HESA

Higher Education Strategy Associates

Category Archives: U.S.

March 17

Oregon’s “Pay It Forward” Scheme and the ICR vs. Graduate Tax Problem

You may have heard some rumblings from south of the border over the past few months with respect to a program called Pay It Forward (PIF).  The brainchild of a student group called Students for Educational Debt Reform, this idea was picked up by the Oregon assembly last summer; within a few months, over a dozen state governments were examining similar draft legislation.

The basics of the program are these: instead of paying tuition, students agree to pay a percentage of their future income (the percentages vary by state – in Oregon it’s 0.75% per year of study) for 20 years after graduation.  Some people mistook this for a version of income-contingent loans because it emphasized paying for school after-the-fact rather than up-front, and also because repayments were to be made as a function of income.  But there’s one key difference.  Loans have a limited liability: once you pay off the principal and interest, you’re done.  With PIF, there is no principal – once you start paying into a hypothecated fund, destined for the state’s higher education institutions, you keep on paying for 20 years no matter what.  This is formally known as a “graduate tax”.

Graduate taxes tend to be more progressive than income-contingent loans.  If you’re at the bottom of the income scale, you probably come out better off – you simply never pay anything.  If you’re at the top of the income scale, you’re likely going to pay a lot more because a portion of your income will go into public coffers long after you’d likely have paid off a loan.  Interestingly, the famous Yale Tuition Postponement Option of the early 1970s (designed by Nobellist James Tobin, and used by Bill Clinton when he attended law school there) went off the rails for precisely this reason – the richer students got tired of paying for the poorer ones, and started making a fuss.

One downside to a graduate tax is that it’s harder to collect than a loan.  In the US, for instance, it’s hard to imagine enforcing something like PIF, unless it was instituted nationally (if someone moved from Portland to Chicago, would Illinois be responsible for collecting the PIF contribution?).  A graduate tax was in fact examined relatively thoroughly not once but twice in England (the 1997 Dearing Report and the 2005 fee reform), and was rejected precisely because of concerns about grads evading repayment through emigration.

Another downside is: where exactly does the money come from while you’re waiting for graduates to start earning money?  If tuition is covering 40% of institutional expenditure, someone has to make that income good over the 20 or so years before the grad tax makes up the difference.  It’s not clear who that might be; if the state had money to do this, it probably wouldn’t be faffing around with ideas like PIF.  You could securitize the revenue stream, of course, but that also might get tricky.  Income-contingent loans lack graduate taxes’ most potentially progressive features, but they do have the advantage of: a) being collectable, and b) producing income for institutions in the short term.

There is of course one country that is trying very hard to merge the ideas of ICR and graduate taxes, with some really odd results.  More on the English experiment tomorrow.

October 22

Faculty Salary Data You Should Probably Ignore

Recently, the Ontario Confederation of University Faculty Associations (OCUFA) published a comparison of American and Canadian academics’ salaries.  Using Canada’s National Household Survey (NHS) and the US Occupational Employment Statistics (OES) survey (which they described as being not quite apples-to-apples, but at least Macintosh-to-Granny Smith), they noted that average salaries for the combined college-and-university instructor population (the OES cannot disaggregate below that level) were $76,000.  In Canada, the figure was $65,000.  Hence, according to them, with the dollar at par, there is a 17% gap in academic pay in favour of the Americans… and much more of a gap if PPP is taken into account.

There are three reasons why this conclusion is deeply suspect.

First, OES and NHS are not even vaguely comparable.  One is a world-class instrument, based on administrative data collected at over 200,000 places of employment; the other: a self-report from a nonrandom sample of Canadians which has been widely panned as a steaming pile of horse manure.

Second, the actual numbers seem to be slightly off.  When I go to the OES, the category for 2- and 4-year post-secondary teachers (25-1000), I get $77,600.  The Canadian NHS files show that “university professors and lecturers” (category 4011) earn $87,978 and “college and other vocational instructors” (category 4021) earn $57,275.  Together, weighted, that’s an average of $70,033.  So, a 10% gap, not a 17% one.

Third, since the two countries don’t have identical proportions of instructors in the 2- and 4-year sectors, it’s hard to tell how well these numbers reflect differences among university professors.  Neither do we have any sense of the proportion of part-timers and sessionals in the count, on either side of the border.  In other words, this comparison is based on a hodgepodge of non-comparable data, and proves absolutely nothing with respect to relative salaries of professors on either side of the 49th parallel.

More direct comparisons are possible.  Oklahoma State University has been doing an annual survey of salaries at Public and Land-grant Universities – the grouping of US institutions that look most similar to Canadian universities – for 40 years.  The figure below compares the 2012-13 OSU data with that of Canadian profs from Statistics Canada’s last UCASS study (2010-11), as published by CAUT.

Canada vs US Professors’ Salaries

 

 

 

 

 

 

 

 

 

 

 

 

One can quibble with this graph, of course.  The Canadian numbers have probably gone up another 6-7% in the intervening two years.  The US numbers don’t include the income professors get from summer research grants, which would probably add another 10% or so to their averages (see here for that calculation).  But effectively, there’s about a 15% pay gap in Canada’s favour, if dollars are counted at par, not a 17% gap the other way.

Naturally, one could get into arguments about purchasing power parity, living standards, and the like – that’s all fair game.  What’s not fair game is using a set of bad statistics when better ones are available, just because the bad data happens to better serve your cause. You’d think an association representing academics, of all people, would know that.

September 19

Cultural Determinants of Data Acquisition Costs

I saw a fascinating piece in the New York Times awhile back.  It was about a trend at American universities, asking applicants if they were gay or not.  Apparently, these institutions believe that by asking students this question, they are sending a message that they are a gay-positive environment.

Interesting.

Americans think that transparency about identity is the path to utopia.  Enrolment statistics by race?  They’ve got them.  Indeed, they are required to keep such statistics, because of a clutch of laws designed to monitor whether or not Blacks (and, to a lesser extent, Latinos and America Indians) are being discriminated against.

In Canada, the rule of thumb is simple: on forms used for administrative purposes, you can’t compel anyone to reveal data about identity, beyond what is strictly necessary to achieve the purpose for which the information is being collected.  So, on applications to universities and colleges, asking people’s names and addresses is about as far as you can go (provinces have different standards on whether you can ask gender – some say you can’t).  Asking about ethnicity, or aboriginal status?  Totally verboten.  Whereas in the US it’s mandatory.

What that means is that, in Canada, acquiring any data about students – other than raw numbers – requires voluntary surveys.  And those can get expensive: done centrally through StatsCan (and its levels of quality standards) they cost millions; even if you just get a decent-sized consortium together to do something, it will run into hundreds of thousands once you count everyone’s labour costs.  You can get it down into the tens of thousands if you go with an electronic survey, but then there are response bias issues (you can correct for them, but it requires someone to have already done a decent survey to begin with – and with the loss of the census long form, it’s not clear that we have such a survey).

Of course, even Canada is at least somewhat ahead of, say, France.  There, the local conception of nationalism means that state agencies are forbidden from classifying citizens as anything other than citizens.  Blanc, beur, noir: they’re all French according to the government, and its socially unacceptable to classify them as anything else.  A morally attractive stance, perhaps, but what it means is that the French have real trouble measuring social inequality in ways that matter.

All of this is simply to say, if you’ve ever wondered why we don’t have statistics on ethnicity the way the Americans do, it’s this: they assume racial bias exists and keep stats to measure it.  We assume that racial bias exists, and so try to mask parts of individuals’ identities to prevent it.

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 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.

April 11

Paying For the Party

Paying for the Party: How College Maintains Inequality is a quite remarkable new work of ethnography, by sociologists Elizabeth Armstrong and Laura Hamilton.  I recommend it unreservedly for student professionals, or anyone interested in how university affects social mobility.

Embedded in a women’s dormitory at a large, unnamed Midwestern flagship state university (which, if I had to guess, is probably either Indiana or Illinois), the authors observed the girls on one floor for a year, and then conducted regular follow-up interviews with them for another four years.  The results are fascinating, in a horrifying sort of way.

The authors advance an argument that the culture of partying – specifically fraternity/sorority (or “Greek”) partying – is the key factor determining long-term success in college.  Rich kids can live the Greek life through a combination of massive parental subsidies and a proliferation of “business-lite” degrees, and their job prospects aren’t diminished because their success in post-graduation job searches depends much more on parental connections than it does on academics.  Their less-wealthy, and less-networked peers can either attempt to keep up (which can lead to much higher debt and/or reduced academic achievement, which hurts them more than their better-networked peers) or they end up feeling alienated and alone, which also has negative effects on completion rates.

The authors’ most interesting claim is that flagship public universities actively aid and abet the partying culture, both by providing the Greek system with legitimacy/prestige and by dumbing-down the curriculum with too many “business-lite” degrees.  (I’m usually skeptical about “dumbing-down” arguments, but some of this stuff shocked me – karate and ballroom dancing as for-credit courses?) Almost without exception, the kids in this book who studied hard turned out fine; the problem is that too many students are either distracted by other things, or not given institutional encouragement to study the right things.

Two small caveats about this book, though.  The first is that its arguments for state-level public policy change are much weaker than the ones it makes for campus reform.  Asking for more public funding because students party too much, and don’t study enough, just isn’t going to sell.

The second, simply, is that this is an American book.  Much of the really nasty stuff documented here occurs in Canada only in a very attenuated fashion.  The Greek system is less important here than it is in the US, and our class systems are different, too; so one shouldn’t assume the arguments translate directly.  Still, Armstrong and Hamilton’s message about how social class affects the pathways one takes in higher education, and how they affect post-graduation experiences, is nevertheless a very important one; we should all pay much closer attention than we currently do.

March 15

The US Debt Freak-Out

If you read the US papers at all, you’ll have noticed a recent ratcheting-up of panic about student debt.  Take Charles Blow’s recent New York Times column, which describes US debt levels  as “staggering”, and having “long-term implications for our society and our economy, as that debt begins to affect when and if young people start families or enter the housing market.”

Some facts are in order.

It is certainly true that, in the United States, it’s possible to accumulate some absolutely staggering amounts of student loan debt, to no good purpose.  Law grads, in particular, routinely rack up six-figure debts, only to end up in positions with mid-five-figure salaries (do read Paul Campos’ Don’t Go to Law School (Unless) – it’s an eye-opener on this topic).  But those numbers are severe outliers.  In fact, among the 60% of American students who borrow, the average debt is about $27,000 – with median debt being somewhat lower.

Sound familiar?  It should.  Those numbers are almost exactly the numbers we’ve had in Canada since the turn of the century.  And though life isn’t as easy for young people with loan debt today as it was thirty years ago, it’s not as though the last decade’s worth of graduates are some kind of immiserated proletariat.  Against expectations, the rise in debt in the 90s didn’t reduce access (quite the opposite, actually), and it didn’t lead to a generation of debt peonage.  In fact, grads in their late 20s and 30s live pretty much the way they always have.  True, home ownership rates have fallen among the under-40s, but that has at least as much to do with a historic rise in house prices as it is does student debt.  In short, current levels of debt don’t have major behavioural or life-course consequences.

So, are Americans freaking out to no good purpose?  Only partly.  There are two good reasons why a similar level of debt in the US might be more consequential than it is here.  The first is that, with weaker safety nets, the consequences of falling into poverty are much, much worse.  The second reason is that the US student loan policy choices have been sub-optimal.

In Canada, thanks to Interest Relief (and later, the Repayment Assistance Program), students with incomes into the mid-$20,000s are exempt from making payments on their loans.  In the US, the threshold for loan deferment is, in practice, about half that, meaning that, unlike in Canada, some very poor borrowers can be required to make large loan payments.  America could have copied us in ensuring a good safety net for the poorest; instead, they chose to subsidize student loan interest rates across the board, regardless of need.

High levels of student debt are manageable.  It just takes good policy choices.

February 21

Stuff Happens: Rise of the Latinos

When you think about recent developments in American higher education, the negatives tend to predominate.  Cutbacks in state funding, soaring tuition fees, ballooning debt levels – it all leads you to believe that there’s been an enormous diminution of access.  But, very quietly, there’s been one incredibly good piece of news: a massive jump in Latino participation rates.

For decades, now, one of the biggest challenges in American higher education has been low participation rates among Latino students.  Latinos are, of course, quite heterogenous, even with respect to higher education.  Puerto Ricans in the Northeast have long had access rates similar to those of whites, while participation rates among Mexican and Central American Latinos in the West and Southwest have been persistently abysmal.  Other immigrant groups with low-education backgrounds have tended to see their participation rates rise by the time the second generation rolls around.  In many cases in the west, the Latino population was well into its third generation; it seemed, by-and-large, as if Latino youth simply hadn’t grasped the fact that higher education was increasingly necessary to succeed in the modern economy.

As Latino birthrates rose, and as that population became an increasing percentage of the general population, there were real worries in the Southwest that the persistently-low participation rates would lead to declining overall participation rates, and an increasingly de-skilled labour force.  A lot of policy attention – and some money as well – got lavished on this population, through groups like Excelencia in Education.  But for years, Latino access rates flatlined, and all this work seemed to be for naught.

Then suddenly, in the middle of this recession, the situation changed dramatically.   Between 2008 and 2011, the participation rate of Latinos, aged 18-24 years-old, who had completed high school, jumped from 36% to 46%, surpassing the black participation rates for the first time ever.  And no, this wasn’t a trick of the denominator – Latino high school completion rates were rising too, from 65% in 2005, to 76% in 2011.  In 2010 alone, the country saw an increase of nearly 200,000 Latino enrolments from the previous year (to put that in perspective, that’s the equivalent of the population of Quebec’s francophone universities).

Maddeningly for policy wonks who want to replicate this little miracle, it’s really not clear what prompted it.  There was no big policy shift that preceded it, for instance.  Many say “it’s the recession”, but this begs a lot of questions (e.g. why this recession, and not earlier ones?  Why isn’t it having a similar effect on black enrolments?).

Sometimes, if you work at something long enough, stuff just happens.  That’s bad news for social scientists who like to link cause and effect, but good news for America’s Latinos.

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