"Ephemeralization" Follow-Up: Is the marginal benefit of college more than the cost?

August 22, 2010
Comment and Review, Resources
5 Comments

Matthew Denhart and Christopher Matgouranis write on the August 19 blog of the Center for College Affordability and Productivity (CCAP):

The only way to judge the how worthwhile an investment, is to know the marginal benefits that result from it compared to its initial cost.

Based on these criteria, it is clear that the public is largely in the dark as to the value of a college degree. As we discuss in an article for Forbes.com today, colleges and universities rarely collect and publish information about the outcomes of their graduates. Perhaps this is an area where the U.S. Department of Education should step in and require alumni information be gathered and presented to the public in a clear and coherent manner. This would go lengths at providing the transparency and accountability in higher education that would benefit students and taxpayers at large.

The full text of their article can be found at Forbes.com.

In case you were wondering whether factoring value into reputational rankings of colleges and universities would change things, the answer is yes.  CCAP publishes an annual ranking of undergraduate colleges based on value.  The top of the list may not be a big surprise.  Williams College is the top ranked institution.  Princeton is second.  MIT and Stanford are in the top ten.  But so is Claremont McKenna College (9). Some Ivies don’t make the top fifty (Cornell is ranked number 70).  Georgia Tech ends up way down the list (242), a few positions ahead of Ohio State, but well out in front of the University of Arizona (339) and the University of Minnesota  (418).

Not surprisingly, the CCAP/Forbes rankings have generated heated — some might say enthusiastic — responses that either decry the irresponsibility of Forbes editors for publishing an obviously flawed ranking or agree  “it’s about time..” that Middlebury (26), Bowdoin (40), and the U.S. Naval Academy (29) get the recognition they deserve.  Research institutions — particularly those with high per-student expenditures — populate the bottom of the list in alarming numbers.  On  the other hand, student and alumni approval improves a school’s rank.

One reading of the CCAP article is that ephemeralization is overdue since American higher education seems incapable of doing more with more. I’ll let you take a look at the rankings and come to your own conclusions.

"Where's the money, you…?"

August 12, 2010
Resources
1 Comment

I’ve been writing about the financial stability of seemingly solid institutions:  the hundreds of colleges and universities in the Middle.  What exactly is the Middle?  It’s the great swath sandwiched between the seventy or so Elite universities that have amassed the resources to set their own directions and a handful of For-Profits, the proprietary institutions that are able to grow income and profits while serving an increasingly larger share of the American market for higher education.  The Elites have brands that will carry them through financial storms.  The For-Profits have a plan.

A growing number of institutions in the Middle see a bubble of  increased costs, declining enrollments and vanishing endowments.  Like Frank Capra’s George Bailey in It’s a Wonderful Life , they are looking for an Uncle Billy to rail at: “Where’s the money, you stupid old fool?”

Any one who doubts that the Middle sits precariously atop an economic bubble has not been following events closely enough. The U.S. Department of Education issues a regular report on the financial health of  degree-granting colleges and universities.  It is a sort of test of financial strength.  When I started tracking the course of these institutions for my book, there were about a hundred non-profit colleges  that failed the test.  By 2008, that number had risen to 127.  The Chronicle of Higher Education has just reported that 150 non-profits now fail the Education Department’s test.  That certainly looks like a trend.  In that same period, the number of failing For-Profits actually fell.

There are some venerable institutions on the list, but that is not surprising. Venerable institutions can fail.  The death in 2007 of  Antioch College — the university founded in 1852 by Horace Mann — was announced in an obituary masquerading as an op-ed piece in the New York Times. I remember Antioch in the 1960s as a thriving haven of liberal thought.  At the height of its popularity it enrolled nearly three thousand students.  Coretta Scott King was an alumna, and her sister was the first African-American admitted to its fully integrated curriculum. Who would have thought that Horace Mann’s college, guided by his admonition  to every graduating class to “be ashamed to die until you have won some victory for humanity, ”  could quietly wink out of existence with an enrollment of two hundred students and an endowment of less than five million dollars?  Not every school on the 2009 list is destined for extinction. Some will tighten their belts, rethink their value and pull through.  Some will be purchased by For-Profit universities.  Some, like Antioch, will simply die.

Officials of some of the schools on Department of Education list claim with complete deadpan candor that they are victims of a collapsing market that undermined their financial strength. It’s probably true, but those officials need to talk to the executives at Lehman Brothers to understand how little it matters.

Here’s the scary thing.  There are no public institutions on the list.  That’s not because public universities are uniformly healthier than their private counterparts. In fact, the finances of public institutions are uniformly opaque. It’s hard to tell whether they are financially sound or not.  Public support for a university means that the Education Department does not test financial strength.  Public universities are too big to fail.

The plan for the Middle — public and private —  seems to be to ask, “Where’s the money?”   George Bailey had a plan to stave off the run on his Building and Loan Association. His plan was to demonstrate that his bank had value that small homeowners could not get anywhere else:

You’re thinking of this place all wrong. As if I had the money back in a safe. The money’s not here. Your money’s in Joe’s house…right next to yours. And in the Kennedy house, and Mrs. Macklin’s house, and a hundred others. Why, you’re lending them the money to build, and then, they’re going to pay it back to you as best they can.

Better than screaming at Uncle Billy.

I got the point of Edupunk…it's the opposite of a factory!

July 26, 2010
Loose Cannons
1 Comment

As I said in my October 14, 2009 post:  “I got the point of Edupunk right away.” At first I was a little cautious about using their  apocalyptic language with all the talk about irresponsibility and lethargy and the literal redefinition of what it means to be a university.  That was before I started interviewing some of the revolutionaries for my book.

I started to see the difference between the expensive, closed, corporate systems that, as Jim Groom says,  have been “foisted onto the American higher education system as a substitute for deep reflection about what universities should be evolving into,” and the open,  democratic systems that need simply to be connected together by lightweight, easily programmable platforms.

If you need a touchstone to rely on, then think about blogging.  A little PHP programming, a widget or two, and you’re ready to go.  If you are very serious, maybe you can add a lightweight registration system to separate out the serious participants from noisy but ultimately uninteresting rabble who might stumble in after partying at the celebrity gossip site next door.

My colleague Mike Hunter and I ran an experiment this spring with our Introduction to Information Security Course.  We wanted  to encourage classroom discussion, but realized –or, rather,  I have come to expect after forty years in front of computer science classrooms — that two thirds of the students simply would not raise their hands in class.  Even if their grades depended on it.  So we set up a blog.

The rules were simple.  Participation counted for ten percent of the final grade.  We would keep track of who spoke up in class, but we also let students create or join conversations online in lieu of actually speaking up.

We were just jaded enough to guess that near the end of the semester — particularly if we reminded them that their grades were at stake — there would be a spike in traffic and that some students would guess that padding the written record with  valueless but copious comments was an easy enough path to improving their letter grades.  So we stopped counting after final exams and put an upper limit on how may comments would actually affect their grades.  This in effect rewarded students who made early, meaningful comments.

Two thirds of the class participated.  Some didn’t like it very much, and they said so online. Others thought the organization of the blog was opaque and  unhelpful.  They were right, but in our defense, we did not aim very high.  The best students were active in both the physical and virtual classroom.  The most gratifying feedback was from the students who said they thought it was incredibly cool that there were discussions that spanned several weeks and included both faculty members, students, and guest lecturers.

I always thought that I was pushing it with my anti-factory rant about the lack of open systems in universities, but I quickly convinced myself that Georgia Tech’s multimillion-dollar course management software implementation of Sakai was not democratic.  It did not permit public and private blogs to live together.  Like all course management systems, it is designed to keep people out.  Extending it in any useful way would have meant a major Java development project (enough said).

What happened at the end of the semester was an even bigger shock.  Our teaching assistant finished entering the raw test and project scores, and then scampered out of town, leaving me to assign letter grades and close out the semester.  How hard could that be?  There was already a button for assigning letter grades.  So I pushed the button.  All hell broke loose.

It turns out that  Sakai defaults to a standard weighting of grades, and the cleverly designed classroom/blogging participation scheme that Mike Hunter and I had devised threw that standard weighting out of kilter.  When I pushed the button, I unwittingly assigned class participation grades that were ten time more important than we had thought they were going to be.  It made a couple of students happy, but most were not.

When I finally reached our grader — a computer science PhD student — and asked him why he had not customized the grading scheme, he said he could not figure out how to do it.   Grading is the most fluid and individualized component of university teaching, but we had been unwittingly trapped in a factory in which deviation from the standard grades required sweat and ingenuity.  Anyone who wanted to use Sakai for anything more than an expensive grade book was out of luck.

I’ve been stewing over this experience all summer.  When you set out to create the opposite of a factory and find yourself  instead caught in the gears of an assembly line, it clarifies the the situation.  I decided to write a short note on the experiment along with some suggestions for how to improve things, but today’s Faculty Focus stopped me in my WWC tracks with a story about an otherwise anonymous Professor Jones, whose experiment with classroom blogging led to this:

Thinking that others might want to add a blog to their class as well, [Jones] goes to IT and offers to lead workshops for faculty on blogging in higher education. A few weeks later he is informed by IT that they have not only rejected his proposal, but that he is in violation of university policy and must stop immediately. Professor Jones asks what university policy he has violated, and is told that the policy has not yet been created, but will be soon.

I’d better shelve my plans to make some modest suggestions about Sakai.  I might be seen as an instigator. That sort of thing is like a red flag. It draws unnecessary attention in a factory, and I don’t see Paulette Goddard coming to my rescue.

Ephemeralization of American Universities

July 18, 2010
Institutions, Resources
4 Comments

Let’s imagine a pill. I’ll call it e-pill. It’s available to every young adult who wants it — probably a benefit of some program to link health care and education.  E-pill has one effect: it permanently rewires brains to store, understand and effectively use knowledge equivalent to the general education requirements at a good American university. You know what courses I am talking about: science, math, history, philosophy, art, social science, writing, and literature. No side effects.  It does not make you any smarter, but if you’ve taken e-pill, you have a lock on credit for English 101 and Intro to American History.  No downside to the pill at all except for this:  you have to forgo the classroom experience.

Thinking about e-pill  clarifies something that has been on my mind a lot these days: ephemeralization of American colleges and universities.  Ephemeralization is a term that Buckminster Fuller  used to capture the economic concept of dematerialization.  In effect, ephemeralization means doing more with less.

The National Conference of  of State Legislatures just issued a report that makes it clear the extent to which public universities will have to do more with less over the next several years. According to State Higher Education Executive Officers:

Appropriations per student remained lower in FY 2009 (in constant dollars) than in most years
since FY 1980.

Tuition increases — which now average 37% of revenues — have made up for some of the shortfall, but as Delta Project data makes clear, although increased tuition may cover lost revenue, it does not necessarily find its way into instructional budgets.  Public institutions have been using stimulus funds provided by the 2009 Federal American Recovery and Reinvestment Act (ARRA) to keep the wheels on.  ARRA funds will disappear soon. All the while, students are pouring into dozens of campuses like the University of Central Florida where access is paramount.

The lead article in today’s Chronicle of Higher Education, was a jaw-dropping summary of the budget shortfalls awaiting the State University System of New York and other systems where state finances are so broken that higher education funding will be disastrously inadequate for years. Maybe decades. Short of rolling over and shedding both students and programs, dematerialization is the order of the day for most of us in public universities.

As I pointed out in last week’s post, there are swirling financial misconceptions that — if acted upon — could actually make matters worse.  This is not the time, for example, for an aspiring public institution to undertake a large research commitment in the blind hope that research revenue would help the budget.

What does this have to do with e-pill?  This is a time to take a serious look at the value proposition for American universities.  If there is a way to get the unnecessary cost out of the general education requirements, it would have an enormous impact on the economics of running a public institution.  Universities — particularly research universities — are under-reimbursed for the cost of offering courses that do not need to be taught in the traditional , expensive, bricks-and-mortar way.  I mentioned the University of Central Florida above, because as the third largest university in the country, they have already shifted a substantial portion of their introductory load to online delivery — not exactly an e-pill, but the marginal cost per student in an online course is a tiny fraction of the cost for campus-based delivery.

If the marginal cost were actually zero (the e-pill scenario), then what would be the rationale for charging anything for the first two years of a university education?  The argument that was made shortly after the American Civil War was that the social experience of attending a university was worth the price of admission.  It was not a winning argument, and the structure of higher education in the U.S. was forever changed as a result.

The experiment should be easy enough to run.  Let’s set two prices.  The first price, a nominal fee, reflects the true cost of the general ed requirements when they are offered efficiently using modern technology — costs that are unburdened by subsidies to research, athletics, and bureaucratic offices that add little value to a student’s education.  The second price — the deluxe treatment — reflects the true cost of the on-campus experience. Virtually all of the value for the high price on campus experience is from activity outside the classroom, and  because there has been an effective dematerialization for English 101, the income from families who have the wherewithal  to pay for first-class tickets can be applied to other institutional priorities.  Maybe even the upper division courses where smaller class sizes and dedicated instructional budgets might have a beneficial impact on a student’s education.

Vendors of proprietary Unix™ servers had to face this same problem a decade ago.  Why would a customer pay the high-margin premium prices for HP-UX™, Solaris™, or AIX™, when there was a “free” alternative?  The answer, it turned out, was that customers paid for value. The smart companies figured out that the high-margin, high-expense proprietary Unix business was different from the low-margin open source business. Smart companies figured out how to make both businesses work.

This is the opportunity for ephemeralization.  Since doing more with less is inevitable, why not turn our attention to it?  We will never get an e-pill, but we might be able to squeeze half the cost out of the rapidly commoditizing general education requirements.

The question for public universities is what to do when the crossover point is reached —  when the value to students exceeds the cost of delivery.  I asked Arizona State president Michael Crow exactly this question, and,  without skipping a beat, he told me he would like to do: “Let’s figure out what we are the best at, and make that available to as many students as possible. If ephemeralization is inevitable, what other value propositions change what universities will look like when we reach the crossover point?