HESA

Higher Education Strategy Associates

Category Archives: Policy

November 28

Some Free Advice for the Parti Quebecois

So I see that the Government of Quebec, far from hitting their zero deficit target this year, is in fact going to come in with a deficit of about $2.5 billion.  This means that, not only will the “reinvestment” in higher education – the money that was going to compensate institutions for not getting their promised tuition increase – not come any time soon, but it’s better than even-money that there’ll be cuts this year instead.

Two points:

1)      Hey, CREPUQ!  Still think the “playing it quiet” strategy in the spring of 2012 was such a hot idea?  Congratulations on such a well-executed plan.

2)      Man, Quebec universities need to find some revenue sources.

That second one is a bit of a problem, of course.  The PQ has indexed domestic tuition to some form of inflation, and, as I understand it, the Liberals have agreed to this policy as well – so that’s out.  It could charge differential fees to out-of-province students, but they already tapped that well back 1996, so that’s out too.

So what about international students?

There are two oddities about Quebec’s international student fee policy.  One is the policy of having regulated fees in some disciplines (e.g. arts, science) and de-regulated fees in others (e.g. engineering and business).  Institutions get to keep all the money they take from students in de-regulated programs, but in regulated ones, any money received over and above what domestic students pay gets clawed back by the Ministry (yes, really).  The second oddity is that international students from la francophonie pay Quebec tuition.

It’s clearly time for Quebec to get rid of both these policy oddities.  The first one can’t be eliminated on its own, as it will be perceived as favouring the anglo universities, and, you know, dieu nous en garde.  But if both are killed together, then there’s something in it for everyone.  McGill gets to cash-in on all the Americans who come to study Arts, and enjoy the more righteous legal drinking age, and U de M and Laval get to actually charge all those European and African students who come over for the Engineering and Business programs.

(This is where someone says: “but they’ll lose students if they charge more!”  Irrelevant.  The only issue is whether they make up the attendant lost revenue through higher fees.  Which shouldn’t be hard.)

The benefits of the francophonie tuition policy are minimal.  Heck, one of its main consequences is that the Quebec government is currently subsidizing over 700 French students each year to study in English at McGill.  So why bother?  For the Quebec government, killing it would be a cost-free way to help universities with their funding issues.  It should be a no-brainer.

October 30

The Cultural Determinants of Student Debt Policy

With the school year now back in full swing, one of the things you’ve undoubtedly heard, and will continue to hear, is the question of student debt, and how it has become “out of control”.  And in that spirit, I wanted to relay a little anecdote.

A few months ago, as part of a student loans-related project that I was working on in a Southeast-Asian country, I led a session for government and bank officials looking at possible loan parameters, and their potential cost implications.  One of the parameters, obviously, was the repayment period of the loan.  In most of my sample models, I had assumed that the period would look something like Canada’s – about 10 years.  But in most of the models the participants developed, the period was only 4-6 years.

Shorter repayment periods on student loans are pretty common in Asia – in China, 4-6 years is also the norm. The policy implications of shorter periods are straightforward.  If the government is providing interest subsidies, then shorter repayment periods will reduce those subsidies; if not, then shorter repayment periods reduce the total amount of interest paid by students.  Either way, the shorter the period, the greater the repayment burden to students, as they must distribute the repayment of a given principal over a shorter period of time.

None of this was an issue for the participants, who just viewed debt as something young people had to repay quickly in order to get on with their lives.  When I pointed out that, in some cases, this would mean repayments would take up between a quarter and a third of graduates’ income, there were shrugs.  Borrowers were, for the most part, young and unmarried, participants said, they can just live at home and pay it off quickly.  What about getting married, I asked?  Or buying a car, or a house?  Almost unanimously, the reaction was: “pay this one down first, then borrow again if you need to”.

At this point it occurred to me that the entire narrative around student debt in the developed world is based on the notion that post-secondary graduates ought to immediately be able to join the middle-class, with all the consumption privileges that implies.  Data suggesting that graduates are putting off purchases because of student debt are treated as prima facie evidence that student loan debt is out of control.  In Asia, on the other hand, this might be considered a sign of policy success.

I am not saying the Asian way is right and ours is wrong.  I am just saying it’s worth understanding the cultural biases behind our own policies – and occasionally asking ourselves how much we want to pay to keep those biases intact.

October 25

Daycare Subsidies, Tuition Subsidies

I see the Globe is currently doing a series on affordable child care.  It’s a good series, but it’s striking how different the tone is from public discussions on higher education, despite the evident similarities between the two policy fields.

This occurred to me a few months ago while reading a Globe op-ed from a new-ish parent, wondering why daycare was so unaffordable.  It was framed in the Globe’s very weird, class-politics manner, as: “My wife and I make $100,000 and we can’t afford daycare”.

(Sidebar for non-Torontonians: the tribes of downtown “Tronna” have literally no idea that a $100K family income puts them around the 80th income percentile, and that such whining makes the rest of Canada want to smack them upside the head.  Nice people, but clueless in this respect.)

One meme which keeps popping up here is that daycare users should receive greater subsidies, as day care is an expense that people incur at a time in their lives when they’re just starting out, have less capital, etc.  In higher ed, our answer to this problem is loans, which provide precisely this kind of income-smoothing.  So why not provide loans to help people afford daycare?

Think about it: both Early Childhood Education (ECE) and higher education are non-compulsory forms of education, which is why we ask people to pay for them (compulsory education should always be free).  In universities and colleges, we generously underwrite the education providers, and provide need-based aid – part loan, part grant – to help people who can’t afford to cover the remaining costs.  In most of the country, daycares are funded similarly, if less generously.  The outliers are Quebec, where funding comes almost entirely through core grants (with a little extra assistance available to low-income parents), and Ontario, where it comes mostly through individual fees (though significant subsidies for lower-income families exist).  Thus, outside Quebec, net price for daycare is on a sliding scale based on income, just as it is for university and college (though subsidies for daycare are MUCH simpler, and more transparent, than those for student aid – PSE could learn a lot from ECE in this respect).

So why not daycare loans (or “extended payment plans”, if the word “loans” is too icky)?  Why not give people like the author of this Globe op-ed piece – that is, people just outside the subsidy range (at $1500/month in fees, the subsidy in Toronto disappears at around $92,000), and who find it too burdensome to pay 25% of their after-tax income on daycare – a break by letting them pay fees over 6-8 years, rather than 3-4?  Unlike students, these are people with steady incomes – costs to the public should be minimal.

October 17

Innovation Literature Fail

So, I’ve been reading Mariana Mazzucato’s, The Entrepreneurial State.  It’s brilliant and irritating, in equal measures.  Brilliant because of the way it skewers certain free-market riffs about the role of risk and entrepreneurialism in the innovation process, and irritating because it’s maddeningly cavalier about applying business terms to government processes (in particular, the term “risk”, which Mazzucato doesn’t seem to understand means something entirely different in government, if losses can be made whole through taxation).

Anyways, one thing that occurred to me while reading was just how America-specific much of the literature on innovation is.  Take the Defence Advanced Research Projects Agency (DARPA).  In innovation policy circles it’s generally considered a wicked-cool way of organizing Big Science: it’s project-based, it brings teams together from both academia and business, and it has substantial independence.  And, of course, the basic research has produced things like GPS and the Internet (still the core anecdotes used to back the “government-should-be-involved-in-research” argument). 

Brilliant, right?  So why doesn’t everyone have a DARPA?  Why doesn’t Canada?

The answer is that DARPA wouldn’t make any sense here.  Our government agencies don’t have enough of the “big problems” that DARPA is designed to solve – or, at least, that could be solved at a price we can afford.  And frankly, we don’t have enough private-sector research scientists to make headway into these kinds of projects, anyway.

More broadly, the American system of funding science works because of a particular combination of factors: the problems needing to be solved, the presence of major private sector research efforts, a particular type of venture capital industry, and scale.  Canada – like most countries in the world – would, at most, get part-marks on any of those four criteria.  So why do we think that policies based on American examples work for us?

Take questions of “applied” vs. “basic” science.  Maybe the classic Vannevar Bush formulation of, “government funds universities to do basic research, and companies do the applied stuff” only makes sense in the US context.  Maybe without the VC culture, or the private sector research culture, the idea that government should only be playing in the “basic” side of the continuum doesn’t make any sense. Maybe countries who aren’t quite at the technological frontier don’t get as much bang for their buck in basic research as America does.

This is just speculation on my part, of course.  But I’m tired of the innovation literature assuming that US-inspired solutions will work here.  Just for once, I’d like to see some literature and policy prescriptions based on what works in Korea, the Netherlands, and Scandinavia.  There’s probably a whole other set of policy lessons to be learned, if only we looked for them in the right places.

September 25

Campaign Platforms on Higher Education – Halifax Edition

It’s election time out on the east coast, and with polling day (October 8th) fast approaching, it’s time to see what the various parties have on offer for post-secondary education.

The ruling NDP is proposing… nothing.  Nothing at all.  Instead of an actual manifesto, they are running on their record (kind of) and making seven “key commitments” for the next term, none of which touch on post-secondary education in anyway.  This is a tactic often used by sitting governments, but it’s still disappointing.  It’s basically a way of saying “trust us”.  In PSE, where the Dexter government’s policy has essentially been, “raise student aid, cut grants to universities, and pray that somehow, beyond all reason, institutions self-implement the O’Neill Report“, it’s not a reassuring method.

(Seriously, why did Dexter ask Tim O’Neill for that report in the first place?  O’Neill never made any bones that he thought the situation going forward was dire, or that significant reform was necessary – why ask him to recommend such difficult measures if, as a government, the NDP lacked the will to implement any of them?)

The Liberal platform contains two proposals, both of which are pretty lightweight.  One is to remove interest on provincial student loans, even in repayment; apparently, government paying people to borrow is a good idea.  The second is to create – and I quote – “graduate scholarships for research and innovation to build research capacity for Nova Scotia”.  Well, of course!  Who knew building research capacity was that simple?

The Conservative platform is probably the most interesting.  For one thing, it suggests requiring institutions to provide prospective students with information about graduate employability.  I have no idea what that might mean in practice, but I suspect this meme will be popping up in many manifestos over the next few years.

More importantly, perhaps, the Tories are offering five-year MOUs with both NSCC and the province’s universities.  In the case of universities, these MOUs are to be based on – pay attention here – “high quality, affordable post-secondary education, institutional fiscal responsibility, commercialization, and population growth”.  In the case of NSCC, it is to be based on, “affordable and accessible post-secondary education, job ready skills training, increased focus on the trades, institutional fiscal responsibility, and population growth”.  Interesting distinctions, no?

Here’s the bottom line.  No party is making any promises of new money to universities or colleges (the Tories are offering MOUs, but not making cash commitments).  The only new money any party is offering is targeted towards students, which is consistent with the recent pattern of “feed the students, starve the schools” that we’ve seen in recent provincial budgets across Canada.

So, no change there, unfortunately.

September 06

Grants and Net Prices

Yesterday, we saw how tax credits lowered net prices by refunding students (or their families) roughly one out of every three dollars spent on tuition.  But that’s not the whole story, because there are a lot of university students who also get some form of non-repayable assistance (i.e. grants); for them, tuition is even lower.

Let’s start with Quebec, where net tuition after tax expenditures is a mere $1,555.  Data from the latest Aide Financiere aux Etudes annual reportadjusted for known changes in student aid expenditures, suggests that somewhere in the neighbourhood of 50-55,000 university students are receiving grants, which, on average, are worth $6,380 apiece.  Meaning that net tuition for grant recipients in Quebec is in fact negative $4,825.

In Ontario, net tuition after tax credits is $5,680.  Everyone with a family income under $160,000 is eligible for the Ontario Tuition Grant, which is (effectively) worth $1,730.  So that means that, in fact, for a considerable majority of the full-time undergraduate population, net tuition last year was is $3,950, which is lower than it’s been at any time since 1998-99.

Figure 1 – Net Real Tuition in Ontario, After Tax Credits and Tuition Rebate, 1995-96 to 2012-3

 

 

 

 

 

 

 

 

 

 

 

 

Here’s where the analysis gets tricky.  In the CSLP zone, many people receive more than one grant, mainly because of the overlap between federal and provincial aid.  But while we know the average size of each grant, there’s no method of working out how many of the 320,000 recipients of federal grants (who receive on average 1.18 federal grants each – you can get more than one) also receive one of the 250-300,000 provincial grants.

However, based on a little bit of policy analysis – and some phoning around to friends in provincial governments – I reckon that between half and 2/3 of all provincial grant recipients are getting federal aid, as well.  That would give us a ballpark of about around 430,000 total grant recipients, of which roughly two-thirds are in universities.  With roughly $1.2 billion being given out in the CSLP provinces, that suggests that the average grant recipient there receives about $2,800.

Taking that data and merging in the Quebec numbers gives us the picture we see in Figure 2: 

Figure 2 – Actual Net Costs, Canada, 2012-3

 

 

 

 

 

 

 

 

 

 

 

 

Across Canada, the sticker price of tuition and fees last year was $6,331.  As we saw yesterday, that falls to just over $4,300 when you take tax credits into account.  And that’s the real net cost for about two-thirds of the full-time student body.  But for the other third, the third that gets grants, real net tuition averages just over $1,000 – and it would appear that for a substantial proportion of these students, the actual cost is negative.

So, when the Statscan tuition numbers come out, just remember: no one actually pays the amounts Statscan reports.  Most students pay about 66% of the sticker price, and the neediest third (proportions may vary by province) pay about 17% of the sticker price.

August 30

So, This Obama Plan, Then (Part 2)

To recap yesterday’s blog: President Obama has a plan to make colleges reduce their costs, and deliver better value for money.  It involves having the government rate institutions on Accessibility, Affordability, and Outcomes; those which rate poorly risk losing eligibility for various forms of federal student aid (which, in total, is up around $150 billion/year these days).

While there’s no question that college costs do need to be reined in, this particular solution strikes me as odd.  Here’s what you have to believe in order to think that the President’s plan will work:

1)      That there exists a set of metrics, applicable to all institutions, which can measure Accessibility, Affordability, and Outcomes.  Forget data availability, institutions juking the stats, and whether one should judge institutions based on graduate salaries – can this stuff actually be measured in an equitable manner?  Will universities be judged on affordability without reference to the amount of state aid they receive?  Will those in rich states be penalized for the number of Pell-eligible students they enrol because there are fewer of them around than in, say, Alabama?  For employment rates or salaries, do tribal colleges or HCBUs get measured on the same scale as Princeton?  And if you’re looking at university-wide comparisons, rather than program-level ones, won’t mid-tier liberal arts colleges get completely blown out of the water?  There are probably work-arounds on most of these, but they aren’t simple.  Which leads to the next issue:

2)      Assuming the answer to 1) is yes, that the government is actually capable of finding and choosing the right measures.  I’m skeptical, let’s put it that way.

3)      That the Government, at the end of the day, is prepared to take students hostage to make this work.  Does anyone really believe that the government is going to reach the point where it says to a group of students: “we’re with you, your school isn’t delivering good value.  To show you our support, we’re going to cut off your student aid”?  The words “communications nightmare” don’t even begin to cover it.

This last one really speaks to a large problem with the Obama program.  The US federal government actually doesn’t have the tools to affect affordability because it doesn’t control the appropriations process.  At the end of the day, it’s a state issue, as it would be here in Canada.

So is this just an elaborate set-up to allow Obama to use the bully pulpit to jawbone institutions into line?  Or does the White House (and it is the White House – DOE appears to have had little to do with this) actually believe that there is a workable technocratic solution here? I’d like to think the former; I’m afraid it’s the latter.

August 29

So, This Obama Plan, Then (Part 1)

Canadians have few – if any – original ideas when it comes to education.  Generally speaking, we tend to reuse American ideas a few years after the’ve gone viral down south.  But what with all these interwebs and the Twitter these days, the lag time on this is getting shorter and shorter.  That’s why it’s definitely worth paying close attention to the recent Obama initiative on college costs: there are a lot of themes in that plan which have resonance here, and it’s likely that we’ll be hearing about them from both sides of the border soon enough.

Basically, Obama wants to keep the price of higher education down.  For years, Washington has tried to do this by increasing student aid, or providing tax credits, or what have you.  And they’ve actually been largely successful in doing so, at least for lower-income students, as the data from Matt Bruenig shows, here.  But this strategy is costing the US Government loadsadough, and it has started to dawn on them that Reagan-era Education Secretary, William Bennett, might have been right when he said that student aid just ends up raising tuition (as a side note, one of the most fascinating things in the US scene over the last two years has been the conversion of all the lefty education types into believers of the Bennett hypothesis).  So they’ve moved on to bigger fry.  They don’t just want to get prices down.  They want to get costs down.

This, as Joe Biden once almost said, is a big freaking deal.  No higher education system in the western world has ever succeeded in getting its costs down.  What with the cost disease and all, the only way costs go is up.  Unless of course you start reducing the price of labour.

So, how does he plan on getting costs down?  Well, he wants more experimentation with delivery methods.  MOOCs and Competency-based learning (CBL) are clearly big parts of that.  And he’s prepared to spend a quarter of a billion to fund this kind of experimentation in order to find out what works and what doesn’t (some governments still do believe in evidence-based policy, apparently).

That’s the easy bit.  The trickier stuff involves penalizing institutions that do not provide “value-for-money”.  The US Government plans to come up with a rating system for institutions, based on: Accessibility (the percentage of its students receiving Pell Grants), Affordability (some combination of tuition, scholarships, and financial aid), and Outcomes (graduation rates, advanced degrees, and the salaries earned by graduates).  Institutions that don’t score well on this rating will see federal funding reduced via a decrease in their students’ eligibility for student aid.

Sound crazy?  It kind of is.  More on this tomorrow.

August 26

Fired Up. Ready to Go.

Welcome back to our daily edition of One Thought to Start Your Day.  I hope you all had a relaxing summer, because this year is shaping up to be one of the most interesting in the entire history of higher education.  It’s going to be exhausting.

As always, America – the home of mass higher education – will be setting the pace.  President Obama’s higher education reform proposals are so ambitious and touch so many hot-issues (metrics for institutional evaluation, how to beat the cost disease, the use of rankings, how to steer institutions using public funds) that the debate will echo around the world.  If you haven’t been paying attention to the Obama plan, start now.  With a 3-4 month lag, it’s pretty certain that this language will start popping up in Canada as well.

One key part of the Obama message is a focus on competency-based learning (CBL) as a way to cut time-to-degrees, especially for non-traditional students.  For this and other reasons, it’s going to be all CBL, all-the-time this year.  Expect to really sick of hearing about Western Governors University and South New Hampshire State (whose model I looked at while back, here).  This is a good thing, partly because it means we’ll have to hear less about MOOCs but also because CBL has the potential to generating genuinely useful conversations about what “outcomes” and “degrees” mean, and that’s long overdue.

In Canada, we have all the makings of a memorable year, financially.  Higher education institutions in Alberta have already been kicked hard; in Ontario and Quebec, all the signs are for zero growth in government income at best, and with institutions still locking in faculty salary increases of 4-5% per year once RTR is accounted for, it’s going to be Come to Jesus time at several institutions very soon.

(Yes, seriously, 4-5%.  Notice how neither University of Ottawa nor the faculty union is revealing details of the strike-averting settlement earlier this month?  They’re terrified of releasing it; pleading poverty to government while handing over 4-year 20% pay hikes to people making an average of $115K/year is really hard.)

Maybe that zero income wouldn’t look so bad if money was still coming in like gangbusters from students.  But it’s not.   This summer’s foreign service strike may result in major lost revenues in colleges and universities.  And even if it doesn’t, there’s trouble lurking in foreign recruitment waters due to a general slowdown in the BRIC economies and the tanking of the Indian rupee. 

A crisis is a terrible thing to waste.  It’s going to be rough – but there’s a chance we might start to see some interesting structural change, too. 

So…are you ready to go?

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?

Exactly.  

Page 10 of 12« First...89101112