Saturday, November 9, 2013

Obama’s Bargain: Affording Higher Education

by Alex Katsomitros, The Observatory:

Policy reforms usually come with big words and bigger expectations.

Barack Obama’s higher education reform plan, announced in August, is no exception.

Τhe plan aims to tackle in one stroke the two main problems facing the sector in the US: soaring student debt and high dropout rates.

Technology is seen as a catalyst for change, but the plan fails to give specific directions for its use.

Value for money

The plan could be called ‘Affordability and how to learn to love it’. Its cornerstone is a new university rating system, College Scorecard, that will score institutions on affordability, tuition changes, access and graduation outcomes, including loan repayment.

If the plan is implemented, federal allocations will be based on these rankings from 2018. The administration's goal is to push universities to reduce tuition fees and incentivise students to opt for value for money.

This is an interesting twist to rankings. The three big international ones focus on citation impact, reputation and research output; cost is ignored and employability is taken into account only in the QS ranking, but is of minor weighting.

As pointed out by TechCrunch's Gregory Ferenstein, ‘it is the first time that colleges will be judged on how their graduates perform in the real world’. This may affect the reputation of institutions that fail to contain costs and produce employable graduates.

Even the Ivy League may come under scrutiny for offering degrees that are too costly or less relevant to the job market; according to a ranking by Forbes and the Center for College Affordability and Productivity that measures student satisfaction, postgraduate success, student debt and graduation rates, Pomona College in California can be better value for money than Berkeley or NYU.

Liberal arts colleges may see the College Scorecard as a threat, as their graduates earn less in the short term.

For-profit institutions might also receive a blow, as they receive most of their revenue from the federal government through student loans, have high dropout rates and are more expensive than public institutions.

A study by the National Bureau of Economic Research shows that the for-profits eligible to receive federal funds charge up to 75% more for tuition than those that are not.

Student debt

The plan's main goal is to reduce student debt - the time bomb at the heart of the system.

According to a study by the Federal Reserve Bank of New York City published last March, student debt is approaching $1trn, having tripled from 2004 to 2012, while almost one-fifth of borrowers are more than 90 days delinquent.

The White House announcement acknowledges the issue and notes that 'the average tuition at a public four-year college has increased by more than 250% over the past three decades, while incomes for typical families grew by only 16%’.

It also recognises that state funding has declined, dropout rates have reached worrying levels (only 58% of full-time students who began college in 2004 earned a four-year degree within 6 years) and loan default rates are rising.

To address the problem, the Obama administration will cap loan repayment at 10% of monthly income for all students.

Not much is said, however, about decreases in public funding, although this is one of the main reasons why student debt has soared, as institutions facing cuts increase fees and recruit more international students to fill the revenue gap.

Technology and MOOCs: Measuring success

Technology is seen as a magic wand to make higher education affordable. The plan vaguely promotes e-learning as a means of lowering cost and praises experiments with online provision at Carnegie Mellon and Arizona State where students graduate earlier, get better grades and pay less.

One side-effect of this tech evangelism is the emphasis on 'results'. The reform aims to reward institutions that 'award credits based on learning, not on seat-time.'

Examples mentioned in the plan include The University of Southern New Hampshire and Western Governors University, which award low-cost online degrees based on competency tests.

The goal is to make the system more efficient; thus far federal aid is allocated on the basis of the number of students and their financial needs, while competency and graduation rates are ignored. This has exacerbated the problem of dropout rates, which can be up to 75% at community colleges.

The plan includes penalties for colleges with high dropout rates and encourages students to graduate on time by requiring them to complete a percentage of their classes prior to receiving aid.

Increasing emphasis on efficiency in government policy derives from recent technological advances, such as the increasing importance of algorithms and data in almost every sector of the economy.

A recent O’Reilly report claims that big data can revolutionise the way healthcare services are delivered and concludes that more emphasis should be put on 'outcomes rather than procedures'.

The advent of MOOCs has sparked a similar trend in the education sector.

As suggested by the Observatory's recent horizon scanning report, the rise of online education may gradually enhance the role of data as a tool to personalise learning by allowing institutions to 'know up-to-the-minute how a student is progressing, where they are struggling, and how to improve’.

Standardised tests will also increasingly be used, particularly in hard science, to assess student competency.

Technology can lower the cost of provision but it has no answer to the decrease in public spending, which has pushed up dropout rates and student debt.

In the long term, it might create a new 'division between a personalised elite education available only to the few, and a standardised mass-produced format that provides a credential with little opportunity for original thought’, as pointed out to us by Kevin Kinser at SUNY.

It may also affect quality; a weakness of MOOCs is the lack of personal feedback for struggling students. Blended learning perhaps deserves promotion over fully online programmes.

Interests make all the difference

Obama's plan is the first government initiative that endorses and even institutionalises the 'unbundling' of higher education; it pushes universities to award credit for 'prior learning' (eg, in high school and the workplace) and pledges to allow 'federal financial aid to be used to pay test fees when students seek academic credit for prior learning, and combining traditional and competency-based courses into a single program of study.' Many academics will find this contentious.

It could all remain on paper in the absence of political action to legitimise the use of technology and incentivise universities to use it.

The plan includes, for example, a call for philanthropists, entrepreneurs and technology leaders to use a 'datapalooza' released by the government to 'catalyze new private-sector tools, services, and apps to help students evaluate and select colleges', but little is said about how this is to happen.

Technology does not have a free hand; political and economic interests make all the difference. The College Scorecard will require approval by Congress; in the current climate this of course cannot be taken for granted.

For-profit providers may also fiercely resist the release of college and student performance data to the public domain, as they have done in the past.

Back to reality or back to the future?

The Obama plan is an idiosyncratic mix of realism and futurism. It is a call to universities to be more realistic in tuition and provision strategies. A lot of hope is pinned on technology in lowering costs but the plan does not flesh out how to realise this vision.

There is no mention of specific measures to legitimise MOOC provision; that is going to be a hard and politicised process, as demonstrated clearly by the demise of a Bill in California that would have required public universities to award credit for MOOCs.

Traditional American aversion to regulation and the complexity of their system of government might be a reason for the open-endedness. But at least the debate over costs is underway.

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