Higher Education Strategy Associates

Category Archives: U.S.

September 30

Fields of Study: Some International Comparisons

Stop me if you’ve heard this one before: “We really need to have more STEM grads in this country.  Really, we ought to be more like Germany or Japan – fewer of these ridiculous philosophy degrees, and more of those lovely, lovely engineers and scientists.”

Personally, I’ve heard this one too many times.  So, just for yuks, I decided to take a look at the distribution of degrees awarded by field of study across the G7 countries, plus (since I’m overdue in throwing some love in the direction of the blog’s antipodean readership) New Zealand and Australia.  The data is from the OECD, and is valid for 2012 for all countries except France, where the data is from 2009, and Australia where it is from 2011.

I started with the percentage of degrees that came from the Arts and Humanities.  The result was… surprising.

Figure 1: Percentage of All Degrees Awarded From Humanities Fields














Germany leads the pack with just under 21% of all degrees being awarded in humanities, and Canada and Australia bring up the rear with 11.6% and 11.1%, respectively.  So much for the narrative about Canada producing too many philosopher baristas.

But as we all know, humanities are only half the story – there’s also the question of applied humanities, or “Social Sciences” as they are more often known.  The Social Science category includes business and law.  It turns out that if you add the two together, the countries cluster in a relatively narrow band between 47 and 56 percent of all degrees granted.  No matter where you go in the world, what we call “Arts” is basically half the university.  We should also note that Canada’s combined total is essentially identical to those of the great STEM powerhouses of Japan and Germany.

Figure 2: Percentage of All Degrees Awarded From Humanities and Social Science Fields














Let’s now look directly at the STEM fields.  Figure 3 shows the percentage of degrees awarded in Science and Engineering across our nine countries of interest.  Here, Germany is in a more familiar place, at the top of the table.  But some of the other places are surprising if you equate STEM graduates with economic prosperity.  France, in second, is usually not thought of as an innovation hub, and Japan’s third place (first, if you only look at engineering) hasn’t prevented it from having a two-decade-long economic slump.  On the other hand, the US, which generally is reckoned to be an innovation centre, has the lowest percentage of graduates coming from STEM fields.  Canada is just below the median.

Figure 3: Percentage of Degrees Awarded from Science and Engineering Fields














Last, Figure 4 looks at the final group of degrees: namely, those in health and education – fields that, in developed countries, are effectively directed to people who will pursue careers in the public services.  And here we see some really substantial differences between countries.  In New Zealand, over one-third of degrees are in one of these two fields.  But in Germany, Japan, and France – the three STEM “powerhouses” from Figure 3 – very few degrees are awarded in these fields.  This raises a question: are those countries really “good” at STEM, or do they just have underdeveloped education/heath sectors?

Figure 4: Percentage of Degrees Awarded in Health and Education Fields














So, to go back to our initial story: it’s true that Japan and Germany are heavier on STEM subjects than Canada.  But, first, STEM-centricness isn’t obviously related to economic growth or innovation. And second, STEM-centricness in Germany and Japan doesn’t come at the expense of Arts subjects, it comes a the expense of health and education fields.

September 14

Better Post-Secondary Data: Game On

On Saturday morning, the US Department of Education released the College Scorecard.  What the heck is the College Scorecard, you ask?  And why did they release it on a Saturday morning?  Well, I have no earthly idea about the latter, but as for the former: it’s a bit of a long story.

You might remember that a little over a year ago, President Obama came up with the idea for the US Government to “rate” colleges on things like affordability, graduation rates, graduate earnings and the like.  The thinking was that this kind of transparency would punish institutions that provided genuinely bad value for money by exposing said poor value to the market, while at the same encouraging all institutions to become more attentive to costs and outcomes.

The problem with the original idea was three-fold.  First, no one was certain that the quality of available data was good enough.  Second, the idea of using the same set ratings for both quality improvement and to enforce minimum standards was always a bit dicey.  And third, the politics of the whole thing were atrocious – the idea that a government might declare that institution X is better than institution Y was a recipe for angry alumni pretty much everywhere.

So back in July, the Administration gave up on the idea of rating institutions (though it had been quietly backing away from it for months); however, it didn’t give up on the idea of collecting and disseminating the data.  Thus, on Saturday, what it released instead was a “scorecard”; a way to look up data on every institution without actually rating those institutions.  But also – and this is what had nerds in datagasm over the weekend – it released all of the data (click “download all data” here).  Several hundred different fields worth.  For 20 years. It’s totally unbelievable.

Some of the data, being contextual, is pretty picayune: want to know which institution has the most students who die within four years of starting school?  It’s there (three separate branches of a private mechanics school called Universal Technical Institute).  But other bits of the data are pretty revealing.  School with the highest average family income? (Trinity College, Connecticut.)  With the lowest percentage of former students earning over $25,000 eight years after graduation? (Emma’s Beauty Academy in Mayaguez, PR.)  With the highest default rates? (Seven different institutions – six private, one public – have 100% default rates.)

Now, two big caveats about this data.  The first is that institutional-level data isn’t, in most cases, all that helpful (graduate incomes are more a function of field of study than institution, for instance). The second caveat is that information around former students and earnings relate only to student aid recipients (it’ a political/legal thing – basically, the government could look up the post-graduation earnings for students who received aid, but not for students who funded themselves).  The government plans to rectify that first caveat ahead of next year’s release; but you better believe that institutions will fight to their dying breath over that second caveat, because nothing scares them more than transparency.  As a result, while lots of the data is fun to look at, it’s not exactly the kind of stuff with which students should necessarily make decisions (a point made with great aplomb by the University of Wisconsin’s Sara Goldrick-Rab.

Caveats aside, this data release is an enormous deal.  It completely raises the bar for institutional transparency, not just in the United States but everywhere in the world.  Canadian governments should take a good long look at what America just did, and ask themselves why they can’t do the same thing.

No… scratch that.  We ALL need to ask governments why they can’t do this.  And we shouldn’t accept any answers about technical difficulties.  The simple fact is that it’s a lack of political will, an unwillingness to confront the obscurantist self-interest of institutions.

But as of Saturday, that’s not good enough anymore.  We all deserve better.

September 01

The Tennessee Promise

So, yesterday I talked about a big increase in access in the UK, which seems to have little to do with tuition fees.  Today, let’s talk about a developing story in the United States, where a lowering of net prices seems to have had a big impact on access.

You may recall that in the US over the last couple of years, there has been a growing movement for free community college, something that President Obama picked up on earlier this year.  But before Obama picked up this baton, free community college had already been introduced in Republican Tennessee, where governor Bill Haslam had turned something called “the Tennessee Promise into law in 2014.

Technically, the Tennessee Promise is not “free tuition”.  It’s only available to students entering straight from high school (which is a bit weird in terms of design, but whatever).  Students have to be full-time, maintain a 2.0 average, meet regularly with a mentor, and perform eight hours of community service per term.  And technically, what it does is reduce your tuition to zero after all other forms of aid and scholarship are taken care of (this is what is known in the business as a “last dollar” scholarship).  If you apply for the award and meet the terms, government will cover your tuition to the point where your net price is zero.  For a good number of people, this means free tuition with minimal strings attached, so let’s just call it free tuition.

Now, you might expect that with this kind of incentive, enrolment might rise a bit.  And you’d be right.  According to very early results, the number of freshmen is up 29.6% over last year.  Obviously this is a pretty impressive result, but before we get too excited, we should probably find out a little more about where these new students are coming from.  Are they “new” students, or are they mostly students who would have gone to a 4-year college, but have chosen 2-year instead?  And what about students’ financial background?  If you’re poor enough to be anywhere near maximum Pell grant ($5,775), the Tennessee Promise provides no additional aid, because tuition at Tennessee Community Colleges is about $4,000.  So it may well be that what the Tennessee Promise is doing is providing aid to people higher up the income ladder.  This is a little inefficient, but since (as I noted back here) community college students tend to come from poorer backgrounds anyway, this is not as regressive as it would be if it were implemented at 4-year colleges.

We should be able to answer these questions in a few weeks (yes, Canadians, in some places data is available in weeks, rather than years).  Even though Tennessee does not track applicants by income the way the UK does, the state’s excellent annual Higher Education Fact Book does contain two pieces of data that will help us track this.  The first is college-going rates by county, which will help us understand whether the jump in participation is concentrated in higher- or lower-income counties, and the second is the percentage of students who are Pell-eligible.  I’ll keep you up-to-date on this when the data is out.

The most intriguing possibility here is that rates of attendance for Pell-eligible students might be rising, even though the Tennessee Promise provides no actual added benefit for many of them.  It may well be that simply re-packing the way we frame higher education costs (“it’s free!”) matters more than the way we actually fund it (“your tuition is $4,000, and you also have a grant for $4,500”).

This would have significant policy ramifications for us in Canada.  As we noted last year in our publication, The Many Prices of Knowledge, many students at Canadian community colleges face an all-inclusive net price that is negative, or very close to it.  Similarly, poor first-year university students in both Ontario and Quebec have negative net prices.   No one knows it, because we package aid in such a ludicrously opaque fashion, but it’s true.  And if the Tennessee data provides evidence that the packaging of aid matters as much as the content, then it will be time for Canadian governments to re-evaluate that packaging, tout de suite.

August 24

Welcome Back

Morning, all.  August 24th.  Back, as promised.

School starts shortly.  The new crop of frosh were born in 1997, if you can believe that – to them, Princess Diana has never been alive, and Kyoto has always been a synonym for climate change politics (check out the Beloit Mindset List for more of these ).  Stormclouds line the economic horizon.  It’s going to be an interesting year.

In the US, progress on any of the big issues in higher education are likely to be in suspension as the two parties spend months figuring out who their candidates are going to be.  On the Democratic side, the presumptive candidate, Hilary Clinton, has put forward an ambitious plan for higher education, which, barring an absolute sweep at the polls, has almost no chance of passing Congress.  On the Republican side, no one apart from Marco Rubio seems to care much about higher education, except for Scott Walker who seems to want to use higher education as a punching bag, much as his idol Ronald Reagan did fifty years ago.

Overseas, the most consequential potential development is in the UK where – if the government is to be taken at face value – for the first time anywhere, measured quality of teaching might meaningfully affect institutional resources. In the rest of Europe, the ongoing economic slump looks set to create new problems in many countries: in Finland, where GDP contracted for the third year in a row, government funding will be down roughly 8% from where it was last year.  And that’s in one of the countries that thinks of itself as being particularly pro-education.  Germany, Sweden, and (maybe) Poland look like the only countries that might resist the tide.

Here in Canada, the outlook remains that post-secondary education will continue to see below-inflation increases in government funding for the foreseeable future, except in Alberta where the new provincial government intends on giving institutions a big one-time boost, which may or may not be sustainable, depending on how oil and gas prices fare.  This means resources will be scarce, and in-fighting for the spoils will be fierce.  And this, in turn, means a lot of governance, a lot of wailing about “corporatization” (always a good epithet when funding decisions aren’t going your way), and – inevitably, given the recent events at UBC – a lot of arguments about resource allocations, dressed up as arguments about governance.

(In case you’re wondering: I have no idea what happened there, exactly.  I do, however, believe three things: i) in a corporate context, the statements by the Board of Governors and interim President on Gupta’s departure are actually quite easily interpretable, and don’t leave a whole lot to the imagination; ii) if/when the truth comes out, it’ll be a hot mess of grey zones, and some of the wilder conspiracy rhetoric about the departure will seem ludicrous; and, iii) any theory positing that Gupta was fired for a lack of “masculinity” by a Board Chair who not only spent millions of his own dollars to create a dedicated Chair on Diversity in Leadership, but also that replaced said “unmacho” President with Martha Piper of all people, has more than one prima facie credibility problem.)

But behind all this, there’s a broader truth that I think the higher education community is being very slow to acknowledge.  The era of growth is over.  Higher education is not a declining industry, but it is a mature one, and this changes the nature of the game.  In the aughts, Canadian university income increased faster as a proportion of GDP than pretty much any country in the world (Netherlands and Russia aside).  It was a rising tide that raised all boats.   And I mean that literally: as a share of the economy, universities grew by half a percentage point (from 1.4% to 1.9% according to the OECD, which I think is a bit of an underestimate), which is like adding more than the value of the entire fishing industry.

But those boats stopped rising a couple of years ago.  Institutions with smug strategic plans about increasing excellence need to face reality that there’s no new money with which to achieve those goals: funds for new projects are, for the most part, going to have to come out of increased efficiencies, not new money.  It’s tougher sailing from here on out – permanently.  Institutions are going to need to be leaner, better managed, and more focused.  However, the meaning of those terms are hardly uncontested in academia.

This should make for a fun year.  Looking forward to it.

August 12

Summer Updates from Abroad (3): An Intriguing American Student Aid Debate

Why do we give people student loans and grants?  Is it to help them get knowledge, or just credentials?  That question is subject to much debate in Washington right now.  At issue is whether student assistance helps or hinders innovation in higher education; at stake are potentially billions of dollars in public funding.

Let’s rewind a bit here: student aid in the US is governed by something that goes by the name of “Title IV” (meaning, essentially, chapter IV of the Higher Education Act, as amended from time-to-time).  The very first section of title IV states that student loans can only be given to students at “eligible institutions”, which means (among other things) that the institution has to be post-secondary, has to award degrees, has to be accredited, etc.  All sensible things to protect both consumers and the public purse.

The problem is, what if a new form of education pops up that is valuable, but doesn’t meet these tests?

There’s been a lot of focus recently on a variety of different types of programs called “just-in-time” education, the buzzword du jour that refers to code academies/bootcamps, and the like.  These academies – private educational establishments that often skirt the legal edges of provision of vocational education – are seen in many quarters as being incredibly valuable.  Coders are in short supply, and these bootcamps provide short (usually 8-12 weeks) courses that allow students to get the basics, and apply for jobs.  Some of them also provide training in entrepreneurship, and have mentors on-site to help with start-ups.  Stories about graduates quickly getting well-paying jobs abound, and given the long-standing worries about the youth labour market, a lot of people want to see these things expand further.

But these organizations aren’t charities.  A 12-week course in New York or San Francisco will run a student five figures, and not everyone has that kind of scratch on hand.  Hence, the desire in some quarters to see student loans extended to this sector.

Now you can see the argument here: why are we prevented from giving public support to institutions that provide skills rather than credentials?  Why are we stifling potentially beneficial innovation?  On the other hand, you can also see the opposite argument: who runs these schools, who regulates them, what are their credentials as educators, and what kinds of cranks and shysters will flood into the sector if you start letting students pay for this education using public money rather than their own?

The cranks and shysters problem is a perennial one in American higher education.  Even the vaunted GI Bill attracted them.  Though it’s more famous for putting ex-servicemen though college, the Bill also dealt with vocational training, leading to some rather dubious circumstances; Glenn Altschuler and Stuart Blumin, in their excellent account of the Bill, have a hilarious anecdote about veterans signing up at a school that offered three-month courses in chicken sexing, because they could get their living expenses covered while doing a (sorry, can’t resist) bird course.

Quite simply, when you hand over a lot of your education system to the private sector, *and* you choose to allow students to use public money, you either have to have some very good regulators, or you have to tolerate the fact that there are going to be some dubious folks trying to make a fast buck out of the situation.  As the Harkin Report on for-profit education, and Suzanne Metzler’s excellent book Degrees of Inequality have made clear, that’s exactly what happened in the 00’s when he Department of Education’s rules were too lax.

At the moment, the Obama administration’s preferred solution seems to be to try to get these academies to nestle themselves within existing universities and colleges.  There are some advantages here: universities would love to have these kinds of spaces to help students gain tech/entrepreneurial skills, the academies would gain access to more secure revenue, and the government would be assured of some oversight on quality.  From the perspective of people worried about cost-inflation in higher education, though, this might be a disaster.  Universities would undoubtedly pay for this by charging even higher fees to all students; instead of academies being a force outside the system, competing with universities, and forcing them to get better at producing better employment incomes, they’d be joining the Beast instead.

Complicated stuff.  Personally, I’m glad the Americans go through these debates, so the rest of us can learn from them without actually having to do the difficult and politically dangerous work of experimentation ourselves.

June 01

The Cost of Moving the Needle

One of the things about increasing post-secondary participation is that the cost of improving access increases all of the time – as you get closer to universality, the students you want to attract becoming increasingly marginal, academically, and require greater investments in order for them to succeed.

A really good example of this comes from the City University of New York (CUNY), which recently completed an evaluation of its Accelerated Study in Associate Programs (ASAP), which is meant to encourage completion among students taking Associate (i.e. 2-year) degrees at the school, on a full-time basis.  The program design is pretty much what you’d expect: it tops-up financial aid so that net cost is zero, plus throws in textbooks and a transit pass.  Each student gets a personal advisor/mentor/coach, as well as career counselling.  Participants get grouped together in small classes (25 students, or less), and the classes are block-booked so that students can take all their courses either in the morning, afternoon, or evening (of great assistance to students with work or family responsibilities).

This is not a cheap program.  At the time the program was being evaluated, it cost over $4,000 per student, per year, though the cost later fell towards $3,500 per student as the program ramped-up.  In the context of US 2-year colleges, such as the nine CUNY community colleges at which this program was implemented, and where per-student expenditure is about $8,000 per student, this is a heck of a lot of money.  But it works.  MDRC, one of the world’s top social science research organizations, evaluated the project recently using a random-assignment experiment, and found that ASAP’s effects on a range of outcome measures were “the largest it (had) found in any of its evaluations of community college reforms”.

The evaluation (executive summary available here) showed that 40.1% of program participants graduated within three years, compared to just 21.8% of students from the control group, and 25.1% had enrolled in a four-year college by semester 6, compared to just 17.3% in the control group (though many American community colleges offer more technical programs, the colleges at which the program was implemented mostly offered arts programs designed as pathways to 4-year colleges, so this metric is actually quite important, because completion without continuation to a 4-year college is of substantially lower value to the student).

Now, that’s a pretty impressive-sounding statistic: for $4,000/year, ASAP can almost double the graduation rate.   But let’s not get ahead of ourselves: in fact, it takes $14,000, spread over 3 years, to achieve this effect.  And even with a doubling, the program is really only affecting one-out-of-five students; one-fifth of students would have graduated anyway, and another three-fifths still don’t graduate.  So to produce one extra graduate, you actually have to spend something in the neighbourhood of $50,000 or so (it’s not actually 5 x $14,000, because you stop spending money once a student drops out).  That’s a lot of money to get one extra graduate, especially for a general Associate degree, where both public and private returns are quite low.

This is by no means a criticism of ASAP: it’s a good program delivering excellent results.  But it does go to show how much money it takes to move the needle on degree completion.  That’s not all going to come from new government sources; it’s going to require changes in institutional business models to reduce costs in order to put more money into things like counselling, advising, and support.

May 28

The 2016 Presidential Race

I’ve been spending a bit of time in the United States the last couple of weeks (Indianapolis, Boston, Washington DC), and one of the things I’m noticing is the extent to which political discourse – which, ludicrously, already centers around the 2016 Presidential Race – is focussed on issues in higher education.  Specifically: issues of tuition and student debt.

This is interesting for a couple of reasons.  First of all, it’s an enormous shift from about ten years ago, when higher education first started to inch into the news.  Back then, it was about competitiveness: how can we use higher education to gain a march on all these various Asian countries (usually India and China) who suddenly  appear to be eating Americans’ lunch.  Back then, higher ed was relishing the attention – finally, a Sputnik moment, to push higher education back to the forefront of the political debate (Sputnik being a positive thing in American higher education, because it brought about a huge burst of spending on university science).  Now, no one is talking about a higher education bonanza.  No one is talking about quality.  To the extent anyone is talking about putting up new public money, it is meant to be used to make education more affordable.

(In Canada, of course, we’re way ahead of them.  This is the feed-the-student-starve-the-campus routine that we’ve seen for the last four years.)

On the Democratic side, it’s President Obama’s proposal for free college tuition that is setting the tone of the debate.  Bernie Sanders, trying to outflank Hillary Clinton to the left, has been an outspoken proponent.  Martin O’Malley (remember Mayor Carcetti, from The Wire?  He’s based on O’Malley), the only other semi-serious contender, talks about “debt-free college”, but his actual policy proposals involve expanding and improving income-based repayment, and allowing college students to refinance their loans at lower rates of interest.  Clinton, meanwhile, has said she supports Obama’s free college plan, but then went on to say that debt is caused by more than tuition, which implies that her thinking actually lies in other areas (most likely: more Pell grants, more tax credits, and tougher regulation of for-profits).

Action on the Democratic side of the ledger isn’t all that surprising: they’ve owned the higher education file since 1992, when Bill Clinton became the first ever candidate to successfully campaign on the issue.  What’s more interesting is the amount of attention being paid to higher education by Republican candidates.

Among currently declared candidates, Marco Rubio has shown the most audacity, backing a relatively serious access and completion agenda.  He has co-sponsored legislation backing so-called “human capital loans”, and has also called for the creation of a national unit-record data base to collect better data on student outcomes.  This has made him something of a darling among centrist wonks who think he might herald a new age of bipartisanship in higher education.

That may be clutching at straws: a number of other Republican candidates seem to be trying to run based on their ability to beat the living crap out of colleges: Governors Jindal (Louisiana) and Walker (Wisconsin) both introduced stonking cuts to higher ed in their budgets this year, mostly to show how tough they are on feckless elites (a Republican meme that goes back to Ronald Reagan’s successful 1966 run for the California Governor’s office).

The presence of differences in policy thinking in both parties means it’s sure to be a topic of debate right through the primaries (i.e. for another ten months or so).  Stay tuned.

February 18

Performance-Based Funding (Part 2)

So, as we noted yesterday, there are two schools of thought in the US about performance-based funding (where, it should be noted, about 30 states have some kind of PBF criteria built into their overall funding system, or are planning to do so).  Basically, one side says they work, and the other says they don’t.

Let’s start with the “don’t” camp, led by Nicholas Hillman and David Tandberg, whose key paper can be found here.  To determine whether PBFs affect institutional outcomes, they look mostly at a single output – degree completion.  This makes a certain amount of sense since it’s the one most states try to incentivize, and they use a nice little quasi-experimental research design showing changes in completion rates in states with PBF and those without.  Their findings, briefly, are: 1) no systematic benefits to PBF – in some places, results were better than in non-PBF systems, in other places they were worse; and, 2) where PBF is correlated with positive results, said results can take several years to kick-in.

Given the methodology, there’s no real arguing with the findings here.  Where Hillman & Tandberg can be knocked, however, is that their methodology assumes that all PBF schemes are the same, and are thus assumed to be the same “treatment”.  But as we noted yesterday, the existence of PBF is only one dimension of the issue.  The extent of PBF funding, and the extent to which it drives overall funding, must matter as well.  On this, Hillman and Tandberg are silent.

The HCM paper does in fact give this issue some space.  Turns out that in the 26 states examined, 18 have PBF systems, which account for less than 5% of overall public funding.  Throw in tuition and other revenues, and the amount of total institutional revenue accounted by PBF drops by 50% or more, which suggests there are a lot of PBF states where it would simply be unrealistic to expect much in the way of effects.  Of the remainder, three are under 10%, and then there are five huge outliers: Mississippi at just under 55%, Ohio at just under 70%, Tennessee at 85%, Nevada at 96%, and North Dakota at 100% (note: Nevada essentially has one public university and North Dakota has two: clearly, whatever PBF arrangements are there likely aren’t changing the distribution of funds very much).  The authors then point to a number of advances made in some of these states on a variety of metrics, such as “learning gains” (unclear what that means), greater persistence for at-risk students, shorter times-to-completion, and so forth.

But while the HCM report has a good summary of sensible design principles for performance-based funding, there is little that is scientific about it when it comes to linking policy to outcomes. There’s nothing like Hillman and Tandberg’s experimental design at work here; instead, what you have is an unscientific group of anecdotes about positive things that have occurred in places with PBF.  So as far as advancing the debate about what works in performance-based funding, it’s not up to much.

So what should we believe here?  The Hillman/Tandberg result is solid enough – but if most American PBF systems don’t change funding patterns much, then it shouldn’t be a surprise to anyone that institutional outcomes don’t change much either.  What we need is a much narrower focus on systems where a lot of institutional money is in fact at risk, to see if increasing incentives actually does matter.

Such places do exist – but oddly enough neither of these reports actually looks at them.  That’s because they’re not in the United States, they’re in Europe.  More on that tomorrow.

January 13

Packaging Student Aid

One of the things about student aid that makes it such great fun as a policy area is that it’s as much about framing as it is about actual policy.  For instance, which of the following two policies would you like to have?

a)      A policy where students are asked to bear a huge amount of debt – over $100,000 in some cases for an undergraduate degree – over 25 years, and where three-quarters of students will never repay their loans in full; or:

b)      A policy where graduates are asked to pay a 9% surtax for 25 years, up to a maximum of about $100,000, but much less (possibly even $0) if their earnings are low.

If you’re a regular reader of the Guardian, you’ll probably recognize the first policy as being the one implemented by the Cameron government in 2012, to cover fees in English universities.  That’s the one the progressive types are always pointing at and shouting: “Look!  Students are being horribly indebted AND the government is losing lots of money through the program!  Quelle fiasco!”

But here’s the thing: that second program is also the English loan scheme.  As I’ve explained before, for the three-quarters or so of graduates not expected to pay off their loans in full, the scheme is simply a graduate tax.  It’s not explained that way, but that’s what it is.  It’s a packaging issue.

There’s something similar going on in student aid policy in the United States; namely, the interest in something called “Income Share Agreements”.  It’s been kicking around for awhile (the American Enterprise Institute wrote about it a year ago), but is getting more of a hearing these days because Florida Senator, and potential Presidential candidate, Marco Rubio is now backing it.  It’s basically a Human Capital Contract – someone gives you money today, and you agree to give them a set portion of your income for a set number of years.

If that sounds like a Graduate Tax, that’s because it’s exactly how a graduate tax works – the difference in this case simply being that you’re not giving that money to government, but rather to an individual who has chosen to “invest” in you.  The beneficiary is different, but the flow of funds is precisely the same.  But that difference is enough to get the idea some love from a Tea Party favourite.

And that is to say nothing of our experience in Canada where the CFS, which absolutely hates income-contingent loans, and has done so for years, applauded the introduction of the Repayment Assistance Program (RAP) – which basically makes the Canada Student Loans Program fully income-contingent – because the government simply chose not to call the program “income contingent”.

This all goes to show: in student aid, few people actually look at substance.  The real debate is about the packaging.

January 12

That Obama Free Community College Proposal

I was going to start on a series about growth in non-academic staff numbers today, but the news out of Washington late last week was too spectacular, so I’m bumping it.  Did Obama really say he wanted to make community college free?

Well, yes he did.  But he might not have meant it the way we all heard it.  And whatever happens, it’s unlikely to occur any time soon.

Let’s start with what he actually said (White House fact sheet, here).  He said he would make tuition free for “responsible students” (read: on course to graduate on-time, with a 2.5 GPA) attending community colleges and taking courses towards a 4-year degree, or an occupational training course in an “in-demand” field.  But there were some catches.  Only institutions that adopt “promising and evidence-based” programs to improve graduation rates will qualify.  States also have to agree to participate, kick-in 25% (or thereabouts) of the funding without cutting any other higher education programs, plus adopt a new outcome-based formula-funding system that funds completions rather than enrolments.  It’s not clear how many states will agree to this (nor, indeed, is there much likelihood that a republican congress would agree to those kind of state spending mandates).

There are obviously a whole bunch of questions that weren’t answered in the initial announcement.  The main one was whether Obama meant “free”, or if he actually meant “government would cover the cost”.  That makes a big difference; Pell grants already cover the cost of tuition for nearly half of all community college students.  If that were the standard, it would imply that all of the new money would be going to students currently considered wealthy enough not to need grants.  That would make the new program very similar in distributional consequences to the notionally universal $1,500 refundable tax credit that Bill Clinton introduced in his second term, but which in fact was only available to those receiving less than $1,500 in Pell.

Another question, not raised much in the US, is: if the initiative is in fact successful at increasing the number of students at 2-year institutions (some of whom, to be fair, could simply be people switching from 4-year to 2-year), where are they all going to study?  In many states – California, for example – the systems are already at breaking point.  Who funds the growth required to make this system successful?

A lot of people seem to think that the President really did mean “free tuition” (i.e. no displacement of Pell grants, which are income-based), based on a comment made last week by his spokesman.  But on the other hand, the spokesman also said the program had been costed at $60/billion over ten years, or $6 billion per year, or about $666 per community college student.  Given that average tuition is about $3,800, it’s hard to see how this plan makes sense unless the administration: a) doesn’t expect most states to participate; b) doesn’t think many students will qualify; and, c) doesn’t in fact mean free tuition, but rather just “cover the cost”.  Or maybe the administration threw together a bunch of nonsense numbers that don’t matter.  Regardless, the likelihood of this becoming policy anytime soon is pretty low; it’s value is mainly rhetorical and as a marker for future policy initiatives by future Presidents.

As I said a last year, free tuition in community colleges makes a fair bit of sense.  The main rationale for fees is that: a) there are substantial private benefits, and, b) the clientele is mainly better-off and don’t need all the subsidies.  But those don’t hold true in community colleges the way they do in universities.   So while there might be some better ways to use that amount of money, this is still a generally worthwhile and positive initiative.  Would that a Canadian government could be so bold.

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