Tag Archives: Higher Education

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

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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

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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?

Why Universities Do Research?

July 5, 2010

Comment and Review, Institutions, Resources

16 Comments

The title of this post is a question.

My colleague Mark Guzdial recently asked whether it makes sense for colleges and universities to do research:

I’m wondering now why universities do research — how does it make economic sense? Is it because it’s their raison d’etre? I don’t buy that, because that wouldn’t explain why so many smaller colleges and universities are increasing their research portfolio. Is it because a “hit” cancels out all the losses? One good piece of IP makes up for all the research that didn’t bear fruit? Or is it because a research portfolio is necessary for reputation surveys?

It’s a question that I try to answer in my new book. Here are some of the facts.

University research seldom pays for itself. Institutional data is hard to come by because accounting practices vary wildly from place to place, and there is wholesale mixing of revenue sources. According to the Center for College Affordability and Productivity, for example, the historical trend at AAU institutions has been toward reduced teaching loads for faculty actively engaged in research. But that is a trend that flies in the face of increased enrollments. Additional instructors are needed for the classes that would otherwise be taught by faculty members engaged in sponsored research. Costs like these are not recoverable, so research sponsors get an effective discount because faculty salaries do not reflect teaching productivity. Who makes up the difference? Most institutions tap a general fund to cover these costs — the same fund that is used for instructional budgets. Reduced teaching loads are a tax on the cost of instruction, and it is just one of dozens of ways that cross-subsidies fund the research enterprise. I recently asked the vice president for research at a top fifty land grand college about their discount rate. He told me, “We spend $2.50 for every research dollar we bring in.“
Institutional envy drives both behavior and investment. Presidents of public masters universities are motivated to define their institutional profiles to conform to a “higher” Carnegie classification. It is a phenomenon that Arizona State president Michael Crow calls institutional envy, and it drives the behavior of hundreds of colleges and universities. Sometimes institutional envy is simply the way that institutions climb the reputational pyramid. Other times, it is the only way to make scarce resources stretch to fit expanding missions, because non-state, non-tuition revenues flow disproportionately to the universities at the top of the hierarchy. Public support for public masters universities declined by 15% from 2001 to 2006, In that same period, tuition rose only 10%. Gifts, endowments, grants, and research contracts are the only means available for closing the gap, but private giving has been in decline since 2001. In fact, public university endowment income on a per-student basis is less than $600, which is essentially its pre-1987 level. That means federal and state research contracts have to generate enough income to keep fragile programs afloat. Since the 2008 market collapse, tuition increases have been used to try to stave off disaster, but, according the Delta Project on Postsecondary Costs, Productivity, and Analysis, few of those dollars have benefited instruction. In fact, once you remove discretionary spending, instruction is dead last among the beneficiaries of increased tuition.
You do not need a research program to prosper and innovate. The examples that come readily to mind are Williams College and Harvey Mudd College. Williams in particular eschewed the tug of becoming a research university in the wake of Daniel Coit Gilman’s 1876 launch of Johns Hopkins as a research institution in the mold of the great German research universities. Harvey Mudd is a continuing experiment in how to keep a mission focused on students. The University of Mary Washington in Virginia innovates around technology that keeps students and alumni closely bound to the university.
Commercializing and licensing IP is a pipe dream for most institutions. Every tech transfer office knows the examples: Wisconsin’s vitamin D patent, Stanford’s rDNA patents. But according to NSF’s John Hurt: “Of 3,200 universities, perhaps six have made significant amounts of money from their intellectual property rights.” John Preston, former head of MIT’s technology commercialization office is even more blunt: “Royalty income is such a horrible means of measuring success. Schools should instead focus on wealth and job creation, economic development, and corporate goodwill.”
Research universities have conflicting incentives. They are in many ways inconsistent institutions. The legendary University of California president Clark Kerr used the term multiversity to describe the modern research university — it is a wonderfully clarifying word. What it means is that what we think of as monolithic institutions are actually loosely federated enterprises that all live together under the same brand. A modern research university consists of several undergraduate colleges, one or more professional schools, many graduate schools, several intercollegiate athletic programs, hospitals, hotels, performing arts centers, technology commercialization offices, and distance education centers. Each component has its own network of stakeholders who demand success, even if it comes at the expense of another part of the university.

Viewed through this lens, Guzdial’s questions are even more interesting. It frequently makes little economic sense for a university to conduct research. It may be part of the mission of a multiversity, but it is not the only mission — and there are plenty of examples to guide other choices. If the dream of IP commercialization success drives institutions to build their research programs, what about the data that predicts little chance of success? And if a university is concerned about reputational hierarchies, does building a research portfolio actually help? Among the many components of a modern multiversity, few could survive without the instructional programs. Academic programs, on the other hand, might do quite well without hospitals, theaters, or fancy football arenas. So, why should a university do research?

Let’s hear your thoughts.

A Sabbatical

February 28, 2010

Comment and Review

1 Comment

Abelard and Heloise surprised by Master Fulbert (Painting by Jean Vignaud)

I’ve been receiving email the last couple of weeks. “Where are the WWC posts?” “Are you still writing on WWC?” The short answer is “yes,” but I am taking a short sabbatical to finish my book Abelard to Apple: The Fate of American Colleges and Universities in the 21st Century. I like the idea of taking a sabbatical from writing to be able to write something, but it’s not an original idea. I noticed that when New York Times columnists like Tom Friedman and Maureen Dowd go silent for a few weeks to finish a book, they say that they are taking a sabbatical, and I thought that I would also take a sabbatical. Maybe some their marketplace magic will rub off on me.

What’s the book about? It’s a WWC story about the challenges that face American higher education as the sudden appearance of abundant choices in university education erode the value of traditional colleges and universities. I have written a little about this before. My colleague Dick Lipton has an excellent post on what he thinks is the doomsday scenario for American colleges.

The appearance of Peter Abelard’s name in the title of my book always draws curious looks. It is in part a metaphor for a long-lost approach to education in which the connection between students and teachers defined the learning experience. But it is also a real part of the story of where our universities are heading because it is the starting point of an historical arc that might well lead to Liptons’s extinction event.

Peter Abelard is known today mainly because of his disastrous love affair with Heloise, but

Few teachers ever held such sway as Abelard now did for a time. Distinguished in figure and manners, he was seen surrounded by crowds — it is said thousands — of students, drawn from all countries by the fame of his teaching, in which acuteness of thought was relieved by simplicity and grace of exposition. Enriched by the offerings of his pupils, and feasted with universal admiration, he came, as he says, to think himself the only philosopher standing the world…Great as was the influence exerted by Abelard in the minds of his contemporaries and the course of mediaeval thought, he has been little known in modern times but for his connection with Heloise[1].

Abelard to Apple will be published in 2011 by MIT Press. I will be back with new WWC posts in few weeks.

References

[1] George Croom Robertson, M.A., Professor of Mental Philosophy and Logic at University College, London, 1867-1892, first editor of Mind, his articles have been republished under the title of Philosophical Remains.

—Innovate.EDU

Change and Transformation for American Colleges and Universities

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