HESA

Higher Education Strategy Associates

October 02

Straight Thinking about International Education (2)

Yesterday, we looked at one of the big mismatches in Canadian international education; namely, that big-names schools simply don’t have the financial incentive to take many more international students than they do already. Today, we’ll look at another pervasive mismatch: the one between program demand and program capacity.

Bluntly, international students tend to be less interested than domestic ones in programs like philosophy, women’s studies, fine arts, education, social work, etc. What they’re really interested in learning about is business, science and engineering/technology. It’s a cultural thing; most of our international students come from countries which view higher education in a fairly pragmatic light. If we had more students from America and Western Europe, it might be different, but we don’t and it isn’t; our customers want science, engineering and business.

Most schools offering undergraduate programs to international students would prefer to have them take business courses than science or engineering, simply on grounds of cost. The average international student fee doesn’t cover the cost of an undergraduate engineering degree, so it’s actually a financial burden to let them into that field (though of course international students may bring some other benefits which make it worthwhile). But what happens when the business courses fill up, or when an institution hits capacity in science or engineering?

One of the hot memes in campus international offices these days is the need to “spread the international student experience around,” by which people mean that they would like to get more students into faculties other than business, science and engineering. Usually, it’s clothed in language about making sure domestic students get the benefit of contact with these exotic foreigners (a lingering relic of the days when the argument for international students emphasized how they were here for our benefit, rather than vice-versa). Rhetoric aside, though, an increasing number of schools have a substantive problem: they genuinely can’t accommodate more international students in the fields which are in demand. And their solution, apparently, is to try to shift demand.

This Canute-like response is doomed to fail. Success in international education depends on meeting and satisfying demand, not on trying to divert it into areas to suit our own preferences. If we’re going to be an international education powerhouse, meeting demand is something we need to learn how to do.

Bottom line: doubling international enrolment means vastly expanding programs in business and to a lesser degree science, even as other parts of the university shrink. No one says this out loud, because in our ultra-collegial universities, the political implications of such a policy change are brutal. But if we’re serious about doubling international enrolment, we need to face up to this imperative and plan accordingly.

October 01

Straight Thinking about International Education (1)

Over the past summer, we at HESA have been thinking a lot about international enrolment, and speaking to international student recruiters and advisers, and international students themselves. You’ll get to see some of the results of this in the coming months as we publish some of this research, but I wanted to share a couple of thoughts with you all now, while the federal task force report is still fresh in everyone’s minds.

My main thought is this: we’re not ready to double international student enrolment in this country. Not by a long shot. Institutions don’t have the capacity, and provincial governments aren’t prepared to create the right incentives to make them do so.

Let’s take an example. Institution A is a big, research-intensive school in the GTA while institution B is a regional school in northern Ontario. They both get about $12,500 per student per year in tuition and government grants for a domestic student, and both can charge about $16,000 per year in tuition for international undergraduates (net of stuff like health insurance and other fees that haven’t much to do with running a university).

For the regional school, the decision to go after foreign students is a no-brainer. These schools have declining enrolment and capacity to spare. Any dollar they get on the margin is a dollar they wouldn’t get otherwise – as long as they cover their recruitment costs, any income they earn from international students is a net gain.

But for Institution A, which doesn’t have any problems picking up domestic students, it’s a different equation. They have a choice between an international student and a domestic student, and so the decision will simply come down to: “is the margin between revenue from an international student and a domestic student large enough to cover all the costs associated with recruitment”? You lose ten to fifteen percent of the first year’s tuition right off the top in agent’s fees – that wipes out half your margin in year one right there. Then there’s paying for the international admission staff, the international recruitment staff (and presidents and VPs) and all their trips overseas. Throw in international student advisors and the cost of any head-taxes that a deeply confused provincial government may have thrown at you in the last budget, and it’s not clear why you’d go for foreign recruitment.

And there’s the central problem. Big research-intensive universities – the ones great foreign students would probably most like to attend (prestige matters in this market, folks) – have no financial incentive to accept them. Any plan to double enrolment that doesn’t address that simple issue isn’t going to work.

September 28

Credit Transfer Agreements

Minor buzz earlier this week about a credit-transfer agreement between seven universities in Ontario. According to the press release, Queen’s, McMaster, Western and the Universities of Toronto, Ottawa, Waterloo and Guelph have agreed to full recognition of each others’ first-year university credit.

While credit mobility generally is a Good Thing, this specific announcement puzzled me a bit. How is this actually new? Back in 1995, the Council of Ministers of Education, Canada introduced the “Pan-Canadian protocol on the Transferability of University Credits,” which essentially said that ALL first- and second-year course credits across Canada should be transferable. The Council of Ontario Universities (COU), to which all seven of these institutions belong, endorsed the protocol with a couple of riders to the effect that the right of credit transfer didn’t imply a right to transfer, and that institutions could still accept or reject whichever students they wanted. At least one of the seven universities actually passed this agreement through its senate; all seven of them endorsed it – 16 years ago – through COU.

The easiest interpretation here is that most or all of the seven have in fact been ignoring their own endorsements for the past decade and a half and so the agreement is genuinely new in practice if not in theory. And it’s easy to see why: credit or degree recognition, at the end of the day, is about trust. You have to trust another institution’s academics in order to recognize them as equivalent (or better) than their own. And until now that wasn’t happening.

This trust factor is in fact a major rationale behind quality assurance regimes the world over; institutions gain one another’s trust by setting explicit standards and meeting them. But that’s not very Canadian. We don’t like explicit standards and, as a result, we have no trust. And for some reason, whenever a government (or CMEC) wants to break the deadlock, they run from the obvious (but difficult) trust-based solutions preferring instead to blunder around shouting “thou shalt recognize each others credits,” to little effect.

Clearly, these seven institutions trust each other and are prepared to treat each others’ teaching as their own. It’s not surprising: six of them are U-15 members and so view one another as equals anyway (then there’s Guelph, which we said was basically U-15 quality a few weeks ago – apparently others agree).

That’s great, but there’s a more interesting question: why don’t they trust anyone else? I’d love to just ask the seven presidents: “what would, say, Laurentian have to do to join this agreement?” The answer, I think, would illuminate much about how institutions understand the term “quality” and the dog-eat-dog nature of the fight for institutional prestige.

September 27

The Reading List: Three Thumbs Up and a Meh

It’s been awhile since I updated the reading list, so, without further ado:

Science in the 20th Century and Beyond by Jon Agar. Less a history of scientific discovery as it is a history of contexts and manners in which science was practiced over the past century. In this interpretation, what gave American science the edge in the 20th century was less the massive inflow of talent from Europe than it was (a) the closer integration of scientists and engineers (the latter being very important in instrumentation) and (b) the ability of Americans to manage the discovery process in an industrial fashion (e.g., Bell Labs, the Manhattan Project). It’s also enlightening on the subject of how commercial problems, in one way or another, have always had a decisive factor in shaping the scientific agenda. For such a broad and important topic, it’s a very well-written survey.

The Roots, Rituals and Rhetorics of Change: North American Business Schools after the Second World War by Mie Augier and James March. This is intellectual history the way it is supposed to be written. It’s the story of how a few key individuals and institutions (RAND, the Ford Foundation, the University of Chicago and Carnegie Mellon University) managed to create an intellectual movement in favour of changing and upgrading an entire field of university activity. Though you’d never know it now, the move to create a modern business school was consciously based on the process of reform that had swept through the field of medicine forty years earlier. The last third of the book could have used a better edit, but it’s still worth a read.

How Economics Shapes Science by Paula Stephan. This book, which looks at the economic incentives which face individuals and institutions engaged in science is almost certainly the best book on public policy and higher education published anywhere in the world this year. For obvious reasons, it’s fairly U.S.-focussed, but even that is in some ways enlightening; I for one had absolutely no idea the extent to which American universities were built on soft money (being a V.P. Finance at one of those schools must be absolutely terrifying). It’s a lucid sweep over an enormous literature which isn’t often tackled in a systematic way. If your job in any ways relate to making policy on science and research, this needs to go on your reading pile.

Lessons Learned: Reflections of a University President by William Bowen. Presidential memoirs are rarely very entertaining. Bowen’s is mercifully short, but far too Princeton-centric to be of interest to most. Plus it’s suffused by that seriously pompous tone that male American university presidents tend to have. Why can’t they be more like Josh Molina in The Big Bang Theory?

September 26

Public Research or Risky Research?

Why do we pay for research from the public purse, exactly? As I wrote a few weeks ago, it wasn’t always the case. It was only after American scientists working in universities demonstrated how their knowledge and skills could contribute to national security that the idea really took off.

Fifteen years later, two American economists came to provide a dollars-and cents rationale for public funding of research. In 1959, Richard Nelson argued that the private sector was likely to underinvest in “basic research” with wide applications relative to “development” of specific products and applications because companies were simply much less likely to be able to fully capture the benefits of the former. Kenneth Arrow then popped up a couple of years later in a paper called The Rate and Direction of Inventive Activity and argued that there were actually three reasons why companies might not invest appropriately in research: indivisibility, inappropriability and uncertainty.

When we hear university lobbyists talk about the need for more “investment” in research, they’re usually relying on Nelson’s arguments, which imply that basic research is a classic case of government intervention to solve a market failure. But maybe we should pay more attention to Arrow’s arguments; the private sector doesn’t shun basic research because it’s unprofitable – it shuns it because it’s risky.

Yet, as governments around the world have increased their investments in research, they have also been promoting ideas about ensuring that the public receives “value-for-money.” The problem is that doing this creates a lot of incentives for “safe” research – research that one knows in advance has a good chance of “success”, in the sense that it will yield a modest advance in human understanding (and, of course, publishable results).

The problem is that the more governments insist on “value for money,” the less useful public funding actually is. If government-funded science is just as risk-averse as private science, what’s the point? Obviously all that research money is useful for the care and feeding of twenty thousand scientists or so, but what’s the actual public benefit?

There’s an interesting thought experiment here: what if we slashed research budgets but also removed all the constraints around value-for-money? There’d be less money overall, but just the crazy geniuses would be let loose to do things which are really innovative. Sure, there’ll be higher rates of failure but that’s what public funding is actually for.

What do you think the actual benefits to society would be? Would they increase or decrease? Hw big a research budget cut would it take before the loss of money outweighed the gain of losing the constraints. In other words, what’s the cost of “value-for-money?”

September 25

Countries with Free Tuition

One of the things that various anti-tuition types like to point to in debates is the number of countries which have “free tuition” (by which they mean the user pays nothing and the state pays everything). If these dozens of countries can do it, the argument goes, why can’t we?

There are limits to this line of argument, as, on its own, it’s a variant of “my friends are jumping off a bridge, and I’d like to join them.” But perhaps these countries provide evidence which suggests that free tuition in some way “works”; if so, it would be worth taking a look at these countries.

And that’s where the problem starts. Free tuition genuinely only exists in a few places: Scandinavia, Greece and the Gulf Emirates. Most of the countries that people like to refer to as “free tuition” do in fact have fees of some kind – in some cases, quite substantial ones.

How do these countries appear to be “free-tuition” without actually being so? Here are a few tricks:

(1) Introduce fees which are not called “tuition.” French students pay a few hundred euros a year in these kinds of fees. In Ireland and Italy, the annual administrative fees are now up around 1000 euros. Ghana uses this ruse as well.

(2) Make sure the no-fees thing applies only to full-time students at mainstream universities. Ireland charges quite high part-time student fees. The French exempt Les Grandes Ecoles from tuition rules so they can charge several thousand euros per year.

(3) Introduce “dual-track” tuition. That is, keep tuition in public universities free for some students (usually the ones who score high on exams), while introducing high tuition for others. Poland is big on this approach – so too is much of Africa (e.g., Kenya, Uganda).

(4) Keep public universities small. This one’s a favourite across Latin America. Keep tuition free at public universities, but keep the supply of public spaces very small (because it’s too expensive to educate all those kids publicly), and limit them to students who do well in matriculation exams. Places like Brazil, Argentina and Mexico push around two-thirds of their students into private universities in order to keep the fiction of “free” tuition.

Options 3 and 4 in particular have appalling consequences. Kids from rich families who can pay for top-notch secondary education get free tertiary education at good institutions, while poorer students pay thousands of dollars for lower-quality private institutions. In much of the world, that’s the consequence of “free” tuition.

But, hey, as long as you can get some misguided adulation from Canadian free-tuition campaigners who can’t be bothered to check facts, I’m sure that’s good enough.

September 24

Fifteen Years Ago Today…

Jean Chrétien rose in the House of Commons to present his reply to the Speech from the Throne. About half-way in, he noted casually that there would likely be a financial surplus that year (a miracle, considering where we’d been in 1995). And he was planning to blow it on something called “Millennium Scholarships.”

Until that exact moment, his caucus had been in the dark about the idea. Indeed, cabinet had been in the dark until the day before. So, too, had the Privy Council Office – Chrétien had deliberately kept them out of the loop because he knew they’d hate it.

The way the project was pursued in the run-up to the 1998 budget didn’t do the Foundation any favours. There were two basic problems. One was that it wasn’t clear for months whether these were going to be merit scholarships or need-based grants (in French, the word “bourses” covers both). The civil servants at HRDC and Paul Martin wanted it to be about need; Pierre Pettigrew and the Finance mandarins wanted it to be about merit.

In the end, 95% was distributed “primarily” on the basis of need, while 5% went to merit. This mix was about right; broad fears of rising tuition and debt required a policy response that emphasized need. Conversely, had more been allocated to merit, the excellence awards would have been devalued – part of what made them special was the fact that they weren’t available to the tens of thousands of students originally envisaged.

The second problem was that no one in Ottawa – including HRDC – really understood how student aid worked. The result was a commitment to give the Foundation’s need-based aid to students with “the highest need” – that is, to exactly the students who already received grants from the provinces. The result was that Millennium awards ended up saving provincial aid programs a bucket-load of money. The Foundation did its best to get provinces to re-invest that money. Apart from Ontario and Nova Scotia it was pretty successful. With some justification, students were disappointed; Eddie Goldenberg was apoplectic.

This isn’t the place to recount the Foundation’s history (for that, I recommend Silver Donald Cameron’s A Million Futures. All you really need to know is that for ten years, the Foundation ran a national social program that wasn’t one-size fits all, it ran a merit program that was much more than just money-for-marks, and was rigorous about using empirical research to improve our understanding of how to improve access to higher education. It was just a different way of doing student aid.

The Foundation was created on the back of a cocktail napkin. But within the boundaries of that cocktail napkin, a lot of neat stuff happened. The country’s worse off without it.

September 21

Friday Round-up

Frequently, I’m asked how I manage to write these blog posts every day. Well, a lot of it is planning – if you use the summer months to build up a stock of articles, the day-to-day is less onerous. And then there are days like today, when I blatantly cheat on the format by ditching reasoned argument and just belch up of a bevy of hotlinks accompanied by vaguely pithy commentary.

Reason Number One Why Universities Aren’t Rushing To Online. www.wetakeyourclass.com. Go ahead, click on it. You’re allowed to weep after reading it.

New Heckman Article on Early Learning. If you’re a veteran of the “why spend on college students when you can spend on early interventions” debate, you’ll like Nobel Prize-winning Economist James Heckman’s piece in this month’s Boston Review.

University of New Delhi Plans to Introduce Four-Year Degree. Presented without comment. It’s too easy and I have standards.

Department of “It Could Be a Hell of a Lot Worse.” Greek university professors asked to take a 17% pay cut (from a really low base). Japanese professors take an 8% cut, in line with other public servants, to pay for the Tohoku earthquake/tsunami. Seriously, why aren’t Canadian universities aggressively scouting in these countries? Our packages are so much better, it’d be a cinch to raid some good talent.

Missing Out on Revenue Streams. If the argument against online education is that students are paying for social experiences, then universities need to start monetizing some of these experiences. This one in particular seems like a good place to start.

There are Whole Graduate Theses in Psychology Waiting to be Written about This. Coursera’s free, non-credit MOOCs apparently are rife with plagiarism. Try introducing that clanger into the human capital theory vs. signaling theory debate.

Hong Kong Switches From a Three-Year to a Four-Year Curriculum. Also presented without comment. Although, man, restraint is hard.

Don’t bet on MOOCs. This article by Arnold Kling is, I think, pretty persuasive on why we’re all watching the wrong things in terms of how technology is affecting education.

More from the Department of “It Could Be Worse.” This one’s a bit dated, but I don’t think it’s widely known: Chinese universities are collectively in debt to the tune of $40 billion, mostly due – allegedly – to corruption (though given the Epoch Times’ well-known beef with the PRC, take that with a grain of salt). That sounds bad until you realize that per capita, it’s only about 20% of the size of the gap in Ontario universities’ pension funds.

Have a good weekend.

September 20

The Cost of PSE, 2030

One type of story which always makes the back-to-school news is the “what will PSE cost in 2020/2025/whatever” (the choice of year is usually 18 years in the future) story, which normally emanates from a press release from a financial institution trying to sell savings products of some kind. The problem with most of these estimates is that they are based on straight-line extrapolations of recent trends. Thus, all the stories from the late nineties assumed that 8% increases in tuition were going to continue on indefinitely; thus the headlines that the cost of an education by 2015 would be in the region of $125,000. Cue apocalyptic headlines.

I’m not here to engage in retrospective sniggering – heck, it was perfectly clear at the time that these projections were nonsense. Making decent projections isn’t tough: and just to prove it, you can do a walkthrough with us of our own PSE cost projections for 2030.

Tuition (40% of total expenditures): It doesn’t seem like we’re heading towards large tuition increases anytime soon. Governments have decided that universities are like utilities and need to be regulated in roughly the same way. That said, like all labour-intensive industries, costs tend to rise faster than inflation and it’s not as if governments will have the money to cover that. So, let’s say that tuition will rise, on average, by 2% above inflation, or 43% over 18 years.

Books and supplies (7%): In some industries, technology reduces prices, but not in this one. For the forseeable future, the model for publishing is going to involve giving students better products for similar or higher prices. Best guess: 1% over inflation, or 20% by 2030.

Rent (25%): This depends a lot on location: over the last decade, rent went up 46% in Saskatoon, but fell in Toronto. Best guess: no change in real dollars.

Food (12%): This could actually be the biggest problem area. Oxfam recently suggested that food prices could double by 2030 due to rising demand and climate change. Even at half that (which is what we’ll use), it would be a big increase.

Transportation (7%): This one’s tricky – does Peak Oil hit? Do fuel efficient/electric/driverless cars make a major difference? To be conservative, let’s assume a 50% real increase, as for food.

Other (9%): Almost by definition, everything else is going to rise at about the rate of overall inflation.

(Disagree with our guesses? Make your own! Then multiply out by the weights provided.)

Multiply all that out, and what you’re looking at is an increase in total PSE costs of 26.1% (or, about $4,700) over and above inflation over the next 18 years. Nothing to sneeze at, of course, but not exactly apocalyptic, either.

September 19

Prizes for Excellence

I wrote recently about using prizes as a way to distribute research money. More generally, though, prizes have a lot of potential as a way for governments to influence institutional behavior and create a more diverse higher education sector, and deserve to be given a lot more thought by policymakers.

The reason for this is that we desperately need a more diverse set of incentives in our system. When politicians moan about how universities “aren’t responsive,” they are getting it precisely backwards; universities are plenty responsive to the financial incentives that are in front of them. At the moment, they only really get rewarded for doing two things: admitting more students and publishing more research (academic norms of behavior reward publications, too, so there’s a built-in second incentive on that front). Ministers can kvetch all they want about other stuff, but unless you change the incentives facing institutions, their behavior won’t change.

The solution, simply, is to set up a different set of incentives. They don’t have to be enormous – a small tail can wag a pretty big dog in academia – but they have to substantial and varied. For instance, why not give $5 million each year to the institution that gets the best teacher ratings from its students (yes, I know they can be gamed, but there are equally ways to control for gaming – see Côté and Allahar on this.). Or $10 million to the institution doing the most to promote local economic development? Or $10 million to the university doing the best job of integrating technology in the classroom? It’s a cheap way to buy change.

A really ambitious version of this was mooted recently in the pages of Policy Options, where former PMO Chief of Staff Ian Brodie suggested creating a $1 billion challenge fund to get one Canadian institution into the Top 10 of one of the major rankings agencies. Under his plan, the institution would get the money up front and pay it back if they didn’t succeed within 10 years.

Now, I’m fairly sure this specific plan wouldn’t work. Apart from the Shanghai rankings, the methodologies change too radically from year to year to make them reliable barometers of excellence, and the gap between U of T, UBC and McGill and the current top 10 of the Shanghai rankings is probably too big to be bridged by $1 billion over ten years. And if I were going to start incentivizing stuff, it probably wouldn’t be in research, because there are already lots of incentives there.

But Brodie’s basic idea is an excellent one. We need more and varied incentives. Bring’em on.

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