College Admissions, Selectivity, and Grit

By Watson Scott Swail, President & Senior Research Scholar, Educational Policy Institute

In 2013, Angela Duckworth became a bit of a phenomenon for her book “Grit: The Power of Passion and Perseverance.” She toured the talk shows and became the flag-bearer for showcasing that individual passion had much more to do with future ability than purely academics. Five years later, there are many critics of the “grit” analogy. Scientific observations have shown that grit has a limited and “weak” impact on future success.[1]

For the past 30 years, there has been a push for non-cognitive factors for student success. I have written and spoken prominently on the balance between academic data and non-cognitive and social attributes for students in the Geometric Framework for Student Retention. William Sedlacek of the University of Maryland was one of the first researchers who focused on non-cognitive variables in predicting future success for non-traditional students. His basic point remains that grades and academic testing data are not, in isolation, an appropriate way to measure the future success of students. Thus, the game is about finding variables beyond traditional test scores to provide other indicators of success. Duckworth’s research on grit and other variables was largely based on this believe in not over relying on traditional measures of academic achievement and potential.

In the end, we always must warn that these issues are mostly indicators of interest for selective institutions of higher education, which is attributed to less than half of the students who begin their college experience each fall. However, if we focus exclusively on the four-year level, then selectivity rises to 81 percent of students who attend institutions that are at least marginally selective. It can be argued that only the very selective institutions focus discretely on these numbers, but certainly the moderately selective schools do, as well.

As illustrated in the graphic below, 26 percent of public four-year students attend very selective students as compared to 41 percent of students at private, not-for-profit four-year institutions. In fact, only five percent of students at the private level attend open admissions institutions compared to 18 percent at publics. But the selectivity of four-year institutions has increased over the years. Once thought of primarily a private-institution issue, sheer demand has forced public institutions to be much more selective in admitting students, especially at land grant institutions.

Exhibit 1. Selectivity of US Institutions of Higher Education, by Control and Level, 2011-12

180606 BPS Selectivity

SOURCE: U.S. Department of Education, National Center for Education Statistics, 2011-12 Beginning Postsecondary Students Longitudinal Study, First Follow-up (BPS:12/14). Data downloaded and analyzed by the Educational Policy Institute, June 6, 2018). 

But measuring non-cognitive indicators is difficult. Perhaps tricky is a better term. Just as with academic measures, such as the ACT and SAT tests, there are issues of bias and validity with any type of test. The fact that the two measures illustrated—the ACT and SAT—with over a century of research and development by arguably the best psychometricians in the world, still has bias and validity issues should set this in perspective: if these tests still bear weight of internal and external validity, then what about these other non-cognitive tests and measures that have not nearly had the same research and development? Would they be more biased and less conclusive? The answer is yes, most certainly.

The ability for admissions personal at institutions who admit most of their applicants is not terribly difficult. But as the institution becomes more selective, the process gets much more complex and difficult. Focusing on the most selective institutions, many of which accept less than 15 percent of their applicants (e.g., Stanford (5.1 percent), Harvard (6 percent), Princeton (7.4 percent), etc.), these institutions need a process for sifting out students who are largely very talented. For instance, only 1 percent of students who take the SAT earn a perfect 1600, and only 5 percent score over 1400.[2] Yet many of these top schools have hundreds of students who apply for admission with perfect or near-perfect test scores.

To put this in perspective, Stanford University had 44,073 applicants in 2017, of which 2,085 were admitted and 1,708 enrolled. The average SAT for reading and writing was between 690 and 760 and average math was 700-780 and the average ACT score fell between 32 and 35. Thus, almost everyone who applied to Stanford had an exceptionally high test score. Harvard has over 200 students applying each fall with perfect SAT scores.[3] UC Berkeley received over 89,000 applicants plus another 19,000 transfer applicants in fall 2017, with an average SAT of 1337 and 29 ACT, with over 10,000 students above 1400. That translates to 108,000 highly-qualified applications for 14,000 freshman positions.

With so many applicants and so few spaces, relatively speaking, how can these institutions possibly decide who gets in or not? Non-cognitive testing? Not likely. It has been noted that at some point, once you get into the highest 10 percent of test scores, the cease to matter at these institutions.

Most institutions say that the GPA and the test score are useful but not important indicators of selection. Other factors, such as academic coursework (read: rigor), extracurriculars, essays, recommendations, and the “interview” are also considered. But let’s face it: the extra curriculars, essays, and recommendations are all fodder: they will all be good. The interview is important, but how many of the 108,000 applying to UC Berkeley get the chance to interview? In the end, the prime factor that still must be addressed is academic ability. The standardized test score and course rigor are the two items that should matter most in admissions, I am afraid to say. GPA is not useful in any statistical matter because of the rampant grade inflation over the decades. The average GPA at Berkeley is 4.10. So big deal. What matters is how students score on a standardized test and what courses they completed at these highly-selective institutions.

This isn’t the message a lot of people want to hear, but in selective institutions, this is the way it is and the way it should be. For the other institutions—the moderately and minimally selective—admissions processes are even more challenging because the rigor of students is still high even if downgraded from the top tier. And there are more of them. Hundreds of thousands of students who fit a decent test score and academics trying to get into these hundreds of institutions. Now we get into a number issue. Simply put, addressing a fair admissions strategy with so many applicants. In the end, the number has to rule because everything else would seemingly be unfair. We have arguments when legacies get into schools in front of others; when sports and other factors are determined; and, of course, when race/ethnicity is considered, attested by the numerous court cases over the decades by various plaintiffs who have mostly argued that affirmative action should not be the law of admissions.

Thus, in the end, grit is a wonderful four-letter word that doesn’t necessarily matter that much unless you believe that grit is what gets you good test scores and results in the completion of high-level course work in high school. Otherwise, what is grit really measuring? Perseverance? I’d say getting top test scores and taking the right courses also indicates perseverance. And perhaps preference, opportunity, and social status, with no argument.

The argument against, of course, is that not all students are in a position where they can take and complete high-level courses due in large part to the dismal teaching and learning environment where they are raised. This is true. But can we really dismiss the actual academic performance of the top tier students for top-tier institutions? This isn’t an anti-affirmative action rant. Not at all. But if we really want to level the playing fields at the college level, we need to level the education at the K12 level first.

To do this, we have to convince policymakers to invest heavily into public schools—not charter schools—and change how we educate students, especially those who do not typically go to college or who go and do not succeed. I’m talking low-income, first generation, and students of color. The best affirmative action we can do is to change the process of teaching and learning. Sure, we can increase the expectations and the requirements for high school graduation, but we’ve done that before with dreadful outcomes. You can only change those expectations once you retool the system. This is not a simple effort, of course. We’ve been retooling for decades. We have lived through open space schools, gender-only schools, and even playing with the curriculum, as we did with Algebra and geometry in the EQUITY 2000 project when I worked at the College Board. That didn’t really work, either, because the school districts failed to provide the necessary supports for students to succeed after years and years of bad mathematics instruction. In the age of educational technologies, we still have failed to largely harness their potential for altering the teaching and learning environment, arguably because we’ve only placed those systems on top of traditional curriculum and standard maps.

The challenge, of course, is that we do not create an equitable system over night, and perhaps, never. And this will remain a long, frustrating issue for higher education: how do we equitably admit students to our selective institutions?

It will still come down to test scores. That is the truest form of grit we have.

[1] Credé, M., Tynan, M. C., & Harms, P. D. (2017). Much ado about grit: A meta-analytic synthesis of the grit literature. Journal of Personality and Social Psychology, 113(3).

[2]https://www.mercurynews.com/2018/04/02/perfect-act-sat-scores-dont-mean-admission-to-top-universities/.

[3]http://www.thecollegemoneyguys.com/49/.

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Beware the Rhetoric About the Over Importance of a BA

By Watson Scott Swail, President & Senior Research Scholar, Educational Policy Institute

An article posted yesterday in MarketWatch trumpeted that 9 out of 10 new jobs are going to those with a college degree. The article uses data from Georgetown’s Center on Education and the Workforce.

It is important to note that these data—while accurate—are also cherry picked from a very specific time period that overemphasizes the importance of a college degree in today’s economy. The article also notes that employers will “demand” that replacements for those leaving the workforce (e.g., Baby Boomers) will be better trained rather than “let them learn on the job.” But the reality is that there is enough of a glut of BA earners that employers simply filter out everyone else.

We can all safely assume that someone with a four-year degree has more knowledge and expertise than someone with a two-year degree, and that those individuals have more knowledge and expertise than those with only a high school degree. And so on. But how much of that is based on maturation rather than what they have learned? I hear often in the workforce that those with associate degrees are more employable, with respect to skills and work ready, than BAs, depending on the job. As well, how more prepared are BA grads due to age maturation rather than what they have learned? I can argue both sides of the point, but regardless, we need to hear more arguments.

debt-to-income-ratio-2

Our employers have made the college degree a self-fulfilling prophecy by filtering out non-BAs for certain jobs that once went to those with less than a BA and, in some cases, high school graduates. Those who have recently looked at monster.com or indeed or any of the other job walls on the internet will understand this clearly: the bot systems are preferential to those with higher degrees. Thus, if you do not have a higher degree, your application may not get considered or even accepted for a position. In addition, these systems are also preferential to those who will accept a lower salary by asking what salary a prospective employee would accept, thus lowering the cost to employers. This economy, where the competition for decent employment is remarkably high, is forcing graduates to reduce their expected wage simply to get hired.

Building an entire economy based on the principle that the BA is a holy grail is dangerous because it increases the debt burdens of individuals and parents. Much of the price tag of college is paid for by student and PLUS loans, as well as disbursements from retirement funds for those who have them. Data illustrate that graduates are more likely to delay retirement and the purchase of a house than ever before, and, according to CNN Money, the rising cost of college will result in “weaker spending and wealth accumulation among young consumers in the years to come.”[1]

In the end, our economy is pushing individuals and families towards debt levels that this nation has never seen before. According to the other EPI, the Economic Policy Institute, half of all workers have no retirement savings at all.[2] In fact, those workers between the ages of 21 and 37 are more likely not to have retirement funds. It is true that those with a college degree are more likely to have retirement funds than others, but that is largely due to the fact that the employers who hire those people are more likely to have retirement plans available than other companies. It isn’t because of the BAs… it is because of the type of company. Those who hire skilled workers, for instance, are less likely to have retirement plans in place, especially if they have 50 or less workers on staff, freeing them from certain federal requirements, including participation in Obamacare.

In January of this year, I posted BLS data in The Swail Letter that accurately illustrated where the growth of US jobs will be in the next decade. Of the top occupations, by number of jobs, none of the top 10 will require a postsecondary degree or credential (see below). That stated, many of those jobs will go to those with BAs and other credentials simply because employers will filter for those people. Food prep, retail sales, cashiers—many will have an earned associates or bachelors degree. The US will have the most well-educated service workers with the highest level of debt this world has ever seen. And while the economy is humming along at record levels with respect to employment rates, there are also more people who are part time and without benefits than at any other time in history.

What does this mean for the future? It is always difficult to predict, but I foresee an economy crash in the next decade that could rival the Great Recession of 2007 once current fiscal policies come home to roost.[1] The cost of the ill-advised tax cuts, which produced the largest deficit in US history, will hit the economy hard when our loans are called in. The reduction of fiscal protections via the weakening of Dodd Frank, as well as the increasing cost of health care, will also have severe implications on the earning and retirement, if not total welfare, of all Americans, including those with college degrees. Our elderly will need help, both physical and fiscal, beyond anything we have ever seen as this nation continues to grow grayer.

Getting a college degree is a good thing. Please do not misinterpret my critique. But it can’t be the only thing that makes our economy tick or will go upside down very quickly. Rhetoric overstating the importance of a college degree in lieu of other important credentials in the workforce isn’t extraordinarily helpful.

 

[1] http://www.businessinsider.com/wall-street-dodd-frank-deregulation-bill-trump-gop-obama-legacy-2018-5.

[1] http://money.cnn.com/2017/07/13/pf/college/student-debt-home-ownership/index.html?iid=EL.

[2] https://www.epi.org/publication/retirement-in-america/#charts.

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New World Reputation Rankings Unleashed

By Watson Scott Swail, President & Senior Research Scholar, Educational Policy Institute

The UK-based Times Higher Education (THE) released their 2018 World Reputation Rankings today. This is a different ranking from THE’s World University Rankings, as the reputation piece focuses on an invitational-only survey of scholars from various universities around the world.

Harvard University is the number one school, so it was given a score of 100 from which every other institution is then placed in rank below that number. THE only ranked the first 50 due to the fact that the increments between institutions were simply so small that determining who was 59 versus 60 became pointless. Critics could argue that the entire endeavor is pointless, but it at least gives us an indicator of how scholars perceive the relative value of institutions. In some ways, this reputation piece is more interesting that the world rankings in the fall, as there is more to argue in how they determine non-reputation rankings. Here it is quite simple: the rankings are all about perceptions, for better and worse. And that is all they are.

With Harvard at the top looking down, we find that the top 10 is mostly an American listing, with Cambridge and Oxford clawing some respectability for the UK. Joining Harvard, in order, are MIT, Stanford, Berkeley, Princeton, Yale, UCLA, and University of Chicago. Knowing that “10s” are arbitrary at best, the next two on the list are also from the US: Cal Tech and Columbia University. US-based colleges account for 27 of the top 50 slots and 44 of the top 105. That last number may seem a bit odd, but 105 is the THE cut for the previously mentioned reason: it was difficult to cut at 100 when the next 5 institutions were at the same level as the 100th. So it makes sense, even if it messes with our conditioned framework of statistics a wee bit.

As we can see from the graphic below, only a few countries were able to make a meaningful strike in this reputation survey. The UK had the second most institutions in the top 105 with 9, followed by China and Germany (6), Japan and the Netherlands (5), France (4), Canada, Hong Kong, and South Korea (3), and 14 others to make up the list.

180530 Swail Letter

SOURCE: THE World Reputational Rankings. Graphic by EPI. 

In the end, what does all this information mean? Not much, to be fair. But it is interesting to see how the world perceives the best colleges in the world, and it isn’t much of a surprise that the US continues to wield significant notoriety in higher education. Without a full accounting, there is little doubt that the research funds that pour into the top 44 US institutions on this list likely account for the next 200 institutions put together. That is a very unofficial estimate, of course, but it is worth understanding how big the research emphasis is at these colleges. To give example, Johns Hopkins received almost $2 billion in funding from the federal government alone in 2017, and the University of Washington received $909 million. In total, 32 of the US institutions on this list had R&D budgets in excess of $28 billion in 2017. We were unable to find data from 12 additional US institutions on the list, but let us assume that if we did the aggregate would total somewhere between $35 and 40 billion in R&D funds. A startling amount of funds at the university level. Just as an aside, while the private institutions are very well known, 61 percent (or 27) of the US institutions in the rankings are publicly-controlled and account for over half the funding just described.

The funding, in large part, is a main part of the reputational piece of the rankings. Scholars from around the world publish and conduct research and read pieces by other scholars from these top institutions on a regular basis, thus their attitude is biased on the productivity of these universities in large part. The reputation is well earned and well paid for.

As time goes on, expect to see more international universities break this list, but it will take a long, long time. The efforts of the Saudis, Indians, Chinese, and others will take decades if not centuries of continued and large research investment to match what has been going on in the US for well over a century.

Ranking Institution Country
1 Harvard University USA
2 Massachusetts Institute of Technology USA
3 Stanford University USA
4 University of Cambridge UK
5 University of Oxford UK
6 University of California, Berkeley USA
7 Princeton University USA
8 Yale University USA
9 University of California, Los Angeles USA
9 University of Chicago USA
11 California Institute of Technology USA
12 Columbia University USA
13 The University of Tokyo Japan
14 Tsinghua University China
15 University of Michigan USA
16 University of Pennsylvania USA
17 Peking University China
18 Cornell University USA
18 UCL UK
20 Imperial College London UK
21 Johns Hopkins University USA
22 ETH Zurich – Swiss Federal Institute of Technology Zurich Switzerland
22 University of Toronto Canada
24 National University of Singapore Singapore
25 London School of Economics and Political Science UK
26 New York University USA
27 Kyoto University Japan
28 University of Washington USA
29 Duke University USA
30 Carnegie Mellon University USA
31 University of California, San Diego USA
32 University of Illinois at Urbana-Champaign USA
33 Lomonosov Moscow State University Russia
33 University of Wisconsin-Madison USA
35 University of Edinburgh UK
36 University of Texas at Austin USA
37 Northwestern University USA
38 University of British Columbia Canada
39 Paris Sciences & Lettres – PSL University France
40 University of Hong Kong Hong Kong
41 McGill University Canada
42 King’s College London UK
43 École Polytechnique Fédérale de Lausanne France
44 University of California, San Francisco USA
44 Georgia Institute of Technology USA
46 Seoul National University South Korea
47 University of California, Davis USA
47 University of Melbourne Australia
49 LMU Munich Germany
50 Pennsylvania State University USA
51-60 Delft University of Technology Netherlands
51-60 KU Leuven Belgium
51-60 Heidelberg University Germany
51-60 University of Manchester UK
51-60 University of Minnesota USA
51-60 Nanyang Technological University, Singapore Singapore
51-60 National Taiwan University Taiwan
51-60 University of North Carolina at Chapel Hill USA
51-60 Purdue University USA
51-60 Sorbonne University France
61-70 University of Amsterdam Netherlands
61-70 Australian National University Australia
61-70 University of California, Santa Barbara USA
61-70 Hong Kong University of Science and Technology Hong Kong
61-70 Humboldt University of Berlin Germany
61-70 Karolinska Institute Sweden
61-70 Michigan State University USA
61-70 Ohio State University USA
61-70 University of Southern California USA
61-70 Technical University of Munich Germany
71-80 Brown University USA
71-80 Chinese University of Hong Kong Hong Kong
71-80 Korea Advanced Institute of Science and Technology (KAIST) South Korea
71-80 Leiden University Netherlands
71-80 University of Maryland, College Park USA
71-80 Sungkyunkwan University (SKKU) South Korea
71-80 University of Sydney Australia
71-80 Texas A&M University USA
71-80 Tokyo Institute of Technology Japan
71-80 Zhejiang University China
81-90 Arizona State University USA
81-90 Free University of Berlin Germany
81-90 Fudan University China
81-90 Indiana University USA
81-90 Osaka University Japan
81-90 University of Science and Technology of China China
81-90 Shanghai Jiao Tong University China
81-90 Tohoku University Japan
81-90 Utrecht University Netherlands
81-90 University of Warwick UK
81-90 Washington University in St Louis USA
91-100 Boston University USA
91-100 University of Colorado Boulder USA
91-100 University of Copenhagen Denmark
91-100 École Polytechnique France
91-100 Hebrew University of Jerusalem Israel
91-100 University of Helsinki Finland
91-100 Indian Institute of Science India
91-100 Moscow Institute of Physics and Technology Russia
91-100 University of Pittsburgh USA
91-100 Rutgers, the State University of New Jersey USA
91-100 RWTH Aachen University Germany
91-100 Uppsala University Sweden
91-100 Wageningen University & Research Netherlands
91-100 University of Zurich Switzerland

SOURCE: THE World University Rankings.

 

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The New Dropout Crisis? Not so New

By Watson Scott Swail, President & Senior Research Scholar, Educational Policy Institute

The New York Times David Leonhardt, one of the few journalists that I read on a daily basis, published an article this morning on the “new dropout crisis.” The crisis, in this case, is that the national college dropout rate has eclipsed the national high school dropout rate. While I am glad to see the focus on an area that I have studied for over two decades, I do take some issue with this comparison. To begin, it is very true: we have done an extraordinarily poor job in higher education to graduate the majority of our students. Half of students who begin at college of any kind this fall will not earn a degree within six years. That includes two-year and four-year students attending public and private institutions. The causes for this are complex, but we can boil it down to several things, including the arguable beginning of this trend with the Civil Rights Act of 1965 as well as the large subsidies to higher education which helped created the massification (a real word in higher education policy studies) of the system. There are other issues, but these are two very big pieces.

College-dropouts1.jpg

I call the comparison of the two dropout rates a false positive because this has been the case for a long, long time. The data used by Leonhardt, created by Chad Aldeman of Bellwether Education Partners, is seemingly incorrect to me[1]. First, it uses IPEDS (Integrated Postsecondary Education Data System) data to create the rate, which probably is not the best data source for comparison as it is self-reported by the institution and IPEDS is known to be suspect. Not a bad choice, but perhaps not the best. A superior source may be the US Department of Education’s NPSAS (National Postsecondary Student Aid Study), which I use below. NPSAS is a specially-designed, randomly sampled database from across the country.

Another factor, of course, is the definition of dropout. Dropout means various things, and in higher education we must talk about dropout in the context of stopouts: those students who drop but come back. Leonhardt’s conclusion is correct, of course. Dropouts in higher education is a serious issue and too many students who begin a degree or certificate program will not succeed, typically carrying a financial debt for a piece of parchment they never received. This is serious stuff.

Where the high school dropout rate comes from I am even less sure, because the status dropout rate of 16-to-24-year-olds is only 5.9 percent according to the US Department of Education[2]. So, I don’t trust the numbers from Bellwether to any degree.

What is true is that dropout in higher education has—for much longer than the NYTimes and Bellwether suggest—been a critical problem in our education system. But the reasons for the dropout in postsecondary education is a much different animal than in secondary education. First and foremost, higher education is not a compulsory requirement as is K-12. By law, most youth must go to school until they are at least 16-years of age, and many states have passed laws to increase that age to 17 or 18. In college, students make their own choice to enroll and to dropout. We know the issue is much muddier than this, but people still have choice. Second, there are much different issues associated with persistence in higher education than in persistence in high school. For almost all students, if you go to high school, you will complete high school. The academics rarely get in the way, but the social issues do. People do not typically dropout because they don’t like or can’t do algebra. They dropout because they don’t like school, would rather work, and take really bad advice from people who are ill-equipped to give it to them. People dropout out primary for bad reasons, not academic reasons. I’m a math guy: I can teach algebra to anyone. Anyone! Trigonometry? Um. Less so, which begs the question why we require all students to learn trig anyway (arguably a sidebar conversation for another time). High school, by definition via its graduation requirements, is designed to succeed via minimum levels and expectations. It’s a pretty low bar to graduate from high school, especially in a non-agrarian society.

In higher education, though, there are many factors that impact the ability of students to persist and graduate. First, many students who leave are simply not adequately prepared to be admitted—let alone graduate—from college. Thus, some high school graduates enter higher education do so with very limited academic wherewithal to succeed. It should be no surprise when many of these students stop showing up. If anyone wants to know what the number one indicator of college success is, guess what? It isn’t someone’s race/ethnicity, income, or education legacy. It isn’t where they come from, per se. It isn’t even their intellect or cognitive ability, necessarily (although it can be). Ultimately, the biggest predictor of postsecondary success is the academic rigor of their prior education, as prominently noted by US Department of Education Analyst Clifford Adelman in his “Answers in the Toolbox” transcript study. Cliff, one of the best policy analysts around, passed away only a few weeks ago.

Another looming issue for students is ability to pay. That doesn’t happen in high school. Even with large public and private subsidies, depending on the college one chooses, there is still a high price to pay. Interestingly enough, the pricing for low-income students is better than many people think it is, due primarily to Pell and institutional grants provided to people betow about 150 percent of the poverty level. In most cases, the expected family contribution (EFC) for students falls between $12,000 and $17,000 a year at the four-year level (see below). For low-income students, this amount is actually quite a bit lower, averaging about $3,000 or less per year. Important to note, of course, is that many low-income students who do dropout do so because the unanticipated costs of college that is not covered by grants, such as travel, health care (copays), drugs (not that type!), and even food. The unexpected items push them over the edge and they leave.

180525_SWAILLETTER

SOURCE: US Department of Education, National Postsecondary Education Student Aid Study (NPSAS:16). Data collected and analyzed using PowerStats, W. Swail, May 25, 2018. 

One other note in the NYTimes piece. Leonhardt makes the standard point that the returns to a higher education are large. He’s right. But the echo of this statement gets very stale because it creates a false understanding of why there is an ROI gap. But the returns are declining while graduate (and dropout) debt is increasing. In parallel, the cost of an education is also increasing. It should be noted by readers that one of the reasons that there is such a earnings gap between high school graduates and college graduates is that employers aren’t hiring high school students anymore. And they do so because they can hire BA and other graduates for work that requires nothing more than the skillset learned in secondary school. They could hire high school graduates, but they don’t. As I have written extensively about before, employers use the BA as a filter, without any real thought about the skillsets that they are trying to attract. The assumption is simple: if you bothered to go to college and you were able enough to navigate the system and earn a degree, you can probably do something positive for me. There is nothing wrong with that assumption, because it carries water. But this belief has also propelled the value of college degrees—in particular the bachelor’s degree—to heights that are absurd. About 25 percent of our population has a BA degree and that percent will surely increase in the next quarter century. But 25 percent of the jobs in the US do not require a BA degree. Check my stats from the Bureau of Labor (link above). We simply do not need that many people with BAs. Having one is a good thing. But having too many is a societal problem, too. Ask the BAs who can’t find a steady job or can’t get one that has anything to do with their very expensive (always consider the opportunity cost of not working for 4-6 years) degree. There absolutely should be some level of rationing, by degree and program, in the US, so that we do not overproduce certain graduates. But doing so is a third-rail issue. Who is going to make that decision in America? The Death Panel?

As always, I enjoy comments on these pieces and put them out there for interesting dialogue. I also strongly encourage you to sign up for David Leonhardt’s daily opinion pieces. Always great stuff. And sign up for The Swail Letter, too.

Have a great weekend.

 

[1] “Seemingly,” because I cannot reproduce the data that is used in the chart. Thus, I am not sure which data sources they actually used, but given that I know most of the data sources available, I have my doubts about the legitimacy of these comparisons.

[2] https://nces.ed.gov/programs/digest/d16/tables/dt16_219.70.asp?current=yes.

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Declining Enrollments? Not Such a Big Deal

By Watson Scott Swail, President & Senior Research Scholar, Educational Policy Institute

A new report released yesterday by the National Student Clearinghouse (NSC) reported that undergraduate enrollments were down 1.3 percent from the previous year, equivalent to 231,674 students from the previous spring. The biggest losses were in the two-year public sector, which accounted for over half of the losses (53 percent; 107,393), and the four-year, for-profit sector (33 percent; 67,637). The losses at the four-year public and private non-profit sectors were negligible.

A similar reporting was noted by the NSC in fall 2017, a more traditional measure of postsecondary participation compared with the spring semester. In that NSC report, total enrollment declined 1.0 percent, or 199,179 students. As with the spring 2018 report, about half of the decline was in the two-year public sector and 36 percent in the four-year for-profit sector, with negligible declines in the others.

What does this mean and why does it matter? I ask because people seem to be getting in a tizzy over these reports. Obviously, colleges worry about declining enrollments because it impacts their financial forecasting. For instance, 50 students may not sound like many, but if a private institution loses that many students from one fall to another, the financial impact of those losses could add up to $1.5 million pretty quickly, depending on the institution. And what is the impact of $1.5 million? Depending on the institution, $1.5 million could translate to 20-25 FTE employees. These issues are nightmares for business officers and executives, let alone academic deans.

Although these NSC data are interesting, the overall issue is relatively insignificant in the long-term. In preparation for this Swail Letter, I did a quick check on CDC birth records and the population trend of 18-24-year-olds in the US. There is no serious concern for enrollment worries as they should remain relatively stable over the next decade. My bet is that they will likely increase over that period of time with the aid of a rebounding of the two-year and for-profit sectors.

Still, the question remains: if things are so stable, why are the numbers down? First, let’s put this in perspective: we are talking about a 1.0 to 1.3 percent change, and given the nature of enrollments and the sheer size of the overall student population, these are data “blips.” Numbers vacillate for a lot of reasons, and as some people have noted about this new report, the issues are also about geography and are not steady across the country. Our concern should be focused on when blips turn to trends, and that isn’t happening at this time (ask me next year). Thus, the answer to the question of why this is happening is actually quite simple: it’s the economy.

Every higher education policy analyst understands that when the economy is good, enrollments, beyond the factors of demographics, decline. Why? People are employed and can find jobs. A certain bubble of the population will tend toward postsecondary education and training when the economy is bad and tend toward employment when it is good. Right now, with the economy humming at an unemployment rate of 3.9 percent, they are trending towards work. This percentage rate, by the way, is considered “full employment” by economists. As the President would like everyone to acknowledge, the unemployment rate has continued a downward slide since he was in office. And he’s right; it clearly has. Of course, the rate has been on a downward slide since the first year of the Obama Presidency, so one might choose words and data carefully given the nature of the economy versus the power of the office. The graphic below illustrates the trends in long-term unemployment by Administration, first with the Bush Administration, followed by Obama, and then Trump.

Table 1. Number of people in the United States who were unemployed for 27 weeks and over, 2008 to 2018 (in thousands)

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SOURCE: https://data.bls.gov/timeseries/LNS13008636. Graphic by the Educational Policy Institute. 

Bubble students take quick opportunities in the work force because they can earn money. Many, especially at the two-year level, will choose to leave higher education (or not enroll) and re-enter the workforce because they are employable due to a strong economy. This perspective would also make sense in the for-profit sector, which also enrolls people who are on the bubble of employment.

Interestingly, the NSC also reported that the number of adult students (above 24-years of age) was also down. The argument above also would forecast this happening, too.

In the end, let’s keep a positive outlook. The economy is good. People are working, albeit we know that the people who are working and receiving benefits is a grave concern in the US. Take a quick look at the graphic below. The red dots and lines represent part-time workers in the 25-54 age range and the blue the full-time workers. The combination of the Great Recession and the introduction of Obamacare spiked the number of workers who moved from full-time to a part-time status, in large part because the economy was unsettled as well as employers knee-jerk reaction to reduce employee hours so they wouldn’t have to provide health care as a benefit. Only now do we see that the economy is strong enough that the trend is reverting back to pre-Great Recession numbers. That is a good thing.

Table 2. Part-time versus full-time employment ratios between 2007 to 2018 (April) for workers between the ages of 25 and 54.

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SOURCE: https://www.advisorperspectives.com/dshort/updates/2018/05/07/the-ratio-of-part-time-employed-april-2018.

Declining enrollments are always a challenge for colleges and policymakers. But, ultimately, we must remember what we are here for, and that is to provide an education for those who desire and need it. Our job is not to admit people who actually want to be doing something else and we shouldn’t promote something behind the curtain when some potential clients already know what they want to do and how to get it. If and when those people are ready, we will be there for them. But if they want to work, that’s a good thing for them and the nation as a whole.

For right now, the data presented suggest that the issue of declining enrollments is much ado about nothing.

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Cliff Notes

By Watson Scott Swail, President & Senior Research Scholar, Educational Policy Institute

Cliff Adelman passed away last week. To the uninitiated, Cliff was arguably the best data analyst on student issues that this world has ever seen. This is not an overstatement nor hyperbole. I’ve met most of them around the world at some point and he was leaps above any of them. If you don’t know Cliff, you know his data. His work was that omnipresent in the education arena.

Cliff was important to many of us data wonks. More than anything, he taught me what stories could be told from a bag full of data. He played Jeopardy with data (literally). He spoke of the “toolbox” and how students “swirled” and how business falsely used the BA as a filter, something I talk about to this day.

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What separated Cliff from everyone else was his devotion to the data. He knew “the data,” of course. Perhaps he knew data more than some people. I’m not sure. I spent time with Cliff at countless conferences and meetings, and after a few beverages, he would be head back to his room and run more numbers for the next day. As others knew greatly, he was difficult to argue with—even if you were pretty sure you were right—because he had such a command with the data that you figured he had something on you. And he was confident, which totally made you feel you were doomed. Cliff and I were pretty much always on the same side of the argument, so it was never an issue that I can remember between us. He was on the students’ side. Cliff used data to tell stories of students in a hope to influence public policy and the “business” of higher education. In “Answers in the Tool Box,” his thematic piece from 1999 using data from the High School and Beyond (HS&B) database, he let us know that what mattered most with regard to higher education access and success, more than anything else, was the rigor of prior learning: enrolling and excelling in the most challenging courses during high school paved the way to future success, regardless of race/ethnicity or income. That was something that might have been inferred before, but these data, based on transcript data that he fought long and hard for at ED, told us definitively.

In 1988, not so long ago, Larry Gladieux and I had the privilege of having Cliff spend six months with us at the College Board for an Intergovernmental Personnel Act (IPA) assignment. We were all excited about it, and it is where he did most of the work on “Toolbox.” He also laid the groundwork for his analysis of job ads where he noted the discrepancy between the skills employers desired and the inflated level of education they required. We were all excited to have Cliff hang out with us for half a year. In reflection, however, we never really saw Cliff very much. He was always out talking to be people or doing his analysis. That, again, was Cliff. He did his work.

Many of us spoke on panels with Cliff throughout our careers. If you saw Cliff in the audience at a session, there was a question coming. And it would be a short question led by a five-minute oratorio building the foundation for the question. And if the receiver of the question wasn’t listening with intense focus, he or she was dust. Cliff took no prisoners. He wasn’t rude about it, but he would be all over someone if they gave an answer that had no credence in it from an empirical standpoint. Numbers rule (as they should), anecdote does not. But as someone said this week on Facebook, we all learned to speak before Cliff, not after him. This, of course, had a double-edged sword. If you went before Cliff, he could critique your analysis live before he even started talking about his content. If you went after, your 20-minute presentation was squashed to three due to a bit of “overtime” on his part. Cliff could talk. And talk.

When changes happened at the College Board back in 2000 in the form of Gaston Caperton, the former West Virginia governor who became the CEO at the Board that year, a bunch of us were suddenly unemployed. When the news hit the wire back in late January 2000, Cliff immediately had me meet with his wife, Nancy, over the bridge in Rosslyn at SRI International. She also was an education researcher and she hired me on the spot. So, I owe them both personally and professionally for the opportunity and don’t think I ever gave them the proper “thank you” for that. Thank You. Both.

My first boss back in Winnipeg hired me as a teacher because I was a musician. He hired almost all musicians for “shop” teachers because, as he said, “Musicians were mathematicians.” There was a connection between the music and the technical. This perfectly describes Cliff, too. He was an excellent piano player and he loved to play. He would bring his folder of music to conferences and, if there was a piano, it was to be played. As a piano player myself, I loved this about Cliff. I remember playing the grand at the San Diego Hilton at the very end of ConnectED 2000 when people were filing out, and Cliff gave me a wink. A page from his catalogue.

There is much more to tell, but this was difficult enough to write with all the “humidity” around here. I will miss Cliff. We all will, even if you never knew him. #cancersucks.

Cliff.jpeg

 

Thanks to Nick and the rest of the Adelmans for putting up the wonderful Facebook celebration. Many of us never knew Cliff had dark hair. Or the Speedos. 

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The Nexus of Tuition Discounting and Federal Funding of Higher Education

By Watson Scott Swail, President & Senior Research Scholar, Educational Policy Institute

A new study by NACUBO says that half (49.9 percent) of the revenues from tuition and fee charges at private, not-for-profit institutions of higher education are used to discount the sticker price of a college degree at these institutions. The lesson from NACUBO is that students and parents must look at the discounted price—not the sticker price—when making a decision on where to go to school.

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NOTE: This is NOT an advertisement!

And herein lies the problem. When the pricing formula in higher education requires a college education to understand it, it probably isn’t the best marketing system in the world. Unless, of course, institutions prefer obscurity rather than transparency in selling their product. I’m not so sure that is the case, but it could be argued from a business perspective that complexity in numbers equals higher enrollment to some degree. While an angle may be that discounting actually helps low-income students (it does) and others who could normally not afford these private schools, the real angle is that the system is preposterously designed when it requires a discounting program to undercut their actual printed tuition, fee, and room and board costs.

We don’t see this at the publics to near the same degree, of course, because their financial systems are different due in large part to the fact that they receive large direct state subsidies that significantly impact their public prices. As we will see, the privates do receive other subsidies in the form of federal grants and other funds. Without these funds, only a fraction of the privates would be in operation today. The most exclusive/selective, heavily-endowed schools would remain for two reasons: (1) they have the resources to provide free or reduced-price education to most of their need-based students anyway; and (2) they could fill their seats with full pays regardless if they wanted or needed. (see this link for information on the largest endowed institutions in the US and beyond).

But for the approximate 1,600-plus private, not-for-profit institutions in the United States, most rely on Pell Grants to help lower the burden on students and families. From there they then discount their tuition.

If readers don’t quite follow how institutions use a discount method, it really is an extra level in Pell Grant, although not always to the lowest-income families. Consider that an institution ends up with a pool of resources from their tuition and fee charges. With this anticipated, formula-driven pool of expected revenues, they are then able to redistribute the wealth to a few different populations. The first is lower-income students and families (need-based) who could not possible attend without a lower price. The second is for exclusive students that they want to entice to their institution through special institutional grants and scholarships. A third population are the legacy students whose parent or family had attended. The discount rate and final cost of attendance (COA) can only be provided to a student when they have applied to the institution and applied for financial aid via the FAFSA. Thus, many students actually self-select themselves out of certain institutions because they refer to the sticker price as the real cost of education. Rarely, and likely never, is the sticker price remotely accurate for need-based students.

This is how the financial aid business works in higher education and why the college search process can be so mind-blowing for families. The issue of discounting is complex because it can be argued, in principle, in a number of ways. First, if you believe in reducing the cost for low-income families at more prestigious (sometimes), private, not-for-profit institutions, then the idea of redistribution becomes a welfare-style program. The Pell Grant is, by definition, a redistribution program, and so is providing a “discount” to a large degree. However, if you believe that the cost is the cost and it should be transparent and factual while letting other Pell-like programs take care of affordability adjustments, then it comes across as an unfair system, especially for the more affluent who are ultimately bankrolling the redistribution process.

How we deal with this issue depends on which viewpoint you have. If you believe in the former, then you probably just live with the opacity of the true cost of a higher education at these institutions because at least you are on the receiving end of the redistribution. However, if you support the latter, then you probably want to remove discounting to a large degree and pay what you feel is appropriate, not a formula-driven method that will work against you every time.

In reality, public two- and four-year institutions receive the most Pell Grant funds available to the higher education system. In 2015-16, two thirds, or 69 percent, of Pell Grant funds went to public institutions of higher education, compared with 15 percent going to private, not-for-profit and 16 percent to for-profit institutions.[1] In most cases, public institutions receive a higher percentage of available federal dollars for student aid than private, not-for-profit institutions do. However, it is important to note that this sector takes up a significant portion of the distribution depending on the type of aid. According to the College Board[2], private, not-for-profit institutions take up 41 percent of Federal Work Study funds, 50 percent of Perkins Loans, 26 percent of Direct Subsidized Loans, 37 percent of Direct Unsubsidized Loans, 42 percent of Parent PLUS Loans, and 67 percent of Graduate PLUS Loans.

Thus, the private, not-for-profit sector, together with the private, for-profit sector, take up a considerable amount of public taxpayer funds that are used to help students go to college. An argument could be made for, and against, moving those funds to public institutions where the costs of providing an education are less expensive, in most cases, than at private institutions. The one argument is that institutions playing the discounting game should be limited in their access to public funding. True, they do not receive direct federal support except in federally-funded research but do receive federally-funded need- and non-need-based grant and loan funds. The need-based funds are supplied by taxpayers; the non-need funds supported by repayments from students and families.

chart1

 

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I expect that most people do not support the action or conclusion of limiting federal funds to private institutions. To be fair, private, not-for-profit institutions have provided great expertise and knowledge to the world, let alone the US. But how much public support for a private enterprise is appropriate? Personally, I do not know the answer to this question, but I do know that sometime in the future we need to address it.

Regardless of how the question is couched, there is something inherently wrong with the massive discounting process we see at the private institutions. Again, most discounting is for the right reasons. But we should question whether there should there be discounting at all. In the end, discounting confuses the system and its users; makes the financing of a college degree difficult and obscure; and potentially misappropriates public funds.

 

[1] Author’s calculations using IPEDS Data Center (April 30, 2018).

[2] https://trends.collegeboard.org/student-aid/figures-tables/percentage-distribution-federal-aid-funds-sector-2015-16.

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The Texas College Dilemma: How Big? How Much?

By Watson Scott Swail, President & Senior Research Scholar, Educational Policy Institute

The San Antonio Express-News wrote an opinion yesterday on the expansion of higher education in Texas. Senate Bill 828, which failed earlier this year, would give authority to expand higher education campuses to meet the growth and needs of the state.

As noted by the state’s higher education commission, Raymund Paredes, building new facilities alone will not solve the higher education challenges in Texas. In Paredes’ testimony before the Senate Higher Education Committee on March 21, 2018, he suggested that constructing new educational buildings while failing to meet the basic financial needs of colleges and universities through public funding could impact the quality of higher education in the state. And he’s correct.

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The issue facing Texas is either playing out now or will soon in many states where populations continue to expand. Higher education pushes hard on the demand curve, while state support either remains stagnant or regresses, depending on state.

The primary question for Texas and other states about expansion is simple: what for? The cost of building higher education, including physical plant, plus programs and staffing, is tremendously expensive. States need to analyze what it is they are building and what the future returns are of that public investment. Public higher education has expanded for many reasons over the last 75 years. Some of it was due to incentives provided via public policy. For instance, the GI Bill, the Pell Grant (BEOG), and state subsidies to keep tuition in check. All of these have an impact on demand. Add in the public sentiment and the overuse of data that illustrates the returns to a higher education, and we realize the large trends in enrollment since the 1970s.

Since the Civil Rights Act of 1965, higher education has largely been held as a right and as an access issue, especially and appropriately for populations that have been historically underrepresented in higher education, including students of color, those from low-income backgrounds, and students with disabilities. In return, and with the expansion of the community college system, the bar for enrollment has significantly lowered. In fact, all community colleges and many four-year institutions are open-enrollment institutions: that is, there are no significant academic barriers to attendance beyond completion of basic GED requirements.

This is not a debate about the virtues of these public policies. It can be stated unequivocally that these policies have helped millions of students over the years. However, the reality is that these policies have considerable costs associated with them. Higher education in the US is very expensive compared to the rest of the world because it has the most leniency. It is a redundant system, to a degree (no pun intended), where students have second and third and fourth chances if they want. The growth of the for-profit industry has relished on these tertiary desires for a degree.

To note, the importance and dynamics of degree attainment have been pushed to hyperbole by the higher education sector, politicians, and employers alike. “Earn a million more than a high school diploma” is a popular advertising soundbite. And many people who earn a BA or higher do, in fact, earn much greater returns. But many people do not. That is the nature of an “average.” Half do; half don’t. In truth, the returns to a BA have flatlined over the past two decades. Only the professional degrees are still experiencing increasing returns, while the return for certificates and associates degrees has decreased. Understandably, there are stories on either side of the argument for all returns to a degree. But when public dollars are compromised, or at least required, to subsidize the system, it is time to take careful stock of the situation and return to the question: what is the purpose of a higher education, to the individual and to society, as a whole?

Although taxpayers and citizens alike will not necessarily like it, higher education, as we know it, will change dramatically in the future. The mission of higher education is a double sword or standard for most institutions. Most missions focus on the importance of serving community and providing opportunity for all, but the truth is that our systems will need to be further filtered by academics and other variables to ensure that those who enroll have a legitimate chance of success. The experiment with open access has been fruitful and we have learned much in the past 50 years. However, our fiscal capacity to keep the doors “open” for all students has hit the fiscal wall. States are either unable or unwilling to support the rising costs of higher education, and that, in the end, impacts those on the lower rungs of opportunity more than any other population subgroup.

For Texas, as well as others, there will have to be more specific analysis to fully define—in realistic terms—what graduates they need for society. Higher education will—and perhaps needs—to become more European: it must start limiting the number of students in particular programs and fields and not keep floodgates open in the name of “equity.” There must be some calculus involved in educating those that can fulfill new jobs and not over-qualify and overeducated people for jobs that simply will not be in existence.

This is not easy work, and the opportunity for argument is large. There will be winners and losers, but there becomes a financial reality for higher education and taxpayers alike: how big a system can we afford? A second is more important: How big a system do we need?

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The Hardest Decision for Student Success: Hiring the Right President

By Watson Scott Swail, President & Senior Research Scholar, Educational Policy Institute

Many of us that study and work in the student retention field understand how complex and challenging it can be. The work involved in changing schools, environments, and cultures to improve student success in higher education can be daunting.

For institutional leadership that have to deal with state and federal guidelines, organizational budgets, human resources, and fundraising, student success can get lost in the shuffle. And when it is found, the issue can be, “what do we do?”

daniels-jacket

The hardest decision that any president, chancellor, or provost has to make is this regarding student success is this: deciding to do everything they can to make a difference. I have seen, first hand, what happens at institutions when they tinker with student success. A little program here; an FTE position focused on retention there; something that looks good but does remarkably little. These can be fine things, but they don’t move the needle of student success. The only thing that changes performance and behavior is an institutional-wide focus on student success, from the top down and the bottom up. I have yet to see it work any other way. And, unfortunately, many of these efforts seem to revolve around a particular person—leader—at campus. And when that person goes, so does the focus.

It is interesting to read job requirements in position postings for presidential openings at four-year institutions in particular. They talk so much about student success, but they want people who are experts in finance and business. They want people who “know people.” In other words, the institutions and their boards talk the talk but rarely walk the walk. They seldom hire the type of people that will focus on improving their institution via student success. Who do they hire? People who can increase the endowment. And who these leaders typically hire? People who can help them increase the endowment! I make some fun of this, but it is largely true.

I have no institutional measures of leadership, but it seems remarkable how many presidents appear to be lost in their job. Some, of course, were hired because they did something extraordinarily well which put them in line for a position of this magnitude. Many others are there because they climbed the administrative ladder. They paid the price by time and position. And others, of course, are simply well positioned, politically and financially. I would argue that not many presidents are hired because of their work, focus, and knowledge on student and institutional success. And not to simply focus on politicians, but look how many politicians have become college presidents. It has seemingly become a rite of passage for those who have been “retired” from politics by the democracy. Mitch Daniels, David Boren, Donna Shalala, Janet Napolitano, Robert Gates, Erskine Bowles, and Bob Kerrey are among the high-profile politicians who have served or currently serve as college presidents. It is argued that many of them did or are doing a good job in their positions.

However, there can be a danger when we want to improve education for students on one hand and hire powerful, well-known people who may lack the appreciation for the plight of the average student. This morning I read a Washington Post OpEd how education is littered by rich people trying to do good but not having a real handle on it. I will never decry our affluent from pouring their money into social work, such as education. But it becomes a different matter when someone without a clear understanding and appreciation for the academy starts mucking up the waters. In particular, the OpEd focuses on Education Secretary Betsy DeVos, who has spent much of her life and money focused on privatizing and chartering schools in Michigan, a state with a tremendously poor track record in education. This is the state that decided to fund education through sales tax rather than property tax back in 1993. (As an aside, the Michigan State Senate passed the law to repeal the use of property taxes to fund public education that year without even having a replacement for it. Sound familiar?). He also pushed through charter school legislation as governor.

And, as I digress, the guy who led that fight was Governor John Engler. Guess what John does now? He is the interim President of Michigan State University. Last fall, Betsy DeVos named him chair of the National Assessment of Educational Progress, or NAEP. NAEP, AKA “The Nation’s Report Card,” is a big deal, and being chair of NAEP is a big deal. Engler, for what it’s worth, became a Washington lobbyist when he left the governor’s mansion back in 2003. For reference, his 2016 paycheck as President of the right-leaning Business Roundtable was $2,734,678.

I’m not sure who to blame on our inability to improve student success in the United States. Is it the presidents, who are hired to do so many things on campus, including and supposedly student success? Is it the boards, who are enticed by shiny items such as globalizing their institutions with campuses in Dubai and Qatar? Or is it simply the public, who allows all of this to go on.

To be fair, not all of the challenges we have in student success are because of the president of an institution. We have set up a dynamic for our 18-24-year-olds by expecting more and more of them to get a “higher” education without the requisite academic wherewithal to do so. We have set the bar so high based on this misperception that higher education is the only road to a successful career and fulfilling life. We do this by showing, time after time, the return in earnings by degree—a disservice to every other avenue to wealth, well-being, and prosperity.

In the end, we admit students to institutions where they won’t succeed and surely can’t afford. And somehow, we think this is good. Perhaps success starts with hiring the right people to focus institutions on learning and success. People who can realistically improve their institution to serve students, who, in turn, can serve society. Maybe the hardest decision is coming to terms with what student success entails and who can lead it.

 

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I’ll take US Higher Education for $400, Alex

By Watson Scott Swail, President & Senior Research Scholar, Educational Policy Institute

Alex: Well, we have a barn burner today, folks. Scott, you’re still in command of the board and close to clinching, so go ahead and make a selection.

Scott: Thanks, Alex, let’s go “US Higher Education for $400,” please.

Alex: Well, its today’s Daily Double. [crowd goes crazy]

Scott: I’ll wager $2,000, Alex.

Alex: For $2,000, here is your clue: This item costs four-year institutions over $7 billion a year in the United States. We’ll be right back after these messages.

jeopardy

Over the past couple of weeks, I’ve been playing with a lot of data from the National Center for Education Statistics (NCES). I’ve boasted about their data before. Simply wonderful for us analysts.

Telling the story of higher education is difficult because it is increasingly complex. Ask me about the retention rate at any institution, and I’ll have to query you on the parameters of which you seek. Nothing is simple because the definitions aren’t simple.

I thought today I would throw out a few numbers that readers may find interesting. They aren’t perfect numbers, because the IPEDS database is not so perfect, but they’re pretty good. The IPEDS (Integrated Postsecondary Education Data System) database includes all Title IV institutions in the United States, who are required to submit a number of annual surveys of information to the US Department of Education. Ask any institutional researcher at a college or university and their eyes will surely roll about these surveys because they are an ominous, if not important, process that has to be done from the smallest institution to the largest. If institutions choose not to do it, they forfeit any federal financial aid (e.g., Pell, student loans) for their students. Thus, they all do it. The Title IV status means everything in the United States.

The challenge in IPEDS data is that some data are “missing.” That is, not all institutions provide data for all questions. This makes analysis a tad difficult because you have one of two choices: either you run the analysis on the schools for which you have the requisite data to conduct your query; or you impute values into these missing fields. The latter process is tricky and extensive to do properly, so I am selecting the first manner, understanding that it leaves some data on the floor. In the end, my analysis still accounts for 98 percent of total enrollment at four-year institutions in the US.

Here is what I’ve found.

At public four-year institutions, the average total revenue per FTE student is $24,370, with an average tuition and fee revenue of $7,840[1]. The additional revenues on top of tuition and fee charges include government subsidies, research funding, and other sundry items. At the four-year privates, the numbers are larger: an average of $25,631 for total revenue, of which $16,335 is derived from tuition. Obviously, the private institutions rely much more on tuition and fee charges for their revenue than public institutions, although the gaps are lessening each year.

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SOURCE: Author’s calculations using IPEDS data (PowerStats)

Public institutions, on average, admitted 61 percent of their 5.8 million applicants, while private, not-for-profit institutions admitted 50 percent of 4.5 million applicants. However, the actual enrollment of students (those who showed up at school) was far less. At publics, 18 percent of applicants enrolled, compared to 11 percent at privates.

Now, back to Jeopardy.

Alex: Right before the break, Scott wagered $2,000 for this clue: This item costs four-year institutions over $7 billion a year in the United States. What say you, Dr. Swail?

Scott: Alex, What is the cost of student departure from higher education?

Alex: That’s it! And with that, Scott win’s today’s round. He’ll be around tomorrow to play against Watson. See you then. 

And this is true. Together, our four-year public and private not-for-profit institutions lose approximately $7 billion a year in lost revenues from students who chose not to return to their institution from the prior year. This amounts to almost $5 billion for four-year public institutions and $2.0 billion for four-year private, not-for-profit institutions. From tuition and fee revenue alone, publics lose $1.6 billion and privates $1.5 billion.

Regardless of how one counts it, this is a lot of coin.

In truth, it is understood that institutions cannot expect to retain all their freshmen students. However, we lose a significant number of them. As the table above illustrates, one quarter of all four-year students leave their institution after a year. Some institutions do much better than others, but this is the average. This results in significant hemorrhaging on behalf of institutions of higher education, but it has become the status quo modus operandi of the industry. Institutions expect to lose students, so they enroll more students. And it goes on and on and on, with an incredible lack of efficiency. This is the cost of our higher education system.

Important to note that this is only a reflection of the revenues generated by an institution. It doesn’t include the opportunity and actual costs that students and families pay for an squandered education. Some students, of course, transfer to other institutions. But many do not.

What if each institution was able to improve their fall-to-fall retention rates only two percent? Public, four-year institutions, collectively, would retain over $93 million in revenue: $29 million from tuition and fees alone. For the private institutions, retained earnings would total $20 million, of which $12 million are tuition based.

Student departure is costly. Given that our first-to-second year retention rate is but 75 percent at the four-year level, and the costs and prices of higher education continue to climb and climb and climb, we really can’t settle for this anymore. In the end, institutions lose the revenue. But long after leaving higher education, taxpayers and students are paying for the privilege.

By the way, I have these data on every four-year insitution in the US. Email me for details.

[1] Analysis did not include enrollment weighted numbers.

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