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Friday, August 07, 2009

Interesting Times

Some changes are truly "revolutionary," in the sense that they come out of nowhere. But my sense now is that most change comes like a heart attack. Stick with me (and forgive any questionable taste). The arteries clog, over time. It's detectable, but only if you look in the right places and in the right way; 'superficially,' the future heart attack victim 'looks fine.' There are warning signs, but those are probabilistic, only--they make such an event 'more likely,' but don't mean that it will ever come.

Then, one day, massive heart attack and you die."No one saw it coming."

The change happens when things have built up to the point where a key event--in the heart attack analogy, shoveling snow, perhaps--puts things past what some would call "The Tipping Point," a book that I have not read. Maybe I should.

I'm starting to worry that the current economic crisis is just such an event for many institutions. Not just the ones that have already garnered massive media attention. My real interest is in institutions of higher education. The growth of many such institutions, the sharp increase in their cost (especially to students), and the unsustainable nature of much of that growth in recent years . . . at least without additional state support for public universities and some other form of support for private ones . . . seems to be obvious now.

For probably about 15 years, those increases have been driven by student borrowing. It's in some ways similar to the housing bubble. Easy money drove up costs. But my sense is that in this credit market--and job market--that the student borrowing gravy train has about run its course. What replaces it?

I am an outsider in this, of course, but that seems to me to be the problem facing higher education.

Small increases in the cost of an item (a house, an education) accrue over time. No single increase is the problem. It's the accretion of the increases. Even then, the increases (in say, a debt load) can be sustained for a very long time, as long as, say, there is easy money to borrow. After awhile, the "price" of the item resets in our minds--of course that's how much a house/education/whatever costs. Just like the future heart attack victim becomes inured to being winded earlier and earlier when exerting himself. It becomes normal.

But it's only normal under one set of conditions. If, say, there's an economic crisis, and the economics of the situation change, that's when things become interesting.

In the realm of public higher ed, anyway, there would be a simple solution, but one that few states will even try--additional state support for public universities. Now, to some extent such a policy would be pro-cyclical, which would be a problem. But politically, it just isn't viable in most states.

Anyone else have any thoughts? And I appreciate that these are hardly original thoughts, but just some things I've been mulling over.


At 9:28 AM, Blogger tekne said...

Well put with the heart attack analogy. I'd suggest that the housing bubble quite directly drove higher ed costs--parents borrowed against their houses to send their child to an expensive school.

Rather than look at higher ed as a single unit, I look at it as a hierarchy of institutions, heavily influenced by, of all things, the USNews rankings. (So when US News added the category of "most connected" to its rankings, that meant schools had to invest there.)

I'd say it's the middle-weight private universities and colleges that benefited most from the bubble--the education is maybe slightly better/more personal than State U, but you pay 4x as much for the cache of going to a private school, enabling your child to pursue competitive sports in college, etc. They'll be the most hurt by the downturn.

Other factors: the end of the baby-boom echo--we'll see a decline in the number of graduating seniors for the first time in a while in the coming years.

The rise of community colleges--a lot of state systems were already trying to attract folks who might otherwise not do college to 4-year programs by teaming with community colleges: do 2 years there, get X GPA, then automatically get in to State U for the final 2 years. Many state Us were shrinking their 1-2nd year programs because of this. They'll do well in this climate, as CC enrollment will go up because of cost and unemployed folks retraining.

//Elitist statement warning//
Also, we need to shift the culture in this country. Not everyone needs, wants or really is prepared to do the college thing, certainly not the 4-year thing. Trades are a positive element of economies, and should be validated in the US like they are in Europe and the UK. Again, community colleges and ITs can cash in on this. As a demolition company owner in town told me: people are always going to need ditch diggers.

Govt funding: yes, this should be increased, although I think even most State Us only get a very small % of their budgets from the state and federal govt these days. Funding for research is underwriting a lot of universities (scientific research primarily), and as that dries up with the crisis it will impact a lot of institutions. And, as institutions shrink their faculty's salaries and research budgets (for some this is already 5-6% salary cut in the form of furlough and no research/travel money) the competition for scarce resources will increase such that grants become truly impossible to get.

They keep telling us the tuition only pays 40% of the cost of putting your child through school, and professor salaries, esp. at the lower and mid-levels, haven't gone up too much across the country, so if the housing bubble enabled folks to spend more, where did that money go? For some, it went to admimistrator salaries, major building & improvement projects on campuses, increased IT costs, increased library/book costs as publishers rely on reveues from expensive journals to publish books at all...does it really add up? I'm not sure...

At 12:05 PM, Blogger tenaciousmcd said...

Although I don't have great answers either, here's my view from mid-level state school world.

College prices rise for multiple reasons, mainly, however, b/c the things that colleges do (e.g., teach students) are not typically subject to efficiencies of technology and corporate organization. So whereas other sectors of the marketplace get more price efficient, we--relatively speaking--do not. Now, add in the fact that much of the expectation of higher education service is driven by those elite schools from US News, colleges which tend to be price "inelastic": higher prices make you MORE desirable not less b/c the product becomes a status marker rather than a traditional consumer good. So at State U., we're now expected to do the same kind of research, requiring the same kind of travel, and teach the same kinds of classes, requiring the same kind of high tech equipment (espec. in the sciences, but actually for everyone--see the "master classroom" craze), all of which increases our costs w/o the compensations of inelastic prices.

Meanwhile, as Tekne says, states have been trimming their budgets over the last generation (the anti-tax era) by scaling back support to higher ed. MTSU used to get 2/3 of its funding from the state, now it gets around 1/3, and that number will go down even more in two years once stimulus cash disappears.

In response, administrators all reflexively look to corporate-style answers: move the boxes around on the org charts, push toward "distance learning" (on-line, etc.) that theoretically allows you to teach mammoth classes w/o a physical classroom, and invest heavily in luxury items (rec centers, student centers, etc.) that make you more marketable against the bigger boys. Of course, that means bolstering your fundraising staff, since most of that stuff cannot be paid for with state funds. So the non-academic aspects of academia become a bigger and bigger part of the bureaucratic apparatus and gain a larger constituency within administrations, which tend less and less to be run by actual academics.

What can be done about this I have no earthly idea. I agree that more state support would be great, but it isn't going to happen in today's political environment.

At 2:03 PM, Blogger DK said...

Without increased federal and/or state funding, it seems inevitable that there will be an even bigger push for online, distance learning, to try and emulate the success of Kaplan and Phoenix. I used to think this was a bad trend. Now I'm not so sure. I've recently surveyed a few courses at the MIT open course project and, while these are not full courses (no tests, grading, etc) this wouldn't be all that hard to develop. This of course would not replace the traditional 4-year in residence approach, just supplement it. In particular, it could work well for continuing education. Not completely sold on this, but it does seem like there could be a business model here that works for some schools, professors, and students, if not all.

At 11:48 PM, Blogger tenaciousmcd said...

DK, as you'd expect I disagree on on-line. Take Phoenix, which has a 16% graduation rate--4% if you consider only their on-line!!! Now that's for finishing a 4-year degree in 6 years or less, so some others still make it, but this is not confidence inspiring. What Phoenix IS good it is raking in federal aid $$. Indeed, they may be little more than a massive federal aid scam.

Even then, Phoenix is arguably more honest than what a lot of other colleges are now doing, which is blurring on-line and traditional ed to the point where you can't tell what is what. At least with Phoenix you know what you're getting: a weak degree that's better than nothing but not necessarily by much. The average age of Pheonixites is pretty old (mid-30s), and they're heavy on business degrees, so maybe you don't lose much there--you're just getting a minimal credential, to people who don't have better options, in a way that is transparent to employers. When other schools make the same moves, however, they often hide that a degree was earned on-line (we do). And they push for more distance "learning" among traditional students, a silent watering down of content. You also create a bureaucracy whose job is to protect and promote these courses/degrees and that is often utterly unaccountable to the faculty as a whole.

So, consider me a skeptic.

At 10:39 AM, Blogger DK said...

I meant to put the "success" of phoenix and kaplan in quotes. Also meant to say that the MIT courses i've perused are quite good (if I'm not mistaken they are the exact same courses you get on campus).

I certainly understand your skepticism. But i still think there may be a business model that could work and preserve academic standards if we think creatively. If the faculty doesn't take the lead on this then the bureaucracy will (as they are now). And as i'm sure you will agree, the overall pressures to go online will only increase with the decline in funding.


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