higher ed

Reading Between the Lines of the Latest ACT Results

Jenny Choi — Wed, 13 Aug 2008 13:12:31 -0400

New ACT results were released today, indicating a slight drop in scores for the 2008 graduating class (details of the results can be found here). But ACT officials were quick to point out that a record number of students took the test this year. They argue that, while the proportion of test-takers who demonstrated college readiness may have stayed the same, the actual number who are prepared for college increased in 2008. Still, the numbers themselves are undeniably grim, with just 22 percent meeting a benchmark score for college readiness in all the four subjects: English, math, reading and science. In math, 43 percent met the ACT's benchmark in college readiness, and just 28 percent met the benchmark in science.

Our research has shown that different parties have widely differing perspectives on the issue of college preparedness. A majority of parents (69 percent) in our Reality Check report said they believe their child will have the skills needed to succeed in college. But most parents also think that their child's education is not only better (61 percent) but that the material they are learning is harder (65 percent) than in their own experience. Some of our earlier research, however, showed jarring discrepancies between college professors and public school teachers. Nearly seven in 10 college professors said a high school dlploma is not a guarantee that a student has learned the basics, compared to 22 percent of public school teachers.

When To Break The Piggy Bank

Paul Gasbarra — Tue, 22 Jul 2008 15:17:21 -0400

Last year Public Agenda discovered that 52 percent of Americans believe that colleges are run mostly like a business with their eye on the bottom line rather than mainly caring about education. It would be hard to make that argument for a school such as Berea College, in Berea, Ky., which accepts only students from low-income families and charges no tuition. There is no football team to root for, no glass and steel recreation center to work out at, and there are no climbing walls to scale. Yet 85 percent of the applicants who are accepted attend. What would you give up to go to a school that costs nothing?

Berea makes ends meet by putting the students to work and forgoing many of the resort-like amenities of big schools that charge big money. They are also gifted with a $1 billion endowment which helps pay the bills. A billion is a lot, but it is dwarfed by the endowments of many other schools.

In an article in Monday’s New York Times, Tamar Lewin reports that the public is increasingly suspicious of schools with enormous endowments. With coffers like Harvard’s of $35 billion some believe that schools should be doing the public more good by paying student tuition in a manner similar to Berea. Anthony Marx, president of Amherst College, claims that his school has considered it, but it doesn’t make much sense seeing as most of his students already come from affluent parents who can pay, which seems like a bit of circular logic on his part.

The big endowment schools are providing more grants to low and middle-class students. With endowments in the tens of billions people are pushing for more money to enter the public sphere. Congress is even looking to impose a law forcing schools with over half a billion dollars to spend five percent of their assets.

Lewin also mentions a proposal in Massachusetts to impose a 2.5 percent tax on schools with endowments more than $1 billion. I’m guessing Massachusetts intends to redistribute the money to grants for students, something 75 percent of Americans support, according to "Squeeze Play." But will this help people? Will it help the schools? And what’s going to become of the endowments, especially when Wall Street has taken so much of their growth away?

In his book Tuition Rising, Ronald Ehrenberg discusses how schools tended to spend only about four percent of their endowment on average over a 40-year period. When one considers the rise of tuition combined with inflation, four percent seems like an insult. But the picture is more complicated when looking at the details.

Much of these large endowments are invested in the market, and the market doesn’t always perform well; there were years with negative returns. On the average though, moderate investment strategies returned nearly 10 percent. So what happened to the other six percent? Well, about four to five percent of it needs to be reinvested to protect against inflation and maintain purchasing power. Other bits of the endowment’s success are sucked up by administration costs involved with tracking money and investments and writing reports.

In order to provide more low cost, or no cost, education, well-endowed schools could buckle to pressure that outside forces are putting on them to spend more of their money, but they risk financial solvency in the long term by doing so. Endowments may have grown tremendously in the past few years, but spending at the rate of growth could make for a mess down the line. The other option is to give up more amenities, and go the way that schools such as Berea have.

The downside of this is that cutting costs would also mean giving up high-paid professors, fancy gyms and important research; the latter is argued as being almost as significant a public service as grants to students. Berea is an admirable example of a school doing a public good, but it is just one of many models of spending. Perhaps not something every school can live up to.

Vicious Cycle

Paul Gasbarra — Tue, 15 Jul 2008 16:35:13 -0400

Yesterday "Inside Higher Ed" featured an editorial addressing the cost of college in an upfront manner. Kevin Carey sees the relationship between the rising cost of college and private student loans to be co-dependent. The article relates how he encountered a cheerful group of college loan lenders trying to attract students with Frisbees and pens. They were peddling debt and, as he outlines it, the way they do it helps to exacerbate the rising costs of college. He brings up some good points; the availability of student loans combined with their proven profitability shoulders students with a college debt that can hound them for the rest of their lives. Because college loans are presented in a cheerful way they leave no incentives for schools to keep cost down. Carey writes, “The rapid expansion of student debt, combined with the soft-pedaling of debt’s true meaning has served to forestall higher education’s inevitable day of reckoning when it comes to price.”In short, as long as students can get the loans, colleges can charge what they want and not have to pay attention to the bottom line.

In conversations that Public Agenda has had with college presidents, most say they are working to keep the bottom line down, but costs continue to rise and Americans are beginning to have doubts about whose best interest colleges have in mind. As reported in Squeeze Play: How Parents and the Public Look at Higher Education Today, half of Americans (52 percent) believe that colleges are like businesses and mainly care about the bottom line, as opposed to education. And going along with Carey’s concerns, 78 percent of Americans believe that students have to borrow too much to go to college – 60 percent saying they believe this “strongly.” Meanwhile, 62 percent of Americans believe that many highly qualified, motivated students don’t have an opportunity for higher education.

With a nation concerned about debt and opportunity – and especially in tough economic times – it seems like both institutions, the student loan industry and higher education need to do more to gain the public’s trust, both in the short term and in the long term. These industries also need to recognize, as Carey mentions, that education is not a private good. The benefits of an educated individual extend beyond just that person and into the public sphere. The more educated a person is, the better it is for everyone. But by making education financially unattainable, especially without the aid of nearly insurmountable debt, our collective future is threatened.