HESA

Higher Education Strategy Associates

Category Archives: Worldwide PSE

Post-secondary education issues and policy in countries other than Canada.

July 14

Brexit

Morning, all.

Everyone’s writing a Brexit thinkpiece these days.  Literally, everyone.  I’m feeling left out.  So here’s mine.

1) Brexit isn’t a foregone conclusion.  Yes, Leave won 52% of a non-binding referendum based on a pack of lies about the results of future negotiations that would make the PQ blush.  But the UK government has yet to invoke Article 50, the clause in the EU constitution that signals a 2-year countdown to departure, and will certainly not do so until a new PM is chosen.They may not do so until after the French and German elections next year, and as the realities of negotiating a divorce sink in they may never do so (and – irony of ironies, there are not enough trade lawyers in the UK to negotiate such deals, so they are having to import them ) .  Even if they do start negotiations, the final settlement may be so far from the Leave fairytale that there would almost certainly be a huge demand for a second referendum before ratification.  So all this handwringing may be for naught.

2) Even if Brexit doesn’t happen, this episode can cause a lot of damage.  The UK hasn’t been booted out of the Erasmus student mobility program yet, but with racist incidents up 500% since the vote, you can bet there will fewer European students thinking London is a place they’ll feel secure.  The UK hasn’t been booted out of the Horizon 2020 European research scheme yet, but multi-national scientific teams have been pulling UK researchers’ names from their proposals in anticipation of Brexit.  And the idea that the UK will make up for the drop in funding?  Good luck with that.  Paradoxically, the longer the uncertainty about Brexit, the less likely the UK will actually pull the trigger; but conversely, the longer they wait, the greater the damage will be.

3) What will happen to International student flows?  Now this is where it gets tricky.  A lot of the focus right now is on EU students, and the fear that they won’t come to the UK because they will have to pay international student fees instead of domestic ones.  But domestic fees are already pretty high (and in humanities and social sciences are set well above the cost of delivery). If universities want to keep those students they could always grant concessionary fees to EU students and keep them paying exactly what they’re paying right now.  No, I think the real issue with EU students has to do with whether students still think the UK is a place they want to spend a part of their lives.  Lots of them now go assuming they can stay and work there: no more.  But it’s not clear that countries like Canada or Australia would be able to pick up on this loss.  If the point of going to London was because it was a “destination” rather than simply a chance to learn English, it’s not obvious that Melbourne or Toronto would be a satisfactory second choice.

It’s the same with non-EU students: you might think that there would be a lot of non-EU students who might be dissuaded from going either because of increasing incidence of racism or because London was no longer a way into the EU.  Since the Tories took power it’s been increasingly difficult for graduating students to immigrate anyway, so it’s unlikely to be the latter: Teresa May’s immigration saw that lot off years ago.  But the racism/intolerance thing?  That’s a vulnerability.

4) Can Canadian universities and colleges cash in on this?  Yes. Advertise a lot in Asian markets where UK currently does well.  Emphasize security and multiculturalism.  Talk about possibilities for immigration.  And do it fast, because odds are the Aussies are already there doing it.

Hope you’re all having a good summer.

June 15

A Canadian Accomplishment

Often, I think, I am seen as a bit of a downer on Canada.  It goes with the territory: my role in Canadian higher education is i) “the guy who knows what’s going on in other countries and ii) “the guy who pokes the bear”.  So frequently I ending up writing blogs saying why isn’t Canada doing X or wouldn’t it be great if we were more like Y, and people get the impression I’m down on the North.

Not true.  I think we have a pretty good system, one most of the world would envy if we could ever stop admiring our minute inter-provincial differences and explain our system properly.  Among OECD countries, we’re always in the top third of pretty much any higher education metric you want to use.  Never at the very top, but reasonably close.  It’s just that it’s not cheap, is all.  We’re never going to win any prizes for efficiency; countries like Israel, the Netherlands and Australia perform far better on those metrics.

But there is one area in which Canada does a fantastic job and doesn’t even realise it.  And that is the extent to which it has a strong culture of work-oriented higher education which is matched by few other countries.

Let’s start with our colleges and polytechnics, which for the most part deliver labour market-oriented professional education at a level known by UNESCO and OECD as “Type 5B” (bachelor’s degree programs are called “Type A”).  Among OECD countries only Japan and Korea do a greater proportion of young people have this kind of education.

Figure 1: Level 5 (post-secondary education) Attainment Rates of 25-34 year olds, Select OECD Countries

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We sometimes hear complaints from colleges and polytechnics about not getting enough respect, but the fact is, Canada has arguably the best-funded and most successful non-university post-secondary education system in the world.  We should say it, and celebrate it.

What about the university system, you say?  Well, the University of Cincinnati may have invented co-op education, but I don’t think there’s much doubt that the University of Waterloo perfected it.  Last time I checked, they were arranging over 17,000 co-op experiences for students every year.  And institutions across the country have adopted the idea as well.  Personally, I think that’s a result of competition from our excellent college sector: it keeps universities on their toes.

 

And OK, it’s easy to scoff at university claims that 40% of students get some kind of work-integrated learning experience because so many of them are so short-term and of not-particularly high quality, and because at least a few universities seem to care more about classifying as things as possible as “experiential” than actually creating more such experiences: but so what?  The fact that we’re having the debate at all suggests we are on the right track.  And that’s a sight better than most other countries I could name.

Now, I know some of you are going to say “but Germany! Switzerland! Apprentices!”.  And there are some admirable things about those systems (though, as I have said before), Canadians deeply misunderstand what it is apprenticeships in Germany actually do).  Namely, they aren’t post-secondary in nature (note how low Germany’s Type B score is in the figure above); rather, they’re part of the secondary system and in many ways are designed to keep people out of the post-secondary system.  It’s hard to compare out system to theirs.

So, in sum: could we do more on experiential and work-integrated learning?  Of course we could (and should).  But stop and smell the roses: compared to most places, we do a pretty good job on this stuff.  And we should acknowledge that to ourselves even if, in true Canadian fashion, we’re a little reluctant to say so to anyone else.

June 14

Affordability of Higher Education in Canada and the United States

About a decade ago, my colleague Kim Steele and I did a comparison of the affordability of public higher education in all ten Canadian provinces and fifty US states. In general, Canadian provinces did not do well; yes, Canada has lower costs for students, but its student aid system is less generous and – this is worth remembering – Americans are wealthier than we are. And so, once you adjust costs and net costs for family purchasing power, it turned out there was a substantial affordability gap in Americans’ favour.However, things have changed a lot in the intervening decade. Tuition has increased at a faster pace in the US than in Canada, and while both countries have made improvements in student aid, the gap in median household incomes has narrowed substantially due to the severity of the recession in the US. And so my colleague Jacqueline Lambert and I thought it would be fun to re-run some of those comparisons. We’ll be publishing our full 60-jurisdiction report in the fall but it seemed like it would be fun to give you some top-level comparisons right now.

First, a brief methodological note on this comparison. We take six different measures of cost (see table below) and divide each of them by each nation’s median household income. We do this because affordability by definition is a function of a household’s ability to pay – simply comparing costs, which on their own are meaningless.

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Most of this data is easily available from various official sources (email me if you’re curious).  The exception is living costs because while Canada occasionally produces student income/expenditure surveys (we at HESA have done a few of these), Americans simply don’t.  Not on a national basis, anyways.  When you hear American student aid analysts talk about “cost of attendance”, what they’re referring to are institutional estimates of costs to live on- or off-campus which form the basis of student aid need assessment.  Sometimes these estimates make sense, sometimes they are batshit crazy (do read the New America Foundation’s recent series on this issue, available here. Regardless, they’re the only data we have.

In our 2006 paper, we used US figures for on-campus housing and in Canada we used results from an Ekos survey for living expenses.  Here’s how affordability stacked up then:

Figure 1: Canada vs. US Cost Comparisons, 2002-03 
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American tuition and living costs were both 15-20% higher than Canadian ones, but once adjusted for household income they were roughly the same – education costs in both countries came out to 11% of median household income and total costs were 23-24%. Where the Americans had a real advantage was in loans: the ubiquity of loans meant that Americans were much less credit-constrained than Canadians and had to dig into their pockets much less in the short term. Result: on the most inclusive measures of affordability, Americans looked better than we did in 2002-03.

Now on to a more recent comparison, after a recession and many policy changes on both sides of the border. We’ve refined the US living cost data by using a weighted average of on-campus and off-campus housing costs, and to make the Canadian data more comparable we’ve chosen to use CSLP living cost estimates for Canada rather than actual survey data (nationally, the two are within 5% of one another, so it’s not a big change in practice). Here’s how the data looks for 2013-14:

Figure 2: Canada vs. US Cost Comparisons, 2013-14

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What happened? How does Canada now look so much more affordable? Well, not much on the income side; in fact US median household income grew slightly faster on the American side. But tuition grew a lot faster in the US than it did in Canada. So, interestingly, did American students’ living costs; in 2003 they were 18% higher than in Canada; now they are 86% higher. To some extent, the increase in US living costs is due to our methodological change of including off-campus housing costs. That said, US cost of attendance is truly rising quickly for reasons which are not entirely clear.

Some policy measures have kicked in to offset these rises. Grant dollars per student in the US have risen by over 170% in the past decade, and loans per student have risen 64%. Both these figures far outstrip the equivalent figures in Canada. But it’s not enough to close the widening cost gap. On the most inclusive measure of affordability – out-of-pocket costs after tax expenditures – Canadian families must spend 11.9% of median household income (compared to 13.1% a decade ago) while Americans must spend 20.8%, up from just 9.7% a decade ago.

Plenty of food for thought – on both sides of the border.

June 09

Modes of College-Going

At HESA towers, we’ve recently been looking at some data on student costs of living in various countries.  This has prompted a number of observations with respect to the ways in which higher education – however global and transnational it may occasionally appear to be – is still deeply rooted in national cultures.

One of the things that started us going down this route was looking at estimates of cost of living for American students.  Everyone of course knows that students at American universities live in relative luxury what with the hotel-style dormitories, gourmet food options, climbing walls, lazy rivers and whatnot.  But what kind of staggered us when we took a look at the data was that American students actually appear to be paying *more* once they leave campus.  According to IPEDS, On-campus cost of living is $11,795 (C$14,792), off-campus (not with parents) cost of living is $12,986 (C$16,484) (for comparison, surveys show average living costs of off-campus not-with-parents in Canada is around C$8,500).

Now take this data with a grain of salt: American cost-of-living data is not based on surveys as it is in Canada, but on a compilation of institutional estimates of costs of living (at diligent institutions this may be based on student surveys but at less diligent institutions it may be a number dreamt up with a view to making students eligible for larger sums of students loans).  But at a deeper level there is a truth here.  American families (middle-class ones anyway) do view the higher education experience in a slightly different way than Canadians do.  Up here, there is a sense that post-secondary is a time when students “pay their dues” and live frugally; in the US, college is supposed to be “the best four years” of a student’s life.  And that materially affects the standard of living we expect students to maintain which in turn affects how much students “need” in order to attend college.  And apparently, that amount is “nearly twice as much per year as in Canada”.

Or, take the UK.  This is a country where over 70% of students leave home to go to school.  This has been falling gradually from the low 90%s twenty years ago, but the fall has been very gradual and seemingly unrelated to spikes in tuition fees (the increasing proportion of students from non-white backgrounds, who may not subscribe to this cultural tradition, is a likelier culprit.  You’d think that as tuition went from $0 to $16,000 you might get a *little* bit of price response, but no: spending huge wodges of cash to live away from home is so ingrained as a being part of the “university experience” that even big increases in costs (both tuition and, if you’re studying in London, rent) make little dent in the practice. 

Of course, in some parts of Europe, it’s the opposite: almost nothing gets students out of the house in Italy and Greece (even with low or no tuition): living away from parents simply isn’t part of the DNA.  In theory that should make higher education more accessible because it’s cheaper, but there’s not much evidence that’s the case.  In Scandinavia, people tend to draw out their time in universities, entering later and spending a lot of time switching back and forth between school and the labour market (more on that here). Result: on average, Scandinavian students are a *lot* older than North American ones.  Similarly: in South Korea, males have to do (roughly) two years of universal military service, which for reasons which I’ve never been able to work out, most males do in the *middle* of their university career (a common pattern is to do military service after sophomore year), which means their time-to-completion stats look very weird.

Anyways, the point of all this is simply to  remember that while higher education is a “common” global experience which a growing percentage of the world’s youth undergo, it remains embedded in some deeply national cultures about how students should transition from youth to adulthood.  It’s a major reason why access and student aid policy doesn’t travel well; it’s also why international comparisons  of students and student outcomes need to be done *very* carefully.

June 07

Improving Higher Education in Africa Through Philanthropy

My reputation in Canadian higher education, for better or for worse, is that of being “the guy who knows what’s going on in other places”.  This credits me with a lot more knowledge than I actually have. But it does occasionally prompt people to ask me some interesting questions.  Recently, someone (hi, Krista!) asked me: so what would you say to someone who has a few million dollars to spend, and wanted to spend it on improving higher education for sub-Saharan Africans?

That’s a really good question.  So here’s my answer. 

What most people are inclined to do, as a first pass, is to create scholarships which allow promising African students to study abroad.  The Mastercard Foundation, for instance, did this as its first initiative.  But while this provides life-changing opportunities for the individuals selected, it does virtually nothing for the continent because by and large students who leave don’t come back.  Mastercard, to its credit, figured this out after a couple of years and changed tack.

So the next option is to try to find ways to fund African universities themselves.  One thing Mastercard now does is fund scholarships at selected high-quality African universities such as Ashesi University in Ghana or the African Institute of Mathematical Sciences in Cape Town.  This is a better idea than sending students abroad (it’s cheaper for one thing, so a given amount of money can help more people) and the institutions can use the income to improve their facilities and offerings.  That’s not bad.  But we can still do better.

Let’s start at the top.  African nations have collectively adopted a lot of high-sounding policies about Science, Technology and Innovation, but frankly the policy capacity of African governments to make this happen is pretty low.  If government capacity is the issue, it’s time to focus training on public servants, few of whom have a strong sense of how higher education and the private sector can and cannot support one another to support innovation.  Take 500 or so public servants from across African public sectors, run constant short-course training over three years through established African public policy institutes such as the Ghana Institute of Management and Public Administration (GIMPA) or the Eastern and Southern Africa Management Institute (ESAMI).  The cost of something like this could be in the low millions; the effects across the continent could be lasting and significant. 

Want something more ambitious?  Try expanding the models of higher education available in Africa.  There’s nothing like a good Canadian Polytechnic or north European “University of Applied Science” anywhere.  Someone should build and fund one for a decade or so – and spend big so that it’s something people want to emulate.

Not big enough yet?  Well, how about actually creating an African peer-reviewed research fund?  One of the problems with creating genuine African research flagships is that an enormous portion (in some cases as much as 90%) of their research budgets come from donors with specific research agendas.  The money is welcome, but shifting donors priorities make it difficult to develop an indigenous research capacity.  The World Bank’s decision to create a few dozen “African Centres of Excellence” is a step in the right direction, but it’s still in a sense “big science” – why not take the same approach and seed African science through thousands of small ($15-20,000) curiosity-based grants?  $100 million over five years could have a heck of an impact.

Or, finally, there’s the biggest challenge of all: re-designing the African university from the current model where all learning is assumed to happen in the presence of a teacher (and students therefore spend 35-30 hours in class per week), to a more North American model where students are expected to do more on their own and are therefore only required to spend 15 hours per week in class (I’ve written about this in more detail back here.  Quite simply, further massification is going to be impossible unless teaching gets less intense, but tradition and faculty interests make it difficult to see how this process will start.  But using philanthropic dollars to found a half-dozen universities to revolutionize the system?  Teach north-American style with a whole new, leaner production-function?  Now that would be a genuine game-changer, one that would open up enormous new possibilities for the entire continent.

June 01

Early Results from the Tennessee “Free Tuition” Experiment

You may remember a blog I wrote last year concerning something called the Tennessee Promise.  Described by some as a “free tuition” program, essentially what it did was ensure that every Tennessee student enrolled in a Tennessee community college received student aid at least equal to tuition.  In the fall, the state touted that first year, direct-from high-school enrollments in Tennessee colleges had increased by fourteen percent.  But now, however, some more complete data is available in the form of the State’s annual higher education factbook, which allows us to look a little bit more deeply at what happened.

What the numbers show is something a little bit weird.  If we look just at direct from-public-high-school -to-community-college/college of technology, the numbers are actually much better than initially advertised.  In 2014, this number was 13,527; in 2015 it was 17,550, and increase of nearly 30%.  That’s quite astonishing.

However, not all of this jump in enrollment at colleges came from “new” students.  To a considerable degree, the jump in the number of community-college bound students came from cannibalizing students who would otherwise have attended 4-year colleges, as shown in the figure below.

Figure 1: Public In-State Public High School Graduate Enrolment by System, Fall 2011-Fall 2015

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So, Community College and College of Applied Technology enrollment rose by about 4,000, but enrollments in 4-year colleges fell by 2,000, meaning effectively that half the growth came from people switching from other types of higher education. Still, net growth in enrollments at all levels was about 2,000 , or 6.8%, which is pretty impressive given that growth in the three previous years combined was only about 4%.  It sure seems like there is something positive going on here.  But what?

Well, free tuition promoters would have you believe that what’s happening here is a rush of previously-excluded poor students suddenly attending because education is more affordable.  Unfortunately, we can’t directly check students’ socio-economic backgrounds, so we can’t know for sure who’s responding to these lower net prices.  However, because the factbook shows transition rate by county, we can look at different enrollment responses by county median household income. Figure 2 plots the percentage increase in enrollments in each of Tennessee’s 95 counties against their median household incomes

Figure 2: Percentage increase in college-going rate, Tennessee 2015 over 2014 by County, vs County Median Household Income

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Pretty clearly, there’s no relationship here, which at face value suggests that participation rates of students from poor counties did not increase any faster than the rates of students from richer counties.  But that’s not quite right.  Remember we are looking at percentage increases, and poorer counties tend to have lower participation rates.  Therefore, in order for the percentage increase to be the same in richer and poorer counties, the percentage point increase actually has to be larger in richer counties.  (think about:  a 10% rise for a county with 30% participation rates is 3 percentage point; for a county with a 60% part rate, a 10% rise requires a jump of 6 percentage points).

So, a pure, unsophisticated simple-stupid pre-post analysis of the Tennessee data, suggests that the Tennessee Promise appears to have i) caused a 30% increase in 2-year college-going rates among high school graduates, half of which was diverted from other types of higher education and ii) caused a 6.8% overall increase in transitions to all forms of college, but that this increase did not primarily take place due to increases of the college-going rate of students from poorer counties.

Make no mistake, this is still a very good outcome for a program that only costs $14 million per cohort per academic year; it works out to $7,000 per new student added to the post-secondary system, which is pretty cheap.  Nevertheless, it’s worth noting that those benefits don’t seem to necessarily accrue to youth from poorer backgrounds.

 

May 30

The 2016 U21 Rankings

Universitas 21 is one of the higher-prestige university alliances out there (McGill, Melbourne and the National University of Singapore are among its members).  Now like a lot of university alliances it doesn’t actually do much. The Presidents or their alternates meet every year or so, they have some moderately useful inter-institution mobility schemes, that kind of thing.  But the one thing it does which gets a lot of press is that it issues a ranking every year.  Not of universities, of course (membership organizations which try to rank their own members tend not to last long), but rather of higher education systems.  The latest one is available here.

I have written about the U21 rankings before , but I think it’s worth another look this year because there have been some methodological changes and also because Canada has fallen quite a ways in the rankings.  So let’s delve into this a bit.

The U21 rankings are built around four broad concepts: Resources (which makes up 20% of the final score), Environment (20%), Connectivity (20%) and Output (40%), each of which is measured through a handful of variables (25 in all).  The simplest category is Resources, because all the data is available through OECD documentation.  Denmark comes top of this list – this is before any of the cuts I talked about back here  kick in, so we can expect it to fall in coming years.  Then in a tight bunch come Singapore, the US, Canada and Sweden. 

Next comes “Environment”, which is a weird hodge-podge of indicators around regulatory issues, institutional financial autonomy, percentages of students and academic staff who are female, a survey of business’ views of higher education quality and – my favourite – how good their education data is.  Now I’m all for giving Canada negative points for Statscan’s uselessness, but there’s something deeply wrong with any indicator of university quality which ranks Canada (34th) and Denmark (31st) behind Indonesia (29th) and Thailand (21st).  Since most of these scores come from survey responses, I think it would be instructive to publish the results of these responses, because they flat-out do not meet the fall-down-laughing test.

The Connectivity element is pretty heavily weighted to things like percentage of foreign students and staff and what percentage of articles are co-authored with foreign scholars.  For structural and geographical reasons, European countries (especially the titchy ones) tend to do very well on this measure and so they take all nine of the top nine spots.  New Zealand comes tenth, Canada eleventh.  The Output measure combines research outputs and measures of access, plus an interesting new one on employability.  However, because not all of these measures are normalized for system-size, the US always runs away with this category (though due to some methodological tweaks less so than they used to).  Canada comes seventh on this measure.

Over the last three years, Canada has dropped from third to ninth in the measures.  The table below shows why this is the case.

Canada’s U21 Ranking Scores by Category, 2012-2016

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In 2015, when Canada dropped from 3rd to 6th, it was because we lost points on “environment” and “connectivity”.  It’s not entirely clear to me why we lost points on the latter, but it is notable that on the former there was a methodological change to include the dodgy survey data I mentioned earlier, so this drop may simply reflect a methodological change.  This year, we lost points on resources which frankly isn’t surprising given controls on tuition and real declines in government funding in Canada.  But it’s important to note that the way this is scored, what matters is not whether resources (or resources per-student) are going up or down, it’s whether they are going up or down relative to the category leader – i.e. Denmark.  So even with no change in our funding levels, we could expect our scores to rise over the next few years.

May 17

How Rich are China’s Universities?

Last week, Mike Gow at the Daxue blog linked to some interesting data recently published by the Chinese government with respect to the budgets of the country’s top universities.  It only covers those institutions which report to the Ministry of Education (and therefore misses some important institutions like the University of Science and Technology of China (which reports to the Chinese Academy of Sciences) and the Harbin Institute of Technology (which reports to the Ministry of Industry and Information Technology).  It suggests that, at the very top of the Chinese system, there are some jaw-dropping amounts of money being spent.

Let’s focus just on the C9 schools (the Chinese equivalent of the U-15/Russell Group/AAU/G-8, or at least on the seven for which data was provided).  Here is the data for 2015-16:

Table 1: Income & Enrollments of Top Chinese Universities

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*From Wikipedia.  I know, I know, but it’s all I had.

**Using the Big Mac Index to covert from RMB to USD at rate of 3.57 to 1

Now, the jaw-droppingness of these figures depends a lot on whether you think it makes more sense to compare institutional buying power based on market exchange rates or based on purchasing power parity (PPP).  For universities, which pay salaries in local currency but compete for staff and pay for journals and scientific journals in an international market, there are some good arguments either way.  It should also be noted that it’s not 100% clear what is and is not in these figures.  Does Tsinghua’s figure include the holding companies that own shares in all of Tsinghua’s spin-off businesses?  Unclear.  My guess would be that it includes income from those businesses but not the businesses themselves – but it’s hard to know for sure.

Comparing these numbers to those of top American universities is somewhat fraught, because of the way American universities account for income from their teaching hospitals.  Thus Duke reports about twice as much income per student as Harvard because one includes medical billings and the other does not; if you correct for this, the two institutions are about the same.  Correcting as best I can for teaching-hospital income, and excluding Rockefeller University because it doesn’t really have any students and excluding Caltech (which has about $1 million/student in revenue) because it’s such an outliers and would break my nice graph, the top five in the US and the top seven in China looks like this:

Figure 1: Total Income, Chinese C9 Universities vs. Top 5 US universities, in USD at PPP

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The basic point here is that Peking and Tsinghua are – on a PPP basis at least, and excluding medical income on the US side without being sure that it is excluded on the Chinese side – at least roughly in the same league as Harvard, though not quite in the same league as MIT, Stanford and Johns Hopkins.  The rest of the Chinese universities trail a bit: the poorest of these, Xi’an Jiao Tong, would be at about the level of Berkeley if you use a PPP comparison, and Florida State if you use the exchange rate.

Now let’s move to the UK, where the top five universities in terms of dollars per student are Cambridge, Imperial College, University College London, Oxford and Edinburgh.    The comparison changes quite a bit depending on whether or not one uses PPP or exchange rates.  On a PPP basis, Tsinghua and Peking would lead all UK universities; on an exchange-rate basis, they would be 5th and 6th – that is, behind Cambridge, UCL, ICL and Oxford but still ahead of Edinburgh.  Either way it suggests that, financially at least, the top Chinese universities are on a similar playing field as the top UK ones.

Figure 2: Total Income, Chinese C9 Universities vs. Top 5 UK universities, in USD at Exchange and PPP

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Next, let’s go to Canada.  Here are the top five Canadian schools compared with the top seven Chinese ones.  On a PPP basis, UBC is the only Canadian university which would crack the top seven in China.  But on an exchange-rate basis, all of our top five would come ahead of Nanjing and close to Fudan.

Figure 3: Total Income, Chinese C9 Universities vs. Top 5 Canadian universities, in USD at Exchange and PPP

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Finally, let’s take a look at Australia, where universities are frankly much less well-funded than elsewhere.  On a PPP basis, even the weakest of the C9 – Xi’an Jiao Tong – would come ahead of the best-funded Australian institutions (Australian National University).  On an exchange-rate basis, ANU would rise ahead of Xi’an Jiao Tong and Nanjing, but would still lag behind the other Chinese institutions, by a factor of 2:1 in the case of Peking and Tsunghua.

Figure 4: Total Income, Chinese C9 Universities vs. Top 5 Australian universities, in USD at Exchange & PPP

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The bottom-line is that while most Chinese universities are still a ways away from the top international standards in terms of income, expenditure, research base, etc., at the very top it seems that the C9 institutions are now very much in the global elite as far as funding is concerned.  They are not yet there as far as research output is concerned – only Peking and Tsinghua make the Times Higher Top 100 and none make the Shanghai Academic Rankings of World Universities – but that’s only a matter of time.  Rankings (and prestige) are a result of cumulative effort and financing.  Another decade with these kinds of numbers will make a very big difference indeed.

April 29

Free Harvard Fair Harvard

Harvard has a unique Governance structure.  Basically, it has two boards and no Senate.  One of the two boards – the Board of Overseers – is composed entirely of Harvard alumni.  It has thirty members and the membership turns over a bit each year with annual elections.  This year’s annual election is a bit of a doozy.

Back in January, an alumni and businessman by the name of Ron Unz submitted a slate of candidates – which included consumer activist and former Green Party presidential candidate Ralph Nader – on a “Free Harvard/Fair Harvard” platform.  His double-barreled manifesto, as its name implies, is to get Harvard first use some of its vast endowment to reduce tuition and second to move to a system of race-blind admissions.

What should we make of this?

Well, the first demand is ludicrous.  75% of Harvard graduates end up with no debt, either because they come from wealth and can afford the fees or have income sufficiently low that they received something close to a full ride (technically, Harvard doesn’t give a full-ride in the sense that a student will be expected to work a few hours a week no matter what, but it’s awfully close).   In practice, for a family of 3 with no assets outside of housing and retirement funds, income needs to be about $150,000/year before the aid package drops below the level of tuition (you can play with Harvard’s net price calculator here.  Pretty clearly then, making Harvard “free” genuinely would only benefit those with very high family income.  And frankly why would anyone want to do that?

The second demand is trickier.  The slate is making quite a bit of hay out of data that Asian-American students are being discriminated against in the application process.  Unz himself wrote quite a fierce piece on this in 2012, which suggested that as far as Ivy League admissions are concerned, Asians are the “new Jews” – a reference to the fact that Ivies imposed much higher entrance requirements on Jews than gentiles prior to WWII so that the former did not swamp the latter and drive away all those nice WASPs to whom the Ivies were in fact beholden for fund raising (this story is told in excellent detail in Jerome Karabel’s The Chosen, which is a history of admissions and the concept of merit at Ivy League schools).  Unz in effect argues – and it is difficult to disagree with him, based on the evidence – that increasingly the group that is “paying” for affirmative action (that is, policies which give Black and Hispanic students preferential access to spots at Ivy League schools) is Asian-Americans, not whites.

There’s no doubt that Unz’s narrative is troubling (though it should be noted not all his claims appear to be factually correct).  That said, his solution here is effectively to end affirmative action.  Given the extent to which Harvard graduates dominate public life in the United States, ending affirmative action would have an enormous effect on the ability of Blacks and Hispanics to access some of the upper corridors of American society.  Add that to the fact that Unz has in the past funded groups with some fairly unpleasant white supremacist associations, as well as sponsoring ballot initiatives against bilingual education, and you can see why some people think that behind Unz’ pre-occupation with fairness for Asian-Americans lie some much nastier anti-Black and anti-Hispanic prejudices.

The presence of the Unz slate has prompted the formation of an opposing “Coalition for a Diverse Harvard” slate, which is vigorously defending the current admissions system.   The balloting is by mail, and results will be announced on May 26th.  The results will be closely watched, particularly in a Presidential election year.  If Harvard’s own alumni – a group which you’d think would be in the tank for the Democrats – votes against affirmative action and for spending more endowment money on the richest of the rich, it will cause some interesting ripples in the campaign.  For that reason, I think it’s quite unlikely to come about, but then again I wouldn’t have guessed Ralph Nader would ally himself with this set of ideas, either.

April 21

Harvard. I Mean, Really.

Last week, the Harvard Crimson printed some unofficial estimates on the university’s current capital campaign.  Be forewarned: these numbers will give many of you a heart attack, so to soften the impact I’m going to lead  by providing some background on the campaign. 

Universities raise money.  Sometimes it’s small donations, sometimes it’s big ones.  Sometime the university spends that money right away, sometimes the money goes into an endowment, which means the capital is available in perpetuity and the university only a small fraction each year (often less than the interest earned).  The standard “take” from endowments these days is 4%, hence the fundraising joke “the quickest way to turn $1 million into $40,000 is to endow it”.  Big donations – the kind you read about in the papers – are almost always endowments.

(The campaign numbers are two paragraphs away.  Are you sitting comfortably?  I want you to be sitting comfortably, because it’s going to be a shock.)

Every 15 years or so universities do something called a “capital campaign”. This is an intense, time-limited effort to get a lot of money out of donors, usually for purposes of acquiring specific physical assets like a new building or two – though the politics of universities are such that capital campaigns aren’t entirely about infrastructure (it’s suicide not to fundraise for scholarships at the same time, for instance).  Capital campaigns always have the same format: they start with a “quiet” period in which money is raised behind the scenes.  Then, after a year or more, they have a public launch ceremony in which the institution sets a goal for the campaign and announces that “surprise!” they’ve already met some suitably high percentage of that goal.  Needless to say, this is always done in such a way that the announced goal will be surpassed.  The face(s) of this effort are always drawn from the senior ranks of local business and alumni.

(Are you ready?  The number is coming.  Deep breath.)

The largest ever university capital campaign was concluded in 2011 at Stanford University, which raised $6.2 billion.  Naturally, when Harvard launched its campaign in 2013, it set a target of $6.5 billion ($8.1 billion Canadian), of which it raised $2.8 billion during the “quiet” phase.  Last week the Crimson broke the story that the $6.5 billion target had been reached.  The University declined to comment, noting that it only announces updates every October, but if true this means that with two years to go, the campaign is on track to raise something on the order of $10 billion by the time it finishes in 2018.

(Everything OK?  Another deep breath.)

Think briefly, if you will, about what $8 billion looks like.  It’s about three years worth of the entire budgets of our granting councils.  It is 33% more than the gross domestic product of Prince Edward Island; (or, if you want to get all internationalist about it, equal to the GDP of Malawi).  It is more or less equal to the aggregate operating budgets of all the universities in Ontario.  And remember, this is just the take from four and a half years of a capital campaign.  We’re not talking the entire endowment here – that’s six times as large again (US$37.6 Billion at last reporting but presumably around US$40 billion now).

Of course, all of this money comes tax-free.  Donations are deductible to the donor, and of course universities are charities and consequently exempt from most taxes.  But at a certain point you have to wonder whether or not Harvard is a charity in any meaningful way.  What’s the public good of having all this money go to a single institution?  Assuming a 30% tax rate, the Harvard campaign has cost American governments almost $2.2 billion in lost revenue.  Imagine the number of students that could be supported with that money. 

Recently, the legislature in Connecticut debated taxing charities’  endowments (read: Yale’s endowment) if they exceeded $10 billion because beyond a certain point it’s tough to make the case that there’s a genuine public benefit to that money.  In the end, they chose not to pursue this idea, but this is – deservedly – going to be a significant public policy issue for the next few years.  There are limits to the amount of money a university needs.  Berkeley aside, the top half-dozen American research universities are now reaching that limit.

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