(1), 17-28.
Meyer, K. A. (2005). Planning for cost-efficiencies in online learning. Planning for Higher Education, 33(3), 19-30.
Learners first, students always!
A pair of Bills (Baumol and Bowen) authored the theory of cost disease in an attempt to understand why certain industries are unable to achieve lower costs relative to other sectors of the economy. Baumol, Blackman, and Wolff (1985) found that technological innovations reduce production costs and consumer price points, but only insofar as the human element of production is either absent or held to a minimum. New technologies tend to have large upfront costs, but these costs also decrease over time. Thus, the savings from new technologies accrue over time as costs decrease relative to increased revenues. Think Henry Ford and the assembly line innovation. However, these cost savings can disappear over time and the activity becomes stagnant as human labor components hold steady or increase. "As the stagnant component must come to dominate the activity's budget, its output cost and price must approach those of its stagnant component, and therefore have to rise, succumbing to the cost disease, " explains Baumol, Blackman, and Wolff (p. 808).
In other words, technological advances that promote efficient use of resources are limited to the productivity of other components. For higher education a primary limiting factor is the very structure of instruction itself. Faculty are the primary "producers" of postsecondary instruction. Classrooms are temples wherein faculty impart their esoteric knowledge to students via lecture, powerpoint, research papers, and examinations. Faculty salaries are fixed costs. That is, you have to pay your faculty or you'll no longer be in business as a school. Thus, faculty are crucial to the formal activity of teaching at postsecondary institutions. The cost disease of higher education arises from 1) dependence upon faculty to produce instruction; and 2) the lack of technological innovations for producing equal or greater measures of instruction. According to Baumol (1993), "The services that have been infected by the cost disease are precisely those in which the human touch is crucial" (p. 19).
Part of the problem for higher education is that change occurs slowly in service industries. In production industries like automotive manufacturing, processes that can be automated have been automated. Except for a small handful of luxury automakers like Ferrari and Rolls Royce all mass producers have automated as many segments of their production lines for which technology provides an answer. The result of such automation is a mass produced product available for a lower price than the handmade luxury product. The problem for higher education is that world wide demand has skyrocketed since the 1970s, but the production techniques have changed very little. Baumol (1993) speculated that were "the pupil-teacher ratio [to remain] constant, so that crude productivity growth per teacher-hour is zero, then a 3 percent rise in nominal teacher salaries (or any growth at all in those salaries, for that matter) will lead to a commensurate rise in cost per pupil" (p. 21). This model suggests that as faculty salaries rise to adjust cost-of-living increases so to must the numbers of students in any given classroom. So, the cost disease of higher education arises from the human production component.
Combatting the cost disease requires institutions of higher education to meet product demands at a sustainable price point. Technological advances have long been touted as sources of efficiency for instruction and learning. Massy and Zemsky offer an optimistic outlook on how the internet and network computer technology can be harnessed to foster new levels of academic productivity at lower costs. Their assessment was recently echoed by Kamenetz (2010) who argues that the internet has unbundled learning from instruction by making information broadly available at fraction of the cost. As I argued last week, we need to change our assumptions of value in higher education. The scarcity of seats at a school is the current metric, but it is failing. We need to shift from an exchange value to a use value. Thus, leaner institutions will produce graduates that can do what the bigger, more expensive elite schools can do, but in larger numbers. Part of the strategy for public and smaller, less-selective private schools will be to increase the numbers of programs and courses offered online while also adapting current pedagogies or creating novel ones altogether.
Meyer's (2005) model for planning for cost-efficient online programs identifies three elements (development, delivery, administration) and seven factors (students, faculty, other staff, course design, content, infrastructure, and policy). The gist of Meyer's model is to get schools to design online programs that are efficient and produce learning consistent with a given educational mission. Meyer concedes that whatever efficiencies accrue from promoting online education hinges upon "all of the decisions an institution makes in each cell of the framework" (p. 29). In other words, schools will need to decide whether they want to make Volkswagens or Roll Royces. Reluctance to accept that change is necessary will be met with increased costs that students and their families will have to pay for. Online programs can be designed to facilitate student learning at less cost than brick-and-mortar. Does everyone need a Rolls Royce when a Volkswagen will do the job?
Baumol, W. J., Blackman, S. A. B., & Wolff, E. N. (1983). Unbalanced growth revisited: Asymptotic stagnancy and new evidence. The American Economic Review, 75(4), 806-817.
Baumol, W. J. (1993). Health care, education, and the cost disease: A looming crisis for public choice. Public Choice, 77(1), 17-28.
Kamenetz, A. (2010). DIY U: Edupunks, edupreneurs, and the coming transformation of higher education. White River Junction, VI: Chelsea Green Publishing.
Meyer, K. A. (2005). Planning for cost-efficiencies in online learning. Planning for Higher Education, 33(3), 19-30.
Learners first, students always!
Sunday, August 7, 2011
These ARE the costs you are paying for!
This week I want to talk to you about trends in student lending and to distinguish college costs from college tuition. It behooves students and families to wisely invest in a college and/ or graduate education. The bad news is that families pay more to go to college nowadays than 20 years ago. The good news is that the well-informed readers of this blog will be able to distinguish actual educational value from the shiny distractions of prestige-building institutions. If you know what a school has to spend money on to produce student learning, you are in a great position to identify where you want to send your children and your hard-earned money.
Based on last week’s posting it is clear that college tuitions are rising. The concern among folks working in higher education is that there does not seem to be a panacea for the cost disease (more on this concept next week). Costs are rising and schools are—particularly the cash-strapped public universities—having to balance public concerns with internal strategic priorities. The recession has shown us all how susceptible we are to modifications of the prices for basic goods and services. The consumer price index (CPI) is a measure of the prices paid by individuals for basic needs and it has been climbing. But it has not climbed nearly so fast as the measure of what colleges and universities pay.
The measure of higher education costs is known as the higher education price index (HEPI). HEPI is a constellation of eight cost factors: 1) faculty salaries; administrative salaries; 3) staff salaries; 4) service employee salaries; 5) benefits; 6) miscellaneous services; 7) supplies and materials; and 8) utilities (HEPI, 2010). HEPI was created by Commonfund Institute to measure the purchasing power of postsecondary institutions. What the folks at the Commonfund Institute are finding is that schools' purchasing power is tethered to its revenue streams. Funding the rising costs of providing an education has meant that schools have had to shift funds around, cut some line items, and raise revenues elsewhere. The point here is that there are basic costs to pay for schools to keep functioning. Discretionary costs function to raise the net cost of providing an education. Thus, the base costs plus discretionary expenses equates to the actual cost of operating an educational institution.
As the recession has worn on states have—particularly in California—cut their appropriations to public higher education. Hauptman (1990) documents the inverse relationship between state appropriations to higher education and tuition increases. Students' and families' experiences have anecdotally born out this factually documented relationship between appropriations and tuitions. My concern is the relationship between decreased state appropriations and the prestige-building of public-flagship institutions. The nameplate schools of UCLA or Cal are synonymous with high GPAs, high test scores, and very selective admissions. The public flagships are by definition public schools and exist to serve the tax-paying state citizenry. Yet, the L.A. Times reports that more California students are finding themselves excluded from state schools to make room for non-residents and international students. Gaps between costs and revenues, however, have meant that schools have had to raise tuitions or find more students to pay higher tuitions. Capital projects funded by donors and state funds have additional costs buried within that adversely affect the long-term costs for which budgets must be planned. These costs have been placed on the students and is affecting student success and student debt.
In fact, student indebtedness is rising at an alarming rate. Deritis documents the growth of student loan balances and links the growth to 1) increased overall demand for higher education and; 2) the skyrocketing enrollments at for-profit institutions. Meanwhile, the folks at EducationSector.org have reported that students now borrow up to 24% more money to pay for higher education than they did only five years ago. The big problem is that we are, according to EducationSector, "Floating colleges on a sea of debt." We know what it costs to keep an American family fed, clothed, and sheltered based on the CPI. We have an understanding of what it costs to keep the lights on, water running, and faculty fed at postsecondary institutions thanks to HEPI. However, our willingness to deficit finance an education must be tempered by the realization that a degree from a prestigious university does not certify any more learning than a degree from a for-profit institution. Our quality assurance system of regional accreditation is only just now beginning to search for ways to measure learning and hold schools accountable for producing learning.
So, when you write your childrens' tuition checks I want you to remember that what you are paying for may or may not directly fund their education. Tuition represents costs plus extras and whether those extras contribute directly to your childrens' learning and future success is an issue in which you ought to take serious interest.
Hauptman, A. M. (1990). The college tuition spiral. New York, NY: Macmillan Publishing.
Learners first, students always!
Based on last week’s posting it is clear that college tuitions are rising. The concern among folks working in higher education is that there does not seem to be a panacea for the cost disease (more on this concept next week). Costs are rising and schools are—particularly the cash-strapped public universities—having to balance public concerns with internal strategic priorities. The recession has shown us all how susceptible we are to modifications of the prices for basic goods and services. The consumer price index (CPI) is a measure of the prices paid by individuals for basic needs and it has been climbing. But it has not climbed nearly so fast as the measure of what colleges and universities pay.
The measure of higher education costs is known as the higher education price index (HEPI). HEPI is a constellation of eight cost factors: 1) faculty salaries; administrative salaries; 3) staff salaries; 4) service employee salaries; 5) benefits; 6) miscellaneous services; 7) supplies and materials; and 8) utilities (HEPI, 2010). HEPI was created by Commonfund Institute to measure the purchasing power of postsecondary institutions. What the folks at the Commonfund Institute are finding is that schools' purchasing power is tethered to its revenue streams. Funding the rising costs of providing an education has meant that schools have had to shift funds around, cut some line items, and raise revenues elsewhere. The point here is that there are basic costs to pay for schools to keep functioning. Discretionary costs function to raise the net cost of providing an education. Thus, the base costs plus discretionary expenses equates to the actual cost of operating an educational institution.
As the recession has worn on states have—particularly in California—cut their appropriations to public higher education. Hauptman (1990) documents the inverse relationship between state appropriations to higher education and tuition increases. Students' and families' experiences have anecdotally born out this factually documented relationship between appropriations and tuitions. My concern is the relationship between decreased state appropriations and the prestige-building of public-flagship institutions. The nameplate schools of UCLA or Cal are synonymous with high GPAs, high test scores, and very selective admissions. The public flagships are by definition public schools and exist to serve the tax-paying state citizenry. Yet, the L.A. Times reports that more California students are finding themselves excluded from state schools to make room for non-residents and international students. Gaps between costs and revenues, however, have meant that schools have had to raise tuitions or find more students to pay higher tuitions. Capital projects funded by donors and state funds have additional costs buried within that adversely affect the long-term costs for which budgets must be planned. These costs have been placed on the students and is affecting student success and student debt.
In fact, student indebtedness is rising at an alarming rate. Deritis documents the growth of student loan balances and links the growth to 1) increased overall demand for higher education and; 2) the skyrocketing enrollments at for-profit institutions. Meanwhile, the folks at EducationSector.org have reported that students now borrow up to 24% more money to pay for higher education than they did only five years ago. The big problem is that we are, according to EducationSector, "Floating colleges on a sea of debt." We know what it costs to keep an American family fed, clothed, and sheltered based on the CPI. We have an understanding of what it costs to keep the lights on, water running, and faculty fed at postsecondary institutions thanks to HEPI. However, our willingness to deficit finance an education must be tempered by the realization that a degree from a prestigious university does not certify any more learning than a degree from a for-profit institution. Our quality assurance system of regional accreditation is only just now beginning to search for ways to measure learning and hold schools accountable for producing learning.
So, when you write your childrens' tuition checks I want you to remember that what you are paying for may or may not directly fund their education. Tuition represents costs plus extras and whether those extras contribute directly to your childrens' learning and future success is an issue in which you ought to take serious interest.
Hauptman, A. M. (1990). The college tuition spiral. New York, NY: Macmillan Publishing.
Learners first, students always!
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