Elites to 99%: Resistance is Futile

Today my Twitter feed brought a swan song for public higher education, sung by a chorus of elites.  It was accompanied in harmony by some   public higher education leaders who are surrendering and turning in their badges.

A few highlights:

• The co-founder and former chief executive officer of CarMax told a crowd attending the Association of Governing Boards of Colleges and Universities 2012 National Conference on Trusteeship that public universities should strive for major tuition increases. Reports the Chronicle of Higher Education, "Poor kids borrow money so that the rich kids can get a tuition discount," said Mr. Auston Ligon, now a member of the Board of Visitors at St. John's College in Annapolis, Md. "Quit subsidizing people like my kids."   
• Gordon Gee of The Ohio State (and buddy of Biddy Martin) is promoting a forthcoming book from Stanford University Press called "Public No More."  This little ditty plays a familiar tune, sung by two business school types. Again we are told, the current business model of higher education is broken (duh) and public higher ed's "longstanding dependence on state subsidies...is unsustainable...recent cuts are permanent...public universities either recognize this...or face decline....attempts to block competitive forces by resistance and delaying actions are self-defeating."  Apparently these dudes never heard of the need to present and evaluate without pre-judgement alternative models in policy prescriptions.
• According to Inside Higher Ed, some educators are full-on gung-ho about privatization and not even experiencing "angst" about it (sidenote to IHE--nice framing, making having reservations sound like neuroses). The chancellor of Maricopa Community College, a man in charge of guiding the futures of thousands of black and brown students, apparently has an oracle.  Rufus Glasper tells us "We have no choice. The state funds are gone forever."  There's no point in anything but his kind of "realism," and his so-called solution is a private for-profit model. 

Just a few questions. Why is the CarMax guy being invited to talk with AGBCU?  What's his expertise-- oh right, car sales. Discounting.  Clearly buying college is like buying a car--all about the transaction. And we all know that poor people with their complete information totally understand how discounting works, that's why high tuition-high aid is so successful...  Say it with me now: puhleese.

Second, when did smart people all start singing in unison about simplistic, singular solutions to complex problems?  Did they all attend a special dinner party together where primers were distributed, and the private monetary incentives for making the education "public no more" were explained?  Sure seems like it.  Because they are talking to highly educated people in a way that is utterly pedantic-- there is one solution and one solution only -- pass the buck onto the "consumer"? Can you imagine if instead they said, "Hey 5th graders, pay your own way through elementary school?" 

Third, how much longer are you people (yes you, our readers) going to take this?  For-profit leaders clearly worked this out quite well ages ago, using their massive profits paid for with your federal tax dollars to lobby legislators and university leaders into believing the future lies in private, for-profit education.  They're doing it from up high in the skyscrapers around the world, while many higher ed leaders are out there wittingly and unwittingly carrying their water and doing their bidding.  We mere "academics" and "students" who won't admit that really we are "obstacles" and "consumers" are simply in the way.

 PUBLIC NO MORE. WE HAVE NO CHOICE. RESISTANCE IS FUTILE. 

Where have we heard that before? 

On Tuition Flexibility

This Wednesday the Wisconsin Special Task Force on UW Restructuring and Operational Flexibilities will hear from the chancellors of Madison and Milwaukee on several issues, including flexibility for tuition-setting.

I'm on the record as having numerous concerns about the unintended consequences of giving institutional administrators more say over tuition, since they operate under intense local and political pressures to generate more resources which lead them to raise tuition even when it comes at the expense of access commitments. The latter are far more difficult to uphold, since even when people feel strongly about supporting college opportunities for disadvantaged families, the fact is that those families are quite distant from the lives of decision-makers, and thus easy to neglect.

A new paper from the National Bureau of Economic Research by Columbia economist Judith Scott-Clayton offers important reminders for this task force and the chancellors.  The access commitment is easy to make in theory, and much harder to fulfill in practice.  Sure, we like to believe that we can simply meet it by redistributing tuition revenue from middle and upper-class families to poorer families via financial aid (discounting).  But this relies on a set of assumptions, including that (a) poorer families will know the discount is coming and ignore the sticker price, (b) they will know and believe this information early enough to ensure their kids are prepared for college (as researchers put it, “potential college students cannot respond to a price subsidy if they do not know it exists"), (c) that this redistribution strategy will survive significant political push-back from the middle and upper-class families, (d) that the unintended divisiveness of the policy won't cause many consequences to campus climate and educational opportunities for the poorer students, and (e) that the access commitment will last even as campus administrations change.

I'm skeptical that these assumptions will be met by the kinds of tuition flexibility proposals we've seen in this country.  Short of a flat-out widely advertised and legislated promise to all Wisconsin residents under $80,000 (or some other income cutoff) that the full costs of attending college will be FREE, I don't think (a) and/or (b) will actually happen.  I don't think anyone knows about (c) or (d) and as for (e), get real-- no one puts this stuff in writing like they ought to.

Back to the NBER paper by Scott- Clayton-- here are key takeaways:

1. The chances are good that the market failure known as incomplete information has become more consequential in recent years as pricing of college has become much more individualized.  Despite decades of informational interventions, misinformation remains widespread-- as Scott-Clayton puts it,  "while many students appear well aware of the benefits of postsecondary education—in some cases even overestimating expected earnings gains—they persistently overestimate costs and are uninformed about sources of potential aid."

2. Creating a more complex system in which costs are higher and more variable, and more discounting is utilized, is unlikely to be offset by purely informational amendments.  In other words, an awareness campaign like that proposed by Biddy Martin last year likely won't even partially solve the problem creating by more tuition complexity.

3.  Informational contraints "can potentially undermine the effectiveness of even very large investments in financial aid."  In other words, we could spend a lot of money without creating much access--and we have to keep that in mind. It's a subject deserving of widespread and thorough public debate.

The lesson from this National Bureau of Economic Research paper for Wisconsin is this:  it's imperative that whatever tuition policy we move towards, it should not exacerbate students’ confusion about cost.   In my estimation, tuition "flexibility" at the institutional rather than System level will create more harm than good from those already left out and left behind by Wisconsin and its universities.

Postscript:  I want to clarify that the hearing on Wednesday will include discussion of two different tuition issues. First, whether the legislature should have granted the Regents flexibility to set tuition and then capped tuition.  I concur with Chancellor Ward that this is inappropriate-- the Legislature has much on its plate, and should allow the UW System Board of Regents the opportunity to convene a full discussion of tuition issues and make its own policies.  There are many ways for various constituencies to make their case to the Regents for keeping tuition very reasonable for Wisconsin residents, and the outcome will have more political legitimacy if done this way. Second, I understand that some chancellors want to have the flexibility to set tuition devolved to their own campus-- rather than have the Regents set it. This is not something Chancellor Ward is arguing for-- in contrast to his predecessor, and to the chancellors of Milwaukee and Stevens Point, he concurs that tuition-setting is an important function of university systems.  Finally, one last point-- anyone who claims that an access agenda is antithetical to an educational quality agenda is caught in the old Iron Triangle rhetoric, and needs to get up to speed.  Access (including diversity) is a key element of quality, and providing quality without access is no way to secure our children's future.

Is Higher Tuition What the Public Wants? And Who Cares?

In a blog over at the Washington Post today, Daniel de Vise raises an interesting question: Does the public want lower (or higher) tuition? He engages with this issue mainly in the context of private institutions, discussing anecdotal evidence from a recent meeting with college presidents.

In a nutshell, here are the highlights of his findings:

1. There is some evidence that the public wants a deep discount on a more expensive product. In other words, families are happier when they get a lot of merit-based financial aid at a high-priced college. Some colleges have found that when they cut tuition, applications drop too, and families complain they aren't getting much aid.

2. There is also some evidence that the public embraces -- even demands-- lower tuition, even thought it means getting less aid. At Sewanee, The University of South, which de Vise highlights, cut its (very high) tuition by 10% and focused efforts on need-based aid, resulting in an increase in applications. de Vise also notes that Sewanee took a key step, first done by George Washington University, freezing tuition for returning students. This prevents surprising hikes in cost from year to year, something that my own research (forthcoming) suggests can alarm students and even induce some to drop out of college.

So what's going on here? How can college presidents say that they must raise tuition because that's what the public wants, while others work to lower tuition, because it's what the public wants?

The answer is quite simple, actually. The "public" doesn't exist. It's an averaged American, comprised of heterogeneous individuals.

Some people equate the price of college with quality. Those are likely the same people who will buy a Lexus, thinking they're getting a better car, even though Lexus and Toyota use the same components. They're thrilled with a discounted Lexus, and have the cultural capital to know that if they go to a dealer and haggle, they might get one.

Other people have negative connotations associated with high prices. They see expensive things as "elitist", "snobby" and most importantly out-of-reach. They don't want to haggle for an affordable price, since they know that when people like them (who don't wear Banana Republic, look white, or speak formal English) walk into a dealership or admissions office, they aren't likely to get a deal. They want the price low, period. Discounting doesn't work for them.

Both types-- and there are nuanced versions of each-- are now part of higher education. But the pricing model, advocated by so many college presidents and backed by evidence produced by economists, is built for the first group-- the We Like Deep Discounts on Expensive Things group. Why? Because it suits the needs of institutions, who want to have more cash on hand, it seems "realistic" given budget cuts from governments and declining endowments, and it's said to be more efficient.

Ok. Let's say that's true (and I worry about the evidence, since much of it is based on studies of students from the 70's and 80s, before tuition went through the roof and disadvantaged students became a large part of enrollments). It doesn't necessarily make it effective policy. The relative effectiveness of the two strategies depends on who's in higher education (who dominates enrollment), what goals are sought, and whose outcomes are more affected by the pricing strategy. If first-generation students are in the I Want It Cheap camp, and they begin to comprise a sizable fraction of enrollment, if the primary outcomes measured are college graduation rates of at-risk students, and if first-generation students are most price-sensitive, then I'm sorry but hiking prices and discounting simply isn't effective.

Thus, the question we ought to be asking is not the one de Vise posed -- Is higher tuition what the public wants?-- but rather, Is higher tuition going to achieve the goals America has set for higher education? If we want to make progress, that's the one we have to get focused on answering.