HESA

Higher Education Strategy Associates

February 17

Some Curious Student Loan Numbers

Every once in awhile, it’s good to go searching through statistical abstracts just to see if the patterns you take for granted can still be taken for granted.  So I recently went hunting through some CSLP annual reports and statistical abstracts to see what I could find.  And I’m glad I did, because there are some really surprising numbers in the data.

So here’s the really big take-away: the number of students borrowing from the Canada Student Loan Program rose from 365,363 in 2008-09, to 472,167 in 2012-13.  In just four years, that’s an increase of 29%.  Which is kind of staggering.  It’s therefore important to ask the question: what the heck is going on?  Where are all these new borrowers coming from?

Well, for one thing, we know it isn’t being led by a new wave of students in private, for-profit institutions.  In fact, the increase occurred across all types of institutions, with a slightly more pronounced growth among students in community colleges.

Figure 1: Growth in Number of Student Borrowers by Type of Institution, 2008-09 to 2012-13

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It’s a different story when we look at borrowing growth  by province.  Here, we see a more straightforward – and somewhat puzzling – story: borrower numbers are up fairly substantially everywhere west of the Ottawa river; however, numbers are even, or down slightly everywhere in the Atlantic (note: because we are looking only at CSLP borrowing, there is no data for Quebec, which has opted out of the program).

Figure 2: Growth in Number of Student Borrowers by Province, 2008-09 to 2012-13

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One thing that Figure 2 obscures is the relative size of the provinces, and thus the portions of growth in borrower numbers.  Ontario, where growth in borrower numbers has been 38%, actually accounts for over three-quarters (77%) of all growth in borrowing within the CSLP zone; in total, Ontario now accounts for nearly two-thirds (64%) of the CSLP loan portfolio.

You can’t explain Figure 2 in terms of economic fundamentals: neither the recession’s effects nor education costs were that different in the Atlantic.  To a considerable degree, what Figure 2 is really showing is population change: youth populations in the Atlantic are shrinking, and that is primarily why their borrower numbers are going down (Newfoundland is falling even further because of real declines in costs and – probably – because family incomes rose quickly in this period thanks to the oil boom).

To get a better look at changes in the borrower population by province, we need to look at changes in the percentage of full-time students who are borrowing.  Now, it’s difficult to do this because CSLP itself doesn’t calculate this figure, and doesn’t quite break down figures enough to do it accurately.  So below in Figure 3 what we show is the number of total borrowers (including at private vocational colleges), divided by the number of students enrolled full-time in public universities and colleges.  This will slightly overstate the percentage of students borrowing (borrowers at private colleges make up about 10% of the borrowing population, so mentally adjust the numbers downward if you would); also, the denominator is total students enrolled in the province, not originating in the province, so Nova Scotia’s figure in particular is an undercount because of all the out-of-province students there.  With those caveats in mind, here are the percentages of students borrowing across the country:

Figure 3: Percentage of Full-Time Students with Loans, by Province, 2008-09 and 2012-13

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The percentage of students borrowing grew in every province except Newfoundland, Saskatchewan, and New Brunswick. But the real story here is Ontario, where the percentage of students borrowing jumped by nine percentage points (from 44% to 53%), which led to a national rise of seven percentage points (42% to 49%). It’s not entirely clear why there was such a jump in Ontario.  The recession there was not that much more severe than elsewhere, and student costs, though high, were not rising that much more quickly than elsewhere.  Part of the answer may be that in the last couple of years the new Ontario Tuition Grant has been in effect, which enticed higher-income students into the student aid system with its outrageous $160,000 family-income cut-off line.  But that can’t be the entire story, as growth in numbers was actually fairly steady from year-to-year.

What might be going on? My guess is two things.  First, student numbers are expanding in most provinces.  Almost by necessity, if expansion is happening, it is going to happen disproportionately among those who we traditionally call “underserved” (that is, the poor, students with dependents, etc.), who by definition are more likely to be eligible for student aid.  This is to say, what we are seeing here is not evidence of a problem, but rather evidence of student aid working exactly as it should, to expand access.

The second factor is what I call delayed recognition.  Back in the 2000s, student aid eligibility for dependent students was expanded enormously.  Essentially, we went from a situation in 2003 where most families saw eligibility for student aid end at around the $85,000-$90,000 mark in family income, to one in 2006 and thereafter where the cutoff rose to about $160,000 (the number varies a bit by province and family size, but that’s roughly the scale of the change).  However, much to everyone’s surprise, take-up rates barely rose, presumably because CSLP didn’t go out of its way to advertise the changes much.  What may be happening is that families across the country – but especially in Ontario – may finally be cluing in to how much assistance they are entitled to under the post-2006 rules, and acting accordingly.  In other words, this could just be an improvement in take-up rates rather than a deterioration in family and student finances.

February 16

Two Simple Reasons Tuition Rises Have Little Effect on Access

It’s that time again, when boards of governors are thinking about tuition for the upcoming year; and as a result, people will be rehearsing their arguments for and against tuition increases.  The basic argument against is the rather simplistic, “higher fees means lower participation”.  And it’s wrong.  Here’s why:

The argument essentially relies on that thing everyone remembers from first-year Econ, where you draw your first supply/demand curves.  When price falls, demand rises; conversely, when price rises, demand falls.  Therefore, a rise in the price of tuition must cause a drop in demand, right?

Well, no.  For this to happen, the starting price must be a market-clearing price – that is, the price that the market will bear.  But in Canada, there are very few universities where this is the case.  In most instances, tuition is already so subsidized that the price is well-below market-clearing levels.  So it’s possible to raise the price without actually affecting aggregate demand.

Think about it: even while we worry about the effects of a price change of a few hundred dollars, we also talk about how great higher education is, and how it makes a difference of tens or hundreds of thousands of dollars in lifetime income (depending on who’s doing the counting, and how).  Well, students aren’t stupid: if there’s an investment that’s going to bring them tens or hundreds of thousands of dollars, a matter of a few hundred dollars isn’t likely to deter them.  Want a prime example?  The massive tuition hikes in the UK in 2012 – which amounted to about $10,000 per year – made almost no dent in access rates (and to the extent they did, the effects were greater among the wealthy and white than the poor and non-white).  Want more data on this?  See here, herehere, and here.

(It’s a different matter when students don’t perceive the benefits that way, which is possible; however, the correct answer in that case is to get the informational issues sorted out.)

Ah, you say.  But what if it’s not a price/value issue?  What if it’s a liquidity issue?  Sure, students understand the value of the degree, but the issue is that they can’t put the money together in the short-term.  And tuition fees make it harder to make ends meet.

Well, that’s a fair point.  Students are cash constrained.  But remember that in Canada, we hand out north of $10 billion in loans, grants, tax credits, and scholarships to students every year.  And half of our students work – maybe not the most ideal source of money for school, but it’s still a mainstay for many learners, and a source of extra income if necessary.  Most students can cover extra costs if need be, which explains why, in point of fact, enrolment over the past three decades has tripled even as tuition has risen by roughly the same.

This is not to say that tuition can be raised with impunity.  Our student aid system is generous, but also it is complicated and opaque, and in need of reform. Some students already receive maximum aid: these students may have significant difficulties in meeting tuition rises, and offsetting measures need to be taken to protect them.  And just because tuition rises in general tend not to have much effect, this doesn’t mean that all fee increases work for all institutions: depending on what local competitors are doing, tuition hikes can sometimes be counterproductive.

In other words, there are good reasons to proceed with caution on tuition fees, to set aside extra funds for vulnerable students, and urge faster reform of student aid.  But they aren’t good reasons to forego a tuition rise altogether.

February 11

“Corporate, Neo-liberal Universities”

Yesterday, we examined Jamie Brownlee’s claim that government’s were engaging in “austerity” in order to ensure that universities became “corporatized”.  The conclusion was that you have to use some pretty idiosyncratic definitions of austerity to make the term stick even half-way; and even then, it’s impossible to make the charge stick after about 1995.  But what about the more general charge of universities becoming “corporatized”?  Does that have any traction?

The main problem with examining this claim is that the word “corporatization” – much like the term “neoliberal” – can mean pretty much anything one wants it to mean.  I went and checked Brownlee’s PhD thesis for this (available here); in the course of the first few pages, he offers up a number of quite different definitions, without really remarking either on how different they are, or on their implications.

For instance, he says:  corporatization” (refers) to the process and resulting outcomes of the ascendance of business interests in the university system.”  Which is fine I suppose, though it depends quite a bit on how one defines “business interests”.

But there are loopier definitions referenced, too: “Corporatization in the university context involves providing businesses with the means to socialize the risks and costs of research while privatizing the benefits, and to accrue advantages through the transfer of technology to the private sector. It subsidizes the retraining of the corporate workforce through a vocational and technically-oriented curriculum, at the same time as increasing marketing opportunities for corporations and bolstering the perception of business legitimacy in higher education”. 

So here, the notion of research externalities simply goes out the window.  How about the idea that some basic research should be publicly-funded because there are types of research that the private sector will not undertake, as it cannot efficiently capture all its benefits?  That’s now twisted into some kind of corrupting evil because the resulting transfer of technology can be described as a “subsidy” to the private sector.  Also, in a description that will amaze engineering faculties worldwide, simply having a technically-oriented curriculum is now a form of corporatization.

Here’s another gem of a definition, which describes a corporatized university as: an institution that is characterized by processes, decisional criteria, expectations, organizational culture, and operating practices that are taken from, and have their origins in, the modern business corporation. It is characterized by the entry of the university into marketplace relationships and by the use of market strategies in university decision making”.

The first part of that sentence is magnificent in its scope.  Virtually anything could be described as an “operating practice”, which has its origin in the modern business corporation.  “Making biweekly payroll”, for instance.  Or, “actively finding efficient ways to run things”, or the dreaded “finding out if people are doing their jobs and rewarding them accordingly”.  How terrible.  How neo-liberal.

(An aside: I hear lots of cheap talk about “neo-liberal universities”, but nothing about “neo-liberal hospitals”, which are far more advanced than universities at using management techniques that find their origins in the modern corporation.  Why is that?)

The second half, the bit about market relationships, is in some ways even better than the first.  Now the mere existence of tuition fees, or even the notion of student choice, can be used as evidence of “corporatization” because anywhere where money changes hands obviously implies corporatization.  In fact, even a no-tuition system where institutions are paid on some kind of enrolment-basis might be described as “corporatized” or “neo-liberal”, because there would be (horrors) an incentive for universities to enrol more students, and that might lead them to use “marketing techniques” to persuade students to come – which of course is prima facie evidence of corporatization!

(Another aside: I recently saw someone on twitter claim that the increasing numbers of bureaucrats in universities was due to rankings, league tables, and other forms of neo-liberal control.  This is perhaps the first time in recorded history that neo-liberalism has been charged with the crime of increasing public-sector employment.)

So, are Canadian universities “becoming more corporatized”?  Well, if you define corporatization as, effectively, “taking any steps at all to ensure revenue and expenditure balance”, then yes, they are becoming more corporate all the time.  And a good thing, too: because in the real world the alternative to so-called “neo-liberal” universities are either bankrupt universities or much smaller, more access-restricted universities.  Which one would you pick?

February 10

False Charges of Austerity

A few weeks ago, Jamie Brownlee (who I believe is a graduate student at Carleton University) published a piece in Academic Matters (available here) in which he developed a two-part notion.  First, he argued that universities had become “corporatized”, and second, he believes that governments played a big role in this by de-funding universities through austerity.  I will deal with the corporatization argument tomorrow; today, what I want to do is demolish the idea that universities have been subject to austerity in Canada.

Specifically, Brownlee makes the following claim: “By the time the federal Liberal’s thirteen-year reign was over in 2006, Canada’s university system was a shell of its former self. Federal and provincial government funding for university teaching and non-sponsored research fell from more than $17,900 per student in 1980-81 to $9,900 in 2006-07.”

So, let’s start with the choice of describing government expenditure in per-student terms rather than in actual terms.  Between 1980-81 and 2006-07, the number of full-time equivalent students enrolled in Canada increased by 92% (headcount numbers increased somewhat less than that because full-time numbers rose, while part-time numbers did not).  So even if we take Brownlee’s numbers at face value (more on that below), what he’s saying is that total government investment actually increased over those 26 years.  Now, obviously there’s an argument to be had about whether total expenditure or expenditure per-student is the “right” measure.  But to not even mention the fact that government expenditure actually increased is plain dishonest.

There’s a second issue here.  Massification *always* entails a reduction in per-student expenditure.  No system in the world gets bigger by spending the same amount of dollars per student: the point is to take advantage of economies of scale.  Exclusively citing per-student investment is quite simply not prima facie evidence of austerity.  For instance, between 1975 and 1986, West German spending per-student fell by 26%.  Between 1975 and 1983, Dutch spending per-student fell by 30%.  And in Denmark, between 1975 and 1983, per-student expenditures fell 23%.  Are these all therefore examples of vicious neo-liberal austerity?  Or are they, I don’t know, simply what happens when the denominator rises more quickly than the numerator?

Now, on to the specific data points: Brownlee claims “federal and provincial spending for university teaching and non-sponsored research fell from $17,900 per-student to $9,900 per-student”.  I can’t replicate this figure.  First of all, there is technically no category in CAUBO’s Financial Information of Universities and Colleges for this.  You can look at income by source (i.e. federal, provincial) and expenditure by function (i.e. instruction and non-sponsored research), but not both together.  So there’s that mystery.

Assuming that what Brownlee means is federal and provincial income for general operating expenditures (i.e. excluding research, capital funds, etc.), my talented data maven Jacqueline Lambert and I can’t come up with numbers that even vaguely replicate his.  Using FIUC for the income data and USIS/PSIS for student data, we get the following:

University Operating Income from Government Sources, 1980-81 and 2006-7 (in $2013 constant)

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Maybe there’s an honest misunderstanding about data here, but this looks like a fall of 11% or 18%, depending on which set of student numbers one uses, not the 45% decline Brownlee reports.  And quite clearly, in terms of total expenditure, we see an increase of 58% in real dollars.  Austerity?  Please.

And more to the point, nearly all of the decline in per-student spending happened in the first half of the period in question.  Canada more or less hit bottom in 1996-97, since which time government expenditure per-student has bounced up and down, but has basically stayed within a relatively narrow band of between $9,800 and $11,200 per-student.  Thus, even by Brownlee’s own inaccurate view of what constitutes austerity, one would have to concede that the evidence is pretty thin.

Government Operating $ per FTE, 1981-2013

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Tomorrow: thoughts on charges that universities are becoming “corporatized”.

February 09

Can Universities Judge Themselves?

One of the more difficult problems to unravel in the world of higher education is the fact that universities are responsible both for delivering teaching and judging whether or not a student has learned enough to get a degree.  To most reasonable minds, this is a conflict of interest.  Indeed, this is the conflict that makes universities unreformable: as long as universities have a monopoly on judging their own quality, no one external to the system (students, governments) can make realistic comparisons between institutions, or can push for improvements.

Yet, it hasn’t always been this way.  Even in living memory, the University of London was, to a large extent, an examination body.  Higher education institutions all over Africa were simply “colleges” that taught at the higher education level; to get a degree, students would still have to sit exams set by the University of London.  One body teaches, one body examines.

Historically, Canadian universities did a lot of this kind of thing.  The University of British Columbia and the University of Victoria both started as “affiliates” of McGill, before they got degree-granting status of their own – students would learn at one institution, and then get a degree from another.  Ditto Brandon with McMaster.  Similarly, the University of Manitoba started out as an examining body for students taking degrees at a variety of denominational colleges across Winnipeg (including United College, which later went its own way and became the University of Winnipeg); even the University of Toronto got its start as an examining body, responsible for overseeing the work of denominational colleges like Trinity.  Eventually, of course, Toronto and Manitoba started providing teaching as well as judging, and eventually all of these institutions became the regular kind of universities we know today, only with really awkward college structures.

Would something like that still work today?  Well, in some places it still does.  A.C. Grayling’s much-maligned New College of the Humanities in London does not issue its own degrees, but rather prepares students to take the University of London exams.  In India, tens of thousands of colleges exist that do nothing but prepare students for examinations from one of the roughly 200 “real” universities (which also teach their own students at their own campuses).

Could we get this genie back out of its bottle by creating a new university, which could test what other universities are doing?  Well, this could only work if the new university had a higher level of prestige than the institutions that students were currently attending; otherwise, a student would quite reasonably not bother, and just stick with the degree from the institution s/he was already at.  The reason it used to work here is because the colleges were new and had no prestige, whereas the established university (e.g. McGill) or the provincially-mandated organization (e.g. Manitoba) were seen as bigger and better.

In truth, the only way this could work nowadays is if a genuinely stupendous university (say, Harvard) would offer to give degrees to anyone who could pass its exams.  But as we’ve seen with the MOOCs saga, the one thing that stupendous universities really don’t want to do is to dilute their perceived exclusiveness by giving out degrees to the hoi polloi.  You could set up government institutions to do it, as Korea has done with its Academic Credit Bank and self-study degrees; as innovative as those are, however, they are still seen as second-class degrees as far as prestige is concerned.

Where you could imagine this kind of system working is in developing countries, where a lot of new universities are opening at once (e.g. Kenya, Ghana).  Here, new universities might actually attract more students if they could claim that students would earn degrees from the system’s flagship institution.  But in our neck of the woods, it’s much harder to see a workable way to divorce teaching from degree-granting.

February 08

(#fake)Tenure, Governance, and Academic Freedom

If you follow higher education news from south of the border, one scrap you’ll probably have noticed over the past year or so is the one over tenure in Wisconsin.  Until recently, tenure provisions at the University of Wisconsin were inscribed in state law.  Last year, Wisconsin Governor and erstwhile presidential candidate Scott Walker decided to remove tenure protection, leaving the University’s Board of Regents to inscribe it in their own rules.  At the same time, the Governor gave university management more power, free from the scrutiny of Senate and other shared-governance arrangements, to close or modify programs.  Put these two things together, add the fact that public sector unions in Wisconsin are legally forbidden from bargaining over anything other than wages, and you have a situation where it’s a lot easier to get rid of professors than it used to be.

So far, so clear.  For obvious reasons, professors at Wisconsin are upset about this, and many are calling this new system #faketenure because they believe that any tenure protection given through new Board of Regents rules is effectively undermined by the new management powers to eliminate or modify programs.  This, they say, means that there will be a form of academic chill at Wisconsin, with people afraid to voice controversial opinions or undertake challenging research for fear of political backlash.

Now, I get why most professors would prefer the old regime to the new, but the idea that challenging or difficult research can only take place in environments where tenure is ironclad and all program modifications can only take place with faculty agreement is simply not true.  If this is genuinely your position, you have to have a good answer to the question: “what about the UK and Australia?”

In the late-1980s, the Thatcher government in the UK simply abolished tenure for anyone hired after 1987.  People were still hired on permanent contracts (though as in the US and Canada, massification also led to an increase in the use of part-time contracts), but there was nothing stopping institutions from making people redundant by chopping whole departments – as is the case in Wisconsin.  Of course, unions can deter this to some degree by insisting on buyouts, redeployments, etc (as indeed Canadian unions do, too – see here for more on this).  But essentially, the conditions in the UK are pretty close to what some in Wisconsin are calling #faketenure, and yet one doesn’t often encounter the claim that UK researchers are doing ideologically cowed, or less daring research.

It’s the same thing in Australia.  Universities give out “permanent” positions somewhat more quickly than our universities – their equivalent of “tenure-track” is maybe half as long as it is here – but academics are much more actively managed (a fall in publications will bring a rise in teaching load relatively quickly), and large-scale institutional restructuring is much more common (La Trobe University, for instance, more or less slashed its entire economics department a couple of years ago).  Again, possibly not a model to follow if you’re a prof, but can anyone really claim that Australian academics are less free, less bold, less daring than their counterparts elsewhere?

To put this simply: people make a lot of universal declaratory statements about tenure and academic freedom.  For the most part, they aren’t true.  There is lots of top-notch research – even in the social sciences and humanities, where a lot of the most controversial stuff is concentrated – that occurs in places without the specific North American context of tenure and shared governance.  This is undeniable.

Now, this isn’t to say that removing those kinds of protections over here in North America wouldn’t have an effect.  One of the reasons the loss of protection in Wisconsin is cause for concern is because Wisconsin’s Board of Regents is increasingly a partisan body, with its members entirely appointed by the Governor, and it’s not that far-fetched to imagine them going after specific programs or even specific professors.

But that’s precisely the point: claims about the effects/benefits/drawbacks of any particular constellation of policies on tenure and academic freedom need to take very close account of the legal and political context in which they are operating.  Claiming that tenure *has* to be inscribed in a collective bargaining agreement, or that it *has* to be inscribed in legislation are equally incorrect; the point is that there are many possible equilibria on tenure, governance, and academic freedom.  Claiming the opposite is simply evidence of a fairly limited imagination about how higher education can be run.

February 05

The Dilemma of Western Education in Saudi Arabia

I see that Ontario premier Kathleen Wynne recently took offense to the fact that Algonquin College is operating a male-only vocational college in Jazan, Saudi Arabia, calling the arrangement “unacceptable”.

What should we make of this?

First of all, let’s be clear about women and higher education in Saudi Arabia.  There are a lot of them; in fact, far more women attend post-secondary education than men in the country.  They just don’t – for the most part – attend the same campuses.  Often campuses get “twinned”, so you get male and female universities quite close to one another – sometimes taking the same courses from the same instructor, only with the women watching via cctv, and so in effect having a distance learning experience.

Aside: I did some work for a bridging-program for an outfit associated with the country’s only undergraduate co-ed university, Al-Faisal University, which was launched a few years ago.  It was “co-ed” in the sense that men were allocated the bottom two floors of the building, while women were allocated the top two floors.  Classrooms were on the second floor, but also had balconies that could be entered from the third.  So men and women could both be in the same room as the teacher, but could not see each other because they were on separate floors (there are some photos here if you want to get a sense of this).  This was deeply weird, but does represent progress in a way.

With respect to vocational training, what the Saudis did was to set-up 37 of these “community colleges” – 19 for men and 18 for women.  They then sent out tenders to colleges all around the world to run these campuses.  Algonquin won a bid for a men’s college; they bid on, but did not win, the right to run a women’s college.

So, the question is: morally, should Algonquin be running this school, or not?  Is it OK to run single-sex schools in Saudi Arabia?  My feeling is that the debate is between an uncomfortable yes and a mostly hypocritical no.

Obviously, it would be better all around if the education were co-educational.  Other campuses in the region have moved towards a co-ed model.  My understanding is that when College of the North Atlantic started running its campus in Qatar, there were discussions about whether the campus would be co-ed (the eventual saw-off: classes are co-ed, but eating and recreational facilities are single-sex).  But Qatar is Qatar, and the Kingdom is the Kingdom, and the only place where co-ed is allowed are in select private institutions sponsored directly by members of the royal family (i.e. KAUST, Al-Faisal), not in public institutions.  Basically, what you’re left arguing is that these kids are going to get taught in single-sex schools anyway, and if someone is going to teach them, it might as well be a bunch of folks from the Ottawa Valley.

The con case is, essentially: “it’s wrong to teach single-sex, and we shouldn’t muddy our hands with it”.  And fair enough.  But there are two places where this argument is vulnerable to a hypocrisy charge.  First, imagine Algonquin had won a competition for a women’s college but not a male one, or that it had won both competitions.  Would the Ontario government still be upset?  Unlikely.  So the objection is not to working in a segregated single-sex environment, but rather to working in one-half of it.  So should Algonquin have quit its male college contract when it didn’t win the women’s contract?  That’s just silly.

The larger hypocrisy case has simply to do with our attitude towards Gulf States as a whole, and Saudi in particular.  Let’s face it, it’s not education specifically that grates our consciences in dealing with these countries: it’s the whole regimentation of clothing, prohibition on driving, patriarchal she-bang, etc.  But either we’re consistent in our application of disgust, or we’re not.  Premier Wynne specifically chose not to contest the rightness of Canadians selling armoured personnel carriers to the Kingdom (which I suspect may infringe upon quite a few rights if they get used in Yemen); why apply our disgust to some areas of trade policy, but not others?

As you can probably tell, I lean a little bit towards the pro-side here, though I acknowledge it’s complicated and quite messy.  I think an equally important consideration, though, is whether the project is actually a good deal for Algonquin.  Note that, at the moment, they are losing money on the deal.  And although they maintain they’re on-track to make that money back over the course of the contract, my worry would be that the Saudi government starts “re-interpreting” contracts as their budget woes worsen.  I get the impression this may have been on Centennial College’s mind when they recently chose not to re-up their apprenticeship training contract in the Kingdom.

Still, it’s always good to be mindful of the tricky ethics of international education.  The situation is often far from straightforward.

February 04

Lessons from Scandinavia on the Value of Tuition Fees

Whenever you hear somebody complaining about higher education funding in Canada, it’s usually only a matter of time before someone says “why can’t we be more like Scandinavia?”  You know, higher levels of government funding, no tuition, etc., etc.  But today let me tell you a couple of stories that may make you rethink some of your philo-Nordicism.

Let’s start with Denmark.  The government there is trying to rein public spending back in from a walloping 56% of GDP, and bring it back down to an only slightly less-imposing 50% by 2020.  And it’s doing this while the economy is still weak, and while oil prices are falling (Denmark has some North Sea oil so, like Canada, it tends to see low oil prices as a negative).  So cuts are on the way across many services, and higher education is no exception: universities there will see cuts of 2% in their budgets for each of the next four years.  Over to Finland, where it’s the same story in spades.  Nokia as a technological saviour/massive boost to government coffers is long gone, and economic contraction in Russia is hitting Finnish exports hard.  With the economy declining and the government trying to stay out of debt, the government there also laid out cuts to many services, including higher education: there the hit is a cut of roughly 13% out to 2020.

Now, in North America, when you hear about cuts like this you tend to think “oh, well, at least the government will let institutions make some of it back through tuition, either by increasing enrolment, or raising fees, or both”.  And in general, this attenuates the impact of funding cuts (unless of course you’re at Memorial in which case you are plain out of luck).  But remember, these are free-tuition countries.  By definition, there is nothing that can attenuate the cuts.  And so that 2% per year cut for the next four years in Denmark?  The University of Copenhagen has since announced a first round of cuts equaling 300M DKK ($62 million Canadian), equal to about 5.5% of the university’s operating budget, and that will involve cutting 500 staff positions.   Those cuts in Finland?  The University of Helsinki has decided to cut almost 15% of its staff positions.

Total reliance on government looks good on the way up; much less so on the way down.  That’s why tuition fees are good.  You know students will pay tuition fees every year, which makes them more dependable than government revenue.  Fees balance the ups and downs of the funding cycle.

Another thing tuition fees do is to provide an incentive for institutions to accept more students; if institutions can’t charge tuition and aren’t funded according to student numbers, their inclination will be to accept fewer students, thus undermining the “access” rationale for free tuition.  And this seems to be the case in allegedly-access-friendly Sweden, where enrolment in first and second degree programs has actually been in decline over the past few years.

Total Bachelor’s/Master’s Enrollment at Swedish Universities, 2007-2014

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I know what you’re wondering: is it a demographic thing?  No.  The 2015 version of the annual report, Higher Education in Sweden (which is a great report by the way… one of those documents you wish every country could publish), makes it clear that the ratio of applications-to-acceptances for students with no previous post-secondary education (i.e. 18-19 year olds) has actually been rising for the last few years (from 2:1 to 2.5:1).  And it’s not a financial thing either: between fall 2010 and fall 2014, real expenditures at Swedish universities increased by 12%, or so.

So what’s going on?  Well, a few things, but mainly it seems to be that universities prefer to get more dollars per student than actually increasing access.  And I mean, who can blame them?  We’d all like to get paid more.  But I genuinely cannot imagine any jurisdiction in North America – you know, big, bad North America, with its awful access-crushing neo-liberal tuition regimes – where reducing spaces while government expenditures were increasing wouldn’t be considered an absolute scandal.  Yet this is what is happening in Sweden, and apparently everyone’s OK with it.

Total reliance on government funding can make universities complacent about access.  Fees can incentivize institutions to actually admit more students.  Fees have a role to play in access policy.  The data from Scandinavia says so.

February 03

The Economics of Interdisciplinary Programs at Small Universities

A minor kerfuffle blew up yesterday in Sackville when the coordinator of Mount Allison University’s Women’s and Gender Studies announced that, due to budget cuts, she had been informed that the university would no longer be offering classes in this program, as of next fall.  Cue petitions, angry students, a buzzfeed listicle, etc.

What follows here is a little explainer with respect to the economics of this situation:

Mount Allison is a small school.  Enrolment last year was 2,369, which was down 8.5% from four years earlier.  Not good.  Total projected operating revenue for the university this year and net money from the feds, like Canada Research chairs, is a shade over $44 million, of which very slightly under 50% comes from tuition fees, with domestic students paying $746.50/course.  A similar amount comes from the provincial government in a lump sum, which is not formula-driven.

The Women’s and Gender Study Program is one of those typical interdisciplinary programs you see at Canadian universities.  It does not offer a major, only a minor.  In practice, it consists of four courses (one each at the 100, 200, 300, and 400 levels), plus some fourth-year independent study and “special topic courses”, which in practice don’t get taught much.  In order to obtain the minor, one must take each of the three lower-year courses, plus at least one of the fourth-year courses, and then another 12 credits from a selection of about forty related courses spread across a dozen or so disciplines (see program description here).

For quite a long time, the program seems to have only had a single dedicated academic staff person, who sadly died late last year.  The coordinator role has since passed to a faculty member in the Psychology Department, and all of the teaching responsibilities have passed to an Instructor (i.e. sessional/adjunct) who – if you think RateMyProfessor.com is of any value – gets rave reviews from her students.

Enrolment is reasonably healthy.  There appears to be roughly 190 course-enrolments across all four of the courses – or about 19 FTE students.  Now, how you turn that student count into revenue is a bit tricky.  In a formula-funded system you could just add per-credit tuition, plus per-student grant, and voila!  In a block-funded system it’s trickier.  One could argue that this money simply doesn’t belong to any particular unit because even if one program disappeared, those students (and that money) would still be in the institution.  So, if you only count tuition as revenue, this program earns $145,255; if you choose to count government grant money as being associated with specific enrolments, then you get double that, about $290,510.

Now, I don’t have access to financial expense data at Mount Allison but it’s not hard to do a back-of-the-envelope estimation of program costs.  A sessional with a little bit of experience costs $10,000 per course at Mount Allison, give or take $1K (that’s cost to the institution, including payroll taxes, benefits, etc.); so a 4-course program like this would likely cost $40K a year, or so.  Coordinators usually also get some course-release, which implies another $10K to hire a sessional to cover this.  The program also shares an administrative assistant with two other departments.  I have no idea what the actual cost-sharing arrangement is, but let’s say it’s another $10,000, or so.  Throw in some other direct costs – phone, mail-outs, maybe a wine-and-cheese once a year, plus a guest speaker flown in – and you get to $70,000, give or take.

But that’s without overhead.  Now, how you count overhead on an academic department is a bit tricky.  It’s easy enough to simply take all costs like utilities, IT, student services, registrar, physical plant, and admin, and then divide it across all students: according to CAUBO finance statistics, that would give you a number not far off $7,700 per student (or $146,300 total).  But on the other hand, there’s also the argument that this is money the university would pay anyways, even if the unit didn’t exist (i.e. the same argument why you shouldn’t count the government block grant money, only in reverse).

For simplicity’s sake then, let’s not count either the government grant or the overhead costs.  We’ve got a program that appears to cost $65,000, and brings in $145,255.  So, what’s the problem?

The problem is that this fantastic situation only works as long as a sessional is the one doing all the teaching.  If the teaching is done by an Associate Professor (as indeed it was until quite recently), the economics change completely.  The minimum salary this year for associate professors at Mount Allison is $85,568.  Add in the costs of benefits, pension, etc., and you’re looking at something in the range of $110,000 at the absolute minimum for compensation.  Then throw in any costs associated with hiring replacement faculty for research leave, sabbaticals, etc., and of course admin costs on top of that, and you’re very quickly back to about $130,000.  But that’s minimum, assuming the lowest pay rung for an associate professor.  With annual pay rises, top-salary associate professors make almost $50,000 per year more than newbies.  In other words, it might break-even for a couple of years with a full-time prof, but would be unlikely to do so over the long-term.

Let that sink in for a second: at Mount Allison – and many other universities – it takes more than 19 FTEs (or 190 course enrolments) to support a mid-career Associate Professor.   That’s what our combination of faculty salaries and tuition policies have brought us to.

Now, I haven’t spoken to anyone in the Mount Allison administration about this issue: but it seems to me the logic would go something like this:

i)  As an institution we’re on seriously thin ice, financially: our per-student operating income is about $5,000 per head below what it is at U15 universities, and about $3,000 per head lower than Acadia;

ii)  We cannot sensibly run an entire program with nothing but sessional instructors;

iii)  This program will have difficulty breaking-even over the long-run unless it is taught by sessionals;

iv)  Maybe we shouldn’t offer this program anymore.

One could of course make the case that Women’s and Gender Studies is so important that it deserves cross-subsidies from elsewhere in the university.  And at larger and wealthier universities, this would be the case.  But at an institution as small and as cash-strapped as Mount Allison, it’s a tougher argument to make.  Most other departments are only just getting by, too.

Unpalatable choice, to be sure.  But that’s what running a university is all about these days.

February 02

Boards of Governors

One interesting piece of fallout from the UBC imbroglio is a newfound focus on governance.  A new group called Take Back #Tuumest (“Tuum est” being UBC’s Latin motto, meaning “it’s yours”) has started up, with the goal of reviewing how the university’s Board of Governors functions, and reducing the proportion of its government-appointed members (you can read their initial manifesto here).

So what should we make of this?  Is UBC’s Board too subservient to government, not attuned enough to actual campus issues?  To answer that, let’s take a quick tour of external governance around the world.

Board governance in Canada varies quite a bit from province-to-province.  As a general rule of thumb, the presence of government-appointees on Boards increases as you head from East to West.  In many places in eastern Canada, the institution pre-dates the province and so they never had government appointees to begin with (McGill, for example).  These Boards are, in effect, self-perpetuating oligarchies – similar to Boards at private US institutions.

In Canada, government appointments are given to friends of the government of the day.  As a result, Boards usually do not become overly partisan.  When governments change, the Board members appointed under different administrations stay in their positions for awhile, and Governors of different political stripes get along reasonably well, reflecting a fairly wide consensus about how universities should be governed.  In most instances, political appointments are more or less free to act and vote on their best judgement.  In the US, on the other hand, we are increasingly seeing state boards (often entirely made up of government appointees) acting like appendages of the Governor’s office, which makes them hyper-partisan.  This isn’t just bad for governance, it’s ridiculous – why have 100% government appointees when government is paying less than a third of the bill?

If you go further afield – say, to Europe where universities began – the tradition of external boards is not nearly as strong.  Indeed, there are some countries where governing boards are entirely free of external representation.  But the movement in much of Europe towards increased external oversight has intensified over the last two decades, or so: universities in Denmark and the UK are both required to have 50% plus one external governors (note: “external” does not necessarily mean government-appointed).  The reason?  Essentially, governments simply don’t trust universities to spend public money properly without external supervision.

The trade-off is essentially about what kind of relationship publicly-funded universities want to have with government.  Refusing government oversight through external board members just means government will try to re-impose control through other, more intrusive means – audits, budget control, greater control over procurement, you name it.  It is not, to be honest, a productive use of anyone’s time.

Is there a “magic proportion” of external governors – whether appointed by government or not – which is “right” for universities?  Not really.  There’s nothing particularly sacred about 50% plus one, other than it gives governments assurance that the lunatics (from their point of view) can’t start running the asylum.  At the University of Toronto, the proportion of externals on the Governing Board is considerably lower than 50%; though, in part, this is because the University’s anomalous unicameral system means that the Governing Board also acts as Senate.  And there’s nothing saying that external appointments have to be government appointments: McGill has proved a good steward of public money simply by appointing its own external overseers (direct government appointments in Quebec are arguably much less successful at doing this – see UQAM’s half-billion dollar construction fiasco).

But this observation cuts two ways: on one hand, there’s nothing particularly dangerous about #tuumest’s push for fewer government appointees; on the other, there’s nothing saying that altering the proportion of appointees is actually going to change much, either.  Boards are made-up of people: some are good and some are bad.  Nobody gave much thought to the UBC Board’s composition until it made a decision with which many disagreed.  And it’s not clear that moving a board member or two around at the margin would have changed the outcome.

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