Higher Education Strategy Associates

June 10

The Latest Bandwagon – American Students

Over the past couple of weeks, there has been a lot of talk about US students coming to Canada.  NBC ran a segment on Americans at McGill, and the Globe and Mail ran a piece on the same.  This seems to have led many institutions to start thinking “hot damn, another market! How can we grab us some of these Americans?”  

But for most institutions, this would be the wrong reaction.  Before venturing into a market, every school needs to ask itself two questions.  Why would Americans want to go to your school?  And why does your school want Americans?

Before a school starts recruiting in the US (any new market, really), some self-reflection is in order.  What, exactly, does my school offer an American that they can’t get at home?  “Cheap” isn’t good enough; Mexican universities are cheap but you don’t see American undergraduates flocking there (they weren’t flocking over our border when the dollar was at 62 cents, either).  There has to be a value proposition.

In fact, there are maybe a dozen schools in Canada that offer a mix of price and quality that make them attractive to parts of the US student population.  Students wishing to go to out-of-state flagship schools – say, Illinois or Virginia – can get similar product at a lower price in a better venue by going to McGill, Toronto or UBC (Queen’s would have a shot here, too; at a stretch, so would Alberta).  Students with their hearts set on a liberal arts education but who can’t get into any of the Tier I Liberal Arts Colleges in the US would consider St. FX, Acadia, Mount Allison or Bishop’s.  Windsor has a shot due to proximity.  For everybody else, it’s going to be a much harder sell.

Which brings us to that second question about “why Americans”: to the extent that international students are revenue sources, it’s important that they be cheap to recruit, so as to maximize net revenue.  If you’re not one of the above-mentioned institutions with a clear-cut value proposition, chances are that American students will be difficult and expensive to recruit. So why spend money chasing after them instead of, say, Korean students, when they all bring in the same amount of revenue?  You might of course just want American students because of the mix of experiences they bring to campus.  That’s fine – but you need to put a price tag on what that’s worth and limit your recruitment efforts accordingly.

In recruitment, every dollar is precious.  Institutions need to know their strengths and value propositions, and not chase every new market just because it’s new.

June 07

Shared Governance, Corruption in Education and Scientific Socialism

I’ve been in Romania this past week working with the World Bank and the Ministry of Education on an interesting strategy project. Just a few stories I thought I would pass on:

Shared Governance: In what I think was an attempt to curry favour among faculty members, the previous Romanian government brought in a bill in 2011 which created what I think is quite a unique “bicephalous” system of university government.  Under this system, the University Rector (who, as in many European countries and bits of Quebec, is elected by the university community) must share power with the President of Senate (a current faculty member).  Yay!  Faculty power!  Except the result seems to be that in a number of universities, business has ground to a halt as the two keep vetoing each others’ measures.  Not good.

Corruption in Education.  One of the alleged success stories in Romanian secondary school system over the past decade was the great increase in the number of students completing obtaining their Baccalaureate (as in France, getting one’s Bacc in Romania is a test-based affair separate from the act of finishing secondary school).   Back in 2009, over 85% of people who took the Bacc passed it.  Then they started installing webcams in test rooms to crack down on cheating.  The 2011 pass rate?  A mind-boggling 43%, suggesting that roughly half of all previous Baccs were the result of some form of fraud or cheating.  It’s obviously not a happy situation, but kudos to the government for facing up to the problem.  Confronting mass cheating on that scale takes political guts; that’s a lot of parents whose kids just lost part of their future.  The problem, of course, is that combined with a huge demographic shift (we’re now 20 years from the legalization of contraception and abortion in Romania, both of which were banned under Ceaușescu), universities just lost over half their potential intake.

Recovering from Scientific Socialism.  This is one of my favourite conversations ever about academia.

Me: (to a senior administrator at the Bucharest University of Economic Studies) So, after 1989, you must have had many faculty members who knew scientific socialism but didn’t know anything useful about the new market economy.  How did you adapt as an institution?

Senior Admin: Well, about a third of us actually did understand market economics – the ones who negotiated all the trade deals with the west.  We ended up running the place.  Another third left the university.  And another third retrained themselves and began teaching in other fields.

Me: Really?  So in what field of study does an economist who only knows Marxist slogans re-train?  Where do they teach now?

Senior Admin: Mostly in marketing.

La revedere și au un bun week-end

June 06

Where MOOCs are really headed

This year was supposed to be the Year of the MOOC. With summer coming, it’s worth asking the question: how have they done and where are they headed?

To me, the answer comes down to developments in three areas:

Demand. This year, MOOCs have proved that i) there is lots of interest in free, continuing education out there – mostly from people who already have degrees – and ii) there are an awful lot of universities who think that catering to that demand (by dropping $50,000/course to mount their own MOOCs) is a good investment in their own brand.

Profitability. Evidence that free MOOCs make economic sense is still thin. Udacity survives thanks to VC money, EdX on the charity of its vastly-endowed founding members, and Coursera on a combination of the two. All of the main mooted ways of making money – talent-spotting for businesses, students paying for certificates, etc.  have apparently come to naught. The day VCs ask for their money back is looming.

Accreditation. In the end, the only way to get revenue is if the courses are of value to students in terms of credit or credentials, which none of the MOOCs can do on their own. Attempts to force the issue– for instance, efforts by state legislatures in California and Florida to force colleges to accept MOOCs for credit – have not gone well.

Pedagogically, there is starting to be a consensus around three judgements. First, MOOCs in subjects that can be tailored to machine-learning (computer science and math being the most obvious) are – for non-remedial students at least – pretty good. Second, that they don’t really represent an advance in pedagogy because they’re still built around “the sage on the stage”. And third, despite that, many of them still constitute a good set of learning resources which can supplements regular old classes in meatspace. This is the MOOCs-as-textbooks, or MOOCs-as-MOORs meme that’s popped up quite a bit in recent weeks.

I think this last is about right; there’s a lot to like about the current generation of MOOCs as replacements or supplements to textbooks. The problem is there’s no obvious revenue stream associated with this option, so it’s hard time to seeing this as a durable outcome.

The other possibility is simply to become independent providers of online education in specialized fields of study. Udacity seems to be going this way with its recently-announced (and heavily subsidized by AT&T) MSc in Computer science with Georgia Tech. It hasn’t publicly said it’s switching strategy (though a poorly thought-out media release from their partners at the University of Alberta seems to have let the cat out of the bag), but it makes eminent sense. I find that Udacity’s insistence on calling it a “MOOC-MBA” (i.e. associated with Ivy League universities) rather than an “online MBA” (i.e. associated with University of Phoenix”) is ironically hilarious; even online, prestige is all.

June 05

Time for a Talent Agenda

Over the past few weeks, I’ve been critical of cheap talk about “skills gaps”.   That doesn’t mean that I think business complaints about human resources are baseless; the calls of dissatisfaction are too loud and broad for that to be the case. 

Business in many sectors has said loud and clear that it can’t get the workers it needs. The problem, I think, is that policymakers have concluded that the problem lies in the quantity of graduates in particular fields.  But what if the real problem is one of quality rather than quantity?  What if the shortage is not of skills or of labour, but of talent?

Canadians don’t spend much time thinking about how to develop or attract real leaders and innovators.  In the War for Talent, Canada is basically a conscientious objector.  Part of the problem (in higher education at least) is that focusing on talent is somehow seen as antithetical to promoting access (something Canadians rightly value).  But that’s a false dichotomy: success in promoting access shouldn’t be an excuse for failing to identify and nurture top talent. 

And fail we do, right across the board.  Our high school guidance system can do “tick-the-box academic advising” but can’t link students to horizon-broadening leadership opportunities in their own community.  Post-secondary scholarships are used as cheap enrollment management tools rather than as a means to identify and develop top talent.  The usual defense of our inaction is that talented young people take care of developing their talents on their own and that public policy should focus on the less fortunate.  But that’s only true if one takes the massively condescending view that “talent” is equivalent to “stuff children of the professional class do”. Assuming we want a broader definition of talent and achievement, and that leadership is something that is necessary in all occupations and walks of life, then its development is something we actually need to pay for. 

Though I could go on at length – how about an immigration policy which actually goes out and actively lures talented people in specific fields rather than complacently wait for them to show up? I’ll spare you.  But just imagine for a moment: a policy agenda which engages educators and businesses across the board in thinking about how we structure opportunities for youth, how we given them the tools to develop their own talents to the fullest, and how we engage everyone in becoming leaders and innovators in the economy and in society.  Now compare it with the juvenile “my-occupation’s-skill-set-is-more-important-than-yours” crap we’ve been dealing with for the last few months.  Which is likelier to lead to a Canada we can be proud of?


June 04

Some Insights Into Medium-term Education Outcomes

As I noted yesterday, Canada is unnecessarily bad at looking at medium-term outcomes of education. The only place where we have data on university graduates even five years out is in BC, and they publish the data in such a weird format (seriously: check it out) that no one really explores them.

It could be worse. In 2005, Statscan, did a 5-year follow-up of the class of 2000 and elected not to publish any results relating to employment or income. *Facepalm*, as the kids say.

However, because I have nothing better to do, I have put together three interesting figures on how graduates fare between years 2 and 5, in select disciplines (chosen because of sample size). It’s all courtesy of that same BC data on the graduating class of 2004. I won’t bore you with employment both at 2 and 5 years, it’s uniformly quite low. Let’s start instead by looking at incomes five years out. It turns out that while some disciplines do have precarious earnings in the first two years after graduation, median incomes rise across all fields by 35% between years 2 and 5 (that’s more than 10% per year, if you’re counting). Just for comparison, the median earnings among all Canadian workers in 2009 was $46,500. So, even in the “soft” disciplines, the ones that allegedly leave people without valuable skills like English and History, graduates five years out show median incomes above the national average.

Figure 1 – Median incomes, 2 and 5 years out, BC class of 2004, selected disciplines

Ah, you say: but are they using their skills? Aren’t they, perhaps, underemployed? Well, not really. Figure 2 shows the percentage who are in jobs which have been classified by the National Occupation Classification system as either being managerial or requiring university education. In the three disciplines where that percentage is lowest after 2 years (Biology, English, and Business) the rates of employment in high-skilled jobs jumps by 50-65% in the following three years. Five years out, the difference between history grads and computer science grads is only five percentage points.

Figure 2 – Percentage of graduates in jobs classified as “Management” or “Skill Level A” by NOC, 2 and 5 years out, BC class of 2004, selected disciplines

What’s perhaps most interesting is how graduates feel about how their education changes over time (figure 3). Across the board, graduates five years out feel less satisfied with their education and are less likely to say they’d do the same program again that they did at two. But while there’s a generalized malaise among students, the regret factor is clearly a lot higher in arts and science programs than it is in professional ones.

Figure 3 – Percentage-point change in graduates indicating satisfaction with program and indicating they would take same program again, 2 and 5 years out, BC class of 2004, selected disciplines

Anyways, that’s just what one bored dude can do with available data on a crappy 12-hour flight. Imagine if governments actually wanted to improve data and analysis in this area! Possibilities: limitless.

June 03

A Better Way to Track Graduates

The real problem Canada has with respect to the whole “does-education-pay” debate is data. It’s not that we don’t have people collecting data – we do, lots of them. The problem is that they’re all collecting data over time frames so short as to be largely meaningless.

The gold standard used to be the National Graduate Survey, which surveyed every fifth graduating class two and five years out. Now the 2-year survey is a year behind schedule and the 5-year follow-up has been discontinued. That’s right, folks – at the start of the recession, when Statscan took a look at their suite of surveys and decided which ones to can and which ones to keep, they decided that the one on medium-term educational outcomes was among the least policy-relevant and canned it. You know, so they could keep funding their monthly poultry storage reports .

For about a decade now, a number of provinces (all except MB, SK and NL) have started collecting data too; indeed, they have been doing so on a biannual basis, which is much better than Statscan could ever manage. However, most only track them out to 24 months, so the issue of long-term outcomes is still unaddressed. BC is the only province which does 5-year reports, and they’re quite interesting (more about them tomorrow).

The long-term outcomes of degrees and programs clearly matter a great deal. So why can’t we measure them? Cost, mainly. Anything further out that about 24 months is expensive to do well (BC’s 5-year response rates are disappointing, for instance), and so – penny-wise pound-foolish nation that we are – we don’t do it.

But there actually is a very cost-effective way to do this; namely, to link student records to tax records. Virginia, Tennessee and Arkansas have already linked their grads’ data to unemployment records and others seem poised to follow. In Canada, we could quite easily do the same thing by having Statistics Canada link its Post-Secondary Student Information System (PSIS) to the T1 family file. Instantly, with no new data collection expenses, you’d have income data by institution, program of study – what have you – as many years out as you like. As always with Big Data, there are some privacy concerns, but frankly none of them are very convincing, certainly not compared with the major public policy gains available.

Linking administrative databases is cheaper, faster and more accurate than what we do now. Why we haven’t moved to this system already is one of the biggest mysteries in Canadian higher education policy.

May 31

Coursera Jumps the Shark

Remember when Coursera – the world’s largest purveyor of Massively Open Online Courses (MOOCs) – was going to disrupt higher education, and put hundreds if not thousands of public institutions out of business? I know it’s hard to cast your mind back all of eighteen months, but try.

Actually don’t.  Because it’s all over. Yesterday, Coursera did a weird strategy about-face by announcing that, rather than competing with public colleges, it’s going to start competing with Blackboard instead.

We’ve been heading this way for awhile.  Last summer, the all-conquering Coursera, armed with $22M or so in venture capital (VC) money, and getting free content from major educational institutions around the world (including McGill and University of Toronto), was seemingly poised to dominate education everywhere, forever, because… well… OK, this part was never clear.  There seemed to be some idea that if you stuck “great professors” (i.e. big research names at big research universities) in front of a camera, eyeballs would follow.  This was always preposterous – if it weren’t, University of the Air would be prime time.  But, of course, nobody ever got rich telling people that the revolution wasn’t coming.

Coursera has simply never had a coherent plan to generate revenue.  Oh sure, it had a bunch of ideas about how to do it, which were outlined in this leaked MOU with the University of Michigan, but few seem to have panned out.  The only thing we’ve heard from Coursera is that their idea for charging people for certificates of completion netted $220,000 in Q1 of this year.  Given that Coursera’s annual burn rate seems to be in the neighbourhood of $10M (that’s on top of their partners spending $50K/course to place it on the Coursera platform), this is peanuts.  Allegedly, they were going to try to make money on a bunch of other things, like being scouts for businesses on the lookout for bright young talent, but there have been no announcements of revenue from these sources.  Given how the tech news industry works, it’s a safe bet that means the figure is close to zero.

So now, with no money coming in, and no new round of venture financing announced since last year (attention education journalists: go interview some Coursera investors – they’re key to this story), it announced this week that it would be working with partners like the University of West Virginia and the University of New Mexico – places which Coursera swore in writing to its AAU/U-15/Russell Group partners that it would never allow to offer MOOCS, because it would taint the brand.  Together with these institutions, Coursera will be developing something called “campus-based MOOCs”, which, upon closer inspection, is completely indistinguishable from what we’ve called “blended learning” for roughly a decade now.

And so the revolution ends with a whimper, not with a roar.

May 30

The Economics of Merit Scholarships

There is a wonderful moment in Philip Delves Broughton’s Ahead of the Curve in which he describes a fight between a student and an administrator at Harvard Business School.  During the altercation, the student asks why he is being jerked-around, since, after all, he is “the customer”.  To this, the administrator calmly replies: “no you’re not, you’re the product”.

For serious institutions, this is exactly right.  People judge a school based on its alumni and their accomplishments.  Students are just inputs in the making of alumni.  And since the easiest way to improve your outputs is to improve your inputs, it’s usually worth paying for better raw materials.  So the way to think about undergraduate merit scholarships is as an institutional attempt to purchase better inputs.

Think about it: what would it be worth to new-ish universities (say, MacEwan or Mount Royal) to have one of their students win a Rhodes Scholarship?  What benefit would they get in terms of recruiting and reputation for something like that?  My guess would be easily half a million or so.  So if you were President of one of those schools, and you could somehow forsee which teenagers were most likely to become Rhodes scholars, what would you stump up to convince such a student to attend your institution?  $100,000?  $200,000?

That sounds like a ridiculous question because we’re conditioned to think about the size of institutional scholarships as being a function of tuition (or, in the case of truly exceptional scholarships, like McGill’s Greville-Smiths, a function of tuition plus cost of living).  Yet we have no problem thinking about merit awards much larger than tuition at the graduate level; so why are squeamish about it for undergraduate students?

I think one reason is that people see too much waste in the current scholarships.  The number of genuinely outstanding people who could shift an institution’s reputation is pretty small; yet, on average, Canadian institutions pass out entrance awards to nearly two-thirds of their entering students in sums so small one wonders what possible purpose they could be achieving.  Fewer, bigger scholarships – or an outright diversion of money from merit to need – might bring greater results, but people are wary about potentially handing even more money to a system which, at present, achieves very little.

It would be interesting if one Canadian institution broke from the herd and started paying for talent as if it mattered, instead of dropping seven figures a year on masses of one-time $1000 and $1500 scholarships.  Among other things, we might just find out just how many great alumni it takes to shift public perception of an institution.  My guess is it’s fewer than you’d think – which is precisely why this is worth a try.

May 29

Rise Through the Ranks (RTR)

So, here’s the little budget secret that everyone in higher education tries to hide: it’s called Rise Through the Ranks (RTR).  That’s the name given to the automatic raise professors and librarians get every year, simply based on seniority.  And over the next few years, as we head into genuine zero-budget-increase territory, it’s going to significantly erode institutional purchasing capacity.

Come collective bargaining time, unions and administrations seem to go at it hammer-and-tongs.  “We demand a 2.5% annual pay increase!”  “No, we can’t possibly give more than 1.5%”, etc.  But what neither side tells the public is that these numbers are on top of raises that every professor gets for “passing Go” every year.  You see, there is the “headline” wage raise, and then there is RTR.   The fights you see in public are almost always about the former, and almost never about the latter.  The size of RTR varies from place to place; in most recent agreements I’ve seen it’s between 2 and 3%.  So when you hear that a faculty union has settled for 2%, keep in mind that individual faculty members are getting increases of 4-5% for the length of the agreement.

Some people argue that RTR doesn’t matter because it gets paid for by the savings an institution reaps when a full professor retires, and a cheaper, assistant professor is hired to replace him/her.  It is true, of course, that an institution books about a one-time $60K salary savings each time a professor retires.  But given that the average salary of professors in Canada is about $113,000, an RTR of 2.5%, means the cost of RTR per professor is a shade under $2,800.  Thus, for retirement to cover the cost of RTR, the retirement rate – that is, the percentage of all professors retiring in a given year – would need to be 4.7%.  In reality, at most Canadian universities, that figure is between 2 and 3%, so retirements only eat up about half the cost of RTR.  In practice, all those three-year agreements allegedly worth 2%/year actually cost the institution about 3.5%.

You can kind of see why no one wants to talk about RTR.  It’s in neither the unions nor the administrations’ interest to make it obvious that staff are getting annual salary bumps twice the rate of inflation; both know there would be a backlash.

Unfortunately, that doesn’t cut it anymore, because “2%” agreements are no longer affordable.  A 3-year 2% agreement means 10% higher labour costs at the end of the contract.  In most provinces, total income growth over the next three years from operating grants and tuition fees will be 5%, at best.  How that slack gets made up is anyone’s guess.

May 28

Some Developments in Rankings

I was in Warsaw the week before last for the International Rankings Expert Group (IREG) Forum.  The forum is designed both for those interested in rankings, and for rankers themselves – the principals behind the US News & World report rankings, the Shanghai Jiao Tong rankings, Germany’s CHE rankings, and the  Quacquarelli Symonds rankings are all regular participants.  It’s always been an interesting place to hear firsthand how rankings are evolving.  When it first started nearly a decade ago, there was a certain degree of rivalry between the main rankers.  Everyone was eager to prove the superiority of their own methodology.  There is much less of that now.  Among those who rank, there is an acceptance that there are many different ways to rank, and the desirability of any given system is largely dependent on the intended audience and the availability of data (which institutions themselves tend to control).  Nowadays, the Forum is interesting as a way to see how people are trying to refine indicators of institutional activity.

The main item of interest in Wasrsaw, though, was the inauguration of IREG’s system of quality certificates.  Seven years ago, the IREG group (including me) put together something called the Berlin Principles, a statement of good practice in rankings.  About three years ago, IREG moved to turn the Berlin Principles into the basis of a quality assurance system; that is, it would offer to certify rankings systems as being Berlin-compliant.  In Asia and Eastern Europe, where rankings have become a de facto method of quality assurance, there seems to be great demand for having external quality assurance for such rankers.

In any event, the rankings done by the Perspektywy Education Foundation and QS (the subject rankings) were the first two to volunteer for the process, and their audit groups were chaired by well-known higher education experts, such as Jamil Salmi (ex-head of the Tertiary Education Group at the World Bank) and Tom Parker (ex-Executive Director of the Institute for Higher Education Policy in Washington).  The process was essentially about compliance with the Berlin principles – most notably, the bits involving data integrity.  Passing an audit is meant to be the equivalent of an ISO 9000 certification, and both QS and Perspektywy passed, becoming the first to qualify for these certificates.

It remains to be seen, of course, if this certification will actually mean anything in terms of how people view rankings (will people be more drawn to the QS rankings now that they have an external stamp of approval?).  Regardless, this is a reasonably big step forward for rankings, generally.  Rankers are starting to show the kind of transparency that they demand of others, and their attention to quality and sound methodology is being rewarded.  It’s a step forward that everyone should applaud.

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