Changing Higher Education

Update on the College of Santa Fe -Laureate deal

2009-07-30T10:02:53-07:00

I recently described some of the financial difficulties of the College of Santa Fe, and attempts by the city and the state of New Mexico to save the College (New on the for-profit higher education front, May 14, 2009). I reported that Laureate Education was part of the efforts, and that the College of Santa Fe was likely to soon join the Laureate family of institutions of higher education.

The Santa Fe New Mexican reported today that the pieces have fallen into place. Laureate will lease the institution, with a purchase option. Laureate has agreed to commit $20M to offset losses, and to offer discounts to local and in-state students. Governor Bill Richardson has committed $11M of state money to help make the deal possible. The College of Santa Fe name will be kept, "while also giving Laureate the flexibility to add other words." The global Laureate University Network continues to grow!

A missing skill in the globalization of higher education

2009-07-28T13:50:04-07:00

Inside Higher Education had an excellent article last week entitled Outsourcing Teaching, Overseas that captures many of the problems faced by higher education institutions as they struggle with globalization:

How to teach university degree programs offered overseas is a complicated question. Does a university rely on faculty from the home campus to travel abroad for a year, semester or month at a time to teach, hire a new cadre of faculty at the overseas location, deliver coursework through distance education, or some combination thereof?

The article describes one approach used by the Utah State University John Huntsman School of Business to offer a Utah State bachelors degree in economics in China. This program is described in the annual report of the School in the following way:

Utah State University has been offering degree programs through cooperative agreements with partner universities in China since 2000. Currently, the programs are offered at Northeast Dianli University (NEDU) in Jilin City, Beijing Institute of Technology (BIT) in Beijing and Institute of Advanced Learning (IAL) in Hong Kong.....

Students in the degree program in mainland China (at NEDU and BIT) pass the rigorous Chinese national college entrance exam, which identifies the top 6% of high school graduates. Once admitted to our partner universities, the students apply for admission to Utah State University and are admitted if they meet our admission standards. The students become matriculated USU students upon successfully passing our intensive English language courses offered by IELI (Intensive English Language Institute)....

In our model, various USU departments agree to provide the specific courses required in the degree program, including general education courses. Departments assign “lead professors” to write the course syllabus, pick the text book and other instructional materials, and to write exams and other assignments for the course. The teaching materials are provided to “local facilitators” (faculty at our partner institutions) who have been approved by the USU department to deliver the lectures and other course material on-site in China and Hong Kong. Lead professors and local facilitators are in contact each week to make sure that the courses are on-track and to deal with teaching and evaluation issues. Final grades are assigned by the lead professor.....

It is anticipated that we will continue to admit 100 students each year into our programs at NEDU and BIT. In our program in Hong Kong, at IAL, we anticipate an increase in enrollments to 150 each year. Hence, we believe that we will have as many as 800 students in our degree program in Asia in the near future (accounting for students who drop out or transfer to Logan). This number is likely to exceed 1,000 once the Hangzhou program is approved. It is likely that we will graduate more than 300 economics majors each year at these locations.

On the “factual” side, these quotes tell us that the program is offered in several sites, and is attracting a pretty significant number of students. The students are high quality, having passed the Chinese national college entrance exam plus intensive English language tests. The annual report emphasizes that the student body is so small at present because the Chinese government limits enrollment. So it sounds like this is a successful program from the student’s perspective.

The concerns discussed in the Inside Higher Ed article relate to the 3rd quoted paragraph above, describing how the courses are taught. Phillip Altbach's comments in the Inside Higher Ed article certainly express the concerns of many:

My view, and I am in a small minority on these matters I think, is that foreign degrees should be taught by faculty from the sponsoring university faculty, and not be random local scholars, even if they are ‘approved’ by the home campus faculty. What USU is really doing is ‘franchising’ their degree -- in a McDonald's way -- which is common especially among low prestige British universities in countries like Malaysia these days. Those British institutions have in some cases gotten themselves into hot water with the British quality assurance agencies and the press for low standards, inadequate supervision and the like. USU may well get into that bind.

This captures, I believe, the cultural and philosophical conundrum that a university must resolve as it seeks to globalize. At one level, it would be nice to have faculty from the sponsoring university teach courses all around the world, as suggested by Altbach. Unfortunately, that is highly unlikely to happen - past experience clearly tell us that faculty generally do not want to be posted to some other part of the world for extended periods. Once is fun, twice is a problem, and three times is impossible. Even regular short stays are often difficult to make work. I know of one top university with two offshore sites where courses are taught in a way that only requires their faculty to be there for two weeks at a time, once each year. After several years of running this program, the only way to get regular faculty to commit to this offshore teaching is to make two weeks at one site, two weeks at the other the entire teaching load for the year! This is not the way to solve our budgetary problems!

So the only way I can imagine having offshore sites is to have “non-regular” faculty to do the job on a permanent assignment. The question then becomes, “Who hires these people?”, and where are they from? The US? The offshore country? Inside Higher Ed also had an earlier article that touched on these issues. People hired in the US may require high salaries; people hired at the offshore site will be hired under the laws of that country, thus requiring enormous caution. Still, it is perfectly plausible to think of having an offshore program taught by people who were all employed by the home institution. But for reasons given above, these would not be “regular faculty”who are imbued with the educational philosophy and ethos of the home institution. Consequently, an apparatus would have to be devised to carefully monitor educational quality at a distance to see that all was done appropriately. In addition, a significant infrastructure likely would have to be set up to deal with local personnel laws and issues. Opening multiple sites with this approach would require an enormous amount of administrative attention at the home institution in addition to the academic oversight required of the program. This would be an example of what I have previously described as the “multinational” approach (Modularity in university higher education:Education, Aug.7, 2006).

An alternative approach obviously is the USU approach, in which local partner higher education institutions do the actual teaching. That gets around the hiring issues and their associated infrastructure. A quality- monitoring apparatus would clearly be involved in this case as well, in order to assure that courses are presented in a way that is acceptable to the parent institution. The positive is that the home institution is freed of day-to-day site administration problems. This is an example of what I have described as the “globalization” approach (ibid).

Both of these approaches have pluses and minuses. Both, however, require a set of competencies that traditional higher education generally lacks because of its essentially “local” character. These competencies are those required to manage a large complex operation at a distance, especially if it is located in another country. We have little experience in such management, and in particular, in knowing how to manage educational quality from a distance. Both the multinational and globalization approaches will fail if we do not understand how to manage quality from a distance.

It should emphasized that managing quality at a distance was also core to both the multinational and globalization periods in corporations, and building the necessary competencies was difficult and took time and experimentation. Thus we should not be surprised that higher education does not always get it just right at it moves into a wider global role. However, failures and mistakes should not be used as excuses to discard the models as suggested by some. Rather, they should be viewed as necessary steps in learning to do something that is both difficult, and worthwhile.

Various thought provokers

2009-07-22T16:43:09-07:00

There are too many interesting higher education tidbits floating around recently for me to write a full post on each, so today I will just briefly comment on several fairly recent reports that struck me as interesting.

I found the recent Inside Higher Ed article entitled Australians Open U.S. Med School to be quite fascinating. The University of Queensland School of Medicine and the Ochsner Health System of Louisiana have opened the University of Queensland School of Medicine Clinical School at Ochsner . This new center will enable a clinical program that involves two years of medical school in Brisbane followed by 2 years of clinical training at Queensland”s outpost at Ochsner. Only American students will be accepted. Graduates will get an Australian medical degree from Queensland. The UQ School of Medicine bills itself as “Australia’s Global Medical School”, and David Wilkenson, head of the School of Medicine, describes this new joint venture as “a new model for preparing doctors to work anywhere in the world.” A very interesting way for a foreign university to enter the US market- and an interesting take on globalization of higher education!

Continuing with Inside Higher Ed, I really liked the even more recent Views article by Dennis Jones and Jane Wellman, Bucking Conventional Wisdom on College Costs. They quite persuasively argue against eight nuggets of conventional wisdom:

Conventional wisdom #1: Spending increases in higher education are inevitable, because there is no way to improve the productivity of teaching and learning without sacrificing quality
Conventional wisdom #2: More money means more quality, and quality means higher performance.
Conventional wisdom #3: Among public institutions, state governments are now minority shareholders in higher education, and as a result public policy goals should take a backseat to market rules to steer institutions.
Conventional wisdom #4: Colleges and universities cannot be expected to invest in change or to pursue state priorities without new money. A corollary is that any reductions in funds must be replaced before funds can be considered as “new.
Conventional wisdom #5: Instructional costs rise by the level of the student taught – e.g., lower-division students are cheaper than upper-division students, graduate students are more expensive than undergraduates, and doctoral students who have been advanced to candidacy are the most expensive of all.
Conventional wisdom #6: Institutions can make up for lost public subsidies by increasing research revenue.
Conventional wisdom #7: An expansive undergraduate curriculum is a symbol of quality, and necessary to attract students.
Conventional wisdom #8: States can improve postsecondary productivity if they direct more students to community colleges

Readers of this blog will recognize that I have written often about many of these points, but Jones and Wellman do a great job of concisely making their point that these are, indeed, false "truths".

Nicholas Allen has a very nice short article entitled The Future of Non-Traditional Higher Education in the United States: A Perspective: Part 1 of 2 on the website of InsideTrack. In the interest of full disclosure, I am on the advisory board of InsideTrack. Allen writes:

Major shifts are taking place that may reshape the higher education industry
as never before, creating both opportunities and challenges for most educational institutions,
and for the nation.

He groups the forces bringing about this change into five categories, and talks about the first two, national needs and critical demographic shifts, in this article. Each of these two points to greatly increasing numbers of non-traditional students, a group that our traditional institutions have not served well in the past. His points generally are not new, but he brings many threads together in a very informative, insightful way. I look forward to Part 2.

And finally- a ranking of institutions that I can understand and appreciate! Readers of my blog know that I am not fond of rankings of institutions of higher education. However, Jane Marshall writing in University World News informed me of the 3rd annual (how did I miss the first two?) Professional Ranking of World Universities put out by the French Grande Ecole MINES ParisTech. This straightforward review takes the CEO's of Fortune Magazine's Global 500 and identifies their degree institutions. Points are then assigned to the degree institutions: 1 point if the CEO had only one degree; 1/2 point to each institution if the CEO had 2 degrees. The points are added up, and viola!- a new ranking that included 377 institutions of higher education, with Tokyo, Harvard and Stanford at the top. Now, in many ways, this is as crazy as any other ranking. For example, there are many sociological reasons why there may be correlations between CEO's and their universities that have little to do with the actual quality of the academic programs. But it has some benefits. First, other rankings generally come from a closed academic world - they rank on the basis of various forms of recognition by other academics. This one ranks based on value judgments made by a world outside of academe - a world that ultimately supports academe and thus should be noted. Second, it is a contemporaneous judgment - that is, it is based on who is succeeding in this world at this moment. Most other rankings are much more backward weighted (Nobel Prizes from 1920!) and so encourage the ossification of the field. Perhaps the most interesting result for me is not the top "winners", which are all pretty predictable, but the very long tail of the distribution. Most CEO's don't come from the winners, but from a variety of institutions large and small. It suggests to me that if one's goal is to become the CEO of a Fortune Global 500, one may want to question whether or not it is worth paying for one of the "winners".

How the Recession of 2009 Will Affect Post-Secondary Education - viewed from Canada

2009-07-20T17:05:50-07:00

I thank James Pringle at Ryerson University in Toronto for calling my attention to a report from the Educational Policy Institute with the challenging title On the Brink:How the Recession of 2009 Will Affect Post-Secondary Education. The report was written by Alex Usher and Ryan Dunn . The report focuses on post-secondary education in Canada, but many of its insights and conclusions apply to higher education more broadly.

The authors look at impacts of the recession, first on endowments, followed somewhat later by decreasing state revenues and corresponding decreasing support of post-secondary education. They discuss increasing tuition to meet some shortfalls, and the differences between Canada and the US in terms of options in this arena. They discuss a number of institutional response options to revenue shortfalls, none of which will surprise most of my readers.

I particularly liked the discussion of what the authors dub the “Peak Post-Secondary” Scenario. They note that around 2014 the main cohort of baby-boomers begins to retire, and at that point, costs of health and elder care begin to rise rapidly, and the percentage of workers begins to decline, thus permanently exacerbating pressure on state budgets. Consequently, just as the recession recedes, societal priorities are likely to be pushed away from education by demographic pressure . Thus the “Peak Post-Secondary” Scenario calls for permanently declining per-student revenues.

In almost any scenario, the authors suggest that Institutions will need to increase revenues from non-traditional sources. In the “Peak Post-Secondary” scenario this becomes urgent. Among the new sources, the authors recommend cross border education, but not just any cross border education:

But cross-border education is not solely about picking up bodies overseas and shipping them here; that might have been an adequate description of the game twenty years ago, but things have moved on since then. The establishment of a broad middle class in many developing countries has vastly increased the demand for post-secondary education. In particular, demand has boomed for education branded (if not provided) by large, established, Western universities is very strong in much of the world. Large public universities from North America, England and the UK have a good name in Asia and Africa – much better in many cases than the local university. The growth market in education for major Western universities lies not in attracting ever-greater numbers of students but rather in modularizing knowledge, delivering it in locally-appropriate forms through international educational partnerships, and certifying students at the end of a course or period of studies.

Sounds like a description you might have read in some of my previous posts!

However, the authors point out that revenue generation is unlikely to be sufficient to resolve the financial problems of post secondary education in the future: Institutions are also going to need to tackle their cost base. At this point, the authors begin to struggle with the challenges of fixing our near-universally broken cost/price model. They suggest one possible change that is quite logical- and sure to be greatly controversial:

One might reasonably expect, therefore, that Peak Post-Secondary will lead to a reengineering of tasks and costs, and in particular the creation of a two-tier faculty. This will see some faculty paid to concentrate more on research and teaching graduate students, while others will be paid primarily to teach – and in some cases teach an increasingly standardized curriculum.

They suggest that this common curricula, which they view as being at the undergraduate level only, could have both financial and educational benefits:

By adopting common curricula, many hours of instructor time could be saved – time which could be used to increase student/instructor contact and assist students in developing mastery over freely-available subject matter courses.

Obviously a break from our image of thousands of post-secondary institutions each offering its own special hand-crafted education. However, it might well offer some educational benefits in that it focuses more on the issue of learning rather than curriculum development.

The report ends with a very important call to reality that sums things up in a way that I heartedly endorse:

Only those institutions and governments that re-think the delivery of education itself, by measuring inputs and outputs and deciding based on evidence where dollars can best be spent, can hope to come out of this recession in better shape than they came in.

What Moody’s doesn’t say in its recent report on higher education

2009-07-15T15:17:36-07:00

Moody’s Investor Service recently put out a report entitled Global Recession and Universities: Funding Strains to Keep Up with Rising Demand. It provides a very interesting and informative view of some aspects of the higher education scene as observed from outside of the system. The report came to my attention through posts in GlobalHigherEd (on whose server the report above resides) and University World News, and I thank both for their nice articles.

Moody has looked at universities at selected areas around the world, and how they are handling the global downturn. Moody’s ultimate interest, of course, is to be able to rate these universities as they access capital markets, so the focus is on aspects of the environment that can or will impact their financial stability. I will describe some of their observations that I find most interesting, and then will talk about the part of the report that I find most important - the things that are not said. I will not try to describe the whole report, but recommend that you simply read the original - it is only 13 pages long. I also will focus on the parts of the report that refer to US universities, since that is the group that I know the best.

As a minor point, the report emphasizes public institutions, stating that public universities “most likely accounting for between 80-90% of all students enrolled in tertiary education.” A recent OECD report claims that private higher education now accounts for 30% of tertiary enrollment globally. This relatively minor discrepancy does not invalidate any of the conclusions of the report, of course.

Moody’s notes that recessions generally lead to enrollment increases for a variety of reasons, but warn these increases may not be uniformly distributed:

While enrolment declines are possible at individual institutions due to particular market, reputation, and management challenges, we expect higher education overall to enjoy a significant “tail-wind” in student demand for spaces over time. This is especially likely for universities that are “access” oriented with less restrictive academic requirements and a mission focused onskill development. Many prominent universities that function as comprehensive research institutions focused on maintaining strong academic quality reputations and high entrance standards may see the greatest impact in their advanced degree programs.

On the other hand, Moody makes a strong point regarding fundamental changes in funding:

Moody’s believes that the magnitude of economic changes in some countries may place pressure on historic funding and financing patterns of higher education. This would likely be driven by two conflicting trends– increased policy directives to expand university programs and more limited ability of governments to fund the desired expansion Not surprisingly, many countries now face significant budgetary challenges with large competing demands on government dollars.

While some aspects of spending on higher education have been temporarily boosted through stimulus spending, this is largely financed by government deficits and may be difficult to sustain beyond the near term. At the same time, the desire for rapidly rising investment in higher education to support higher participation rates and expanded research capacity suggests the need for significant new operating and capital dollars over an extended period. These trends may well become clearer as the ability to fund higher education comes under greater pressure.

In regard to this desire for greater revenues, in the understatement of the year, Moody’s cautions: raising student fees is usually a politically sensitive decision.

For the US, there is a timely warning regarding globalization:

In general, we also believe the level of global competition and pooling of talent for faculty and students will continue to increase. As U.S. universities cut back significantly on hiring and capital spending, non-U.S. faculty and students may be susceptible to recruitment to
other leading universities or home countries. Over the past three decades, the number of students enrolled outside their country of citizenship has risen dramatically, from 0.6 million worldwide in 1975 to 2.9 million in 2006, a more than four-fold increase. Developments like the Bologna Process in the European Union, and similar efforts in other regions, may further encourage the trend of crossing borders to enroll in higher education.

Overall, Moody’s is looking at financial stability impacts of increasing student demand (good), research funding (good), uncertainty of state funding (bad), conflicting demands for services (mixed), political pressures(bad). So what is missing? Actually, it is not so much that something is missing, but that the financial problems and dangers become clearer if one looks at them from a slightly different angle, one that will be familiar to readers of this blog.

First, at universities - both public and private - the cost of providing education is higher than the price paid by the students. Thus the major difference between the two sectors is how this unmet cost/price deficit is covered. Strong undergraduate student demand is rightly viewed as a positive by Moody’s. Any drop in undergraduate enrollment generally translates directly into a budget deficit. In addition, with strong undergraduate demand, institutions have more flexibility in setting their “discount rate”, (net financial aid as a percentage of net published tuition) and in increasing tuition annually . Thus strong demand enables institutions to have a predictable, increasing budget which minimizes- but does not remove - the structural excess cost per student that must be covered by other sources.

Secondly, a similar difficulty occurs with research. Moody’s finds it positive for the balance sheet that federal stimulus funding for research is increasing. However, universities lose money on almost every federal or private research grant that comes in. Sponsors have for a long time required universities to put up matching funds, and that pressure is growing; construction costs for expensive laboratory buildings are only partially reimbursed even in the best grants; sometimes explicit policies of “non-complete cost recovery” decrease even the recovery of nominally allowed expenses; research faculty able to compete successfully for grants are much more expensive than the norm; the list goes on. Research is a core part of the mission of research universities, of course, so research grants are eagerly sought - the core mission could not be advanced without them. However, from a balance sheet perspective, a new grant simply means the institution must find money from another source to cover the costs of the research that are not paid by the sponsor. Thus, it is positive from the standpoint of mission that stimulus funding for research is increasing, but from the standpoint of balance sheet, it just mean another negative pressure, another unmet structural cost/price deficit to be met from other sources.

The third reality is that the costs of both research and education grow more rapidly than the CPI and it is unlikely that this can be changed in a sustainable way without significantly changing the current models for both.

Put this together, and the emphasis in looking at financial stability turns to the question of price, and of sources to meet the certain cost/price deficit. In the educational component of the budget, private universities in the US have been successful in constraining growth of the cost/price deficit by increasing price at significantly more than the CPI for several decades. However, as a result of this strategy, the cost of private higher education is increasing faster than family income for 90% of families in the US, the earnings value of a degree compared to its price has been decreasing, and political pressure has been growing steadily to restrain these price increases, perhaps by law. Thus it seems to many observers quite likely that the strategy of annual large price increases will not survive much longer. Any significant constraint on higher- than-CPI tuition increases would greatly increase the cost/price deficit, thus increasing pressure on alternative sources of funding.

On the public side, there are also constraints on raising price resulting from both political pressures and mission concerns(e.g. universal access). Mission obstacles may possibly be overcome by moving to high tuition, high aid models that assure access independent of financial situation. Political obstacles in many cases are likely to be more serious. Whatever happens in the short run, however, it seems unlikely that public institutions will be allowed to adopt the private university model of yearly above CPI increases, so the pressures on alternative funding will occur here as well.

On the research side, universities seem to have little price leverage. There is little enthusiasm in Washington to increase the indirect costs component of the research cost. As Moody’s rightly observes: Many universities believe this portion of government support is woefully under-resourced. Similarly, corporations are happy to shop their needs around, looking for the university provider who will set the lowest price. Thus, increasing price of the research component to meet cost seems quite unlikely.

Turning to alternative sources of funding to meet these deficits, we actually find very few that are significant at this time. Primary are the state, and philanthropy. Moody’s does a good job of describing the significant uncertainties and long term trends in state funding. Suffice it to say that it seems unlikely that the state will rush to the rescue. Moody’s also describes some of the difficulties in increased dependence on philanthropy, focusing on many of the recession related negatives . There is, however, a large negative that I did not see mentioned: the greatly increased competition for philanthropic dollars. Not only are the public higher education institutions now aggressively seeking philanthropic dollars that previously would have gone to their private peers, but the philanthropic needs of other cultural, health, and welfare organizations have skyrocketed with cutbacks in state spending. Add to that the new found interest in Europe and Asia in philanthropic support of local higher education and you have another segment of philanthropic resources that is suddenly becoming much more difficult to access. In brief, I think neither of the two primary sources of the funding for the structural deficits of higher education can be expected to meet the likely increases in those deficits.

If we turn to secondary sources of revenue to meet the cost/price deficit, we find few that are broadly significant. In Australia and England, a strong secondary source of revenue for many institutions is international students, taught both at home and abroad. For NYU and a few other institutions in the US, continuing education provides significant revenue. For several institutions such as NYU, Columbia, UC, and MIT, IP licensing provides considerable income. It seems obvious that it will be increasingly critical for institutions of higher education to develop these and other secondary sources if they want to be able to meet their structural core cost/price deficits without harming mission. It is not clear that all will be able to find secondary revenue niches that are sufficiently robust to protect mission.

So overall, I think Moody’s is right in saying that most universities are a pretty good bet from the perspective of being able to repay their debts. What is much less certain is the fraction of universiiesthat will be able to successfully fulfill their missions at the same time.

UNESCO's World Conference on Higher Education

2009-07-07T10:03:56-07:00

It became clear to us that we are indeed in the middle of an almost unprecedented revolution in higher education -- not just small changes around the edges, but fundamental changes. And our job in the trend report -- and I think in this conference as well -- is to try to understand and then deal with, in constructive ways, the nature of this revolution. It’s different, ladies and gentlemen, from what’s gone on before.

Phil Altbach, quoted in Inside Higher Education

UNESCO is hosting a second World Conference on Higher Education this week, the first having taken place a decade ago in 1998. A pre-conference press release by UNESCO summed up very well some of the issues facing higher education today. Among the issues raised in that release are:
•    the number of tertiary students worldwide grew by 50% from 2000 to 2007
•    globally, the number of university aged people who enrolled in higher education increased from 19% in 2000 to 26% in 2007, but enormous geographic differences in participation exist. Women now are a small majority of enrolled students worldwide.
•    higher education is increasingly seen as an engine of economic development, but governments worldwide are overwhelmed with the costs associated with widening access
•    as a consequence, public institutions worldwide increasingly are required to find non-governmental sources of funds to cover some portion of their costs. This has led to increasing fees, and a variety of entrepreneurial activities that sometimes risk to conflict with mission.
•    private higher education has increased rapidly around the globe, often in response to inability of the public system to meet increasing demand. Private higher education now accounts for 30% of global enrollment.
•    globalization has produced an explosion of institutions and programs that act across national borders. Countries are becoming international education hubs, regions are developing common educational standards and brand. Distance learning via the internet in increasingly popular.
•    as a consequence of these changes, improving quality assurance and methods to compare institutions and degrees from different countries become critically important. The focus of these efforts has become outcomes of student learning and skills rather than traditional measures of input.

There is a nice report of the early part of the Conference in Inside Higher Education, and University World News is providing continuing coverage, as well as a number of articles focusing of specific aspects of the Conference. A communique will be published at the end of the conference. A draft of that communique is already available, but will be modified based on events.

Another sign that the business model for higher education is broken

2009-06-30T14:25:43-07:00

The National Association of Independent Colleges and Universities (NAICU) put out a report yesterday that bravely tries to put a good spin on the tuition news:

Private College Tuition Rises at Lowest Rate in 37 Years
NAICU Washington Update

June 29, 2009

With families facing one of the worst economic crises in the nation's history, private, nonprofit colleges and universities have responded with the smallest average increase in tuition and fees in 37 years, according to the final results of a membership survey conducted by the National Association of Independent Colleges and Universities.

It is great to know that higher education has responded well to this crisis! So what is the result of this wonderful restraint?

The 4.3 percent increase for 2009-10 is the smallest since 1972-73, when average tuition and fees at private institutions rose by the same rate. The increase is slightly higher than the 2008 Consumer Price Index of 3.8 percent.

Oops!It is, of course, customary to compare next year’s academic year tuition increase to last year’s calendar year CPI increase, and by that standard the tuition increase that is only .5% above inflation shows some restraint. However, these have not been ordinary times in the CPI world. While the first half of last year was reasonably well-behaved, the second half was much less so as jobs and equity vanished at a rapid rate - a trend that has continued to this date. Another comparison that might well be made is next academic year’s tuition increase compared to the CPI increase over the past 12 months. Not only would that better describe today’s economic realities by including the recent tumultuous times for the economy, it has the benefit of being almost an academic year CPI increase that we can compare with an academic year tuition increase. .

If we use this CPI increase for the most recent 12 months available (through May) for our comparison, we see a vastly different picture. According to the June 17 report of the Bureau of Labor Statistics the (unadjusted) CPI has actually decreased by 1.3% over the past 12 months. Plus 4.3% for tuition no longer sounds restrained - or responsible - when compared to minus 1.3% in CPI!

Whatever CPI one wants to compare the 4.3% increase to, it obviously is a very significant increase at a time when unemployment at all income levels is at a very high level, and uncertainty about economic security is on the minds of most families. Unfortunately, for all of the NAICU rhetoric about new “innovative affordability”ideas, this result demonstrates clearly that the higher education business model still demands price increases that are well above CPI increases.

As Stein’s Law assures us, “If something can’t go on forever, it will stop.” A model that demands that prices always rise significantly faster than CPI clearly will break down at some point. It is time to work harder imagining a new, more sustainable model, and to spend less time trying to defend what in the end will not be defensible .

Is online learning ready to become a disruptive technology?

2009-06-29T21:16:57-07:00

In 2000, I wrote an article in Change discussing major disruptive impacts on higher education that distance learning might produce (see, How about distance learning, March 3, 2006). In it, I brashly postulated that:

The experience will certainly be different from that found in the classroom of a great teacher, but in the end DL may well provide a competitive or even superior way to learn.

A recent analysis by the Department of Education of learning outcomes achieved by various on-line learning courses compared to those of traditional courses finds that my “in the end” may actually be now!

The DoE identified over a thousand empirical studies of online learning between 1996 and 2007. From these studies, they chose a set to subject to meta- analysis with the goal of answering 4 research questions:

1. How does the effectiveness of online learning compare with that of face-to-face instruction?
2. Does supplementing face-to-face instruction with online instruction enhance learning?
3.. What practices are associated with more effective online learning?
4. What conditions influence the effectiveness of online learning?

The analysis selected from all of the empirical studies using three stringent conditions:

Limit the search to studies of Web-based instruction (i.e., eliminating studies of video- and audio-based telecourses or stand-alone, computer-based instruction);
Include only studies with random-assignment or controlled quasi-experimental designs; and Examine effects only for objective measures of student learning (e.g., discarding effects for student or teacher perceptions of learning or course quality, student affect, etc.).

The results of the meta analysis are both impressive and thought provoking :

•    Students who took all or part of their class online performed better, on average, than those taking the same course through traditional face-to-face instruction.
•    Instruction combining online and face-to-face elements had a larger advantage relative to purely face-to-face instruction than did purely online instruction.
•    Studies in which learners in the online condition spent more time on task than students in the face-to-face condition found a greater benefit for online learning
•    Most of the variations in the way in which different studies implemented online learning did not affect student learning outcomes significantly
•    The effectiveness of online learning approaches appears quite broad across different content and learner types
•    Effect sizes were larger for studies in which the online and face-to-face conditions varied in terms of curriculum materials and aspects of instructional approach in addition to the medium of instruction

There are many data, and numerous caveats, behind each of these conclusions. I strongly recommend a reading of the report to better understand what these conclusions mean. However, a couple of these results deserve some comment here. First, the result that online students who spent more time on task than students in face to face conditions learned more is at some level somewhat of an obvious outcome. More time spent, more material learned. However, this response involves an acknowledgment of relatively equal time- learning efficiency coefficients for both approaches, which would be a step forward for some. It also begs the very interesting question of why the online students were motivated to spend more time on task than their classroom peers.

The last of the results above regarding effect size emphasized that online and face to face courses had the more nearly equal learning outcomes when the courses were most similar. Thus, since online courses seem to be more effective in general, most online courses are differentiating themselves from the face to face courses in ways that lead to increased learning outcomes. Unfortunately, the data are not robust enough to produce many clear differentiating factors. There is too much “context”hidden in the data - undefined differences in instructor behavior and content. Time on task does emerge as important, as do methods that encourage student reflection.

All in all, this report provides both a powerful signal (warning?) that online learning is rapidly growing up, and a call for additional well controlled studies that will show how to further increase the effectiveness of the online experience. It also raises some interesting policy questions regarding various regulations that view online courses as necessarily being of lower quality than face to face courses.

New on the for-profit higher education front

2009-05-14T10:24:53-07:00

Apollo Global announced on April 29 that they are in discussions with BPP Professional Education, with an eye toward a possible purchase (for background, see my earlier report on Apollo's international activities). BPP Professional Education teaches a variety of professional development courses in areas such as accounting, finance, law, etc. The web site describes teaching centers in 11 countries (plus the UK), and many programs are also taught using distance learning. More notably, however, BPP contains the BPP College of Professional Studies, which in September 2007, became the first publicly owned private company in the UK to be awarded degree granting powers. The College is composed of a business school, and a law school. Should the discussions lead to a purchase, the price is estimated to be around $460M US.

On the home front, many smaller non-profit colleges have been struggling for years with declining enrollment, and increasing debt. The current economic downturn is providing the "last straw" for some of them, and they are finding that the only practical solution is to be absorbed by a well-funded for-profit higher education corporation. In the past few weeks, Daniel Webster College, the College of Santa Fe, and Waldorf College have all taken steps in that direction.

On the 24th of April, Daniel Webster College announced that it had sold itself to ITT Educational Services. Daniel Webster is located in Nashua, NH, and has about 1000 students, 750 of them residential. According to an article in the Nashua Telegraph, Daniel Webster had been considering a sale for several years because of financial difficulties. According to this article:

Daniel Webster College President Robert "Skip" Myers said ITT has plans to eventually expand Daniel Webster into a regional and then national brand of schools.......
Daniel Webster College will remain autonomous from any of ITT's technology-oriented programs, with the faculty continuing to run academics and complete separation, Myers said. The name will remain except for a minor alteration: After the sale, it will be eventually known as Daniel Webster University. Distinction as a university will allow Daniel Webster College to not only increase students and faculty on the Nashua campus, but it would fit with the school's and ITT's goal to offer a "learning network" that will stretch across New England and eventually the country, Myers said.

This would be an interesting new strategy for ITT should it come about.

The College of Santa Fe has also been running a large deficit for considerable time. The College has only about 800 full-time students, and discussions with other non-profits regarding mergers,etc. had not worked out. Over a year ago, the College of Santa Fe entered into discussions with Laureate Education about a sale (see my earlier report on Laureate's move into the US). Laureate was interested, but negotiations with creditors over existing debt apparently did not go well, so Laureate seemingly dropped out of contention. In December, it appeared that New Mexico Highlands University might take over the College, although there seemed to be no idea of where the necessary resources might come from. The newspaper article describing the Highlands bid also stated that the faculty of the College had "surrendered" tenure "in order to court the for-profit education corporation, Laureate." However, on May 1, Laureate rose like the Phoenix, and New Mexico Governor Bill Richardson announced a partnership between the State of New Mexico, the City of Santa Fe, and Laureate to "Save College of Santa Fe":

The partnership envisions the City of Santa Fe, with support from the Governor’s Office, purchasing the college and then Laureate operating the college under a lease.

The Governor has pledged $11M to the deal. Even better of Laureate, the Governor has pledged his support in negotiating with creditors to bring the existing debt down to manageable levels. So there is a reasonable chance that the College of Santa Fe will soon join the Laureate International Network.

Waldorf College, is a small (670 students) liberal arts institution in Forest City ,Iowa, affiliated with the Evangelical Lutheran Church. Waldorf has also encountered serious financial problems for some time, including a shrinking student body and large debt. The College has been seriously investigating options for over two years, but the downturn in the markets made it clear that it was time to move. On May 8, Waldorf officials announced that the College would be purchased by the for-profit Columbia Southern University. Columbia Southern bills itself as the "Premier Online University for Distance Learning." Waldorf leaders said in their announcement that the College would remain a residential college, so this may reflect a move in a new direction by Columbia Southern. In any case, with help from their new owners, Waldorf soon will be introducing new majors and degrees. As in the College of Santa Fe case, faculty will have to give up tenure. Scott Jaschik has a very nice discussion of this purchase in Inside Higher Education, including some thoughtful comments from a faculty member at Waldorf.

All of these purchases in the US have the characteristic that the purchased entity has the highest form of accreditation - regional accreditation. Although the accreditation does not move automatically when ownership changes, it is likely in these cases that it will. Thus, three different for-profit higher ed organizations have profited from the current economic downturn to add regionally accredited institutions to their networks.

Two more, very different, meetings

2009-04-20T05:50:00-07:00

My friend Joe Duffey keeps sending me announcements about meetings in some vain hope that he can keep me more aware of what is happening in the world. I feel compelled to comment on two of his recent alerts because they do say a lot about what is going on. One depresses me, the other I find very hopeful.
1. The World Summit on University Ranking- this is the depressing one.
Readers of this blog know how I feel about university rankings: I dislike them greatly. I could spend a day listing all of the reasons why, but will just run over a few. First, the idea that the overall quality of universities can be reduced to a single number in silly. Every great university has some really terrible programs, and many otherwise mediocre institutions have some superb programs. When trying to rank programs (as the NRC does), one finds that the reputational data are squishy (who really knows very much about the programs at more than a hand full of rival institutions?), and the “harder” data are rather arbitrarily chosen (it can be easily measured). In the end, the statistical uncertainties of the data leave almost everyone in a statistical tie, but that doesn’t stop anyone from dropping the uncertainties and using the numbers as absolute.

Because research data are easier to obtain than teaching data, rankings focus on the research. This effective devaluing of teaching and learning in our self analyses is not healthy, and at some point will lead to difficulties in our relations with the societies that support us.

Whatever data are used, some person then must decide how to weight different inputs in order to add it up to a definition of the best university. Obviously, however, there is absolutely no unique way to combine the data. One way is arguably as good as another. This does not stop anyone either. In fact, the rankers like this aspect, since it means that an almost endless number of rankings can be published, each leading to a happy financial or reputational ending for someone.

Rankings are, of course, a celebration of the status quo. Consequently, they punish institutions that are trying to respond innovatively to the changing world. This would be of little importance if so many governing boards and presidents were not focused on “improving their rankings”. Thus badly needed innovation - including cost cutting innovation - becomes even more difficult to carry out.

Finally, when making “world” rankings, most often the criteria are based on venerable Western universities. Why? Why should looking like Harvard be a good idea in many countries of the world?

So overall, I think we can all be quite concerned that we now have an International Rankings Expert Group. They are producing a product that by definition is flawed, and serves almost no good purpose.

2.The Global Higher Education Forum 2009- this is the hopeful one.
This is almost the anti-meeting to the one described above;

The Global Higher Education Forum (GHEF) brings together scholars, policy makers, researchers, academics and administrators to reflect, analyse, discuss and debate on a wide variety of issues pertaining to global higher education in a south-south context. In particular, GHEF2009 will focus on the theme of Global Higher Education, seeking to ponder and reflect on the benefits and challenges and at the same time, envision the way forward for emerging and expanding, rather than for established, higher education systems.

This is a group that actually wants to think about alternative approaches to those which are celebrated above- approaches that may be enormously more valuable for the countries involved. As pointed out in the Background and Rational of the meeting:

In view of the many similar initiatives by different regions and groups to promote the development of higher education through a common platform (which is increasingly biased towards European/American models), the deliberation on the practicality and appropriateness of Asian, Latin American and African countries following the same pathway is timely. The current global economic meltdown presents another interesting backdrop and context to analyse and deliberate on the suitability of European/American models for expanding and emerging higher education systems in Asia, Latin America and Africa.

There is a wonderful article in GlobalHigherEducation written by two members of the organizing committee, Morshidi Sirat and Ooi Poh Ling, describing the goals of this forum. We should all wish them success.