tag:blogger.com,1999:blog-5040864301255919402024-02-20T21:11:33.867-05:00The Itinerant ProfessorDonald Hellerhttp://www.blogger.com/profile/13255378507407179004noreply@blogger.comBlogger117125tag:blogger.com,1999:blog-504086430125591940.post-66047237402386126562017-03-26T22:04:00.004-04:002017-03-26T22:04:48.756-04:00You can find my current blog at:<br />
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<a href="http://usfblogs.usfca.edu/donaldheller/">http://usfblogs.usfca.edu/donaldheller/</a>Donald Hellerhttp://www.blogger.com/profile/13255378507407179004noreply@blogger.com0tag:blogger.com,1999:blog-504086430125591940.post-44114903369413421042012-04-26T12:39:00.001-04:002012-04-26T12:39:49.247-04:00Please visit my new blog<div class="separator" style="clear: both; text-align: center;">
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEha1fp9UxIfqXpwfxoXpLIdCzSL_5ZsPnkIhnNvKiDoVKI0NH_XH6zVaUWGVEHV-Vlkq5C6K6IHdpN2wLExN4WO3CIXQmtI0PqMvBS4k0dRXzsRklcxYelRE1VHW1SdKexIDDRFZ80Mmb17/s1600/COE+logo.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="56" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEha1fp9UxIfqXpwfxoXpLIdCzSL_5ZsPnkIhnNvKiDoVKI0NH_XH6zVaUWGVEHV-Vlkq5C6K6IHdpN2wLExN4WO3CIXQmtI0PqMvBS4k0dRXzsRklcxYelRE1VHW1SdKexIDDRFZ80Mmb17/s400/COE+logo.jpg" width="400" /></a></div>
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I've moved this blog over to the <a href="http://edwp.educ.msu.edu/dean/blog" target="_blank">site at my new job</a> as Dean of the College of Education at Michigan State University. So please come visit there, where I am broadening the scope of my observations beyond higher education to include K-12 education and other topics.Donald Hellerhttp://www.blogger.com/profile/13255378507407179004noreply@blogger.com2tag:blogger.com,1999:blog-504086430125591940.post-19409736011666074982011-07-09T10:20:00.000-04:002011-07-09T10:20:45.948-04:00Time for a hiatus<div class="separator" style="clear: both; text-align: center;"><a href="http://images.askmen.com/fine_living/keywords/vacation_965867.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="200" src="http://images.askmen.com/fine_living/keywords/vacation_965867.jpg" width="200" /></a></div><br />
The Itinerant Professor blog is going on a hiatus until after the first of the year. I've recently accepted a <a href="http://news.msu.edu/story/9498/" target="new">position</a> as Dean of the<a href="http://www.educ.msu.edu/" target="new"> College of Education</a> at Michigan State University, beginning January 1. I'm going to be spending the next six months finishing up work here at Penn State, and working on the transition to MSU.<br />
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Look for the blog to return after I begin the new position, possibly with the assistance of my colleagues at MSU. In the meantime, if you have ideas for a new name for the blog (something more creative than "The Itinerant Dean"), please send them my way.Donald Hellerhttp://www.blogger.com/profile/13255378507407179004noreply@blogger.com1tag:blogger.com,1999:blog-504086430125591940.post-53904579494169755122011-04-15T08:52:00.001-04:002011-04-15T11:06:01.181-04:00It's not about excessive executive compensation, it's about tax rates<div class="separator" style="clear: both; text-align: center;"><a href="http://graphics8.nytimes.com/images/2011/04/10/business/COMP/COMP-articleLarge.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="105" src="http://graphics8.nytimes.com/images/2011/04/10/business/COMP/COMP-articleLarge.jpg" width="200" /></a></div><br />
This past Sunday's <i>New York Times</i> business section had a <a href="http://www.nytimes.com/2011/04/10/business/10comp.html">story</a> about how executive compensation at large corporations has returned to pre-recession levels. Here's the total compensation (salary, bonuses, perquisites, and stock options) of the top 5 CEOs in 2010 (change from 2009 compensation in parentheses): <br />
<ol><li>Philippe Dauman, Viacom: $84.5M (+149%)</li>
<li>Ray Irani, Occidental Petroleum: $76.1M (+142%)</li>
<li>Lawrence Ellison, Oracle: $70.1M (-17%)</li>
<li>Michael White, DirecTV: $32.9M (n/a - new in 2010)</li>
<li>John Lundgren, Stanley Black & Decker: $32.6M (+253%)</li>
</ol>Poor Larry Ellison, who had to take a pay cut this year. Don't feel too badly for him, however - the article notes that his holdings of Oracle Stock are worth over $26 <i>billion</i>.<br />
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The <i>Times</i> article discusses shareholder concerns over rising compensation, and whether companies are truly getting value for what CEOs and other executives are paid. But as much as the federal government has tried to control compensation through regulation, i.e., Sarbanes-Oxley, passed in 2002, it has had little impact.<br />
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The real issue is not how to control executive compensation, but the fact that tax rates on these mega-millionaires are as low as they are. Each one of these CEOs paid the same marginal tax rate last year - 35% - as anyone who made over $373,650. And they paid only 10 percentage points above the rate paid by someone with an income as low as $68,000.<br />
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The chart below shows the marginal tax rates for married couples with the mean income in each quintile, the top 5% of all earners, and the top marginal tax rate, from 1969 through today (click the chart to see a larger version of it). The largest reductions have come for the top rate, dropping from 77% to 35%. In contrast, the bottom rate has decreased only five percentage points. For families in the middle, there has been a nine point drop.<br />
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<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEji7KxvAEU5VkLsIoA48rJKMfTJsMbtqISI4tKryKMSpHSz17qHxNCJb6-gwuczDZQhovODxn3hqoGqfcFVeTq1OKTcVU0HlRZz0uMIdY3eoTZz4jbGQfg6moNg43kRCPHsSkoggk1YNt9T/s1600/Income.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="238" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEji7KxvAEU5VkLsIoA48rJKMfTJsMbtqISI4tKryKMSpHSz17qHxNCJb6-gwuczDZQhovODxn3hqoGqfcFVeTq1OKTcVU0HlRZz0uMIdY3eoTZz4jbGQfg6moNg43kRCPHsSkoggk1YNt9T/s400/Income.jpg" width="400" /></a></div><div class="separator" style="clear: both; text-align: center;"></div><br />
The fix to this problem is far simpler than crafting legislation to try to control how much corporations pay their executives. All Congress (and the president) needs to do is to have the fortitude and political courage to increase the top tax rate. I am not arguing to return the top marginal tax rate to the 1960s level of 90% or even the 1970s level of 72%. But can anyone convince me that any of these CEOs would work any less hard if the top marginal tax rate was increased to the pre-Bush tax cuts level of 39.6%? Or even a ten percentage point increase to 45%? I'm ready to listen to your arguments.<br />
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What does this have to do with educational policy? The debate about controlling federal government spending - much of which of focuses on discretionary spending, including spending for education at all levels - could be made easier if upper-income Americans paid a fairer share of taxes.Donald Hellerhttp://www.blogger.com/profile/13255378507407179004noreply@blogger.com0tag:blogger.com,1999:blog-504086430125591940.post-42197763799103096532011-04-08T13:02:00.000-04:002011-04-08T13:02:50.336-04:00More on bogus rankings - "The Best Colleges"<div class="separator" style="clear: both; text-align: center;"><a href="http://www.thebestcolleges.org/wp-content/uploads/2010/12/best-colleges-online.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="200" src="http://www.thebestcolleges.org/wp-content/uploads/2010/12/best-colleges-online.jpg" width="200" /></a></div>Last year, I wrote about what I <a href="http://donheller.blogspot.com/2010/07/businessweek-publishes-embarrassingly.html">described</a> as "embarrassingly bad" rankings published by <i>Bloomberg Businessweek</i>. Those rankings were based on the return on investment earned by students attending various colleges, and in the post I described why they were suspect.<br />
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Last week, Penn State issued a <a href="http://live.psu.edu/story/52457" target="new">press release</a> touting its World Campus' selection as the "the No. 1 online institution for 2011." This designation was conferred by the website, <a href="http://thebestcolleges.org/" target="new">TheBestColleges.org</a>, which I had never heard of before - and I've seen lots of different rankings over the years. So I spent a little bit of time going through the website, and after about 30 minutes or so, I sent this message to Penn State's Director of Public Information:<br />
<blockquote><div class="MsoNormal"><span style="font-family: "Times New Roman","serif"; font-size: 12pt;">I read your press release, and not having heard of “Best Colleges,” took a look at the website. Unless you have some information establishing the validity and/or reputation of the website, I’d be a little cautious about how much you want to promote the WC and other rankings from this site. While they say “We do not accept paid placements for our school rankings,” it appears to me that this is a site supported entirely by advertising fees from universities. When you do a search for any of the degrees they show there (not the rankings, but a degree search), no matter what the degree, you get a list of for the most part for-profit and online universities, and very few of what most of us would consider more traditional universities whose quality and rankings are more universally recognized.</span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="font-family: "Times New Roman","serif"; font-size: 12pt;">Here are the “criteria” they say they use to calculate the rankings for the 25 best online universities:</span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal" style="margin-left: 0.5in;"><span style="font-family: "Times New Roman","serif"; font-size: 12pt;">“We’ve relied on the following criteria to generate our online colleges and universities rankings: student satisfaction (as measured by graduation and retention rates), peer and instructional quality (as measured by acceptance rate and student-teacher ratio), affordability (as measured by tuition costs and availability of financial aid), and credibility (as measured by years of accreditation, reputation and awards).”</span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="font-family: "Times New Roman","serif"; font-size: 12pt;">To be blunt, this is garbage. Graduation and retention rates are not measures of student satisfaction, any more than acceptance rates and student-teacher ratios are measures of peer and instructional quality.</span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="font-family: "Times New Roman","serif"; font-size: 12pt;">We can all agree there are problems with the <i>U.S. News & World Report</i> rankings, but they are at least considered reputable by most parties. I would be cautious about trumpeting rankings from “Best Colleges” externally unless you know more about this organization (which I’d be interested in hearing).</span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="font-family: "Times New Roman","serif"; font-size: 12pt;">Don Heller </span></div></blockquote>There may be more substance to this website and their purported "rankings," but I certainly couldn't see it. If you click on the "About" page for the website, this is all it says:<br />
<blockquote><i>The Best Colleges</i> reviews publicly available data and then produces independent ranking assessments of colleges in various disciplines. Our goal is to produce resources that are useful to prospective students. We recognize that no ranking system is perfect, and for this reason we recommend that our ratings be used only as a general guide when choosing a quality school. </blockquote><blockquote>We do not accept paid placements for our school rankings as this would defeat our primary goal of creating resources that students find useful.</blockquote>They may not "accept paid placements" for their school rankings, but it appears that they do have quite a bit of advertising from many of the schools that do end up being ranked. And I'm guessing that they get click-through fees for students who go from their website to these schools.<br />
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I'd be happy to hear from anyone who has more information about this website.Donald Hellerhttp://www.blogger.com/profile/13255378507407179004noreply@blogger.com2tag:blogger.com,1999:blog-504086430125591940.post-51169046782175232242011-04-05T17:34:00.000-04:002011-04-05T17:34:12.726-04:00Is it possible to make Georgia HOPE even worse?<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgw2VhT-6jHliA7XFP5bvETb2q8GusEkmfu903qKRcTWPyZOoauwCUwNazIU05ueUttHb7tdRRHkTao1h0X1VtqMCuw5UVrR6WJuM4E7N7UuvRh8f2xtGzMCQ19ohLqFIu66IucFYv8ps9A/s1600/hope_program.gif" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="102" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgw2VhT-6jHliA7XFP5bvETb2q8GusEkmfu903qKRcTWPyZOoauwCUwNazIU05ueUttHb7tdRRHkTao1h0X1VtqMCuw5UVrR6WJuM4E7N7UuvRh8f2xtGzMCQ19ohLqFIu66IucFYv8ps9A/s320/hope_program.gif" width="320" /></a></div><br />
The answer evidently is, "Yes." The state of Georgia has managed to find a way to make the HOPE Scholarship Program even more <i>inequitable</i> than it already was (see two <a href="http://civilrightsproject.ucla.edu/" target="new">Civil Rights Project</a> reports I co-edited with <a href="http://education.ucsb.edu/Faculty-Research/Faculty-Listing/bio.php?first=Patricia&last=Marin" target="new">Patricia Marin</a> in <a href="http://civilrightsproject.ucla.edu/research/college-access/financing/who-should-we-help-the-negative-social-consequences-of-merit-scholarships" target="new">2002</a> and <a href="http://civilrightsproject.ucla.edu/research/college-access/financing/state-merit-scholarship-programs-and-racial-inequality" target="new">2004</a> for more on this). NPR had a <a href="http://www.npr.org/2011/04/05/135146704/georgias-hope-scholarship-dwindles-amid-cutbacks" target="new">story</a> this afternoon about the changes to HOPE, with a sound bite from me. The state has upped the GPA requirement - to 3.7 - to receive a full tuition scholarship, and added the requirement of achieving at least a 1,200 on the SAT (or 26 on the ACT). These changes are likely to mean that lower-income and minority students will receive less money, and upper-income and white students will be more likely to retain the full scholarship. Not exactly a step in the right direction for a state that still has large gaps in college access and attainment between white and minority students.<br />
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When Tennessee was considering implementing its lottery-funded scholarship program back in 2004 - which, not coincidentally, was modeled on Georgia HOPE - it ran some simulations based on high school GPA and ACT scores. The data showed that white students were approximately <i>10 times more likely</i> than black students to have a GPA of 3.76 or greater and an ACT score of 26 or more. Similarly, students from families with incomes of $100,000 and above were about <i>5 times more likely</i> to have this level of achievement than were students from families with incomes below $36,000 (which was about the median income in the state at the time). It is likely that the results in Georgia would be very similar.Donald Hellerhttp://www.blogger.com/profile/13255378507407179004noreply@blogger.com0tag:blogger.com,1999:blog-504086430125591940.post-15807326224897396932011-03-11T15:47:00.002-05:002011-03-11T15:50:10.348-05:00Governor Corbett's spring break surprise<div class="separator" style="clear: both; text-align: center;"><a href="http://pennstatermag.files.wordpress.com/2011/03/appropchart.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="212" src="http://pennstatermag.files.wordpress.com/2011/03/appropchart.jpg" width="320" /></a></div><br />
It's spring break at PSU, so things have been pretty quiet here in Happy Valley. At least they were until Tuesday, when Tom Corbett released his first budget as governor of Pennsylvania. Governor Corbett ran on a "no tax increase" pledge, and since the Commonwealth was facing a roughly $4 billion budget deficit, and Corbett was not seen as a friend of public higher education, everyone expected that this first budget would likely not be very favorable to Penn State. Discussions I had had with senior leaders of the university pointed to an absolute worst-case scenario of perhaps a 25 percent cut in Penn State's appropriation.<br />
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So nobody was prepared for the 52 percent, or $182 million, cut in Penn State's appropriation contained in the governor's FY 2012 budget. Penn State was not singled out; overall, appropriations to Pennsylvania's state-related (Penn State, Pitt, Temple, and Lincoln) and state-owned (Pennsylvania State System of Higher Education) institutions were cut by 50 percent, or $660 million. This is most likely the largest proportional cut in appropriations to higher education in the history of any single state, though the $660 million is dwarfed by Governor Jerry Brown's budget for next year, which cut $1.4 billion in total from the appropriations to the U. of California, California State U. system, and the California Community Colleges.<br />
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Penn State's <a href="http://live.psu.edu/story/51840" target="new">response</a> was swift and critical. Al Horvath, Penn State's chief financial officer, said, "A reduction of this magnitude would necessitate massive budget cuts, layoffs and tuition increases, with a devastating effect on many students, employees and their families." If the governor convinces the legislature to go along with such a large cut, Penn State will likely face some of the draconian responses other public systems have implemented during the current recession, including larger-than-normal tuition increases, layoffs, and furloughs. President Graham Spanier, in a <a href="http://www.youtube.com/watch?v=P3zf2b8tTXE" target="new">press conference</a> the next day, even admitted that the possibility of closing one or more of the university's 24 campuses may be on the table, a measure that had not been considered in recent memory.<br />
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<div class="separator" style="clear: both; text-align: center;"><a href="http://pennstatermag.files.wordpress.com/2011/03/cumulativechart.jpg" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" height="320" src="http://pennstatermag.files.wordpress.com/2011/03/cumulativechart.jpg" width="213" /></a></div>In the press conference, Spanier made the point that Penn State and the other public universities in the state were not responsible for the budget deficit the Commonwealth faced. He showed the chart at the top of this post (you can click it for a larger version), which shows that the appropriations to the university have been largely flat over the last decade. He also showed the chart on the right, which shows that while overall spending in the Commonwealth grew approximately 40 percent over the last decade, appropriations to the four state-related universities increased by only 5 percent (through the current year).<br />
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It is still unknown whether the legislature will go along with cuts of this magnitude. Even though Republicans (who control both houses of the legislature) will want to support the new governor, they will face intense lobbying to restore some of the cuts. State Senator Jake Corman, who represents the local district and is chair of the Senate Appropriations Committee, <a href="http://www.centredaily.com/2011/03/09/2569754/state-funding-cut-in-half.html" target="new">said</a>, “It will be important for all institutions ... to come in and tell us what the ramifications of such cuts would be," a position that may be signalling an open door to restoring some funding for the universities.<br />
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I've been serving for the last year on a <a href="http://www.psu.edu/president/cqi/strategic_planning/corecouncil/index.html" target="new">university-wide committee</a>, chaired by Provost Rod Erickson, that has been charged with identifying ways of cutting the university's budget by $10 million per year over the next few years. I can attest to the challenge of the effort, as this committee has been reviewing data on every single academic program and administrative unit in the university. A number of programs and departments have already been slated for <a href="http://live.psu.edu/story/51602" target="new">closure or merger</a>, including <a href="http://www.ed.psu.edu/educ/for-current-faculty-and-staff/college-response-to-core-council/UPARCC%20Decision%20Memo%20-1%2007.pdf" target="new">some</a> in the College of Education. Even with these moves, however, finding $10 million of savings has been difficult. As I said in an <a href="http://chronicle.com/article/Campus-Leaders-in-Pennsylvania/126670/" target="new">article</a> this week in <i>The Chronicle of Higher Education</i>, the $10 million now "looks like a rounding error after the governor's announcement."Donald Hellerhttp://www.blogger.com/profile/13255378507407179004noreply@blogger.com2tag:blogger.com,1999:blog-504086430125591940.post-14569398626428227992011-03-06T18:40:00.002-05:002011-03-06T18:42:21.410-05:00Are college costs a major problem?<div class="separator" style="clear: both; text-align: center;"><a href="http://graphics8.nytimes.com/images/blogs_v3/economix/economix_main.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="56" src="http://graphics8.nytimes.com/images/blogs_v3/economix/economix_main.png" width="200" /></a></div><br />
David Leonhardt, economic columnist of The New York Times, published a post in his Economix blog last month stating that "<a href="http://economix.blogs.nytimes.com/2011/02/25/college-costs-arent-the-main-problem/" target="new">College Costs Aren't the Main Problem</a>" facing higher education. While we could all have a nice debate about what the major problem facing American higher education is, I took issue with one thing Leonhardt said. His post implied that there was plenty of financial aid out there, the problem was just that poor students didn't know how to apply for it.<br />
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I wrote to him, taking issue with that statement, and pointing to some research I have done with my Penn State colleague John Cheslock and our graduate assistants Rodney Hughes and Rachel Frick Cardelle. That research demonstrates that students from low- and moderate-income families face large amounts of unmet need, i.e., the gap between their resources and grants they receive, and what it costs them to attend college. You can read <a href="http://economix.blogs.nytimes.com/2011/03/03/the-problem-with-college-costs/" target="new">a summary of what I wrote</a> to Leonhardt, along with his response.Donald Hellerhttp://www.blogger.com/profile/13255378507407179004noreply@blogger.com1tag:blogger.com,1999:blog-504086430125591940.post-22725117241794295982011-02-18T09:04:00.000-05:002011-02-18T09:04:42.630-05:00Making progress on more hockey bucks<div class="separator" style="clear: both; text-align: center;"><a href="http://live.psu.edu/slnoflash2/userpics/10004/normal_hockey01.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="200" src="http://live.psu.edu/slnoflash2/userpics/10004/normal_hockey01.jpg" width="151" /></a></div><br />
Right on the heels of <a href="http://donheller.blogspot.com/2011/02/more-blockbuster-gifts-but-not-for.html" target="new">my post</a> about hockey money at Penn State, the <a href="http://live.psu.edu/story/51419" target="new">university announced</a> that it has received a donation of $1 million toward the $10 million still needed to be raised to bring hockey to Penn State. Bring on the puck!Donald Hellerhttp://www.blogger.com/profile/13255378507407179004noreply@blogger.com0tag:blogger.com,1999:blog-504086430125591940.post-45904868300582219792011-02-16T14:14:00.001-05:002011-02-16T14:22:30.198-05:00More blockbuster gifts - but not for hockey<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhKzFNDq8ghbNPA_YAxZZnTzI_OA8VSXggdeqclEZP5iF0EDBrNGy9HDdWAi67xVxnsALqPnWspO7ndL9bIQ9Sf8Beh9O_c0sPXn8cp64cY9Qi1_LECXqoTnJv3ScL8pj7ziYpiFiep67yu/s1600/PSU+hockey.JPG" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="111" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhKzFNDq8ghbNPA_YAxZZnTzI_OA8VSXggdeqclEZP5iF0EDBrNGy9HDdWAi67xVxnsALqPnWspO7ndL9bIQ9Sf8Beh9O_c0sPXn8cp64cY9Qi1_LECXqoTnJv3ScL8pj7ziYpiFiep67yu/s320/PSU+hockey.JPG" width="320" /></a></div>Back in September I wrote about the <a href="http://donheller.blogspot.com/2010/09/newsflash-penn-state-receives-88.html">$88 million donation</a> Penn State received - the largest in its history - from alumnus Terry Pegula and his wife, with the total amount dedicated to hockey. Well, truthfully it's not all for hockey; some of the money is going to build a 6,000 seat arena directly across the street from the <a href="http://www.bjc.psu.edu/" target="new">Bryce Jordan Center</a>, Penn State's 15-year old, 15,000 seat multipurpose arena. Interestingly enough, nobody has clearly articulated why the BJC could not have been adapted for hockey use; I have been in there for the circus, and it appears to have more than enough space for an NCAA Division I-caliber hockey rink. One explanation given for building the new arena is that it will provide two rinks. But this ignores the fact that Penn State already has one rink in the Greenberg Ice Pavillion where its current club-level hockey team plays.<br />
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One sad aspect of this story is that the $88 million is not even enough to build the rink and support the creation of Division I men's and women's teams. In the latest issue of <a href="http://www.townandgown.com/2011/02/lunch-with-mimi-in-hockey-heaven/" target="new"><i>Town and Gown</i> magazine</a>, Joe Battista - long-time head coach of the men's club team, and now in charge of development of the new rink and programs - was quoted as saying that he has to raise an additional $10 million, bringing the overall cost to almost $100 million.<br />
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An unnamed source (yes, The Itinerant Professor has unnamed sources) informed me that before announcement of the Pegula's gift, the Penn State fund raising apparatus worked hard with them to try to earmark some of the money, or an additional amount, for academic purposes. The Penn State leadership was most assuredly aware of what kind of impact the announcement of the Pegula's gift would make, with the sum total dedicated to athletics. These efforts were apparently for naught, and while I'm sure there is still ongoing cultivation of the Pegulas for more money, we have yet to hear anything.<br />
<br />
This largesse for athletics is in sharp contrast to two other recently-announced gifts of similar scale to public, flagship universities. Last month, UCLA announced a <a href="http://newsroom.ucla.edu/portal/ucla/local-business-leader-donates-191259.aspx" target="new">$100 million donation</a> from an alumnus, with the money earmarked for<br />
<blockquote>"...academic programs and capital improvements that bolster UCLA's efforts to harness intellectual capital, engage the public and serve as a resource in addressing leading civic and societal challenges, particularly in the Los Angeles region. It will be equally divided between the UCLA School of Public Affairs — the campus home for scholarship and teaching in public policy, urban planning and social welfare — and a planned residential conference center that promises to expand dialogue between scholars, government and business leaders, and the public at large."</blockquote>"Addressing leading civic and societal challenges" - quite a contrast with the similar sum of money to be spent by Penn State, unless you consider the leading challenge in our region to be the lack of Division I hockey and a dedicated rink in which to play it.<br />
<br />
Our Big 10 competitor Ohio State just announced its own <a href="http://www.osu.edu/news/newsitem3015" target="new">$100 million donation</a> from alumnus Lesley Wexner (founder of The Limited chain of women's clothing stores) and his foundation. The press release states<br />
<blockquote>"The gift will primarily benefit The Ohio State University Medical Center and The Arthur G. James Cancer Hospital and Richard J. Solove Research Institute. It will also benefit Ohio State’s Wexner Center for the Arts and select other university initiatives."</blockquote>Again, quite a contrast with Penn State's big-ticket donation. <br />
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In all fairness, Penn State hasn't been without large donations for other than athletics. Almost fifteen years ago, alumnus Bill Schreyer (who recently passed away) and his wife <a href="http://giveto.psu.edu/s/1218/base-template.aspx?sid=1218&gid=1&pgid=252&cid=2677&ecid=2677&crid=0&calpgid=15&calcid=752" target="new">donated $30 million</a> to endow an honors college at the University Park campus, later giving an additional $25 million to the college that now bears their name. But there have been few blockbuster gifts of this type in contrast to our competitors, even those in the public sector. And with very few exceptions - including Phil Knight (founder of Nike) at the University of Oregon, and oil magnate T. Boone Pickens at Oklahoma State - gifts in the range of $100 million rarely are purely for athletics. Even Pickens followed up his large donation to OSU athletics with a <a href="http://chronicle.com/article/T-Boone-Pickens-Donates/41004/" target="new">$100 million donation</a> for endowed chairs and professorships.<br />
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Last April, Penn State announced the kickoff of its $2 billion "For the Future: The Campaign for Penn State Students." The campaign <a href="http://giveto.psu.edu/s/1218/index.aspx?sid=1218&gid=1&pgid=299" target="new">priorities</a> are listed as:<br />
<blockquote><ul><li>Scholarships: Ensuring Student Opportunity</li>
<li>Enhancing Honors Education</li>
<li>Student Life: Enriching the Student Experience</li>
<li>Building Faculty Strength and Capacity</li>
<li>Research: Fostering Discovery and Creativity</li>
<li>Colleges, Campuses, & Programs: Sustaining a Tradition of Quality</li>
</ul></blockquote>If Penn State is going to achieve its goals of supporting these areas, it is going to have to work hard to find large-capacity donors who are willing to support something other than athletics.Donald Hellerhttp://www.blogger.com/profile/13255378507407179004noreply@blogger.com0tag:blogger.com,1999:blog-504086430125591940.post-76451055041166610632011-01-14T12:35:00.000-05:002011-01-14T12:35:50.799-05:00Perish or publish?Well folks, The Itinerant Professor has not disappeared from the face of the earth. He's just been swamped with work and other responsibilities that have kept him away from his blogging. But I promise you'll be hearing from him very soon, with a post about the college admissions frenzy.Donald Hellerhttp://www.blogger.com/profile/13255378507407179004noreply@blogger.com0tag:blogger.com,1999:blog-504086430125591940.post-7909280478934907832010-12-09T21:30:00.000-05:002010-12-09T21:30:49.380-05:00Update: English tuition hikes<div class="separator" style="clear: both; text-align: center;"><a href="http://l.yimg.com/a/p/us/news/editorial/c/b3/cb3542ae743d0ea581090967ba772d2f.jpeg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="147" src="http://l.yimg.com/a/p/us/news/editorial/c/b3/cb3542ae743d0ea581090967ba772d2f.jpeg" width="320" /></a></div><br />
Students surrounded a Rolls Royce carrying Prince Charles and Camilla tonight, and attacked it in protest against the tuition hikes. Here's a <a href="http://news.yahoo.com/s/ap/20101210/ap_on_re_eu/eu_britain_tuition_tangle" target="new">story</a> about it.Donald Hellerhttp://www.blogger.com/profile/13255378507407179004noreply@blogger.com0tag:blogger.com,1999:blog-504086430125591940.post-23574149685467286772010-12-09T16:57:00.000-05:002010-12-09T16:57:40.648-05:00More on tuition increases in England<div class="separator" style="clear: both; text-align: center;"><a href="http://chronicle.com/img/photos/biz/photo_8933_carousel.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="256" src="http://chronicle.com/img/photos/biz/photo_8933_carousel.jpg" width="320" /></a></div><br />
It's been a busy autumn in England for the higher education sector. Lord Browne finally <a href="http://www.timeshighereducation.co.uk/story.asp?sectioncode=26&storycode=413806" target="new">released</a> his review committee's recommendations for reforming the student fee system (the full report can be found on the <a href="http://hereview.independent.gov.uk/hereview/">Browne Review website</a>). The Conservative/Liberal Democrat coalition government quickly follow-up with its <a href="http://chronicle.com/article/Tuition-at-Many-British/125256/" target="new">plan</a>, which adopted many of the Browne recommendations but added some of its own, including a proposal to <a href="http://chronicle.com/article/British-Universities-to-See/125032/" target="new">cut funding</a> to universities (the rough analog of state appropriations in the U.S.) by roughly 40% over the next four years. The £3 billion pound cut is part of a larger, £83 billion cut in all government spending designed to help restore the British budget deficit to a more reasonable position.<br />
<br />
Today, the Parliament passed a key component of the Government's plan: an increase in the fee cap from the current level of £3,290 to as much as £9,000, or about $14,000, in the fall of 2012. This is designed to offset the government funding cuts by shifting the burden of financing to students. From the release of the Browne Review committee, through to the Government's proposal, and on to Parliament's vote today, students have been protesting the funding cuts and fee increases. The picture above shows a protest organized by the National Union of Students in response to today's vote (see my <a href="http://donheller.blogspot.com/2009/02/uk-students-protest-over-tuiton-fees.html">blog post</a> on fee protests that occurred while I was on sabbatical in London).<br />
<br />
Once I get out from under the end-of-semester crush, I'll be writing more about how student financing is changing in England, and the implications these changes are likely to have on students and universities there.Donald Hellerhttp://www.blogger.com/profile/13255378507407179004noreply@blogger.com0tag:blogger.com,1999:blog-504086430125591940.post-44366109915860087132010-11-11T11:03:00.000-05:002010-11-11T11:03:40.652-05:00$42 million for the CEO of Strayer Education Inc.<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjYYB_CqMnairy6n2OKotuT2P3qS2fuFwovmkYzwPJJ3yzWqVz6ONzBScwsS3RfJz7U3Frvud51pMcyZ1UlNN6c6GwPcOiyU06JoojRSbHaV-0j9Fl3vUStKzI7RAB53sntpDnUc-_F3jCg/s1600/dollar.JPG" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="155" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjYYB_CqMnairy6n2OKotuT2P3qS2fuFwovmkYzwPJJ3yzWqVz6ONzBScwsS3RfJz7U3Frvud51pMcyZ1UlNN6c6GwPcOiyU06JoojRSbHaV-0j9Fl3vUStKzI7RAB53sntpDnUc-_F3jCg/s320/dollar.JPG" width="320" /></a></div><br />
<a href="http://www.bloomberg.com/apps/news?pid=washingtonstory&sid=am_MEK7XWQr0" target="new">Bloomberg</a> reported yesterday that the chairman and CEO of Strayer Education, Robert Silberman, was paid $41.9 million in compensation last year. Or, as Bloomberg put it, "That’s 26 times the compensation of the highest-paid president of a traditional university." Bloomberg went on to note that Strayer receives three-fourths of its revenue through federal student loans and grants. And Silberman is not the only executive in the proprietary sector receiving this kind of compensation; the Bloomberg article indicates that Charles Edelstein, co-CEO of the Apollo Group (corporate parent of the U. of Phoenix, the country's largest postsecondary institution) received $6.5 million in compensation last year. <br />
<br />
Compensation of executives of for-profit education companies has been in the news of late, with all of the focus on this sector and its dependency on revenues through federal Title IV funds. Much of Silberman's compensation was in the form of stock options granted last year, so it's not as if he was paid the $42 million in salary. Nevertheless it is tempting to compare Silberman's compensation - and his responsibilities - with the heads of other postsecondary institutions.<br />
<br />
Here's a comparison of <a href="http://www.strayereducation.com/growth.cfm?pageSection=growth" target="new">Strayer</a>, <a href="http://www.budget.psu.edu/factbook/" target="new">Penn State</a>, and the <a href="http://www.suny.edu/sunynews/FactBook_June302009FY.pdf" target="new">State University of New York</a> system (all figures are for FY2009):<br />
<br />
<table border="1" cellpadding="1" cellspacing="1"><tbody>
<tr> <td><br />
<br />
<br />
<br />
<br />
<br />
<center><b>System</b></center></td> <td><br />
<br />
<br />
<br />
<br />
<br />
<center><b>Total Revenues</b></center></td> <td><br />
<br />
<br />
<br />
<br />
<br />
<center><b>Number of students</b></center></td> <td><br />
<br />
<br />
<br />
<br />
<br />
<center><b>Campuses</b></center></td> <td><br />
<br />
<br />
<br />
<br />
<br />
<center><b>CEO compensation</b></center></td> </tr>
<tr> <td>Strayer</td> <td align="right">$512 million</td> <td align="right">54,300</td> <td align="right">87</td> <td align="right">$41.9 million</td> </tr>
<tr> <td>Penn State</td> <td align="right">$4.042 billion</td> <td align="right">92,613</td> <td align="right">24</td> <td align="right">$642,760</td> </tr>
<tr> <td>SUNY</td> <td align="right">$8.456 billion</td> <td align="right">218,528</td> <td align="right">64</td> <td align="right">$654,996</td> </tr>
</tbody></table><br />
You can draw your own conclusions.Donald Hellerhttp://www.blogger.com/profile/13255378507407179004noreply@blogger.com0tag:blogger.com,1999:blog-504086430125591940.post-70449754282129970862010-10-17T12:18:00.000-04:002010-10-17T12:18:43.787-04:00The problem of comparing student loan repayment ratios across colleges<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjLS8Lp5ya6Wp9e7KavfkYIA5PFUVMSePp5Q9W0m8xxL20-0xdSRwpzzZlbOCAKBUuXU9iHNXRHVNN6dIPCeM3CxET4skJ-H8PhEsaWIDTvNTGv5R0wr5HPcj9RLGC5D1GKJGDdu4gQVFjc/s1600/dollar.JPG" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="96" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjLS8Lp5ya6Wp9e7KavfkYIA5PFUVMSePp5Q9W0m8xxL20-0xdSRwpzzZlbOCAKBUuXU9iHNXRHVNN6dIPCeM3CxET4skJ-H8PhEsaWIDTvNTGv5R0wr5HPcj9RLGC5D1GKJGDdu4gQVFjc/s200/dollar.JPG" width="200" /></a></div><br />
Earlier this year I <a href="http://donheller.blogspot.com/2010/07/businessweek-publishes-embarrassingly.html" target="new">published a post</a> about <i>Businessweek</i>'s ridiculous attempt at ranking colleges based on the return on investment students earn from attending the institution. I listed the problems with <i>Businessweek's</i> methodology, many of which were based on its decision to use data on salaries from a firm called PayScale, which invites people to complete an on-line survey and post information about what college they attended, their major, what they earn, etc. Beyond the obvious problems with data like these being collected non-randomly, using data like this to come up with a single measure for the return on investment of a college education makes absolutely no sense at all. If you don't want to read my entire post, here's the key part of my conclusion:<br />
<blockquote>Most of the evidence from labor economists (see the work of Card and Krueger, or Ehrenberg) points to the fact that differences in returns to college are driven more by <i>within</i> college variation (i.e., differences in the choice of majors or academic experiences once enrolled in a particular college) rather than differences <i>between </i>colleges. What this means is that the decisions students make about what to major in, what courses to take, and what other experiences they have in college have much more influence on their post-college earnings than does the choice of which college to attend.</blockquote>And now another website, called <a href="http://collegemeasures.org/" target="new">CollegeMeasures.org</a> (sponsored by the American Institutes for Research), is using the same PayScale data to come up with ratios of student loan payments to earnings for individual colleges. CollegeMeasures has a very good intent - to try to provide institutional officials and policymakers with more information about the outcomes related to higher education. The website's stated <a href="http://www.collegemeasures.org/page/Approach.aspx" target="new">purpose</a> is:<br />
<blockquote>. . . to provide measures of performance for four-year colleges to the trustees and state government officials who are responsible for their success. Our goal is to present measures that are informative and thought-provoking, using the best data available. The data are collected from widely-respected sources and represent the best of what is available at the current time.</blockquote>It repeats information available from many other on-line sources on things like first-year retention rates and graduation rates. It also calculates some other measures from publicly-available data, including a cost to produce each undergraduate degree and an annual cost per student. And it then ranks each institution compared to all institutions, as well as all institutions in its own sector (public, private not-for-profit, or for-profit).<br />
<br />
I want to reiterate that the CollegeMeasures website has good intentions. But its attempt at calculating ratios of student loan payments to earnings is, I am afraid, likely to be of little if any value to policymakers, institutional leaders, or even consumers. There are plenty of <a href="http://www.collegemeasures.org/page/Approach.aspx" target="new">caveats</a> about the data used in the fine print of the website, but I doubt most readers will get that far. The basic issue is that coming up with just one measure for this ratio requires the use of average (or median) student loan and earnings data. And the problem is that both of these measures are likely to have very broad distributions on any one campus, thus making a single measure - used to compare across all institutions in the country - of little or no value at best, and entirely misleading, at worst.<br />
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Let me use my own institution, Penn State's University Park campus as an example. You can see PayScale's <a href="http://www.payscale.com/research/US/School=Pennsylvania_State_University_%28PSU%29/Salary" target="new">salary data for the campus</a> on its website. Here's an excerpt (you can click on an image to enlarge it):<br />
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<div class="separator" style="clear: both; text-align: center;"></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhFH5zA854d9QCnAxDQ41dGn4Il6Vh7Nd2czxznjBK_5hkV6SwygjPgAkwhuq3rJH78jkFrQLjMnqOAysXDN22ytdcP91lxZSFLMdlOI1WQEeGNWiXhU97ABZWxDOCvqRmOzx8fCH7b61VB/s1600/PayScale.JPG" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="230" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhFH5zA854d9QCnAxDQ41dGn4Il6Vh7Nd2czxznjBK_5hkV6SwygjPgAkwhuq3rJH78jkFrQLjMnqOAysXDN22ytdcP91lxZSFLMdlOI1WQEeGNWiXhU97ABZWxDOCvqRmOzx8fCH7b61VB/s320/PayScale.JPG" width="320" /> </a></div><div class="separator" style="clear: both; text-align: center;"><br />
</div><div class="separator" style="clear: both; text-align: left;">It's unclear from the PayScale website whether these are the <i>only</i> salary data they have on Penn State graduates, or whether this is just a sample. And similarly, you can't tell from the CollegeMeasures website which PayScale data they use in calculating their loan repayment ratios, other than they say they are using median salary for people with five or less years of experience. But look at the salary ranges shown in the graphic above -- they are huge. In some cases, the student loan repayment ratios for students at the top end of the salary range would be less than half that of students whose salaries are in the bottom end of the distribution. So which one is the "best" repayment ratio on which to base a decision to attend Penn State or on which to judge Penn State's performance? We have no way of knowing.</div><div class="separator" style="clear: both; text-align: left;"><br />
</div><div class="separator" style="clear: both; text-align: left;">There are obviously large problems with the non-random sample nature of the PayScale salary data. For example, you cannot tell who's completed their survey, and how representative they are of all Penn State's graduates. Another problem can be clearly seen in the graphic above, which shows that 65 percent of the PayScale data come from men, and 35 percent from women. But according to data from the U.S. Department of Education's <a href="http://nces.ed.gov/ipeds/datacenter/Default.aspx" target="new">IPEDS Data Center</a>, 46 percent of bachelor's degree recipients at Penn State's University Park campus in the 2008-09 year were women. Given that men and women are non-randomly distributed across different majors, and that the earnings of men and women are quite different, the PayScale data for Penn State are clearly biased toward men.</div><div class="separator" style="clear: both; text-align: left;"><br />
</div><div class="separator" style="clear: both; text-align: left;">Clearly, coming up with good measures of the return-on-investment of attending college is a difficult task. There are too many individual variables that affect the calculation, and attempts to simplify the process by coming up with a single measure - and then using that to compare across institutions - do not help us understand anything about institutional performance.</div>Donald Hellerhttp://www.blogger.com/profile/13255378507407179004noreply@blogger.com0tag:blogger.com,1999:blog-504086430125591940.post-409146304949634922010-09-25T21:27:00.000-04:002010-09-25T21:27:45.568-04:00Rising health care costs hit home<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjJlWcPmhhNDtPqPRd1ng3dCxqibgKxiQEsVS7qmQoIoKEg63iCxorjZBHNJZGdiJfz3bQx4VoObNUvmxfkRrcasSCM7aZ7W5dRRtLOreSu0C3NSuUSowfBFM_N9gBWRFH7tJEwI8fCQYzx/s1600/chart+up.JPG" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" height="200" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjJlWcPmhhNDtPqPRd1ng3dCxqibgKxiQEsVS7qmQoIoKEg63iCxorjZBHNJZGdiJfz3bQx4VoObNUvmxfkRrcasSCM7aZ7W5dRRtLOreSu0C3NSuUSowfBFM_N9gBWRFH7tJEwI8fCQYzx/s200/chart+up.JPG" width="149" /></a></div><br />
The rising cost of health care is one of the public policy topics that probably receives more attention in the press than the rising cost of college, the latter of which I know a lot more about. For almost 30 years I've worked at universities almost without interruption, and the five years I wasn't working at a university I was covered by my wife's health insurance under her union contract as a teacher, which was similar to what I received as a university employee. Having worked in universities and benefited from the very generous benefits many universities offer, I've been largely protected from the challenges that many families face in gaining access to and paying for health care. I recognize that not all higher education institutions offer such generous benefits, but the ones at which I've worked have had very good coverage.<br />
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For example, the current coverage at Penn State (which self-insures its employees) costs me $247.62/month for coverage for our family. As a benchmark, I have a close friend who is my age and self-employed, and has to buy insurance for himself. He pays over $500/month just for individual coverage that is nowhere near as comprehensive as I enjoy as a Penn State employee. And for my monthly premium, the coverage my family receives is close to universal; we pay small ($10-$20) co-pays for office visits, and beyond that, most office visits for primary care physicians, specialists, hospital stays, procedures, etc. are covered in full. There are of course exceptions; you do pay more if you go outside the approved network of providers (20% of the cost), but the network is fairly inclusive of health care providers, at least in our area around State College. We also have relatively good prescription drug coverage. Many preventive procedures are free.<br />
<br />
As an example, a couple of years ago, our youngest daughter was in the local hospital for four days. She had no surgeries or unusual procedures, other than a X-ray or two. The bill came to over $15,000, and we paid nothing other than a $50 co-pay for our emergency room visit before she was admitted to the hospital. This comprehensiveness of the coverage is similar to, and priced in roughly the same ballpark (adjusting for health care inflation) to what I enjoyed when I worked at MIT and at the University of Michigan.<br />
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Well, the other shoe has dropped here at Penn State. Earlier this month the university announced the details of changes to the health care coverage effective next January 1.* The monthly premium for family coverage is going up 12% (the individual premium is increasing at the same rate), not an unusually large rise given recent history. However, the coverage that Penn State employees receive is changing radically. The university is instituting two types of charges that didn't exist in the past. The first is an annual deductible, something that is common in many other health insurance plans. Families will pay a $500 deductible, which means that the subscriber has to pay the first $500 of health care costs in a year, before the insurance coverage kicks in.<br />
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In addition, the university is instituting a co-insurance charge of 10%, meaning that the subscriber is now responsible for paying 10% of all charges, with the health plan paying the remaining 90%, up to a maximum of $2,000 per year (including the deductible) for a family, or $1,000 for an individual. While 10% doesn't sound like much, you have to remember that under our current coverage the plan pays 100% of the costs. Here's a link to the <a href="http://www.ohr.psu.edu/benefits/2011PPOBlueBenefitSummary.pdf" target="new">details of the new plan</a>.<br />
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Thus, the impact of the deductible and co-insurance charges is that many families will end up paying $2,000 (in addition to their monthly premiums) above and beyond what they're paying this year. The combination of the increase in the premium along with the out-of-pocket additions means that my cost for health care next year is likely to go up by about $2,400. This represents an increase of about 80% in the out-of-pocket costs, not including co-pays. But the co-pays are going up also, so 80% is probably a reasonable estimate of the increase.<br />
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Before you run off and blame the federal government's health care overhaul passed earlier this year, for causing these increases, I can comfortably say that that's not the reason. Rather, the university - like many employers - has been struggling with rising health care costs and how to control them over the last couple of decades. This has been a topic discussed in two university-wide panels on which I have served in the last few years, the <a href="http://www.psu.edu/president/pia/strategic_planning/uspc/index.html" target="new">University Strategic Planning Council</a>, and the current <a href="http://www.psu.edu/president/pia/strategic_planning/corecouncil/" target="new">Academic Program and Administrative Services Review Core Council</a>.<br />
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The university has taken some steps, such as instituting wellness programs, to try to help control the demand for health care services among its employees. It also waives the co-pay for visits to two local clinics staffed by employees of Penn State's Hershey Medical Center, in order to encourage employees and their families to use these services (at presumably lower cost) than opting to go to other providers or an emergency room for care.<br />
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But eventually Penn State must have realized that more of the costs had to be shifted from being borne by the university to being paid by employees. The changes being implemented effectively accomplish this. There are obviously large equity issues at play here. The additional out-of-pocket costs represent a little over 2% of the gross income of a professor or administrator making $100,000, but it's 8% of the income of a secretary making $36,000.<br />
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Now that it has instituted deductibles and co-insurance for the first time (at least in the eight years I have been here), it is unlikely that these will ever go away. Penn State employees covered by this plan should realize that they still benefit from health insurance coverage that is probably better and relatively less expensive than what most people in the country have access to. But they should also realize that these costs will continue to rise in the future.<br />
<br />
<hr /><span style="font-size: x-small;">* Last January 1st, the university drastically changed the health care coverage for retirees, with new employees hired after that date receiving a defined contribution health care plan in retirement, while existing employees enjoy a defined benefit health plan. But that's a topic for another day.</span>Donald Hellerhttp://www.blogger.com/profile/13255378507407179004noreply@blogger.com8tag:blogger.com,1999:blog-504086430125591940.post-88092921892836101342010-09-25T07:13:00.001-04:002010-09-25T07:15:13.447-04:00A delay on gainful employment, but a commitment to move forwardThe Education Department <a href="http://chronicle.com/article/Education-Dept-to-Delay/124617/" target="new">announced</a> yesterday that it was going to delay issuance of some of its <a href="http://donheller.blogspot.com/2010/09/one-more-time-on-gainful-employment.html" target="new">gainful employment rules</a> in order to examine more closely some of the 83,000 comments submitted. At the same time it announced that it was still planning on releasing the rest of the rules on November 1, as it had originally planned.<br />
<br />
As I wrote in my <a href="http://donheller.blogspot.com/2010/09/for-profits-keep-pressure-on-gainful.html">last post</a>, the for-profit sector had kept the pressure on even after the comment period on the rules was over. In an apparent attempt to improve its image and perhaps sound more like the other sectors of the higher education industry, the Career College Association has just changed its name to the <a href="http://www.career.org/" target="new">Association of Private-Sector Colleges and Universities</a>, or APSCU, an acronym uncomfortably close to that of AASCU, the American Association of State Colleges and Universities. Or, as APSCU states on its website, ""CCA is changing because there comes a time when only change can get you where you need to be." I have no idea what that means. The new tagline for the organization is prominently displayed on its homepage:<br />
<br />
<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjGPD4g5y4FB1XrW_j4-SJ_ZFan-UnjU4EBLzl_QIBCK3YBSMqKrrApKHtFt_srJQQL9JYcqIlfPQ5wjMD55QKWRcjSd5fDD2q1SI8xUmPJXzkuinVCTQIqXXO9uDRa0p-nD_tBXsOgtRPm/s1600/APSCU.JPG" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="61" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjGPD4g5y4FB1XrW_j4-SJ_ZFan-UnjU4EBLzl_QIBCK3YBSMqKrrApKHtFt_srJQQL9JYcqIlfPQ5wjMD55QKWRcjSd5fDD2q1SI8xUmPJXzkuinVCTQIqXXO9uDRa0p-nD_tBXsOgtRPm/s400/APSCU.JPG" width="400" /></a></div><br />
The notion of providing options to students has been at the crux of the organization's argument against the Department of Education tightening regulations.on the industry. "Committed to putting students first" seems rather facetious given that these are all for-profit companies, and their primary responsibility is to their shareholders, not their customers.<br />
<br />
One of the interesting tidbits in the <i>Chronicle of Higher Education's</i> <a href="http://chronicle.com/article/Education-Dept-to-Delay/124617/" target="new">article</a> about the delay was the revelation that Corinthian Colleges, Inc., the company that started the "My Career Counts" public relations campaign I wrote about in my <a href="http://donheller.blogspot.com/2010/09/for-profits-keep-pressure-on-gainful.html">last post</a>, is spending in the "high seven figures" on the campaign. Probably money well spent if Corinthian and APSCU is successful in getting the gainful employment rules delayed, or better yet for them, significantly weakened.Donald Hellerhttp://www.blogger.com/profile/13255378507407179004noreply@blogger.com0tag:blogger.com,1999:blog-504086430125591940.post-27358286559042069882010-09-19T17:40:00.002-04:002010-09-22T08:34:34.890-04:00The for-profits keep the pressure on gainful employment rules<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg2BeRDndd5TEbZepFQGLILc7z9YjFTeRu0RP9mVA8uZjEm-fAxIrDEcT82w_i-GCelL9UwQLm4KVCLdqGD25qEYLYV7g2jIl4vpL94Lja04nGGUpXgpIXAFBcrFo0VP5yLdEBaFYwcndLd/s1600/gainful+employment.JPG" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg2BeRDndd5TEbZepFQGLILc7z9YjFTeRu0RP9mVA8uZjEm-fAxIrDEcT82w_i-GCelL9UwQLm4KVCLdqGD25qEYLYV7g2jIl4vpL94Lja04nGGUpXgpIXAFBcrFo0VP5yLdEBaFYwcndLd/s320/gainful+employment.JPG" /></a></div>Even though the comment period on the Department of Education's <a href="http://donheller.blogspot.com/2010/09/one-more-time-on-gainful-employment.html">gainful employment</a> rules is over, the for-profit sector is clearly keeping up the fight. This morning's <i>New York Times</i> (Washington edition) has a big, full-page ad (split across two pages) in the front news section (click on the picture to see a larger version of it). Navigating to the URL shown in the ad, <a href="http://www.mycareercounts.org/" target="new">www.mycareercounts.org</a>, takes you to a website with all the reasons why the proposed gainful employment rules should be tossed out.<br />
<br />
It's a little difficult to figure out who created the website, until you look at the very small print at the bottom of the page:<br />
<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjBO418tLqSjKx_As210ANvihCehdCgGwDuSY6PaE0Nsvct5uotAzHtc_LQY6VzNcy64CMh0nXfj3J8uVbuwQ7VJYiVuegm1u2mJv9XMRZ4lK1kLzapCn32E1LV2qC51ffd_rzEepMy_rhJ/s1600/CCI.JPG" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="400" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjBO418tLqSjKx_As210ANvihCehdCgGwDuSY6PaE0Nsvct5uotAzHtc_LQY6VzNcy64CMh0nXfj3J8uVbuwQ7VJYiVuegm1u2mJv9XMRZ4lK1kLzapCn32E1LV2qC51ffd_rzEepMy_rhJ/s640/CCI.JPG" width="640" /></a></div>The website is sponsored by Corinthian Colleges, Inc., one of the nation's largest for-profit higher education providers. A recent <a href="http://www.educationsector.org/publications/are-you-gainfully-employed-setting-standards-profit-degrees" target="new">report</a> by Education Sector on the impact of the proposed gainful employment rules found that 15 percent of the Corinthian Colleges programs would face restrictions under the rules. The report also noted that the firm had recently reported to analysts that "89 percent of its revenue comes from federal aid programs and only about 1 to 2 percent comes from cash payments from students." Yes, you read that correctly: student payments represented only 1 to 2 percent of the firm's total revenues. Clearly, the loss of eligibility for Title IV federal student aid funds poses a major threat to the firm's continued growth and viability.<br />
<br />
Don't be surprised to see continued pressure and lobbying from the for-profit sector, at least until the Department's rules are finalized (due by November 1). The <i>Chronicle of Higher Education</i> <a href="http://chronicle.com/blogPost/For-Profits-Give-Thousands-/27021/" target="new">reported</a> this week that the industry had given almost $100,000 in campaign contributions in the first seven months of the year to members of Congress who had sent letters to Secretary Duncan asking him to reconsider the rules. Many of these letters are <a href="http://www.mycareercounts.org/other-voices.shtml" target="new">prominently featured</a> on the "My Career Colleges" website. The <i>Chronicle</i> also <a href="http://chronicle.com/article/For-Profit-Colleges-Wage-Up/124303/" target="new">tallied the hundreds of thousands of dollars in lobbying costs</a> incurred by for-profits this year, an amount that represented a large increase over last year. For example, the article noted that Corinthian Colleges spent $310,000 in lobbying costs in the second quarter of this year, an almost 200 percent increase over last year's $110,000.<br />
<br />
<span style="color: yellow; font-size: large;"><b>[Update]</b></span> When I finally got around to reading the rest of the <i>Sunday Times</i>, I discovered this full-page ad on the front of the second news section (again, you click to see a larger image):<br />
<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjsN4DEYc5WyvbDasST5sqSjhzbnxp3urOIsQGXvf5-bHSE6K3jEbiAebsvFavycxM1NpM6ndoO8k0tkcI3X0b7Cv4ggHkxDC7_BSSBwT3G8lNevyuaMJ6gsy968yjpVV5FY3MxEkSRF5_m/s1600/DSCF0084.JPG" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjsN4DEYc5WyvbDasST5sqSjhzbnxp3urOIsQGXvf5-bHSE6K3jEbiAebsvFavycxM1NpM6ndoO8k0tkcI3X0b7Cv4ggHkxDC7_BSSBwT3G8lNevyuaMJ6gsy968yjpVV5FY3MxEkSRF5_m/s320/DSCF0084.JPG" /></a></div>Donald Hellerhttp://www.blogger.com/profile/13255378507407179004noreply@blogger.com0tag:blogger.com,1999:blog-504086430125591940.post-27729259382541633792010-09-17T20:16:00.009-04:002010-09-20T12:47:52.317-04:00Newsflash! Penn state receives an $88 million gift for. . . . .<div class="separator" style="clear: both; text-align: center;"><a href="http://live.psu.edu/slnoflash2/userpics/10004/normal_hockey01.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="200" src="http://live.psu.edu/slnoflash2/userpics/10004/normal_hockey01.jpg" width="151" /></a></div>Penn State announced today the receipt of the largest single gift in its history, $88 million, from alumnus Terrence Pegula and his wife Kim. As one could imagine, a gift of this magnitude coming at a time when the university is facing such constrained resources is a huge boost for the institution.<br />
<br />
Pegula made his money in the natural gas business, and evidently had invested much money in the Marcellus Shale, the huge gas field that spreads across parts of Pennsylvania, New York, Ohio, and West Virginia. Earlier this year, East Resources Inc., the privately-held firm of which he was founder, CEO, and a principal shareholder (according to the Penn State press release), <a href="http://www.ctv.ca/generic/generated/static/business/article1706107.html" target="new">was sold for $4.7 billion</a> to Royal Dutch Shell.<br />
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The campus is buzzing and the excitement is impalpable as people think about the potential for such a large gift. Well, at least until you read past the headline and discover that the $88 million is going to be used for. . . . <span style="color: yellow;">hockey</span>. Yes, you read correctly: <span style="color: yellow;">$88 million for hockey</span>. To be a bit more precise, the money is going to help build a "state-of-the-art, multi-purpose arena," as well as provide operating funds for the men's and women's hockey clubs to move to Division 1 status, according to the <a href="http://live.psu.edu/story/48448" target="new">press release</a> issued by Penn State today.<br />
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Penn State is fortunate in that it has not faced the same kind of funding constraints faced by other public universities, especially those in states such as California, Arizona, Florida, and Nevada. Nevertheless, the last couple of years have forced the university to make some difficult choices, including raising tuition at rates well in excess of inflation, withholding raises and keeping salaries flat last year, and instituting additional cost sharing for health insurance for employees (to be implemented next January 1).<br />
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Penn State is not a poor university by any means; according to the <i>Chronicle of Higher Education's</i> <a href="http://chronicle.com/section/Financial-Institutional-Data/132/" target="new">endowment database</a>, Penn State had the nation's 45th largest endowment as of June 30, 2009, at $1.23 billion (since increased to $1.4 billion as of last June 30, according to a <a href="http://www.centredaily.com/2010/09/18/2216866/university-leaders-get-updates.html" target="new">report</a> provided to the trustees yesterday). A key difference between Penn State and our peers with billiion dollar plus endowments, however, is the size of the university. Penn State's endowment has to support 24 campuses and approximately 90,000 students. Contrast this with Wellesley College, two spots above PSU at number 43, whose endowment of $1.27 billion supports its one campus and 2,324 students. For those who don't want to do the math, this means that Wellesley's endowment per student is 40 times greater than Penn State's.<br />
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It is difficult for any university to look the proverbial gift horse (or alumnus, in this case) in the mouth and say, "No thanks" to any gift, particularly one as sizable as this. Those of us who work in universities and study their operation know that when donors get an idea in their heads of what they want to fund, it can often be difficult to get them to consider more pressing needs. I don't know how much the university tried to convince the Pegulas that Penn State had higher priorities than a new ice rink and Division 1 hockey teams. But clearly this was a priority for them, and in a couple of years we'll be able to gaze upon our new "state-of-the-art" hockey rink, right next door to the nation's second largest football stadium, our four year-old baseball stadium (capacity 5,406 and 20 luxury suites), and the now somewhat aged in comparison Bryce Jordan Center.<br />
<br />
One can't wonder about what else $88 million could have bought for the university, if the Pegulas had been convinced to invest in the core of the university's business, i.e., teaching and research, rather than intercollegiate athletics. But here are just a few ideas of what $88 million could purchase:<br />
<ol><li>The university could announce attainment of its goal of raising $100 million in its Trustee Matching Scholarship Program. Announced in 2002, the university had achieved <a href="http://live.psu.edu/story/42760" target="new">63% of the original goal</a> (as of last November). This is a wonderful program, with the scholarships all going to undergraduates eligible for Pell Grants, meaning they come largely from families with incomes below $50,000. Yet raising the money has been a bit of a struggle for the university. The Pegulas could have allowed the university to reach its $100 million goal and still had plenty left over.</li>
<li>Roughly 1,500 full-tuition, 4-year scholarships for enternig freshmen this year.</li>
<li>Roughly 2,500 half-time graduate assistantships this year (stipend and tuition waiver), or tuition waivers for approximately 5,300 graduate assistants</li>
<li>88 endowed professorships throughout the university (such as in the Department of Education Policy Studies in the College of Education, to provide just one suggestion)</li>
<li>An endowment that could fund annually into perpetuity:<br />
-- 300 undergraduate full-tuition scholarships, or <br />
-- 270 graduate tuition waivers</li>
</ol>I'm sure many on campus and off will be rejoicing over this gift, and as I stated earlier, nobody wants to look a gift donor in the mouth. You may even find me in a few years sitting at the new Pegula Arena cheering on the Penn State hockey team when Michigan comes to town. But it is hard not to speculate about some of the missed opportunities of such a sizable gift.Donald Hellerhttp://www.blogger.com/profile/13255378507407179004noreply@blogger.com8tag:blogger.com,1999:blog-504086430125591940.post-88025034240504430372010-09-15T16:08:00.000-04:002010-09-15T16:08:12.514-04:00One more time on gainful employment<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhg5jRIZA6kBa2hamzQ8uRoA8sWzaRqEhtGjFBb-S15Tg5hRokeyp5fqEfUH4AbN7PBy8CQZ1b8YSIKBs6DlJtZ8G5mv20uZSqwdkzv3piZ31g8EHjwvTqUQBBou0Oq3CzPAk1nzoc2NryL/s1600/FR-gainful+employment.JPG" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="128" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhg5jRIZA6kBa2hamzQ8uRoA8sWzaRqEhtGjFBb-S15Tg5hRokeyp5fqEfUH4AbN7PBy8CQZ1b8YSIKBs6DlJtZ8G5mv20uZSqwdkzv3piZ31g8EHjwvTqUQBBou0Oq3CzPAk1nzoc2NryL/s200/FR-gainful+employment.JPG" width="200" /></a></div><br />
After taking a summer hiatus, The Itinerant Professor is back in full swing. Yes, just like network television shows, this blog takes a summer hiatus. And just like major league baseball stars, it also refers to itself in the third person.<br />
<br />
Enough posturing. The big news this fall is the overwhelming response to the proposed <a href="http://donheller.blogspot.com/2010/07/more-detailed-analysis-of-eds-proposed.html">gainful employment rules</a> published by the Department of Education in the <a href="http://frwebgate2.access.gpo.gov/cgi-bin/TEXTgate.cgi?WAISdocID=euQkbx/1/1/0&WAISaction=retrieve" target="new">Federal Register</a> in July. "Overwhelming" as in over 83,000 comments on the rules submitted to the Department, according to <a href="http://chronicle.com/article/Education-Dept-Gets-Record/124390/" target="new"><i>The Chronicle of Higher Education</i></a>, far in excess - by scores of thousands - of any other proposed rules by the Department in recent memory .<br />
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As Inside Higher Ed pointed out in a recent <a href="http://www.insidehighered.com/news/2010/09/13/comments" target="new">article</a>, the vast majority of these came in from students, employees, and supporters of for-profit institutions, often coordinated by the Career College Association (CCA), the lobbying arm for the for-profit sector. These were not the result of grass roots efforts, but more akin to the "astroturf" campaigns where companies or other organizations try to make contacts with Congress or federal agencies appear to come from individuals alone, rather than as part of an orchestrated campaign. The IHE article described how Education Management Corp. hired a "Republican-affiliated strategy firm" to encourage and assist employees of its many for-profit institutions to write letters in response to the gainful employment rules. The article noted that the CCA "also coordinated bulk submissions of hundreds of comments."<br />
<br />
The story about Education Management Corp. was first <a href="http://higheredwatch.newamerica.net/blogposts/2010/exclusive_manufacturing_dissent_at_the_education_management_corporation-36175" target="new">published</a> by Stephen Burd of the New American Foundation's Higher Ed Watch blog:<br />
<blockquote><span style="font-size: x-small;">“This week, employees throughout EDMC and our schools will be receiving phone calls during business hours from our partners, the DCI Group, to assist you in crafting personalized letters to U.S. Secretary of Education Arne Duncan detailing for him your own views on Gainful Employment,” Todd Nelson, EDMC’s chief executive officer, wrote last Tuesday to the company’s approximately 20,000 employees in an e-mail, which was obtained by <i>Higher Ed Watch</i>.</span><br />
<br />
<span style="font-size: x-small;"> “You will be asked a series of short questions that will help DCI Group create a unique letter. These personalized letters will then be delivered to you for a signature, along with a pre-addressed stamp envelope,” wrote Nelson. “We encourage you to mail the letters as quickly as possible so that your comments are received before September 9. The entire process should take no more than 10 minutes of your time, but its impact on EDMC would be immeasurable.”</span></blockquote>One of the major criticisms of the rules raised by the CCA campaign is that they would likely force many for-profit institutions, or at least some of the programs in those institutions, to close, as students in them would no longer be eligible for federal Title IV student aid funds. The campaign has emphasized how this would severely affect access to higher education by poor and minority students, since they are disproportionately enrolled in this sector. A recent <a href="http://www.career.org/iMISPublic/AM/Template.cfm?Section=Press_Releases1&TEMPLATE=/CM/ContentDisplay.cfm&CONTENTID=21196" target="new">press release</a> by the CCA stated that:<br />
<blockquote><span style="font-size: x-small;">By closing programs and placing others in a tenuous “restricted” category, the ED gainful employment proposal has the potential to push 2.3 million students out of higher education, according to a CCA commissioned economic analysis prepared by Charles River Associates. This number includes 790,000 fewer females, 210,000 fewer African-Americans, and 190,000 fewer Hispanics.</span></blockquote>[In the interest of full disclosure, I should note that the CCA had approached me earlier this year about hiring me to conduct this study for it, but I declined.]<br />
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The question now is how the Department is going to react to all these comments. It clearly knows that a good portion of these are the result of the astroturf campaign, and thus, are likely to be discounted in importance. Secretary of Education Arne Duncan has been fairly strident in his criticism of the for-profit sector and the need for the gainful employment rules, and has shown little inclination to back down on the preliminary rules published in July.<br />
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My guess is that the Department will stand its ground, and attempt to implement the rules largely as published. An early indication of this was the <a href="http://www.ed.gov/news/press-releases/student-loan-default-rates-increase-0" target="new">press release</a> issued by the ED earlier this week when it announced the most recent student loan default rates for FY2008, which rose from the previous year - not a great surprise, given the recession. But in releasing the data, Secretary Duncan noted that:<br />
<blockquote><span style="font-size: x-small;">"The data also tells us that students attending for-profit schools are the most likely to default," Duncan continued. "While for-profit schools have profited and prospered thanks to federal dollars, some of their students have not. Far too many for-profit schools are saddling students with debt they cannot afford in exchange for degrees and certificates they cannot use. This is a disservice to students and taxpayers, and undermines the valuable work being done by the for-profit education industry as a whole," Duncan continued. </span></blockquote>So stay tuned. The Department is scheduled to issue the final rules on November 1, with the rules scheduled to take effect next July 1.Donald Hellerhttp://www.blogger.com/profile/13255378507407179004noreply@blogger.com2tag:blogger.com,1999:blog-504086430125591940.post-1986240116275314452010-07-26T16:14:00.003-04:002010-09-15T15:20:31.505-04:00A more detailed analysis of ED's proposed gainful employment rules<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhg5jRIZA6kBa2hamzQ8uRoA8sWzaRqEhtGjFBb-S15Tg5hRokeyp5fqEfUH4AbN7PBy8CQZ1b8YSIKBs6DlJtZ8G5mv20uZSqwdkzv3piZ31g8EHjwvTqUQBBou0Oq3CzPAk1nzoc2NryL/s1600/FR-gainful+employment.JPG" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="128" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhg5jRIZA6kBa2hamzQ8uRoA8sWzaRqEhtGjFBb-S15Tg5hRokeyp5fqEfUH4AbN7PBy8CQZ1b8YSIKBs6DlJtZ8G5mv20uZSqwdkzv3piZ31g8EHjwvTqUQBBou0Oq3CzPAk1nzoc2NryL/s200/FR-gainful+employment.JPG" width="200" /></a></div><br />
Now that I've had a chance to actually peruse (note I didn't say "read," since they are 93 pages long) the Education Department's proposed "<a href="http://frwebgate2.access.gpo.gov/cgi-bin/TEXTgate.cgi?WAISdocID=euQkbx/1/1/0&WAISaction=retrieve" target="new">gainful employment rules</a>" for proprietary colleges, which were just published in the Federal Register today, I feel a little more qualified to comment on them. Pay attention, folks: comments are due to ED by September 9.<br />
<br />
A few interesting observations about the proposed rules:<br />
<ol><li>Rather than basing eligibility for participation in the federal Title IV (student financial aid) programs solely on loan default rates, as do the current regs, the new rules use a two-part test: loan repayment rates <i>and</i> earnings-to-student loan repayment ratios. Thus, institutions with programs that prepare students for gainful employment (i.e., vocationally-oriented programs) would have to demonstrate that students were both making enough money to pay back their loans, and were actually paying them back at acceptable rates. No jokes please about programs that do <i>not</i> prepare people for gainful employment, i.e., most bachelor's degree programs.<br />
<br />
</li>
<li>The application of the default and earnings-to-repayment ratios would result in institutions falling into three categories:<br />
-- Fully eligible to participate in Title IV<br />
-- Ineligible to participate in Title IV<br />
-- Partially eligible, but would have to curtail their growth and provide certain information to consumers about the risks of excessive borrowing<br />
The ED estimates that 5 percent of proprietary institutions would fall into the ineligible category, and 55 percent would become partially eligible.<br />
<br />
</li>
<li>The new rules apply not just to proprietary (for-profit) colleges, as much of the press has focused on. They apply to any higher education institution that offers gainful employment programs. The ED estimates that the new regulations will affect the following number of institutions:<br />
-- For-profit: 22.7%, or 474 institutions<br />
-- Private, not-for-profit: 15%, 36 institutions<br />
-- Public: 11.8%, 252 institutions<br />
Note that the percentages are based only on the number of institutions in each sector that offer gainful employment programs. Harvard, for example, would not be included in the denominator of the private, not-for-profit category.<br />
<br />
</li>
<li>The Dept. of Education obviously has good data on default rates on federal student loans, from the National Student Loan Data System. But the mystery was where it was going to get the data to calculate the earnings-to-repayment ratios. Would it rely on the institutions to survey their graduates? Would it survey graduates? Or perhaps rely on a third party? Well, the answer is found on page 43623 of the Federal Register:<br />
<br />
<br />
<br />
<blockquote>"The Department would calculate the average annual earnings by using most currently available actual, average annual earnings, obtained from the Social Security Administration (SSA) or another Federal agency,. . ."</blockquote>So the Department will most likely use Social Security Numbers to match student loan repayment amounts with individual's earnings, as recorded in the Social Security system. </li>
</ol>Not surprisingly, the proprietary sector has come out guns ablazing against the regs, issuing a <a href="http://www.career.org/iMISPublic/AM/Template.cfm?Section=Home&CONTENTID=20954&TEMPLATE=/CM/ContentDisplay.cfm" target="new">press release</a> on the night they were announced titled, "Career College Association Rejects Metrics-Based Approach to Gainful Employment," calling the new rules "unwise, unnecessary, unproven and is likely to harm students, employers, institutions and taxpayers." They're clearly not going to go down without a huge fight on this one. We'll have to wait to see if they'll have any assistance from the other sectors, who obviously will not be as threatened by the regs as will the for-profit schools. Bloomberg <a href="http://www.bloomberg.com/apps/news?pid=washingtonstory&sid=asJe5MO8dF.g" target="new">reported today</a> that its index of 12 stocks of publicly-traded universities is down 2.1 percent, with DeVry leading the pack down 5.7 percent as of 3:00pm today.<br />
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It is too early to tell whether the regulations will survive largely in the form ED has proposed them. One sign that they likely will is that Congress has <a href="http://www.insidehighered.com/news/2010/06/24/forprofit" target="new">grabbed onto this issue</a> and doesn't appear ready to let go. So some form of tighter rules will likely occur, and how much teeth they have will be determined in large part by the lobbying (and political donation) strength of the for-profit sector.<br />
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Stay tuned.Donald Hellerhttp://www.blogger.com/profile/13255378507407179004noreply@blogger.com0tag:blogger.com,1999:blog-504086430125591940.post-77347903974200820232010-07-23T10:52:00.002-04:002010-07-25T15:45:58.852-04:00Department of Education finally issues the gainful employment rules for proprietary colleges<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhiycmQNr2jUQHhX4-ja1QnfnT-27hLPj956BMlME9wULokw9oh_RLd104xvYg_5S_TsjwsG5dSagAG_urtswRRwt3vYOcq70rbs8EQCauq4tx9FJdclZB83G3FYTBZUH2pUM77Q3LsZ7gH/s1600/ED+logo.JPG" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="76" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhiycmQNr2jUQHhX4-ja1QnfnT-27hLPj956BMlME9wULokw9oh_RLd104xvYg_5S_TsjwsG5dSagAG_urtswRRwt3vYOcq70rbs8EQCauq4tx9FJdclZB83G3FYTBZUH2pUM77Q3LsZ7gH/s320/ED+logo.JPG" width="320" /></a></div><br />
The ED finally issued the rules for measuring gainful employment in proprietary colleges. The rules will impose a two-part test for gradutes of vocational programs, involving both earnings-to-loan repayment ratios, as well as default rates. ED estimates that under the rules, 5 percent of proprietaries will be forced out of the Title IV federal student aid programs entirely, and another 55 percent will see their growth restricted by the regs.<br />
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<a href="http://marketplace.publicradio.org/display/web/2010/07/23/am-new-forprofit-college-loan-rules-consider-students-earning-potential/" target="new">Marketplace</a> covered it this morning, including a short quote from me (here's a link to the <a href="http://marketplace.publicradio.org/www_publicradio/tools/media_player/popup.php?name=marketplace/morning_report/2010/07/23/marketplace_morning_report_full_20100723_64&starttime=00:08:07.25&endtime=00:09:34.0" target="new">audio</a> of the story), as did the <i><a href="http://chronicle.com/article/Education-Department-Takes-Aim/123655/" target="new">Chronicle of Higher Education</a></i> and <a href="http://www.insidehighered.com/news/2010/07/23/gainful" target="new">Inside Higher Ed</a>.Donald Hellerhttp://www.blogger.com/profile/13255378507407179004noreply@blogger.com0tag:blogger.com,1999:blog-504086430125591940.post-15561860964630535132010-07-16T10:45:00.000-04:002010-07-16T10:45:35.695-04:00Businessweek publishes an embarrassingly bad article on the college wage premium<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjLS8Lp5ya6Wp9e7KavfkYIA5PFUVMSePp5Q9W0m8xxL20-0xdSRwpzzZlbOCAKBUuXU9iHNXRHVNN6dIPCeM3CxET4skJ-H8PhEsaWIDTvNTGv5R0wr5HPcj9RLGC5D1GKJGDdu4gQVFjc/s1600/dollar.JPG" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjLS8Lp5ya6Wp9e7KavfkYIA5PFUVMSePp5Q9W0m8xxL20-0xdSRwpzzZlbOCAKBUuXU9iHNXRHVNN6dIPCeM3CxET4skJ-H8PhEsaWIDTvNTGv5R0wr5HPcj9RLGC5D1GKJGDdu4gQVFjc/s320/dollar.JPG" /></a></div><br />
<i>Bloomberg Businessweek</i> published a "<a href="http://www.businessweek.com/bschools/content/jun2010/bs20100618_385280.htm" target="new">special report</a>" on the return on investment to individual colleges that can charitably be described as misleading at best, irresponsible at the worst. Titled "College: Big Investment, Paltry Return," the article purports to demonstrate how students attending some colleges earn a higher return on their investment than students attending other colleges. <i>Businessweek</i> used a consulting firm that collected self-reported salary information on its website, and used that salary information to calculate the median earnings for graduates of each college, and compares this to what people who only have high school diplomas earn.<br />
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The consulting firm then subtracted the current cost of attendance for each institution, adjusts for the school's six-year graduation rate, and used the result to calculate an expected annual ROI over 30 years. And as is ever so popular these days, it creates a ranking of 554 4-year colleges and universities across the country, from highest to lowest ROI (the methodology is described <a href="http://www.businessweek.com/interactive_reports/bs_collegeROI_0621.html" target="new">here</a>). The results? MIT has the highest ROI in the country at 12.6%, and Black Hills State University (in South Dakota) the lowest, 4.3%. The article also publishes a shame list, or those schools with high tuition but a low ROI.<br />
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So what's wrong with this "special report"? Here are just a few examples:<br />
<ol><li>Probably the most egregious error is that the article makes the same mistake so many articles in the popular press make: it confuses correlation with causality. The article implies that any random student out there attending a higher-ranked institution will have a higher ROI than attending a lower-ranked one. But of course students are not randomly distributed across those 852 institutions. If you took all the MIT students, and sent them to Black Hills State University, the Black Hills ROI would skyrocket. Why? Because the typical MIT student has a higher level of human capital (intelligence, skills, aptitude, motivation - whatever you want to call it) than does the average student attending Black Hills State. <br />
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So MIT may very well impart some added value on its attendees, as I'm sure it does, but it can't claim the full credit for their post-college earnings. Another way to think of it is to consider an experiment. Take all those students who were admitted to MIT and Black Hills, and randomly assign some of the students to attend their chosen institution, and others to not be allowed to enroll and instead go into the labor markets without the benefit of a college degree. Under <i>Businessweek's </i>methodology, one would expect all of those non-college attendees to have the same earnings. But of course this wouldn't be true; the students admitted to MIT but not allowed to attend would likely have much higher earnings in labor markets <i>even without attending college</i> than would the students accepted to Black Hills but not attending. This is because many of the same traits that got those students admitted to MIT are also valued in labor markets and thus rewarded through higher wages. <br />
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In statistical terms, the <i>Businessweek</i> methodology suffers from strong selectivity bias effects.<br />
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</li>
<li>The earnings data used in the study are entirely self-reported on the consulting firm's website, and is by no means guaranteed to be representative of the population of graduates of each institution. Thus, the earnings data used in the calculations could very well be biased upward or downward - there is no way to tell.<br />
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</li>
<li>The cost-of-attendance data used in the study are based on sticker prices, and don't account for financial aid students receive. Given the important role that institutional financial aid plays in subsidizing the cost of college today (see for example <a href="http://www.personal.psu.edu/faculty/d/e/deh29/papers/WISCAPE_2006_paper.pdf" target="new">this study</a> I did a few years ago, or more recently a <a href="http://www.personal.psu.edu/faculty/d/e/deh29/papers/SFARN_2010_Final.pdf" target="new">study</a> with my Penn State colleagues John Cheslock, Rodney Hughes, and Rachel Frick-Cardelle), the lack of accounting for institutional aid leads to downwardly biased ROI figures for many institutions.<br />
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</li>
<li>The ROI figures are going to be highly dependent upon the mix of majors in each college. Thus, <i>Businessweek's </i>list of "<a href="http://images.businessweek.com/ss/10/06/0628_payscale2/index.htm?chan=bschools_special+report+--+buyer+beware_college+degree%3A+buyer+beware" target="new">best bargains</a>" is skewed toward public institutions that enroll a large number of students in STEM (science, technology, engineering, and math) fields, i.e., Colorado School of Mines, Georgia Tech, Virginia Tech, Cal Poly, Purdue, and Missouri University of Science & Technology.<br />
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</li>
<li> It has been well documented that jobs that require college degrees generally have much better benefits, particularly pension and health care benefits, than those held by people with only a high school diploma. Thus, by focusing on earnings only, and not accounting for benefits differences, the returns to college are again biased downward.</li>
</ol>Most of the evidence from labor economists (see the work of Card and Krueger, or Ehrenberg) points to the fact that differences in returns to college are driven more by <i>within</i> college variation (i.e., differences in the choice of majors or academic experiences once enrolled in a particular college) rather than differences <i>between </i>colleges. What this means is that the decisions students make about what to major in, what courses to take, and what other experiences they have in college have much more influence on their post-college earnings than does the choice of which college to attend.<br />
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The article concludes with this ridiculous comment:<br />
<blockquote>Over the past 30 years, the S&P 500 Index averaged about 11 percent a year. Only 88 schools out of the 554 in the study had a better return than the S&;P. Everywhere else, students would have been better off—financially, at least—if they invested the money they spent on their college educations and never set foot in a classroom.<br />
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"For almost every school on the list," writes Lee [the director of quantitative analysis at the consulting firm used by <i>Businessweek</i>] in an e-mail, "prospective students paying full price would probably have been better off investing in the stock market 30 years ago rather than spending their money on a college education."</blockquote>So the message here is that unless you attend one of those 88 schools, you are better off skipping college and instead investing the money in the stock market.<br />
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There have been many egregious examples over the years of the misuse of quantitative data to create rankings of colleges and universities. But this is perhaps the worst I have ever seen.Donald Hellerhttp://www.blogger.com/profile/13255378507407179004noreply@blogger.com4tag:blogger.com,1999:blog-504086430125591940.post-25357667261665473922010-07-07T11:14:00.000-04:002010-07-07T11:14:41.630-04:00Glenn Beck University<div class="separator" style="clear: both; text-align: center;"><a href="http://images.publicradio.org/content/2010/07/07/20100707_glenn-beck_18.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="http://images.publicradio.org/content/2010/07/07/20100707_glenn-beck_18.jpg" /></a></div><br />
I was (briefly) interviewed on <a href="http://marketplace.publicradio.org/display/web/2010/07/07/am-glenn-beck-can-call-it-a-unversity-for-now/" target="new">Marketplace Morning Report</a> this morning about Glenn Beck's new "university."Donald Hellerhttp://www.blogger.com/profile/13255378507407179004noreply@blogger.com4tag:blogger.com,1999:blog-504086430125591940.post-57968661440056678222010-05-28T10:16:00.003-04:002010-05-28T10:33:51.821-04:00A spitting contest on HuffPost<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhFqQ4AYQeTFbMISrkW_c-e_YZMY5g2FD6YDzgAkBA07-Qu2rI5OUzpKfFT5axqohMrDyyb7JVekyPT-gyCvOqNWs5f9gCYJ3GeuK4q19e0RKe4zOaek7Q24w19o7CLCS2Z85AMxwfxI_0y/s1600/HuffPost.gif" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhFqQ4AYQeTFbMISrkW_c-e_YZMY5g2FD6YDzgAkBA07-Qu2rI5OUzpKfFT5axqohMrDyyb7JVekyPT-gyCvOqNWs5f9gCYJ3GeuK4q19e0RKe4zOaek7Q24w19o7CLCS2Z85AMxwfxI_0y/s320/HuffPost.gif" /></a></div><br />
Okay, I really wanted to title this, "A pissing contest," or worst case, "A urinating contest," but decided that was not decorous and dignified enough for The Itinerant Professor. So I toned it down a notch.<br />
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Michele Hernandez, admissions consultant extraordinaire of whom I previously <a href="http://donheller.blogspot.com/2009/07/making-silk-purse-from-sows-ear.html" target="new">wrote</a>, published a piece in <a href="http://www.huffingtonpost.com/dr-michele-hernandez/harvard-hampers-admission_b_592228.html" target="new">HuffPost</a> yesterday blaming Harvard for hyping the admissions market for selective institutions. Far be it from me to defend Harvard; I've been plenty critical of the institution in this blog (just do a search for "Harvard" in the search box). I wrote a comment to her post stating that she was playing loose with the facts, and that she and her industry were as much to blame for the frenzy and anxiety students and parents face when dealing with trying to get in to these institutions. She then responded, and. . . .well, you can guess where this is going. She accused me of directing "anger" toward her, which was (I thought) not my tone at all. Guess some people believe anytime you disagree with them you're showing anger.<br />
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For some reason, HuffPost deleted parts of my response, I think because I posted too many times. So I'm reprinting the entire thing here:<br />
<blockquote>Michele, <br />
<br />
There is no "anger" whatsoever in my original comment; I didn't intend it as a wild rant, and if it came across that way, I apologize [I usually keep my angry rants anonymous :) ]. I'm merely questioning some of the facts you provided in your post, along with your assumption about where the admissions frenzy comes from. I questioned in your original post when you said that students were applying to 15-30 schools a year. You said in your comment that "My data is not based on anecdotes but rather on the actual data provided by colleges." I think you need to provide some citation for these numbers. I recognize HuffPost is not a scholarly journal, but there is still an obligation to inform your readers where these numbers come from.<br />
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My suspicion is that your "15-30 schools a year" is a wild exaggeration that is not based on reality, but based on the frenzy created at least in part by the admissions industry, as well as by the media. How many students are really applying to this many schools?<br />
<br />
The U.S. Department of Education conducted a nationally-representative survey of students graduating from high schools in the U.S. in 2004; this survey found that only one-half of one percent of graduating seniors applied to 11 or more schools. Even allowing for the changes in college admissions that have occurred since 2004, due to Harvard's dropping of ED and other changes you describe, you would still be a long way from a norm of students today applying to 15-30 schools. Yes, there may be a very small number who do this, but to put this out there as the norm for those applying to the most selective schools I would describe as fear-mongering.<br />
<br />
You are right that the colleges are to blame in part for this frenzy, as well as the media as I said earlier, but I believe the admissions consultant industry (of which you are certainly a very prominent member) is at least equally to blame. You try to convince parents that the only way to get their children into one of these institutions is by using the insider knowledge that you and others have, and that without that information (and the often five-figure fee that obtains it), their child has a snowball's chance in Miami of getting into one of those colleges. The fact that you state that “I turn away almost as many students as I work with” is no defense of what your industry helped to create.<br />
<br />
In last year’s article in <a href="http://www.nytimes.com/2009/07/19/education/19counselor.html" target="new"><i>The New York Times</i></a> (July 18 2009) on the admissions consultant industry, you were quoted as saying: "‘It’s annoying when people complain about the money,’ the Vermont-based counselor, Michele Hernandez, said. ‘I’m at the top of my field. Do people economize when they have a brain tumor and are looking for a neurosurgeon? If you want to go with someone cheaper, or chance it, don’t hire me.’" Is this really the impression we want to send to parents and prospective students, that getting into college is as complicated – and dangerous – as brain surgery?<br />
<br />
Another way you add to the frenzy is through the impression you and some in your industry help to promulgate that the Ivy League institutions (and the small handful of others with similarly low acceptance rates) are the only reasonable destination for bright, motivated students. This does a terrible disservice to many students who could and would receive an excellent undergraduate education, often better than they would receive at one of these low-admittance schools, at many of dozens of other schools around the country that have much more reasonable acceptance rates and sometimes lower costs (see the work of The Education Conservancy – <a href="http://educationconservancy.org/" target="new">http://educationconservancy.org</a> – for helping to combat this). I imagine you’ll respond by saying that that’s part of your service, to help students find the right schools for them. But it’s hard to deny that your website and publicity emphasizes the Ivies, and by featuring so prominently their low acceptance rates, you help add to the anxiety and insecurity these families face.</blockquote><br />
We'll have to wait and see if she responds.Donald Hellerhttp://www.blogger.com/profile/13255378507407179004noreply@blogger.com5