Mak­ing higher ed­u­ca­tion pay

Financial Mirror (Cyprus) - - FRONT PAGE -

Higher ed­u­ca­tion is a great in­vest­ment, with each ad­di­tional year of post-sec­ondary ed­u­ca­tion yield­ing a 1015% re­turn, on av­er­age. For univer­sity grad­u­ates, that means hun­dreds of thou­sands of dol­lars over a life­time. Un­for­tu­nately, stu­dents as­pir­ing to a higher ed­u­ca­tion, es­pe­cially those from low-in­come fam­i­lies and un­der­per­form­ing sec­ondary schools, lack the in­for­ma­tion they need to make wise choices about where to go and what to study to max­imise the re­turn on their in­vest­ment.

In the United States, Pres­i­dent Barack Obama’s ad­min­is­tra­tion is try­ing to close that in­for­ma­tion gap with the Col­lege Score­Card, a free, easily search­able data­base that of­fers un­bi­ased in­for­ma­tion about the per­for­mance and costs of US public and pri­vate in­sti­tu­tions pro­vid­ing post­sec­ondary ed­u­ca­tion. In­stead of propos­ing an over­all rank­ing of in­sti­tu­tions based on some com­pos­ite mea­sure of key in­di­ca­tors, the data­base of­fers de­tailed data cov­er­ing five broad cat­e­gories: costs, stu­dent debt and re­pay­ment, de­gree com­ple­tion rates, post-en­roll­ment earn­ings, and ac­cess for dis­ad­van­taged stu­dents.

Mak­ing fed­eral data read­ily avail­able to the pri­vate sec­tor and en­cour­ag­ing open in­no­va­tion plat­forms to ad­dress so­cial chal­lenges are hall­marks of Obama’s gov­ern­ment. Jour­nal­ists are al­ready crunch­ing the num­bers in the Col­lege Score­Card to pro­pose rank­ings and rec­om­men­da­tions. Ideas for new busi­ness op­por­tu­ni­ties are sure to fol­low.

The Col­lege Score­Card is a big step for­ward for trans­parency. It will not only help stu­dents and their fam­i­lies make bet­ter choices; it will also spur a di­a­logue that en­cour­ages re­search and in­no­va­tion by ed­u­ca­tors and state pol­i­cy­mak­ers, and puts pres­sure on un­der­per­form­ing in­sti­tu­tions to im­prove.

For stu­dents, this in­for­ma­tion can prove to be in­valu­able. As Is­abel Sawhill and Stephanie Owen of the Brook­ings In­sti­tu­tion found, there are large vari­a­tions in re­turns by in­sti­tu­tion and ma­jor. While the av­er­age four-year col­lege de­gree de­liv­ers $570,000 in ad­di­tional life­time earn­ings, the re­turns on in­vest­ment are ac­tu­ally neg­a­tive for one in five of the in­sti­tu­tions in their 853- in­sti­tu­tion sam­ple. Like­wise, the Univer­sity of Penn­syl­va­nia’s Peter Cap­pelli es­ti­mates that as many as one in four col­lege pro­grams yield neg­a­tive re­turns for their stu­dents. There is also large vari­a­tion in the re­turns among pro­grammes of­fer­ing as­so­ciate de­grees (gen­er­ally two years of post- sec­ondary ed­u­ca­tion) and vo­ca­tional train­ing.

At the same time, tu­ition costs are climb­ing much faster than me­dian fam­ily in­comes across the board. Stu­dent loan debt has quadru­pled since 2010, now to­tal­ing more than $1 trln. Worse yet, many of the more ex­pen­sive col­leges – es­pe­cially pri­vate, for-profit in­sti­tu­tions – have low grad­u­a­tion rates. Re­searchers at the US Trea­sury Depart­ment and the Brook­ings In­sti­tu­tion re­cently found that 70% of stu­dents who de­faulted af­ter leav­ing col­lege in 2011 came from “non-tra­di­tional” in­sti­tu­tions – mostly for-profit univer­si­ties.

These prob­lems raise the im­per­a­tive of de­vel­op­ing new mod­els of ed­u­ca­tion de­liv­ery. In that ef­fort, “pro­gres­sive” fed­er­al­ism – whereby the fed­eral gov­ern­ment sets goals for per­for­mance, af­ford­abil­ity, and ac­cess; de­mands ac­count­abil­ity by providers; and spurs pri­vate and public in­sti­tu­tions at the state and lo­cal lev­els to in­no­vate – can play a crit­i­cal role.

Con­ser­va­tive skep­tics ar­gue that higher ed­u­ca­tion is a mat­ter for the states, not the fed­eral gov­ern­ment. But the fed­eral gov­ern­ment al­ready plays a ma­jor fi­nan­cial role in higher ed­u­ca­tion. In­deed, while states ac­count for the bulk of public spend­ing on higher ed­u­ca­tion, the fed­eral gov­ern­ment fi­nances a big share of that spend­ing via guar­an­teed loans and grants to stu­dents.

The prob­lem is that the in­sti­tu­tions of higher ed­u­ca­tion – both public and pri­vate – that have been re­ceiv­ing sig­nif­i­cant lev­els of fed­eral sup­port have not been sub­ject to much ac­count­abil­ity. Mean­while, many states have slashed public spend­ing on higher ed­u­ca­tion and tried to make up the dif­fer­ence by rais­ing tu­ition and forc­ing stu­dents to take on more fed­er­ally fi­nanced debt.

A well-de­signed pro­gres­sive fed­er­al­ist pol­icy for higher ed­u­ca­tion would set goals for key per­for­mance in­di­ca­tors – based on the mea­sures high­lighted in the Col­lege Score­Card – and re­ward states that ad­vance to­ward those goals. It would en­cour­age and fi­nance state ef­forts to test new ap­proaches to ex­pand ac­cess, in­crease grad­u­a­tion rates, and im­prove stu­dents’ life­time out­comes.

Pres­i­den­tial can­di­date Hil­lary Clin­ton’s higher-ed­u­ca­tion re­form pro­pos­als em­body such a pro­gres­sive fed­er­al­ist ap­proach. Her “Col­lege Com­pact” would grant fed­eral sub­si­dies to states if they com­mit to – and suc­ceed in – con­tain­ing the costs of higher ed­u­ca­tion, in­clud­ing by pro­vid­ing free en­roll­ment at two-year com­mu­nity col­leges.

Many in­sti­tu­tions of higher ed­u­ca­tion are al­ready test­ing new mod­els. Ari­zona State Univer­sity has de­ployed an ar­ray of online tech­nolo­gies, as well as men­tor­ing pro­grammes, to keep stu­dents on track. Since 2008, ASU’s cost per grad­u­ate (which in­cludes both state spend­ing and tu­ition) has fallen from $68,000 to $56,000. Last year, ASU teamed up with Star­bucks to al­low the com­pany’s em­ploy­ees to com­plete their col­lege de­grees for free online. Mean­while, the school’s over­all grad­u­a­tion rate has climbed from 33% to 49%.

Another promis­ing in­no­va­tor is Western Gover­nors Univer­sity, a pri­vate non­profit online in­sti­tu­tion founded by 19 state gover­nors that serves about 58,000 stu­dents spread across the US. WGU of­fers ac­cred­ited col­lege-de­gree pro­grammes in fields from teach­ing and nurs­ing to busi­ness. By fo­cus­ing on the at­tain­ment of spe­cific com­pe­ten­cies, rather than on the amount of time spent in a class­room, WGU has been able to of­fer flex­i­bil­ity at bar­gain rates; a full­time pro­gram, in­clud­ing text­books and a men­tor, costs about $6,000 a year.

Pro­gres­sive fed­er­al­ism can also build on state and lo­cal in­no­va­tions to ex­pand ac­cess. Ten­nessee, a Repub­li­can-led state, has at­tracted na­tion­wide at­ten­tion with a pro­gramme to of­fer all high school grad­u­ates free tu­ition at any com­mu­nity col­lege. The pro­gramme is funded by the state’s lottery, and brings Ten­nessee closer than any other state to mak­ing com­mu­nity col­lege as uni­ver­sal as high school. In­deed, Obama cited Ten­nessee as in­spi­ra­tion for his pro­posal to make com­mu­nity col­lege tu­ition-free na­tion­wide.

Pro­gres­sive fed­er­al­ism of­fers a way to tap into and build on these in­no­va­tions. The fed­eral gov­ern­ment can and should set the strate­gic di­rec­tion, es­tab­lish mea­sur­able goals, and foster new mod­els wher­ever they might arise to build an ed­u­ca­tional sys­tem fit for the twenty-first cen­tury.

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