Flatline

Despite piles of research showing what works in raising retention and graduation rates, more emphasis on the need for college graduates, and new instruments to measure student engagement, ACT published data yesterday showing we still lose about a quarter of college students after one year and only manage to graduate about half of our students in five years. These are nearly identical to the rates of twenty years ago.

Here's what the rates look like in a chart (because ACT's charts are designed to show year-to-year changes, the chart below utilizes their data to show how minor the change has been):Over a period when enrollment increased more than twenty percent, it is the failure of our nation's colleges and universities to increase student retention and graduation rates that are causing our higher education stagnation.

Learning From Finland, Or: The Semi-Voluntary Internationalization Theory of Higher Education Reform

What does the Finnish War of 1808 have to do with contemporary higher education policy in America? Plenty! You can read all about it in my new Chronicle of Higher Education column, here. 

Distasteful

I've been trying to figure out why the University of Phoenix story bothers me so much, and I think I've come to an honest realization: at the heart of my disdain is the feeling that knowledge and learning should be freely acquired rights for all people. It strikes me as utterly distasteful that a profit can be made off these things like other on commodities. They're not shoes, and they shouldn't be treated as such.

Some would suggest these feelings are just the effete snobbery of a privileged individual. If someone wants to pay for an academic credential, the argument goes, who am I to stop them? A July 2008 Reason article came to much the same conclusion:

There are legitimate criticisms of the university. But the education establishment's hostility to the institution often lies elsewhere, in an attitude toward for-profit higher ed that is essentially an aversion to change and commerce, the same snobbish disdain directed at payday lenders, providers of adjustable rate mortgages, and inner-city fast-food vendors. Few sins are less forgivable in polite society than offering poor people products they actively seek.

The problem with this line of reasoning, besides its obvious failure of subtlety, is that the items listed alongside for-profit higher education as being repugnant (but ultimately acceptable as commodities) are objectively bad things. Payday lenders prey on people living month-to-month; no wealthy person would ever submit to their usurious rates. Adjustable rate mortgages don't seem to be working out too well either for the borrowers or society at-large. Fast food has caloric, fat, and toxin contents that are simply bad for human bodies. These are not the opinions of a high-minded liberal; they are facts determined objectively by experts.

Unfortunately, our public institutions of higher learning have neither the tools to show whether or if they're superior, nor the moral high ground. As "public" higher education becomes increasingly less reliant on public funds, less willing to devote those funds to teaching and learning, and more invested in high-revenue sports, they slowly begin to look more and more like for-profit education institutions. Worse, the for-profit institutions are not stealing "customers" from public institutions through price mechanisms. Public four- and two-year institutions are often cheaper than for-profit alternatives. Rather, the for-profits are gaining market share by offering more night, weekend, and online opportunities to a group of students who are busy during traditional schooling hours. These are real areas where public institutions could learn from the for-profits.

In other areas experts in higher ed have ample evidence to make their case against for-profits. As the single largest recipient of federal student loan money, the University of Phoenix has an official graduation rate of about 15 percent. This number is so low partly because they actively and aggressively recruit students who are often vulnerable academically and/or financially (for more on their recruiting tactics, check out pages 9-13 of this .pdf file from a lawsuit filed against them earlier this month). The business model of for-profit higher education institutions relies on federal student financial aid for the majority of its revenue, which means it's all of our business how that money gets spent.

It's a flawed argument that demand for a certain product automatically leads to its rightness. Just because one can make a profit off something does not mean one should.

Shameful Cont'd

Matt Yglesias responds to the University of Phoenix post below:

I think the main lesson here is that traditional universities need to do a better job of getting into the niche that’s currently dominated by these poorly performing for-profits. In part, state governments would do well to shift emphasis away from trying to burnish the sheen on their “flagship” traditional universities and toward doing more in the way of providing community college services for working and non-traditional students. But given the nature of the American system, perhaps the bigger part of this is that social and intellectual pressure needs to be brought to bear on rich people to stop donating to already-wealthy universities with huge endowments and to instead focus their efforts where they’ll do more good. Harvard and Yale have plenty of money, and their students aren’t coming from needy families. But plenty of students on the low end of the higher education system are genuinely in need, and they simply don’t have much in the way of decent educational services available to him.

Exactly right. To extend the first sentence a bit further: One of the big shortcomings in the market for post-secondary credentials is the lack of meaningful differentiation in degrees bestowed by non-elite institutions. A degree from Princeton is valuable because it transmits important information about the degree-holder: "I was smart enough to get into Princeton."  But most colleges and universities--well over 80 percent--admit the majority of students who apply. Many admit everyone who applies. And since few colleges provide any kind of objective, comparable, reliable information about how much students learn while they're in college, what's left is a huge mass of largely undifferentiated degrees from non-selective institutions. The fact that we live in an unusually large country with many higher education institutions and a high degree of mobility just makes things worse. Practically speaking, there's simply no way for an employer to understand the difference in the quality of education provided at Southeastern State University at Somewhere as compared to the Regional College of Somewhere Else.  One degree from an accredited non-selective institution pretty much looks like all the rest, and this is what allows the University of Phoenix and other for-profits to thrive. If traditional institutions don't want for-profits to eat their lunch, they can't just assert that they're providing a higher-quality education--they need to prove it, by providing actual credible evidence of student learning results and other outcomes. 

Shameful (Part II)

Not to belabor Kevin's point below, but these are serious allegations against the University of Phoenix (UOP) and its parent company, the Apollo Group. Three former students have begun a class action lawsuit against the company for improper handling of their federal student loans. The students allege that after dropping out early in their first semester, they received collection notices from UOP seeking payment for the exact amount of the federal loans.. In other words, UOP is being charged with paying off the students' federal loans and turning around and demanding payment for the same.

Why would the University of Phoenix voluntarily pay, in cash, the full amount of a student's federal loans in exchange for risky future returns?

That's the question everyone should ask, because it makes no logical sense for a for-profit company to take on the debt of students who are most likely to default. Or perhaps it does, when 77% of your revenues come from federal student loans (as for Apollo), and the federal government has rules about loaning to students at institutions with high default rates.

Shameful

That's the only word for the University of Phoenix's conduct if the allegations described in today's Higher Ed Watch and reported in the Chronicle are true. In a nutshell: Back in the early 90's there were a series of scandals involving unscrupulous for-profit colleges that tricked students into borrowing lots of money through federal loan programs for which the students received little or nothing in return. The students would quickly default on the loans, the colleges would keep the money, and the federal government, which guarantees student loans, would be left holding the bag. In response, the feds prohibited students from using federal loans to attend colleges where more than 25% of borrowers default within two years. (Last year Congress changed the provision to 30% within three years). 

Now three former Phoenix students have filed a class-action suit in Arkansas alleging that after they dropped out of the university, Phoenix payed off their federal loans without their knowledge and then turned around and demanded repayment on more onerous terms that the students would have gotten under the federal loan program. Other for-profit institutions have allegedly used similar tactics in the past, involving collection agencies and other high-pressure tactics. Basically, it's a way of lying about default rates that hurts students in the bargain. Phoenix disputes the allegations. 

I'm not among those who think that for-profit colleges and universities are necessarily bad. It's a free country and some institutions have put together a package of services that students want to buy. For-profits often seem to be focused on meeting the needs of their customers, particularly working and non-traditional students, in ways that traditional non-profits do not. But they also tend to be expensive and highly dependent on students borrowing a great deal of money to attend. Dropout rates at for-profits are often quite high. And if more than a quarter or a third of your students are defaulting on their loans within a few years of leaving, then pretty much by definition they weren't getting a sufficiently valuable service in exchange for their money. 

"Our Schools Fail Too Many"

That's what President Obama (!) said yesterday during his inaugural address, which I watched on a Jumbotron while standing near the Washington Monument with roughly a billion jillion other cold and decidedly warm-hearted people. It was the first of two references to schools, the second being: "And we will transform our schools and colleges and universities to meet the demands of a new age."

There are no accidental words in an inaugural address. And there are a lot of different ways to talk about the challenge of improving public education. One could say "Too many of our students are failing" or "Too many children can't read" or any number of other things. If you believe that improving educational results is significantly (although by no means exclusively) a matter of improving educational institutions, Obama's formulation should be heartening. 

Equal Funding for All Low-Income Students

The stimulus proposal recently released by the House of Representatives includes a lot of money for education. That's a good thing, unless you subscribe to the Petrilli school bankruptcy theory of education reform. But while Mike and his colleagues are wrong to think that financial stress will induce more reform-mindedness, they're right to point out that there are better and worse ways to pump out billions of new federal education dollars. In that vein, I have a proposal for how Congress should spend the extra $13 billion in Title I funds:

Equal funding for all low-income students.

One might assume this is the way Title I funds are currently disbursed. But they're not. Instead, Congress adjusts the amount of money each district gets per low-income student based on the states' average level of state and local funding per student. Rich states, being rich, tend to spend more. Poor states, being poor, tend to spend less. As a result, poor children living in rich states like Connecticut get 50% more Title I money than poor children living in poor states like Alabama. The Title I program starts with existing wealth-based inter-state disparities in education funding and makes them worse. 

Under normal circumstances, fixing this would be difficult because it would involve redistributing lots of money from rich states to poor states. But these aren't normal circumstances. It's all new money, so everyone's going to benefit. In a perfect world we'd distribute funding inversely to wealth, as Medicaid does, but I'm a reasonable guy and understand that politics is the art of compromise. So let's just go with a simple formula that everyone can understand:

Equal funding for all low-income students.

An even bigger problem potentially lurks in the $39 billion that Congress is considering giving states to support their general education aid programs.  The problem here is that some of the formulas that drive those programs are deeply inequitable and so throwing money on top of them will also make existing disparities deeper still. The tricky thing is that there are really three kinds of general education aid programs to consider:

1) Good general aid programs in states with equitable funding systems (funding systems being defined as the totality of state aid and local property taxes) that would be become more equitable with more general aid funding. These we should feel good about funding.

2) Bad general aid programs in states with inequitable funding systems that would be become more inequitable with more general aid funding. These we should feel bad about funding.

3) Good general aid programs in states with inequitable funding systems that would be become more equitable with more general aid funding. In other words, it's possible to have a bad overall funding system but a well-designed general aid program that just doesn't get enough money to overcome local property-tax based inequities. Indeed, the under-funding is probably the main source of the inequity, and as such pumping more money into the general aid program would be a good thing.

The problem is that it can be hard to figure out from the outside which states with inequitable systems are a #2 state and which are a #3 state, because most analyses measure (as they should) the overall inequitableness of a given state's funding system as a whole. Congress should keep an eye on this issue as it crafts stimulus policy.