Monthly Archives: April 2015

Paul Campos on why tuition is so high

Paul Campos in the NYT has a good piece on whether tuition is so high because state funding has been cut:

ONCE upon a time in America, baby boomers paid for college with the money they made from their summer jobs. Then, over the course of the next few decades, public funding for higher education was slashed. These radical cuts forced universities to raise tuition year after year, which in turn forced the millennial generation to take on crushing educational debt loads, and everyone lived unhappily ever after.

This is the story college administrators like to tell… It is a fairy tale in the worst sense, in that it is not merely false, but rather almost the inverse of the truth…

Read the rest here.

What does the future hold for law schools?

:

A former colleague once put it like this: “If we could run this law school without students, this place would be perfect.” He happened to be the dean. Such a system is unlikely to be changed from within…

My 20 years as a legal academic causes me to predict that no serious change will occur until a cataclysmic event occurs…

Meanwhile, Natalie Kitroeff reports that

Around 5,400 people with the highest scores will enroll in law school this year, down from 9,400 in 2010…

And Jerry Organ notes that

One interesting side note is that the significant decrease in the number of applicants with LSATs of 165+ is likely to put significant pressure on a number of top-50 law schools as they try to hold their enrollment and their LSAT profiles.  Simply put, there are not enough applicants with LSATs of 165+ to allow all the law schools in the top-50 or so to maintain their profiles and their enrollment…

Whether the relative decline in attractiveness of law schools among top students will be “cataclysmic” enough to induce change remains to be seen.

Jay Greene and Charles Miller on the UT Admissions Scandal

The admissions scandal at the University of Texas is not getting as much attention as it should. Jay Greene:

Two internal investigations and reporting by Texas media have revealed that the leadership of the university regularly intervened in the admissions process to ensure the acceptance of unqualified applicants connected to politically powerful figures in the state.  University officials also attempted to mislead investigators to conceal or mis-describe their activities.  And Wallace Hall, a trustee who tried to bring these corrupt practices to light, was threatened for his efforts with criminal indictment by a grand jury and impeachment by state legislators, some of whom were the beneficiaries of preferential admissions.

Charles Miller:

What was going on? Specially tagged candidates based on interventions from ‘powerful’ people; special lists developed by the president outside of any of the official procedures; active and forceful intervention by the president and his staff in admissions decisions; destruction of admissions records; legal and public descriptions of the admissions process which were knowingly incomplete and inaccurate; and the admission of students —some severely unqualified— for purposes of gaining some sort of favor from a special class of privileged people…

The leaders of the UT System seem to hope the fallout from these improper activities will go away if they just ignore what transpired. Surprisingly there has been no official response from the Board of Regents regarding the two highly negative reports resulting from investigations by Kroll Associates and the Texas Attorney General.  The UT System administration has not even taken a public position challenging the rationale for this improper admissions behavior which is tantamount to approving of it…

Higher Ed Revenue per Student only $118 Short of Record High

New data from the annual SHEEO finance report reveals that educational revenue per public college student is at the third highest level in the past quarter century. When adjusted for inflation (see below), total revenue per student in 2014 was $12,329. The only two years with higher figures were 2008 at $12,396, and 2007 at $12,447.

However, most people won’t notice this because the SHEEO report itself and virtually all of the commentary focuses on figures using the Higher Education Cost Adjustment (HECA) to adjust for inflation. But the HECA doesn’t adjust for inflation, it adjusts for costs. If revenue goes up by 20%, and costs go up by 20%, then using HECA will show no increase in “inflation” adjusted revenue, which would be incorrect.

To find out how much revenue-per-student changed over time, you should adjust for inflation using something like the Consumer Price Index (CPI) (see this subtly titled report for more discussion on this point). While it is no secret that I have issues with SHEEO using the HECA instead of the CPI, SHEEO does deserve credit for being a model of transparency – their report clearly indicates that they use the HECA, and they make their data available (this year’s raw data isn’t ready yet, but they did make the highlights available here, including calculations using the CPI instead of the HECA.)

How could the seemingly boring choice of what price index to use possibly make any difference?

I’m glad you asked.

The distinction between adjusting for costs or inflation is important because it gives a false impression of why tuition increases. Adjusting for costs leads one to conclude that the cost to educate a college student has been about the same—$12,000— for the last 25 years. It therefore stands to reason that cuts in state funding cause tuition to rise dollar for dollar.

But if you adjust for inflation, the data no longer tell that story. The chart below shows total revenue per student over time adjusted for inflation rather than costs.

sheeo blog 1 While total revenue per student bounces up and down with recessions, there is an upward trend over time. From 2008 to 2012, state funding fell by 24 percent and total revenue by 8 percent, yet total revenue in 2012 was still 8 percent higher than in 1989. It is unlikely that we could experience such brutal reductions in state funding and total revenue and still end up with greater total revenue than we had 23 years ago unless there was an underlying upward trend in total revenue.

Because of this overall upward trend in total revenue per student, we shouldn’t expect to see a perfectly offsetting relationship between state funding and tuition. And if we look at the data, we don’t see much of an offsetting relationship. The next figure simply unstacks state funding and tuition revenue per student to show this more clearly.

sheeo blog 2State funding per student follows a cyclical pattern, falling during recessions; rising during recoveries. But tuition generally rises, regardless of whether state funding is rising or falling. Some might argue that tuition revenue rises even when state funding is rising to “catch-up” to the old baseline (note that tuition revenue doesn’t increase by enough to fully offset falls in state funding during recessions). But this argument is not convincing because of the overall upward trend in total revenue per student over time.

The next figure looks deeper into the relationship between state funding and tuition by plotting the change in tuition revenue per student in response to the change in state funding per student for each year.

sheeo blog 3The red line shows the presumed $1 for -$1 relationship where tuition revenue per student increases by $1 for every $1 decrease in state funding per student. If tuition only rises to offset cuts to state funding, then each year should fall somewhere along the red line. They do not. Far from being 1 for -1, the historical relationship is 0.11 to -1 (p-value = .14). Every $1 decrease in appropriations revenue per student is only associated with $0.11 higher tuition revenue per student.

From a public policy perspective, the bottom line is that tuition at state colleges does not rise merely to offset cuts in state funding. This means that increasing state funding is not an effective method of preventing tuition from rising. Based on the historical data from the last quarter century, a $100 increase in state funding per student will save each student only $11.

Another great post from Lloyd Armstrong

Lloyd Armstrong has a characteristically terrific post on why it is so hard to keep cost under control in higher education. My excerpts won’t do it justice, and only serve to peak your interest enough to to read the whole thing:

Universities often report a number that appears to indicate how much the university spends on instruction. We might believe that this number accurately represents teaching expenses and even do some analysis based on that belief. We would be wrong to do so.

John V. Lombardi, in How Universities Work

We enable (encourage?) this indeterminacy through our accepted form of higher education accounting – fund accounting. The focus of fund accounting is on management of individual sources of income, rather than on the expenses related to particular activities. As Lombardi points out;

Although fund accounting does not prevent universities from understanding their finances, it does not require them to do so.

Cost accounting, on the other hand, focuses on understanding the actual costs of a product, so that management can manage those costs… there is an enormous pressure on higher education to lower educational costs, which have grown much faster than inflation for many decades. The current system, which demands large annual real cost increases, is broken. It is very difficult to do experiments to lower costs of education if administrators do not know the original cost and the contributions of the various components of education to that cost…Charles Schwartz, Professor Emeritus at the University of California (UC) Berkeley… concludes that the actual amount of spending per undergraduate student on the education function at the UC in 2013-2104 is $7,500. This number is considerably less than the 2013-2014 average expenditure per student (averaged over both graduate and undergraduate students) of $18,060 reported by the UC. Schwartz’s calculated expenditures for undergraduate education are, in fact, even less than the tuition and fees currently required of the students!… Schwartz’s calculation suggests that the UC calculation has shifted costs equal to about $10,000 per undergraduate from the graduate education and research functions to the undergraduate instruction function…

Hello World

Welcome to my personal blog. I am starting this blog because for the first time in 8 years, none of my jobs entail blogging. I never thought I would miss blogging, but once my professional life no longer required it, I found that I did. Fortunately, there is a relatively easy fix for that.

In terms of content, I will continue to cover higher education (you can read some of my past writings on higher education at the Center for College Affordability and Productivity, the American Council of Trustees and Alumni, and the Quick and the Ed). However, I expect that the content will diversify over time as I gradually get used to the freedom (and horror) of not having an editor around to keep me on track.

I look forward writing in this space as often as I can, and I hope that you find this blog informative and helpful.

– Andrew