The Growth in Growth

Prior to the 2005-2006 school year, schools around the country were required to count how many students in each school were "proficient" to determine whether a school made Adequate Yearly Progress (AYP). That year, two states, Tennessee and North Carolina, began the Growth Model Pilot program to allow schools to meet AYP another way, by moving children sufficiently along on a path to proficiency. No more was it just about status; growth and progress mattered too. It was a fairly inauspicious start: in that first year, a grand total of seven schools nationwide made AYP by growth targets alone. But in 2007, 353 did, and last year, 1,571 schools did it. This represents just a fraction of our country's 90,000 schools, but the growth in growth is a positive sign.

The difference between old and new is one of "status" versus "growth." Status models count as making AYP only those students who score above a pre-determined cut-off. Schools have a strong incentive only to worry about those students close to meeting (or close to failing to meet) that bar. These are the "bubble kids," the ones where extra attention may be just enough.

In contrast, the best growth models encourage adults to watch the progres of all students. If a student fails to meet proficiency standards but makes sizeable gains in the process, that student counts towards a school's proficiency. In Tennesee, where they have a particularly rigorous growth model, a student who scores in the "proficiency" range is not counted as such if she has slid backwards to the point where her future proficiency is in doubt**. No more ignoring kids at the poles.

The growth models as currently implemented are by no means perfect. Several states, for example, have implemented a system where students have to cross thresholds into newly created tiers to qualify as making growth. These are more or less arbitrary and not much more than additional layers of status--a student could still meet AYP by making a small jump across a threshold or fail to make AYP despite large gains within a tier. As more states get approved to use growth models--15 will be using them in 2009--further study will be needed on their impacts (see the first program evaluation here). Yet, growth models are already adding needed flexibility to the unpopular No Child Left Behind Act, flexibility that may better identify successful schools that help students below proficient make larger than expected gains.

**To clarify, I meant this sentence to suggest only that Tennessee's growth model was rigorous in this specific context. Whereas North Carolina and other states count all kids above the target plus those on pace to be above it as making AYP, Tennessee adds another wrinkle. It looks like this:

AYP = kids above proficient + kids on pace to be proficient - kids above proficient on pace not to be

This is just one among many trade-offs each growth model makes. North Carolina, for example, chose a relatively simple model that takes the amount a student is behind and divides it by three or four years, depending on the student's grade. If the student made gains higher than that, they count towards AYP for growth. Tennessee, on the other hand, uses multiple regression to predict future scores, a far more complicated and difficult to explain system. These issues are complicated, and the implementation choices states make matter. Look for more from Education Sector in the near future on this very topic.

The Americans

One of the great pleasures of living on Capitol Hill is the ability to walk out the front door on an unseasonably warm Sunday afternoon in February and amble down to the National Gallery of Art. Great national museums are normally experienced during short vacation-related timeframes that force you to engage in a fairly brutal calculus of weighing the desire to see iconic works against the desire to fully appreciate them and your brain's limited capacity to process the experience. Living nearby means you can focus on small pieces of the permanent collection or ignore it entirely and give all your attention to exhibitions like the one currently on the ground floor of the West building dedicated to Robert Frank's seminal book of mid-20th century photography, The Americans.

Before today, I knew enough about art and culture that I could have told you that The Americans was considered to be a milestone in photography, that Frank was a European Jew who brought an outsider's perspective to America, much as Tocqueville had, and that the book was highly controversial on publication due to its unsparing portrayal of race and class in the 1950s, which stood in stark contrast to popular photography like that published in Life magazine. Knowing things like this serves you in good stead at dinner parties or if you happen to end up on Jeopardy or Who Wants to Be a Millionaire. It's also no substitute for spending a couple of hours actually looking at the photographs, thinking about what they mean, and marveling out how Frank condensed years of work into less than 100 images, each of which contains a small world and which together seem to miraculously tell a story as deep and rich as the nation itself.  Yesterday I only knew about Frank's work, while today I know it, or at least I've begun to know it, and that makes all the difference. 

Taking Requests for Non-Education-Related Pop Culture Posts

From time to time I'll be at an event or conference of some sort and someone will walk up, introduce themselves, and say "I like your blog." (This is, FYI, a surefire conversation-starter; I'm as susceptible to flattery as the next guy.) Yet often--it actually happened twice this week--this is followed by "especially the posts that aren't about education." From there the conversation trends quickly to matters like the tragedy of Frank Sobotka and why Omar loved Honey Nut Cheerios. While this is all to the good since you really can't spend too much time pondering the larger meaning of Omar, it does make me wonder about the posts about education. But I'm going to yield to the collective wisdom of our readers (or at least our sociable conference-going readers) and take requests for further posts on topics wholly unrelated to education. The final season of Galactica? The new Watchmen movie? Books? Video games? Rock music? You tell me! The comments are open. 

Never Let A Serious Crisis Go To Waste

If all goes as planned, the Department of Education's budget could double between now and President's Day. Double. In. Less. Than. Three. Weeks. As I read reports and reactions in the edusphere, I'm amazed at the nonchalance from the left and the lack of imagination from the right.

Let's start with the left. With post titles like "Overstated" and "Stimulus Bill Intensifies But Does Not Change Federal Role" from sites and sources I respect, my mind keeps going back to the figures we're talking about here. As Charlie Barone points out in a great post, the new money will be the largest increase in federal education funds ever. Money alone does not change the federal role in education, but it's hard to believe that this kind of increase will not have a major impact, especially come re-authorization time.

There's indication that people are already getting used to the money. A USA Today article on the stimulus package had this innocent-looking paragraph in it:

Mary Kusler, a lobbyist for the American Association of School Administrators, says Title I and IDEA "are areas where they cannot cut back three years from now."

Congress continues to assert that these funds are temporary, although those assertions are somewhat unbelievable. In a conference call on the stimulus on Wednesday, House Committee on Education and Labor Chairman George Miller was somber and eloquent throughout the call. But when asked if a $500 increase in the Pell Grant would be permanent or for only the next two years, as the stimulus is, Miller reiterated that it was an "emergency recovery act" but also indicated the decision would be made later, in concert with President Obama's future budget requests. My question is: does anyone really believe the first time we "fully fund" No Child Left Behind, as this bill does, it will be the last? Won't cities, states, and interest groups (like the American Association of School Administrators, for example) adjust to this influx and kind of like it?

The right is as upset as the left is credulous. Over at the Gadfly, Mike Petrilli and Checker Finn are ready to pronounce the entire school reform movement dead. "How so?" they ask:

Because of what turns out, in retrospect, to be a tragic flaw in the strategy of many reformers in recent decades: offer the education establishment a lot more money in return for a little reform. Understandable, sure, and in many state capitols and along the banks of the Potomac there probably was no other way to go about it. But what happens when the extra money dries up? When even the pre-reform money sinks into the recessionary soil? During flush times, buying reform seemed to make a certain kind of sense and to be relatively low risk, a bit like buying a big new house or fancy new car. During hard times, however, that turns out to be the very definition of unsustainability.

This analysis is both gloomy and missing in all creativity. The stimulus may or may not have some key ed reform provisions, depending on which way the Senate goes, but if George Miller, Arne Duncan, and Barack Obama have a say (and I think they will), the provisions will be in the final version. What's more, the Gadfly analysis has no vision into the future. "Fully funding" NCLB gives the Department of Education and future Congresses more leverage to go after pet reforms. Advocates of local control used to be able to say that federal spending in K-12 education was "only nine percent" of all education dollars. But now that ratio is changing, and where I come from, more money contributed means more influence. A higher percentage of federal dollars means greater clout, too.

That, I think, is the real lesson here. The stimulus package is an unfathomably large sum of money that will be passed through Congress in an incredibly short period of time. Three weeks is a blink of an eye in legislative history, and soon the federal role in education will be changed irrevocably. Let's not pretend that that's not true or that it's an entirely bad thing. Crisis breeds opportunity.

Additionally: If you're still unconvinced, consider doubling the federal investment in education again. It would then total 35-40 percent of all revenues. Or, think of the fact that, in a few weeks, we'll have doubled the federal investment in education in 2002 and again in 2009. 2016, anyone?

Stimulus Package – Restricted Funds Grow While Unrestricted Funds Shrink

States will be glad to see the in large infusion of federal funds into K-12 education. But will they help districts balance their budgets without major teacher layoffs? Most of the reductions in state and local resources are unrestricted funds resulting from reductions in local property tax revenues or state general support for schools. All of the new federal funding will be restricted funding that can not replace the unrestricted funds that districts are losing. So, likely districts will have to lay off hordes of teachers that are supported with unrestricted funds at the same time that they hire teachers for special education and Title I activities. Much of the time, these will not be the same teachers (if we want them to be highly qualified). The fix would be to allow Fiscal Stabilization funds to be used for general K-12 purposes instead of restricting the funding for Title I, special education and career tech. Here are the details:

Let’s just concentrate on the three big pots of funding – Title I ($13 billion), Special Education ($13 billion), and Fiscal Stabilization Funds ($39 billion – shared with higher education).

Title I – These funds are distributed through existing Title I formulas, and the funds are general subject to restrictions that the funds support disadvantaged students (Schoolwide Title I schools have a little more flexibility). These funds have supplement not supplant requirements which restrict the funds from replacing funding sources that the state or locals would otherwise have provided. Estimates of district by district allocations for Title I and special education are available (here).

Special Education – Distributed by existing formulas can only be used for special education, and subject to supplement not supplant language.

Fiscal Stabilization funds – The distribution of these funds is a little more complicated, but once the state shares have been determined, and K-12’s share of that is determined, then the K-12 funds are distributed using a combination of the general purpose funding formula used in that state, and the state’s allocation method for Title I funds. While the funds are distributed using the general purpose fund formula, the Stabilization funds can only be used for ESEA, Special Education and Perkins Career and Technical Education purposes.

States are Cutting General Purpose K-12 Funding that Can’t be Backfilled with Title I and Special Education Funds
To illustrate this point, it might be easiest to focus on a specific school district. I will look at the impact on Los Angeles Unified (LAUSD) which is the second largest in the country and located in a state that is facing one of the worst state budget crises in the nation. Based on the analysis of the Congressional Research Services (referenced above), LAUSD would receive $218 million in Title I funds and $91 million in special education funds for the 2009-10 school year. I estimate that LAUSD will get in excess of $250 million in fiscal stabilization funds (there are too many moving parts to get an accurate estimate here). So in total, LAUSD would receive around $550 million for 2009-10 to be used mainly for Title I and special education purposes.

California’s Governor has proposed cutting general purpose funding to schools by about $2 billion in the current school year, and effectively $3 billion in 2009-10 from the current funding level (which has already been cut in adopting the 2008-09 budget). As part of this reduction, he is also allowing schools to reduce the school year by 5 days. Of course there are other specific programmatic cuts, deferrals and other budget gimmicks, but most of the reductions are general purpose. LAUSD educates roughly 11 percent of California’s students, LAUSD share of the cuts will be around $550 million for the two fiscal years combined. [It should be noted that California education advocates would argue that the reductions are much larger than suggested here because these cuts come on top of the state not providing statutorily required cost of living adjustments in either year. The advocates estimate the total cuts at around $10 billion. Which the actual cuts are probably somewhere between the Governor’s numbers and the advocates numbers, using the Governor’s numbers makes the point on the impact of the stimulus package]

LA’s Cuts Roughly same as LA’s Funding Under Stimulus
Perhaps by magic perhaps by intent, but the cuts that LAUSD will face under the current budget proposal are roughly equivalent to the new Stimulus funds they would receive. Unfortunately, the color of the money is different. They will lose general purpose funds, and get restricted funds. What will this mean for their budget? Basically, they will have to cut a large number of programs being funded with general purpose funds. Then at the same time they will have to create or expand another set of programs to serve special education and Title I students. And, if they cut a program that is general fund supported, and replace it with new ESEA, special ed or Stabilization funds, they will likely violate the supplanting language and have to give some of the funding back to the feds.

What Can be Done About This?
A simple change in the stimulus package to allow the fiscal stabilization funds to be used for general purposes instead of targeted purposes could quickly fix the issue. This would mirror the flexibility that higher ed or other parts of state budgets will have with respect to the stabilization funds. Absent such a change, it will be difficult for districts to use the stimulus funds without a whole lot of unintended consequences.


Correction: It was brought to my attention that may initial post was inaccurate. The Fiscal Stabilization funds can be used for any ESEA purpose not just Title I uses. While this broader flexibility would provide districts more options than just Title I, it is still replacing general purpose funds with restricted funds.

Why KIPP Matters

I first heard the word "kip" in seventh-grade gymnastics class. It was a special move where, lying on your back, you pulled your legs to your chest and then quickly pushed them forward. The momentum would propel you up and into a standing position. This was all theoretical of course, at least for me; I never have been able to do one.

I find it fitting that this gymnastics move is a homophone for one of the most well-known and successful innovations in the education world today. The Knowledge is Power Program (the education world's KIPP) has performed this same motion for hard-luck children for the last 15 years, not in a theoretical way but on the ground where it counts. Last night Education Sector hosted Jay Matthews to discuss his new book, Work Hard. Be Nice.: How Two Inspired Teachers Created the Most Promising Schools in America, with Jonah Wright Edelman, executive Director of Stand for Childen, and Richard Barth, CEO of the KIPP Foundation. If you missed the discussion, please enjoy it below:

ContreDemps

Secretary of Education Arne Duncan and the Obama White House are facing an early test of their school reform street cred. Earlier this week the Senate Appropriations Committee, where Sen. Tom Harkin of Iowa chairs the subcommittee with jurisdiction over education, stripped out of the stimulus package several provisions being pushed by school reform groups, the administration, and Democratic leaders on education in the House. Harkin, a pro-labor guy, dropped money targeted to charter school construction from the infrastructure section of the package, lopped off a $100 million that would have doubled the size of Teacher Incentive Fund (a federal effort to promote teacher performance pay), jettisoned language requiring school systems to distribute teachers equitably among affluent and impoverished schools as a condition for portions of the incentive funding, and struck language requiring states to establish computer systems capable of linking students and student test scores teachers, a prerequisite for rating schools and teachers on the basis of how much their students learn. Since these initiatives have been opposed by teacher unions seeking to preserve the hegemony of public schools and the current practices of paying and assigning teachers on the basis of credentials and seniority, it's not much of a stretch to assume that the teacher unions got to Harkin. The looming question is how Duncan and Obama are going to deal with the divisions within their own party on the education issue.

Van Milder

If you're a policymaker looking at how long it takes college students to graduate these days and you know that educating upperclassmen costs more than educating freshmen and sophomores (the former take smaller classes and use more campus resources), you might think it would be a good idea to penalize students who take more than four years to graduate. Unfortunately, it's not that simple.

Students who graduate with more than the bare minimum of credits could be lazy cretins who only want to hang on to a partying lifestyle, true, but they could also have perfectly legitimate reasons for needing those additional credits. Students accumulate superfluous credits when they study abroad, transfer, seek additional majors or minors, or, heaven forbid, change their minds.

The policymaker role should be to examine why some students graduate in four years and others do not. Is it because they were required to take remedial classes that did not count towards a major? Is it because they changed their minds seven times (oh and by the way that's the average now)? Is it because their major simply required more credits, or because they chose to pursue multiple majors and minors? Were they transfer students whose credits were not accepted? The answers to these questions matter.

Only careful policies can address these issues. Legislators in Virginia, on the other hand, are proposing a crude one: they want to charge all in-state students who fail to graduate after accumulating 120 credits (the bare minimum) the out-of-state rate. In other words, a student from Virginia attending the University of Virginia would see their tuition bill climb $10,000 per semester as soon as they reached the 120 credit limit. They except students pursuing majors requiring more than 120 credits.

Part of their complaint hinges on the concern that qualified students from northern Virginia are being rejected at the three major public universities in Virginia (UVa, Virginia Tech, and the College of William and Mary) in favor of out-of-state students who pay higher tuition bills. The logic behind their proposal is to create an incentive for students to finish earlier and thereby create more room for in-state students. But the solution makes no sense for this problem for a couple reasons. To begin with, the proposed penalties target in-state students only, which does not solve the problem of too many out-of-staters. Next, these three schools are not the ones with time-to-degree problems. All three have very high four-year graduation rates, and a 2005-6 report found that at all state public four-year postsecondary institutions, first-time, full-time students took an average of 4.1 years and 131 credits to complete their degree, and the numbers were even better at the targeted schools. This also means the average student would be subjected to the legislators' tax for one full semester.

Policymakers should be concerned about time-to-degree. We know that too many students take too long to graduate, and often the policies of colleges and universities are to blame. Take a look at page 28 of this report out of Tennesee and you'll notice that transfer students are routinely forced to take 20-25 additional credits in order to earn their degree. Those are credits that are wasted in the transfer process due to instituional policies. Those are the types of barriers Virginia state legislators should target in order to accomplish their stated aims.

H/t/Eduwonk.

Obama Tells Truth About Washington Weather Wimpiness

Today President Obama brought some much-needed leadership and tough-minded thinking to the crucial education policy issue of hair-trigger weather sensitivity and resulting needless school closures (at HuffPost via Russo):

"My children's school was canceled today, because of what? Some ice," Obama said, and all at the table started laughing. "As my children pointed out, in Chicago school is never canceled," he continued. He said that in their old hometown, "you'd go outside for recess in weather like this. You wouldn't even stay indoors." The President said he would have to bring "some flinty Chicago toughness" to Washington. Asked if he was calling Washingtonians wimps, Obama responded: "I'm saying that when it comes to the weather, folks in Washington don't seem to be able to handle things."

So, so true. I lived in Connecticut until I was 12 and then upstate New York through college, and it's just sad the way school gets cancelled here in DC every time the National Weather Service forecasts a 5 percent possibility of light flurries. An inch or more of snow and civilization itself immediately lurches toward post-apocalyptic chaos with all kinds of public institutions shutting down, cars careening off the road, and hordes of people descending on supermarkets to stock up on bread even though we live in a densely populated city with access to major interstate highways and rail lines and as such there is no chance whatsoever that we're going to run out of food.  In four years of high school in Schenectady, New York, where it drops below freezing around Thanksgiving and stays that way until Easter, school was cancelled exactly once and the superintedent endured all kinds of grief about it because all we got was a measly six inches of ice. When I was in Finland last month, I visited a day care center where four-year old children play outside in sub-freezing weather for three hours every morning, and the Finns have the highest test scores in the world. Clearly there's just a basic underlying weakness of character in this part of the country which in turn explains all kinds of other things. 

Gates Speaks

The Post exerpted the education part of Bills Gates' annual State of the Gates Foundation letter on their op-ed page this morning (Disclosure: Education Sector receives grants from the foundation). It proceeds in pretty standard fashion until this sentence, about halfway through:

Many of the small schools that we invested in did not improve students' achievement in any significant way.

That's one of the (many) good things about being one of the richest and most famous people in the world. You can straightforwardly admit that your initiatives haven't always been successful, because having done so you're still one of the richest and most famous people in the world. It's also the upside of moving into charitable work in the middle of your life as opposed to the end--you have time to learn, refine, and plan for the long term. Gates also said:

We had less success trying to change an existing school than helping to create a new school.

This is important because it goes right to the heart of how we think about accountability and educational improvement. NCLB-style regulatory accountability systems are primarily designed to identify low-performing schools and make them better. How they make them better is complicated and subject to debate: we identify them publicly, we give their students the option to transfer away, perhaps we give them more money, or send a technical assistance team from the State Department of Education, or ask them to submit an improvement plan, or implement a new curriculum, or extend the school day, or replace the principal, or the teachers, or something else. There are a lot of options. But they all involve preserving the existing school. And that approach , in turns, stems from the fact that schools are seen as public institutions, which they are, and thus we apply public institution improvement ideas to them. In many areas of public interest, we have little choice--if the Department of Defense isn't performing well, we have to improve it, because we can't not have a Department of Defense, nor can we build a whole new one from scratch. 

Schools are different. They're structurally small and decentralized, whereas Defense Departments are, for obvious reasons, not. We don't have to improve existing low-performing schools. It's perfectly possible to just shut them down and build new ones. The fact that the Gates Foundation had more success creating new schools than changing old ones is unsurprising--turning around a chronically underperforming school is really difficult. So difficult that it's worth asking why we should try, when there are other, better, faster, less expensive options instead? 

Go, Grassley, Go!

As college endowments rose dramatically over the last several years, higher education leaders explained low endowment payout rates as savings for hard times. The rates would inherently rise, they said, when the market turned sour. The market's as curdled as it's been in decades, but a survey released today ($) found less than four percent of colleges are planning to raise their payout rates.

The savings-for-tough-times rationale has not matched actions so far. During the 2008 academic fiscal year (July 1, 2007 to June 30, 2008), the Dow Jones Industrial Average fell 13 percent and college endowments 2.7 percent. Yet, the average payout stayed the exact same (4.6 percent) as in 2007, when the Dow rose almost twenty percent.

Let's take the case of Harvard, because they're the biggest and most interesting. Harvard's endowment began fiscal year 2000 with $14.3 billion in assets. In nine and a half years since, a period in which the broader market declined, Harvard's endowment doubled to $28.5 billion. Using the rule of 72, it managed to grow in value about seven and a half percent annually. The word "value" here is important; it signifies not the rate of return, but total holdings after donations and its payout rate of 4.25 percent are included. They owe some of that growth to federal tax policies, policies that give breaks to donors and exempt earnings from the grasp of tax collectors.

Reading the stories describing the losses incurred during the first six months of fiscal year 2009, I was heartened to see Senator Charles Grassley (Rep., Iowa) continue his campaign to require colleges and universities to pay out at least five percent of their endowment annually--a requirement that all other foundations manage to meet. The idea makes a lot of sense for college and university foundations, and the five percent requirement, moreover, would affect only the top tier of university foundations, since ones with lower assets tend to spend more than five percent already. The best counterpoint against the five percent mandate is to consider what would happen if colleges and universities were forced to spend all of a largesse in one year. That money could not be spent responsibly or sustainably, and Senator Grassley would be wise to allow for flexibility through some sort of rolling average over a multiple year period.

While heavy-handed government action is the least desired outcome, if colleges and universities do not spend more of their endowments during tough times, a five percent minimum would be a helpful prod.

"Work Hard. Be Nice."

Famously, that's the slogan of the much-discussed KIPP network of charter schools that have had great success in helping low-income and minority students learn. Now it's also the title of veteran Washington Post education reporter Jay Matthews' new book chronicling how the organization came to be what it is today. Education Sector is sponsoring an event this Wednesday, January 28th, at 5PM where Jay will be discussing his book along with Richard Barth, CEO of the KIPP Foundation, and Jonah Edelman, executive director of Stand for Children. Spaces are still available but they're going fast! Sign up here. 

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.