Changing Higher Education

Knowledge Management: an expanded role for higher ed in a changing world

In a post back in 2006 entitled What business are we in?, I suggested that a broader definition of the business of higher education might be Knowledge Management. At the time, the pieces were not in place to envisage how such a definition might usefully extend the roles of the university. Some key pieces now seem to be in place. Lifelong post- baccalaureate learning has become a career necessity for an ever-increasing number of workers; employers are struggling to hire and retain employees with skill sets needed to meet challenges and opportunities created by rapidly developing technologies and pressures of globalization; the development of competency based stackable modules has opened up the potential for just-in-time learning that meets career needs of learners and simultaneously fits with knowledge needs of employers; and the centrality of the traditional academic degree hierarchy is being challenged by development of competency-based descriptions of workforce needs. The present COVID -19 upheaval of life in general has upended the job market, and the eventual recovery of the economy can perhaps be facilitated by a universities playing a more expansive role in meeting knowledge needs of industry. This post considers how a Knowledge Management role for universities might be envisaged today.

 

 

Free college tuition is a lovely, but dangerous idea

"Free college tuition" is rapidly becoming a rallying cry in the permanent presidential campaign which now drives all policy discussions. It is easy to understand why. Tuition and fees in both the public and private sectors of higher education have been climbing much more rapidly than inflation and family income for over four decades. Even families well up in the middle class are finding the cost of higher education increasingly prohibitive, greatly limiting educational choice and opportunity. Higher education debt has become one of the largest debt categories for individuals and families, and is negatively impacting career choices, initial home ownership, automobile purchases, etc. The heart of the American Dream- educational and economic mobility-is threatened. 

This issue of educational and economic mobility is indeed critical,and deserves to be at the center of  serious policy discussions. The problem is that free college tuition,as catchy and simple and attractive as the idea is, is not a viable solution to that problem in any proposal that I have seen.

Cost allocation in the research university and what it tells us

Universities often report a number that appears to indicate how much the university spends on instruction. We might believe that this number accurately represents teaching expenses and even do some analysis based on that belief. We would be wrong to do so. 

John V. Lombardi, in How Universities Work

This somewhat cynical observation by Lombardi was informed by his broad and sometimes painful experiences as Provost at Johns Hopkins University, President of the University of Florida, Chancellor of the University of Massachusetts at Amherst, and President of the Louisiana State University System. However, in these times of heated discussions over who should pay for higher education and a background of rapidly increasing student debt,  it is important to have some idea of what the actual costs of producing that education are. In this post, I review some of the reasons why it is difficult to define the instructional costs at a research university, and why various constituencies might not want that information to be generally available. After discussing how a business model view simplifies some of the issues around calculating instructional costs, I describe a recent analysis of such costs in the University of California system, which reaches some surprising conclusions. These conclusions lead to a consideration of why cost -shifting between missions is so important in the current approach of the research university. Taken together, these results suggest that one of the key issues that should be focused on in order to control higher education prices are the synergies between the different functions of the research university and the actual "added value" to the customer of those synergies. In particular, the analysis suggests that rising prices in undergraduate education are not likely be controlled unless society finds alternative ways to fund a significant component of the cost of university research. 

The problem with CA higher education is that no one asks what the problem is

The advertisements in a newspaper are more full of knowledge in respect to what is going on in a state or community than the editorial columns are.
Henry Ward Beecher

The editorial board of the Los Angeles times weighed in on December 29 on the funding situation of the UC system with Finally, UC gets budget attention  . This latest Times editorial joined earlier ones about the UC in demonstrating a certain naivety on the part of the Times editorial board in matters of higher education in California. The editorial strongly supports President Napolitano's solution to the UC problems - send more money - and egregiously mischaracterizes Governor Brown's proposals as "mechanistic". If only the UC issues were simply about "budget"!

Why MOOCs threaten academic freedom - too much value for the students

A recent article in the Chronicle of Higher Education about the use of MOOCs contains the following fascinating interview:

Chandrakant Panse, a professor of microbiology at MassBay (Community College) and president of the union chapter there, does not think MOOCs will make local faculty members obsolete. But Mr. Panse does think an edX certificate, acknowledging the completion of an MIT course, is worth more to students than three credits at a community college. And that could pose a threat to academic freedom in the future.

"The MIT certificate has a lot more value in the marketplace than three course credits at MassBay—absolutely," Mr. Panse says. In the context of a student's job search, says the professor, an edX certificate "is going to matter tremendously more than saying I have three credits at MassBay for doing a programming course."

Considering the possibility that edX courses will become part of the curriculum at MassBay, Mr. Panse believes that students will want the opportunity to earn edX certificates in addition to credit toward their MassBay degrees. That demand could prompt administrators to require that MassBay professors hew closely to the curriculum prescribed by the MIT professors.

How can we think about the wave of new innovations in higher education?

Much has been happening recently in higher education - MOOCs, competency based degrees, alternative credentialing, Presidential (of the US, that is) statements that real increases in tuition must stop, etc. This has led various observers to predict tsunamis, tipping points, crises, and/or disruptions for higher education.

How should one begin to analyze the possible impacts of this seemingly endless set of new "environmental conditions"? I find that a useful starting point is the business model of higher education.  The following picture describing the elements of a business model is taken from a recent publication, Disrupting College,  by Clayton Christensen, Michael Horn, Louis Caldera and Louis Soares (CHCS).   

 

This picture emphasizes that there are four key components of a business model, and that all of these components must fit together in an interdependent way in order for the model to be viable. The lock on the picture emphasizes that no one component can be changed without causing significant changes in the other components once the model has reached a viable equilibrium. 

edX: a step forward- or backward?

edX, the new distance learning collaboration recently announced by MIT and Harvard, has gotten a lot of attention, and rightly so:

Harvard University and the Massachusetts Institute of Technology (MIT) today announced edX, a transformational new partnership in online education. Through edX, the two institutions will collaborate to enhance campus-based teaching and learning and build a global community of online learners.

Coming on the heals of the appearance of Coursera, Udacity, and the edX precursor, MITx, this has led numerous commentators to suggest that we have entered a veritable age of aquarius for massively open online courses (MOOCs). All of these efforts involve, to one degree or another, universities of the very top rank and each will offer online versions of university level courses using the most advanced technologies. Further, all will be open to anyone who wants to sign up, and the courses will either be free or involve a very nominal cost for e.g. testing. Importantly, however, none of these efforts will lead to course credit, degree or certificate from the universities involved. Instead, successful students can hope for a signed letter of completion from their well-known instructor or a certificate from the organization

Preliminary results are very exciting, indeed. Sebastian Thrun, founder of Udacity, did an online course at Stanford that drew over 160,000 student, and Udacity has over 200,000 students signed up for its first six courses. MITx's first course enrolled about 120,000 students.

Harvard inaugurates its Initiative for Learning and Teaching

ON ONE HAND:

The good news is that Harvard is beginning to play a public leadership role in increasing student learning! The Harvard Initiative for Learning and Teaching (HILT) had its inaugural event, a symposium, on February 3. HILT was founded as the result of a generous $40M gift from Harvard alumni Gustave and Rita Hauser. The invitation only event brought in several outside luminaries with considerable expertise in learning, such as Physics Nobel Laureate Carl Weiman, and around 300 people from the Harvard community including Harvard's own luminary in the field, Eric Mazur.

The poor state of undergraduate student learning over all has been chronicled in many books and studies (see an earlier discussion here).  One of the most readable of these books was written by Harvard's own Derek Bok - Our Underachieving Colleges, so the issues are not unfamiliar at Harvard itself. As Bok (and many others) pointed out, the problem is not that there aren't many well documented ways to greatly increase student learning, it is that these methods have not been adopted widely by colleges. The powerful forces of the status quo have dominated teaching and learning.  

The State of the Union on college costs

So let me put colleges and universities on notice: If you can’t stop tuition from going up, the funding you get from taxpayers will go down. Higher education can’t be a luxury. It is an economic imperative that every family in America should be able to afford.

Barak Obama, State of Union 2012

Does this speech signal that the time has finally arrived when the government - which pays a good part of the bill - will step in to limit the rapid and seemingly never ending growth of tuition? In normal times, the answer would likely be "yes" given that politicians from both sides of the aisle have been introducing bills that would cap tuition in one way or another for almost a decade.  Thus, we might expect to see a quick moving bipartisan effort.

Cost and price in higher education, again

These administrators are like cookie monsters… They seek out all the resources that they can get their hands on and then devour them

Ronald Ehrenberg in Tuition Rising

As economic conditions around the country (and world) impose increasing limitations on funding for higher education, it is worthwhile to review some of the major reasons that higher education costs are so high and rise so rapidly. An understanding of these reasons is critical to making rational responses that preserve (and perhaps even strengthen) important components of institutional mission. This is, of course, a subject that has been extensively written about over the past several decades by many authors, but since responses to the current economic situation seem to generally ignore what is known about the problem, perhaps another brief review is justified. Interested readers will find my many earlier takes on this issue collected here. 

The quote above is basically a brief restatement of what is known as Bowen's Rule, which appeared in one of the earlier (1980) extended studies of cost in higher education. Bowen pointed out that budgeting in higher education is basically the inverse of that which occurs in most industries: first you see how much income you can raise, then you spend it all in pursuit of an elusive goal of "excellence" and brand. I put excellence in quotes because it is a concept that primarily is internally defined by academe itself rather than by its customers.

Interestingly, however, a recent work by Christensen, Horn, Caldera and Soares (CHCS) called Disrupting College showed that many of the cost issues in higher education actually correspond extremely closely to well - studied cost issues in other industries. Turns out there are cookie monsters everywhere!

Multiple views of globalization of higher education and of place

I had the pleasure of attending the Laureate International Universities' annual Leadership Summit last June.  As readers of this blog know, Laureate is a for-profit corporation that runs a world wide network of higher education institutions, both brick-and-mortar and online. Laureate is one of my potential disruptors. Not surprisingly, while listening to some of the talks at the Summit, I found myself musing about some of the very different ways that various players in higher education are conceptualizing globalization, and how this was related to the place-based identity of most higher education institutions.

I have written about what I called the place-based identity of higher education institutions, and how it impacts globalization efforts. Most higher education institutions were created in response to local needs, typically with funding either from individuals of the area or local (or state) government.  They initially served primarily students from their surrounding regions. Thus, they responded to the special contexts of their regions - they were place-based both physically through their campus and also programmatically through their focus on response to local conditions and needs . As time went on, the contexts of regions changed and became more complicated, and successful institutions responded to those changes, keeping in step with those changing regional contexts. In addition, some institutions began to view themselves as national, not regional, institutions and so the context to which they were responding became much larger and national in scope. However, the simpler, geographic component - the campus- of place-based identity generally did not change in any significant way. Most institutions continued to maintain one main campus right where it started. If there were offshoots, they were generally small and designed to better serve their region. This maintaining of the original campus as the "main campus" further connects today's institutions to their origins even as they change to respond to new contexts.  

An educational system built for another time, another student demographic

Complete College America has just released a very interesting and important report entitled Time is the Enemy: the surprising truth about why today's college students aren't graduating- and what needs to change. The report moves beyond typical IPEDS information that focuses on full time students who enter as freshmen, thus ignoring part time and transfer students. Thirty three states provided information on their public systems that went into this report. A couple of caveats: The data do not track educational pathways of individual students (as is now available in a few instances), but rather use gross data such as entries, graduations, drop-outs, transfers from one part of a state's public system into another part of the same system. Thus, for example, transfers to private (either non- or for-profit) institutions and public systems in another states are not included. In addition, the labels "full" and "part-time" student are defined by the status of the student in the first term of enrollment, which may or may not be descriptive of the way many of today's students follow their education.These and other similar caveats aside, this report provides an excellent first look at a much larger and broader set of students than are described by IPEDS.

The report contains two striking demographic facts that underline problems in the way that we typically view higher education:

• 40% of public college students are able to attend only part time
• only 25% of college students are "traditional" in the sense that they are attending full time, attending a residential college, and have parents that are are paying most of their bills 

Christensen on disruptive innovation in higher education

Regular readers of this blog know how often I call upon Clayton Christensen's ideas regarding disruptive innovation as described in The Innovators Dilemma. Christensen has now turned his focus to higher education in a superb, must read white paper called Disrupting College:How Disruptive Innovation Can Deliver Qualityand Affordability to Postsecondary Education , published by the Center for American Progress and the Innosight Institute. The report is coauthored with Michael B. Horn, Louis Soares, and Louis Caldera. This white paper does a great job of succinctly describing the challenges and issues facing American higher education today, outlining the concepts of disruptive innovation, and then applying those concepts to higher education.  

Going Global

The British Council recently held its annual Going Global conference in Hong Kong, the first time it had held the conference outside of Britain. Inside Higher Ed has several interesting articles describing the conference (Global Comparisons, Evolving Higher Ed Hubs, How Asian are Asian Universities?).  

The Chronicle of Higher Education published an interesting interview with Martin Davidson, Chief Executive of the British Council, regarding the importance of holding the conference in Asia.  In that interview, Davidson made several related points that I think deserve emphasis and comment.

The real crisis in higher education?

I begin by noting three articles (from among many similar ones that have appeared) and a personal interaction that raise important questions for higher education:

California visual effects firms facing a bleak landscape

Foreign locales are luring away productions and work with tax credits and cheaper labor, causing once-successful companies to close.

This is the headline of an article in the LA Times describing the financial plight of many California visual effects firms.  Lower costs elsewhere, growth of worldwide pools of talent, and widespread availability of cutting edge technology are the villains. The jobs being lost are high paying, and involve very high levels of skill.

The technology represents the cutting edge of filmmaking, involving teams of digital artists trained in 3-D modeling, computer animation and computer graphics....

California-trained visual effects artists are still in demand, but often now have to travel overseas for work.

Limits on the globalization of the American model of higher education?

Clara Lovett, president emerita of Northern Arizona University, has recently published a very insightful Commentary in the Chronicle of Higher Education.  The Commentary focuses on recent globalization experiences of American business schools, both successes and limitations.  The lessons she draws from these experiences are then extended to American higher education more generally.  

Lovett begins her story with the 1990's, when "The comparative advantage of American business schools as sources of well-prepared graduates turned into something resembling a global monopoly...".  At that time, American schools ramped up international recruiting to their home campuses, drawing students primarily from "elite, Westernized, Anglophone families", students who had academic backgrounds that matched well with those of  American students and the resources to pay high American tuitions.  Soon, responding to the international demand for American degrees,  American business schools began to branch out around the world in the most promising markets.

Although successful branches were opened in many world sites, difficulties began to appear, some arising on the home front.  It was, of course, impossible to replicate home-campus conditions in the new branches, and many faculty felt very uncomfortable about the resulting programs. Accrediting constraints added  another level difficulty.  Externally, international political events often made overseas operations more difficult.

Lovett's key point, however, is that something much more fundamental was at play:

In retrospect, however, it is clear that demography and culture, not politics, placed limits on the ability of American business schools to clone themselves successfully abroad, even when conditions were favorable and suitable local partners could be found. 

Even with the branch campuses in place, the children of the elite were still going to the US for their schooling. The new offshore campuses were attracting  primarily students from families in an emerging middle class - students for whom study in America would be a major financial burden. The offshore campuses also attracted young women for whom study abroad was considered to be culturally inappropriate.  This offshore group belonged to a very different demographic that was less well prepared than the group going to America in terms of traditional academic credentials, mastery of English, comfort with Western norms.  Of course, the American model of elite higher education, with its blending of research and teaching,  is the most expensive model of higher ed ever invented.  Pricing offshore programs at the high levels demanded by this model put these programs out of reach of most middle and lower income students.  Thus the realistically defined potential student body turned out to be less than predicted.

More damaging to the model was the unwelcome realization that not all of the world works just like America. Students, although they were hungry for access to many of the components of the world-famous American MBA, and the networks to which it provided entry, did not find it met all of their more actual, contextual needs.  Thus:

Graduate students in the United Arab Emirates, for instance, noted that to function in their region, they needed to apply principles of Islamic finance even while learning those of Western finance.

US faculty are, by and large, not in a position to speak knowledgeably about many of the problems of actually doing business in other countries and other cultures. Consequently,the door was left open for foreign institutions to "borrow" what they could from American higher ed, and then add country-and culture-specific material and pedagogies to provide a more powerful local product.   Thus, there is a proliferation of "other models" being developed, some of which already are being exported to countries with similar cultural conditions. 

Lovett finds that higher education leaders around the globe are quick to acknowledge the core strengths of the American approach, including peer evaluation and academic freedom. Nevertheless, those leaders see the key challenge of the century to be making higher education accessible to an ever increasing number of students, most of whom will be in countries where economic, social, and political conditions provide constraints that make the American model of limited applicability.

As a consequence, according to Lovett, in order for American higher ed to remain a major player on the international scene:

it means joining colleagues across the globe to develop alternatives to the academic models developed in Western Europe and the United States in the past couple of centuries.

In the light of the resistance to change that so characterizes American higher education, this will be a tough prescription to fill!  However, since the model is already breaking down in the United States, we may have our own internal impetus to move in the direction suggested by Lovett (see The business model for higher education I and II).

Readers might also be interested in looking at an article on a related topic that I recently published in the Times Higher Education entitled Don't assume one (US) size fits all.

Has for-profit higher education missed its big opening into the mainstream?

The news has been filled recently with two “orthogonal” continuing stories about higher education.  The first story involves a seemingly never-ending list of egregious activities that touches almost all of the well known (and less well known) names of for-profit higher education, and the congressional indignation that has followed. It seems increasingly likely that the congress will enact laws that will restrict significantly the conditions under which the for-profit higher ed world can access government student financial aid.  Should this happen, it could greatly constrain the growth of the for-profit sector, and, in fact, put the survival of some of its players at risk. The second story involves the increasingly aggressive growth of on-line degree programs of traditional, bricks and mortar non-profit universities and colleges. This aggressive growth has been driven by an increasing understanding that current funding models of the non-profit sector are broken, and it is imperative to find new revenue streams. Perhaps the most visible, and potentially game changing, of these on-line efforts was recently announced by the University of California system.  One can imagine a situation in which the very highly respected UC system offers a broad spectrum of effective, high quality on-line degrees at prices competitive with those of the better for-profit institutions.  Brand sells, and UC has a much better brand than any of the for-profits are likely to have in the foreseeable future. Under these circumstances, what space would be left for the for-profits laboring under a host of congressionally mandated constraints?

The realization that US post-secondary education attainment is dropping below that of many of our global competitors, and the increasing constraints on capacity defined by shortfalls in the current funding models of higher ed have pointed to need for significantly increased post-secondary capacity (The coming shortfall in workers with postsecondary credentials).  A year ago, many would have suggested that only the for-profits could provide that needed capacity, providing a perfect opportunity for the for-profits to move into the mainstream of higher education. Have the for-profits missed this golden opportunity because of a perfect storm driven by greed of some members of their community on the one hand, and the changing economic conditions for nonprofit higher education on the other?

There obviously is not a clear answer to this question at this point. However, it is interesting to consider some important points regarding both the for-profit and non-profit sides of the question.

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The negatives of the for-profit side are on much display at present. There seems to have been a widespread lack of understanding in the sector that higher education plays a central role in the American dream that puts in on a different level from, say, auto repair or mortgage lending.  Because of this special role, unethical (not to mention illegal) behavior in the provision of higher education will likely be met with societal responses that are considerably harsher than would be stimulated by similar failures in other sectors.  Perhaps because of this lack of understanding, the sector did not sufficiently police itself against providers who focused on the quick buck, and many of the more responsible players did not set up sufficient internal controls to catch bad behavior on the part of employees.  Business models that focused almost exclusively on gaming the federal student aid budget through recruitment of large numbers of aid-eligible students with little or no potential to graduate put the sector in a very risky position, indeed.  Thus, we see recruiting scandals, loan repayment scandals,etc.  As a consequence, it would not be at all surprising to see a number of laws and rules coming out that greatly restrict conditions under which students in the for-profit sector have access to federal loans, and much tighter rules on student recruiting.

However, there also is much to be positive about on the for-profit side. Much of the real innovation in higher education over the past decade has come from this sector. Most have focused on matching educational opportunities to the realities of the life conditions of adult students, e.g. courses that start on an almost continuous basis rather than two or three times a year, learning centers located in high traffic areas for better access, broad on-line offerings, standardization of course content between campuses to enable continuity when students move, and an emphasis on career preparation. They are flexible, able to expand or contract following demand, and rapidly create new courses of study in response to local employment opportunities and in consultation with local business leaders. Some have evolved systems of advising and tracking of students that provide considerably more contact and support than has been traditional in higher education.

The sector has controlled costs while the rest of higher education has given at best lip service to the issue. Cost control has been at administrative, facilities, and instructional levels. In the last of these, new instructional approaches have been developed. Many of these institutions build new courses by involving subject matter specialists, learning specialists, and media experts in a real partnership of equals to create an approach that encourages learning – a costly approach compared to that followed in the non-profit world where the faculty member is expected to play all three roles while being trained only in the subject matter role. This approach, however, enables a variety of options in presentation that can greatly decrease overall costs. 

The for-profit-sector has not made the mistake of equating program quality either with the level of prior educational attainment of entering students, or the fraction of applicants who are rejected.  This, coupled with the innovations such as those mentioned above, has led to this increasingly becoming the sector of choice for working adults returning to education, and of underrepresented minorities.  Increases in both of these areas obviously fit perfectly with national priorities.

Even among the real and obvious negatives mentioned above, some balance is called for. In 2007, there was a major scandal in the non-profit sector relating to students being directed by their financial aid offices towards loan companies that had financial relationships with the directors of those offices.  Financial aid directors at a number of prestigious universities were dismissed as a consequence.  Thus, greed is not an attribute limited to the for-profit sector, but rather something that must be controlled everywhere. 

A very large fraction of students at the for-profits do have Pell grants – but this also indicates that the sector is providing opportunity to students who are less well off financially.  Many of the less well-known members of the non-profit sector also have high participation in the Pell program.  Both reflect the well known statistic that parental income correlates well with admission into higher ranked institutions.  Indeed, in the loan data that has been disclosed, one sees that a number of less prestigious non-profit institutions have repayment numbers similar to those of the for-profits, as well as similar graduation rates.(see, e.g. MagicDiligence’s analysis of two athletic conferences)  It has also been noted that the historically black colleges have a mean repayment rate that puts them well below the mean for for-profits; another set of institutions with repayment rates below that of the for-profits consists of medical schools such as Harvard, Tulane, and Chicago! 

If one looks at the loan data more globally, what one sees is a problem for all of higher education.  Debbie Frankle Cochrane, a program director at the Institute for College Access and Success calculated from this data that students from non-profit public institutions are repaying loans at 54%, non-profit privates at 56%, and for-profits at 36%.  Thus, in the best case, close to half of the graduates with loans are not paying them off according to the criteria used by the government! This raises real questions about the cost of higher education and the actual financial return on the education obtained-across all sectors, both for- and non-profit.  When and if the government moves forward with criteria regarding “gainful employment”, in all honesty, it is an issue for both for- and non-profit sectors.

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Clayton Christensen’s classic management work The Innovators Dilemma describes what happens to industry leaders when an upstart brings a disruptive innovation into an industry. I have commented before that online learning may well  be a disruptive innovation, and the business model of the for-profit education companies  (especially when connected with online learning ) similarly may be a disruptive innovation.  Christensen’s work shows that it is almost impossible for industry leaders to successfully adopt a disruptive innovation. Primary reasons for this failure  include 1) a corporate mind set that refuses to acknowledge that the new approach brings a quality proposition that the customers will find more valuable than the traditional approach;  2) an infrastructure built to support the more expensive traditional approach prevents the new approach from being used in a cost- effective, competitive way; and 3) the new approach provides  direct competition to the old product, and thus poaches customers away from the old product.   The few companies that have been successful in incorporating a disruptive innovation have done so by setting up independent divisions far from corporate headquarters, carrying little of the traditional corporate overhead costs, and with carte blanche to destroy the viability of the traditional product line – Schumpeter’s Creative Destruction within the corporation itself.

The question of whether or not the traditional non-profit world of higher education ultimately can compete with the new world being defined by the for-profits is a serious one. All of the red flags raised by Christensen are present: 1)The faculty – who make up the academic management of traditional higher ed – are broadly and actively hostile to the for-profits and their approach.  They generally are convinced that the education being offered is second class and the approach is simply wrong. Crafting courses in response to input from businesses is often viewed a violation of academic freedom. As a consequence they resist attempts by their institutions to consider the innovations emerging from the for-profit sector.  2)Where such innovations as online learning are implemented, they are simply grafted onto existing structures and approaches.  This leads to the oft heard- and completely incorrect- statement that creating and teaching an online class is more expensive than a traditional classroom one.   It only seems more expensive because we accept as our baseline the very expensive infrastructure underlying the traditional classroom course, e.g. physical classrooms built at high cost to signal the serious academic standing of the institution; expensive facilities poorly utilized because of a rigid academic calendar; and costly research faculty who teach only a few courses per year to a relatively small number of students.  If we accept this baseline as necessary, then the marginal cost of producing another traditional course is certainly less than the marginal cost of producing an effective online class.  However, to bring the disruption into the university, we must recognize that none of these costs and restrictions need apply to the new product if we start with a fresh approach.  3)There is an oft-articulated fear that “online education will draw students away from our traditional courses”.  One response has been to price online courses higher than the traditional ones, which is hardly the way to create the market share necessary to compete with the innovators.

Another big issue for traditional higher education as it considers this new world will be “brand”, or perhaps “mission”. Mission originally involved teaching students from a certain geographic area.  The geographic region of draw has broadened greatly for most institutions, but mission still relates primarily to students willing to come to the central campus.  Numerically, the overwhelming focus of current mission in this sector is undergraduates, with most outside of the community college area focusing on “traditional” 18-24 year-old full-time undergraduates. Brand has been significantly based on exclusiveness, or the number of applicants that can be rejected as not being up to academic snuff.  Although professional training is now an accepted (by most, but not all faculty) part of college and university life, the major universities have a relatively limited list of professions that they consider worthy of serious study. The for-profits reject geographic mission boundaries, see little value in exclusiveness, focus on  non-traditional students of all ages, and consider job-related training at all levels to be meritorious.  Thus as traditional higher education institutions move into the for-profit space in search of increased revenues, they will have to seriously consider how they will change some of the traditional components of their brand and mission.  Such considerations are likely to be quite contentious (see Christensen’s first point above), and no major traditional institution has yet seriously undertaken this critical step.

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There is little doubt that the regulation that likely will be forthcoming from congress and the executive branch will hit many in the for-profit world quite hard.  In the end, the survivors are likely to  become more formidable competitors because they will much more alert to the business necessity of more closely adhering to the ethical and social norms that society expects to see in higher education.  Phoenix, Walden, Kaplan, Capella and others are already developing offerings at both undergraduate and graduate levels that look very similar to what one might see in a major university.  Unnoticed by many in the non-profit sector, they  are all moving along the path of improving quality that is hallmark of destructive innovators.  Their growth prospects and brands will obviously be harmed by the current mess, but their intention clearly is to fill the space that UC and other traditional universities are thinking of moving into in order to stabilize their revenue models.  Many of the traditional universities clearly have much stronger brands at this point, but are they willing to make the changes necessary to achieve the kinds of market penetration necessary to balance their budgets? Only time will tell, but I would guess that most of the first tier non-profits will have a very difficult time in moving significantly into this space.  The exceptions are likely to be those, such as NYU, that already have highly robust continuing education degree programs and thus have already begun to cope with some of the issues described above. I would expect that several of the second tier non-profit colleges will be more successful in moving into this space – they have more to gain by change, and they have significant  positive brand recognition that will  help differentiate them from their for-profit competitors.

Interesting times!

Making a profit on the core educational function

 Following my posting the article Unexamined premises in reporting on the for-profit higher education front, I received an email from an old mentor of mine, John Lombardi.  Like any good mentor, he praised my efforts in that post before gently pointing out that I have missed a key nuance or two in the discussions of the for-profit vs the non-profit sector.  His insights were very interesting, and serve as a springboard for this discussion.  However, he bears no responsibility for distortions of his viewpoints that I might purposely or accidently set out below.

I have often commented that we in the non-profit world of higher education lose money on education.  John pointed out that that is not literally true.  We lose money on the bundled degree product that we sell, which includes education, socialization, athletics, housing, student services, support for professors to create and disseminate knowledge, student recruitment, etc. But if we do the bookkeeping in a different way, we see a different picture. 

Consider first an abstraction that I will call the core costs of instruction.  John argues that these core costs are very similar institution to institution, for-profit and non-profit. That is, the core of education is essentially a commodity. These core costs are always less than the revenue that comes in to pay for the educational product, creating a profit to the institutions. What varies, institution to institution and for-profit to non-profit, is how this profit is used.

Typically, in the non-profit sector, the instructional profit is used to subsidize the various components of the bundled degree.  Some of the subsidized components are themselves part of the instructional “center”. For example, some of the profit is likely to be used to broaden educational offerings beyond the core of profit making offerings, e.g. to support low enrollment majors, and increased breadth of electives.  However, much of the profit goes to non-instructional areas such as student services, student recruitment, athletics, buildings and support for professorial knowledge creation and dissemination by faculty.  Putting all of this together, we over-subsidize. That is, we spend more than the profit made on the core instruction, thus losing money on our now- bundled degree. This deficit must be made up from additional resources (e.g. philanthropy).

Don't assume one (US) size fits all

I published a short article on April 15 on the Times Higher Education website.  The article is entitled From where I sit: Don’t assume one (US) size fits all.  In it, I express some of my concerns about the widespread desire in developing countries to build new universities using US universities as models.  I find that the biggest challenge in consulting in such countries lies in convincing those in charge to focus on what they want and need from their new institution and how to make it happen, rather than on how to create a copy of a successful foreign institution that is optimized to solve a very different set of problems and issues.

I invite you to check it out, and weigh in with comment on either the THE site or here. It is an important issue.      

The canary in the higher education coal mine

Over the past few months, we have seen an increasing flood of articles by supporters of public higher education around the nation sounding alarms about the potential negative consequences of planned cuts in higher education funding.  Heads of public systems provide detailed analyses of the economic importance of their institutions, and of their role in creating social opportunity and mobility.

What seems to be lost in this discussion is that almost everyone in positions of legislative or executive authority appreciates these arguments and believes they are correct.  The choir is being preached to. The problem, simply stated, is that there are no additional funds that can be allocated to higher education in these times of enormously constrained state budgets.   Even when the economy recovers, as it eventually will, history suggests that funding for higher education will not return to previous levels.  Higher education is simply one of a large number of areas of state funding whose growth exceeds state revenue growth.

The reality is that American higher education generally  costs more than society can sustain into the future.  This is true in both the public and private sectors, which have research and education functions that are organized very similarly even though the funding sources may differ. The “canaries in the educational coal mine” , the early warning system, are, in fact, the tuitions of the private sector of higher education.  Those tuitions have grown for over 30 years at a rate that significantly exceeded the growth in either CPI or family income.  It should have been obvious to all that a system that demanded such growth in order to operate would, in the end, crash into a cost barrier.  Although the immediate crisis is in the public sector, the problem is serious in both sectors.

What are needed at this point are not more calls for a larger piece of the public pie for higher education.  The present economic situation makes it highly unlikely that those calls will be answered in a meaningful way.  What is really needed is a hard look at our present model of higher education.  Accepted beliefs underlying the model need to be challenged and rethought. Mission and the societal role of higher education should be reevaluated for the 21^st century.  Faculty roles, organization of research and its relationship to learning throughout the postsecondary experience need to be reexamined.  Administration, which captures an increasing fraction of higher education’s budgets, deserves equal scrutiny.

It is time to recognize that a redefinition of the model of American higher education is necessary.  It is foolish to argue that we already have the best of all possible models – any model can be improved. Nor should we be fooled by the esteem which our model attracts around the world – indeed, it was the dominant model of the last half of the 20^th century, but the 21^st century looks different in any number of ways.  Real educational and research leadership in the 21^st century will require a model that responds directly to the changing realities of the times

Further developments in the Columbia University Global Impact project.

A year ago, I wrote briefly about Columbia University’s announcement of the opening of a number of global research centers (Columbia goes global following a different track, Mar 20, 2009).  These centers were to be multi-use: facilitating international research collaborations, academic programming, study abroad, etc. As stated in the original announcement:

The goal is to establish a network of regional centers in international capitals to collaboratively address complex global challenges by bringing together scholars, students, public officials, private enterprise, and innovators from a broad range of fields.

This was, and is, a very unusual, and very strategic approach to globalization, seemingly going far beyond the efforts of other universities.  It states that the core missions of the research university of teaching and research should be tied together synergistically as globalization occurs.  It also states that these centers should be used to pull global expertise into the Columbia network of research and teaching, thus leveraging Columbia’s already very significant strengths.  And, of course, the emphasis on complex global challenges is what is most likely to bring those global experts to the centers, thus increasing Columbia’s visibility and prestige.    

Now, a year and 2 days later, Columbia announced the opening of two additional centers, one in Mumbai, India, the other in Paris, France.  These join the original two centers, located in Beijing and Amman.  The role of the centers was further articulated in this most recent announcement as:

Columbia Global Centers are established to encourage new collaboration across traditional academic disciplines at the University. Some of the research and scholarly initiatives will be regionally focused; others will involve multiple centers, and in some instances the full complement of centers will be engaged across many continents. The centers are also intended to support a significant expansion of opportunities for Columbia students and faculty to do work abroad, with the flexibility to pursue long- or short-term research and service-learning projects.

In my original post, I called this A fascinating - and overdue - experiment! It is good to see that the experiment is continuing, and remains fascinating. 

Dana College goes for-profit using a somewhat different approach

Last week, Dana College, a non-profit college of the Evangelical Lutheran Church in America, announced that it was being taken over by the for-profit Dana Education Corporation (DEC).  Dana College had experienced financial problems over the past few years, and had seen declining enrollments.

Most of the press (e.g. the AOL report) has treated this as just another in a series of stories of small non-profit institutions that found that the only road to fiscal salvation lay in purchase by a well financed for-profit.  According to this story, the for profit then uses the institution's accreditation to inflate enrollment, thus simultaneously cheating both taxpayers and students (see Unexamined premises in reporting on the for-profit education front).   However, based on the press release, this ownership transition does not seem to be well described by that generic story.

According to that release, DEC intends to maintain Dana College’s traditional mission, and will focus on liberal arts education in a bricks-and-mortar setting.  Dana College’s old Board of Trustees:

 will continue under the name Dana Education Foundation. The foundation will continue to preserve the heritage of Dana College through support of the Danish American Archives, campus ministry, Alumni Affairs & Alumni Council along with support for community events.

DEC is led by two veterans of the for-profit world:  Niraj Kaji, formerly Vice President of Walden, and C. Ronald Kimberling, formerly President of the Chicago campus of Argosy. Kimberling  also served earlier in senior positions in the Department of Education.   Kaji will become President of Dana College after the transition, and Kimberling will become Provost and Chief Academic Officer.   Other investors were not identified.  However, according to the press release, the new board of trustees will have an interesting composition:

 Upon the effective date of the new partnership, members of Dana’s board of trustees will include leaders from higher education, government, and the private sector including a former state governor, past president of a Lutheran university, administrators from Ivy League universities and local community leaders.

According to the press release, DEC currently has no plans to start an on- line extension, but rather initially will focus on rebuilding the on-campus student population to previous levels, and in building study abroad programs.  

In an interesting break with other similar transitions, faculty tenure will not be abolished. Inside Higher Education describes Kimberling’s views on the tenure issue thusly:

Kimberling said that the decision to keep tenure reflected his belief that "faculty are the lifeblood of institutions" and that to be effective in "blending cultures," a for-profit institution should show respect for "the values of traditional institutions." He said he viewed tenure as "a master's badge" and that there was "nothing incompatible" about tenure in a for-profit environment.

DEC’s decision to focus on rebuilding the campus programs is similar to the strategy typically followed by Laureate Education (parent company to Kaji’s old company, Walden) in its acquisitions.  The board of trustees looks like it will be similar in composition to the boards that Laureate has instituted for its U.S. acquisitions (see, e.g. the recent announcement from the College of Santa Fe).  

The interesting innovation in the Dana case seem to be the maintenance of tenure.  In some ways, it seems that DEC is betting that professional management will enable Dana College to thrive and grow without shedding core attributes such as mission and tenure.  It will be interesting to see how this works out, and how DEC's strategy clarifies and evolves over time. 

 

The business model for higher education: II. How might it be fixed?

In the previous post,The business model for higher education: I. What doesn't work? , I described some of the approaches used by a fictional corporation, VPI, to create ongoing financial health, and looked at higher education’s use of similar approaches. The mainstay of higher education’s search for financial health thus far has been to increase price faster than CPI, while the use of other common corporate strategies has been quite limited.  This post uses the corporate model to suggest several approaches that might be useful in redefining the business model for higher education. In fact, many of  the things higher education might chose to do if it could not raise tuitions faster than CPI are things that already have been done at  many institutions at a relatively low level, or have been discussed widely.  For them to become a major component of the activities of higher education institutions, however, would require major changes in perspective and view of mission. 

The business model for higher education: I. What doesn’t work?

 

The economic downturn has led to numerous calls from a wide variety of sources for higher education to make hard choices and to think more strategically about cutting costs.  Thus far, there have indeed been many hard choices made in both public and private sectors (see e.g. the recent report by the Association of Public and Land-Grant Universities).  These choices almost universally reflect necessary short-term responses to the immediate situation. However, for both good times and bad times, history has shown that the current business model of higher education requires annual net tuition increases that are well in excess of increases in family income or CPI (Perspectives on the elephant of college pricing, Nov 19, 2009).   Clearly, such large increases cannot continue indefinitely.  Consequently , creative long-term strategies ultimately will have to be devised that lead to a significant re-imagining of the higher education landscape - one that results in a sustainable cost/price model that supports the multiple missions of higher education.   

Learning outcomes information and the quality of higher education

But the biggest problem with American higher education isn=t that too many students can=t afford to enroll. It=s that too many of the students who do enroll aren=t learning very much and aren=t earning degrees. For the average student, college isn=t nearly as good a deal as colleges would have us believe.  Kevin Carey

 

 Kevin Carey, one of the most articulate critics of American higher education, has a powerful new article entitled A That Old College Lie@  in the Winter 2010 issue of Democracy.  (Some of my previous posts about Carey=s work are: Sept.1, 2006; Oct.11, 2006; April 13, 2009).  Richard Vedderer also has an excellent recent post talking about Carey=s article.

Carey begins by writing about Pell grants, and the plans of the Obama administration to increase them. He points out that Pell grants have become less important over time as college costs have increased much more rapidly than CPI.  As a consequence, student borrowing is increasing, as are loan default rates.  With this, he segues into his main theme, which is given by the quote that begins this post.  He argues that students at all levels of colleges and universities are not learning all that they could be, and that Aquality@ of American higher education is not what we imagine or claim it to be.  He rightly points out that what we (and much of the world)  think of as the Ahigh quality@ of the American system is Adriven by the top 10 percent of institutions and the students who attend themBHarvard, Stanford, MIT, and the like.@ 

Carey argues, however, that we actually know very little about how good our institutions are at helping their students to learn.  Publicly available data on that subject is almost nonexistent.  As a consequence, Aquality@ is actually primarily Aprestige@, and prestige is defined through combinations of Awealth, admissions selectivity, price, and a generalized sense of fame that is highly influenced by who=s been around the longest and who produces the most research.@  Learning is just simply left out of the mix that defines quality in higher education.   However, if comparable information on teaching and learning were readily available, a number of problems would be addressed.  For example, this information would enable newer institutions to compete more effectively with the old guard, thus increasing competition and leading to greater cost controls. A resulting customer focus on teaching and learning would lead colleges to allocate their more of their resources to that end, rather than, e.g. high priced professors who don=t teach.   

Carey point out that some groups have recently begun to collect information on learning outcomes that would greatly aid parents and students in making informed choices when picking a college - and would help us to give a new and important redefinition of quality.   However, he argues that this information in being held captive by the colleges themselves, and by educational lobbies that represent the colleges.  One has only to review some of the submissions made by such organizations as ACE and AAU against the outcomes focus of the Spellings report to see the merit in Carey=s argument. 

Finally, Carey tells us what needs to be done:

The Obama Administration has proposed huge new increases in Pell Grants and other higher education programs, amounting to more than $70 billion over the next decade. It should require institutions receiving these funds to provide more information to the public in exchange. It should invest in R&D to develop new methods of gauging student success. And it should be prepared to fight a scorched‑earth political battle against the entrenched special interests that will, if history is any guide, surely rise in opposition.

None of these points will surprise readers of this blog.  However, Carey says it all very well, and covers a lot of important points I have not mentioned in this post.  The one issue he did not cover that I think is missing is the Bologna process, which focuses on learning outcomes in higher education (see The Bologna Process- a significant step in the modularization of higher education Sept 12, 2008).  The Bologna process now involves 46 European nations, and dozens of institutions in South America.  Our refusal to seriously consider learning outcomes risks leaving us outside the next big global movement in higher education. This could result in the US losing its leadership role higher education, and becoming a follower with lots of catch-up to do.  

Carey=s solution is one that the Obama administration really should consider- this is an unusual opportunity to move American higher education to a more effective plane, increasing our ability to cope with the changes going on in the wider world. 

Higher education as an urban/national/global services industry

I strongly believe that any post in a higher-ed blog that prominently displays a picture of a bottle of good New Zealand Sauvignon Blanc has a high probability of being worth reading. A recent post in GlobalHigherEducation adds considerable support to that theory.  Kris Olds and Susan Robertson, the co-editors of said blog have reprinted a contribution that they wrote for the UK Higher Education International Unit’s most recent newsletter.  The subject is an increasing emphasis on the international aspect of higher education as an economic engine of national economy.  The reason for the photo of the NZ Sauvignon Blanc being prominently displayed in that article is that a recent report in GlobalHigherEducation shows that trans-national higher education brings more money into New Zealand annually than do international sales of their (justly) vaunted wines.  Olds and Robertson also point to reports from other countries showing similar high economic impact of the globalization of their higher education systems.

A missing skill in the globalization of higher education

Inside Higher Education had an excellent article last week entitled Outsourcing Teaching, Overseas that captures many of the problems faced by higher education institutions as they struggle with globalization:

How to teach university degree programs offered overseas is a complicated question. Does a university rely on faculty from the home campus to travel abroad for a year, semester or month at a time to teach, hire a new cadre of faculty at the overseas location, deliver coursework through distance education, or some combination thereof?

 The article describes one approach used by the Utah State University John Huntsman School of Business to offer a Utah State bachelors degree in economics in China.  This program is described in the annual report of the School in the following way:

Utah State University has been offering degree programs through cooperative agreements with partner universities in China since 2000. Currently, the programs are offered at Northeast Dianli University (NEDU) in Jilin City, Beijing Institute of Technology (BIT) in Beijing and Institute of Advanced Learning (IAL) in Hong Kong.....

Students in the degree program in mainland China (at NEDU and BIT) pass the rigorous Chinese national college entrance exam, which identifies the top 6% of high school graduates. Once admitted to our partner universities, the students apply for admission to Utah State University and are admitted if they meet our admission standards. The students become matriculated USU students upon successfully passing our intensive English language courses offered by IELI (Intensive English Language Institute)....

In our model, various USU departments agree to provide the specific courses required in the degree program, including general education courses. Departments assign “lead professors” to write the course syllabus, pick the text book and other instructional materials, and to write exams and other assignments for the course. The teaching materials are provided to “local facilitators” (faculty at our partner institutions) who have been approved by the USU department to deliver the lectures and other course material on-site in China and Hong Kong. Lead professors and local facilitators are in contact each week to make sure that the courses are on-track and to deal with teaching and evaluation issues. Final grades are assigned by the lead professor.....

It is anticipated that we will continue to admit 100 students each year into our programs at NEDU and BIT. In our program in Hong Kong, at IAL, we anticipate an increase in enrollments to 150 each year. Hence, we believe that we will have as many as 800 students in our degree program in Asia in the near future (accounting for students who drop out or transfer to Logan). This number is likely to exceed 1,000 once the Hangzhou program is approved. It is likely that we will graduate more than 300 economics majors each year at these locations.

On the “factual” side, these quotes tell us that the program is offered in several sites, and is attracting a pretty significant number of students.  The students are high quality, having passed the Chinese national college entrance exam plus intensive English language tests. The annual report emphasizes that the student body is so small at present because the Chinese government limits enrollment. So it sounds like this is a successful program from the student’s perspective.

The concerns discussed in the Inside Higher Ed article relate to the 3rd quoted paragraph above, describing how the courses are taught.  Phillip Altbach's comments in the Inside Higher Ed article certainly express the concerns of many:

My view, and I am in a small minority on these matters I think, is that foreign degrees should be taught by faculty from the sponsoring university faculty, and not be random local scholars, even if they are ‘approved’ by the home campus faculty. What USU is really doing is ‘franchising’ their degree -- in a McDonald's way -- which is common especially among low prestige British universities in countries like Malaysia these days. Those British institutions have in some cases gotten themselves into hot water with the British quality assurance agencies and the press for low standards, inadequate supervision and the like. USU may well get into that bind.

This captures, I believe, the cultural and philosophical conundrum that a university must resolve as it seeks to globalize.  At one level, it would be nice to have faculty from the sponsoring university teach courses all around the world, as suggested by Altbach.  Unfortunately, that is highly unlikely to happen - past experience clearly tell us that faculty generally do not want to be posted to some other part of the world for extended periods.  Once is fun, twice is a problem, and three times is impossible.  Even regular short stays are often difficult to make work.  I know of one top  university with two offshore sites where courses are taught in a way that only requires their faculty to be there for two weeks at a time, once each year.  After several years of running this program, the only way to get regular  faculty to commit to this offshore teaching is to make two weeks at one site, two weeks at the other the entire teaching load for the year! This is not the way to solve our budgetary problems!

How the Recession of 2009 Will Affect Post-Secondary Education - viewed from Canada

I thank James Pringle at Ryerson University in Toronto for calling my attention to a report from the Educational Policy Institute with the challenging title On the Brink:How the Recession of 2009 Will Affect Post-Secondary Education. The report was written by Alex Usher and Ryan Dunn .  The report focuses on post-secondary education in Canada, but many of its insights and conclusions apply to higher education more broadly.

The authors look at impacts of the recession, first on endowments, followed somewhat later by decreasing state revenues and corresponding decreasing support of post-secondary education. They discuss increasing tuition to meet some shortfalls, and the differences between Canada and the US in terms of options in this arena.  They discuss a number of institutional response options to revenue shortfalls, none of which will surprise most of my readers.

I particularly liked the discussion of what the authors dub the “Peak Post-Secondary” Scenario.  They note that around 2014 the main cohort of baby-boomers begins to retire, and at that point, costs of health and elder care begin to rise rapidly, and the percentage of workers begins to decline, thus permanently exacerbating pressure on state budgets.  Consequently, just as the recession recedes, societal priorities are likely to be pushed away from education by demographic pressure .  Thus the “Peak Post-Secondary” Scenario calls for permanently declining per-student revenues. 

In almost any scenario, the authors suggest that Institutions will need to increase revenues from non-traditional sources.  In the “Peak Post-Secondary” scenario this becomes urgent. Among the new sources, the authors recommend cross border education, but not just any cross border education:

But cross-border education is not solely about picking up bodies overseas and shipping them here; that might have been an adequate description of the game twenty years ago, but things have moved on since then. The establishment of a broad middle class in many developing countries has vastly increased the demand for post-secondary education. In particular, demand has boomed for education branded (if not provided) by large, established, Western universities is very strong in much of the world. Large public universities from North America, England and the UK have a good name in Asia and Africa – much better in many cases than the local university. The growth market in education for major Western universities lies not in attracting ever-greater numbers of students but rather in modularizing knowledge, delivering it in locally-appropriate forms through international educational partnerships, and certifying students at the end of a course or period of studies.

Sounds like a description you might have read in some of my previous posts!

However, the authors point out that revenue generation is unlikely to be sufficient to resolve the financial problems of post secondary education in the future: Institutions are also going to need to tackle their cost base. At this point, the authors begin to struggle with the challenges of fixing our near-universally broken cost/price model.  They suggest one possible change that is quite logical- and sure to be greatly controversial:

One might reasonably expect, therefore, that Peak Post-Secondary will lead to a reengineering of tasks and costs, and in particular the creation of a two-tier faculty. This will see some faculty paid to concentrate more on research and teaching graduate students, while others will be paid primarily to teach – and in some cases teach an increasingly standardized curriculum.

They suggest that this common curricula, which they view as being at the undergraduate level only,  could have both financial and educational benefits:

By adopting common curricula, many hours of instructor time could be saved – time which could be used to increase student/instructor contact and assist students in developing mastery over freely-available subject matter courses.

Obviously a break from our image of thousands of post-secondary institutions each offering its own special hand-crafted education.  However, it might well offer some educational benefits in that it focuses more on the issue of learning rather than curriculum development.

The report ends with a very important call to reality that sums things up in a way that I heartedly endorse:

Only those institutions and governments that re-think the delivery of education itself, by measuring inputs and outputs and deciding based on evidence where dollars can best be spent, can hope to come out of this recession in better shape than they came in.

What Moody’s doesn’t say in its recent report on higher education

 Moody’s Investor Service recently put out a report entitled Global Recession and Universities: Funding Strains to Keep Up with Rising Demand. It provides a very interesting and informative view of some aspects of the higher education scene as observed from outside of the system. The report came to my attention through posts in GlobalHigherEd (on whose server the report above resides) and University World News, and I thank both for their nice articles.

Moody has looked at universities at selected areas around the world, and how they are handling the global downturn.  Moody’s ultimate interest, of course, is to be able to rate these universities as they access capital markets, so the focus is on aspects of the environment that can or will impact their financial stability.  I will describe some of their observations that I find most interesting, and then will talk about the part of the report that I find most important - the things that are not said.  I will not try to describe the whole report, but recommend that you simply read the original - it is only 13 pages long. I also will focus on the parts of the report that refer to US universities, since that is the group that I know the best.

As a minor point, the report emphasizes public institutions, stating that public universities “most likely accounting for between 80-90% of all students enrolled in tertiary education.” A recent OECD report claims that private higher education now accounts for 30% of tertiary enrollment globally.  This relatively minor discrepancy does not invalidate any of the conclusions of the report, of course. 

Moody’s notes that recessions generally lead to enrollment increases for a variety of reasons, but warn these increases may not be uniformly distributed:

While enrolment declines are possible at individual institutions due to particular market, reputation, and management challenges, we expect higher education overall to enjoy a significant “tail-wind” in student demand for spaces over time. This is especially likely for universities that are “access” oriented with less restrictive academic requirements and a mission focused onskill development. Many prominent universities that function as comprehensive research institutions focused on maintaining strong academic quality reputations and high entrance standards may see the greatest impact in their advanced degree programs.

On the other hand, Moody makes a strong point regarding fundamental changes in funding:

Moody’s believes that the magnitude of economic changes in some countries may place pressure on historic funding and financing patterns of higher education. This would likely be driven by two conflicting trends– increased policy directives to expand university programs and more limited ability of governments to fund the desired expansion Not surprisingly, many countries now face significant budgetary challenges with large competing demands on government dollars.

While some aspects of spending on higher education have been temporarily boosted through stimulus spending, this is largely financed by government deficits and may be difficult to sustain beyond the near term. At the same time, the desire for rapidly rising investment in higher education to support higher participation rates and expanded research capacity suggests the need for significant new operating and capital dollars over an extended period. These trends may well become clearer as the ability to fund higher education comes under greater pressure.

In  regard to this desire for greater revenues, in the understatement of the year, Moody’s cautions: raising student fees is usually a politically sensitive decision.

For the US, there is a timely warning regarding globalization:

In general, we also believe the level of global competition and pooling of talent for faculty and students will continue to increase. As U.S. universities cut back significantly on hiring and capital spending,  non-U.S. faculty and students may be susceptible to recruitment to
other leading universities or home countries. Over the past three decades, the number of students enrolled outside their country of citizenship has risen dramatically, from 0.6 million worldwide in 1975 to 2.9 million in 2006, a more than four-fold increase. Developments like the Bologna Process in the European Union, and similar efforts in other regions, may further encourage the trend of crossing borders to enroll in higher education.

Overall, Moody’s is looking at financial stability impacts of increasing student demand (good), research funding (good), uncertainty of state funding (bad), conflicting demands for services (mixed), political pressures(bad).  So what is missing?  Actually, it is not so much that something is missing, but that the financial problems and dangers become clearer if one looks at them from a slightly different angle, one that will be familiar to readers of this blog.

Two more, very different, meetings

My friend Joe Duffey keeps sending me announcements about meetings in some vain hope that he can keep me more aware of what is happening in the world.  I feel compelled to comment on two of his recent alerts because they do say a lot about what is going on. One depresses me, the other I find very hopeful.
1. The World Summit on University Ranking- this is the depressing one. 
Readers of this blog know how I feel about university rankings: I dislike them greatly.  I could spend a day listing all of the reasons why, but will just run over a few. First, the idea that the overall quality of universities can be reduced to a single number in silly.  Every great university has some really terrible programs, and many otherwise mediocre institutions have some superb programs.  When trying to rank programs (as the NRC does), one finds that the reputational data are squishy (who really knows very much about the programs at more than a hand full of rival institutions?), and the “harder” data are rather arbitrarily chosen (it can be easily measured).  In the end, the statistical uncertainties of the data leave almost everyone in a statistical tie, but that doesn’t stop anyone from dropping the uncertainties and using the numbers as absolute. 

Because research data are easier to obtain than teaching data, rankings focus on the research.   This effective devaluing of teaching and learning in our self analyses is not healthy, and at some point will lead to difficulties in our relations with the societies that support us.

Whatever data are used, some person then must decide how to weight different inputs in order to add it up to a definition of  the best university.  Obviously, however, there is absolutely no unique way to combine the data.  One way is arguably as good as another.  This does not stop anyone either.  In fact,  the rankers like this aspect, since it means that an almost endless number of rankings can be published, each leading to a happy financial or reputational ending for someone.

Rankings are, of course, a celebration of the status quo.  Consequently, they punish institutions that are trying to respond innovatively to the changing world.   This would be of little importance if so many governing boards and presidents were not focused on “improving their rankings”.  Thus badly needed innovation - including cost cutting innovation - becomes even more difficult to carry out.

Finally, when making “world” rankings, most often the criteria are based on venerable Western universities.  Why? Why should looking like Harvard be a good idea in many countries of the world?

So overall, I think we can all be quite concerned that we now have an International Rankings Expert Group.  They are producing a product that by definition is flawed, and serves almost no good purpose.

2.The Global Higher Education Forum 2009-  this is the hopeful one.
This is almost the anti-meeting to the one described above;

The Global Higher Education Forum (GHEF) brings together scholars, policy makers, researchers, academics and administrators to reflect, analyse, discuss and debate on a wide variety of issues pertaining to global higher education in a south-south context. In particular, GHEF2009 will focus on the theme of Global Higher Education, seeking to ponder and reflect on the benefits and challenges and at the same time, envision the way forward for emerging and expanding, rather than for established, higher education systems.

This is a group that actually wants to think about alternative approaches to those which are celebrated above- approaches that may be enormously more valuable for the countries involved. As pointed out in the Background and Rational of the meeting:

In view of the many similar initiatives by different regions and groups to promote the development of higher education through a common platform (which is increasingly biased towards European/American models), the deliberation on the practicality and appropriateness of Asian, Latin American and African countries following the same pathway is timely. The current global economic meltdown presents another interesting backdrop and context to analyse and deliberate on the suitability of European/American models for expanding and emerging higher education systems in Asia, Latin America and Africa.

There is a wonderful article in GlobalHigherEducation written by two members of the organizing committee, Morshidi Sirat and Ooi Poh Ling, describing the goals of this forum. We should all wish them success.