February 2, 2011--Is This Any Way to Run A College?

One of America's greatest assets is its higher education system. Not only have we found ways to offer access to virtually anyone 18 years-old or older via community colleges, but at the upper end our undergraduate and graduate and professional schools are among the world's leaders. Over the decades these institutions have attracted the world's best and brightest.

And through 50 separate public higher education systems we have figured out how to make attending college relatively affordable. For those for whom state-subsidized tuition still leaves college beyond their means there is the possibility of part-time study and readily available federally guaranteed student loans and Pell Grants, which do not require repayment.

True, in recent years countries such as India, China, and Brazil, as well as many in Europe have expanded their own systems so that more than in the past can enroll, and they have simultaneously improved quality so that their ablest students can stay close to home to receive a world-class education.

As a result, and because of the general slippage in the quality of pre-collegiate education in the United States, we have lost some of our preeminence. For many years we led the world in the percentage of high school graduates entering college and saw more graduate than any other country. The most recent College Board data show, however, that we have slipped to 12th place in the percent we see completing college. Trailing even Russia in this critical higher-education "race."

This decline in the numbers and quality of our offerings is dangerous to our economic and political future as the times more and more demand a higher-educated population.

So how are we responding to this new crisis?

At the state level, ubiquitous fiscal crises may be leading to innovative responses and improvements. Around the country, as a way to cut expense budgets and improve K-12 education, governors are seeking ways to renegotiate contracts with teachers unions. Including, pressing to end of the tenure system so when there need to be cuts they can occur in ways other than as currently required--the last in must be the first out.

Without tenure and the seniority system, there is a chance at least that the inevitable retrenchment can be done on the basis of teacher effectiveness--the least effective can be the first to go. And if this hurdle can be overcome, without the strict requirements of tenure, even when not faced with a budget crisis, teachers can be hired, evaluated, and then retained because of the quality of their work with children. New Jersey Governor Christie is making quite a name for himself by taking on the unions around these very issues.

Than at the higher education end there are also some promising signs, also in part the result of tightening budgets.

According to an article in the New York Times (linked below), the Obama administration is considering rationing federal aid to college and universities on the basis of improved efficiency and student outcomes.

Neither of these should be radical ideas, but in fact they are.

Colleges get aid based purely on enrollment. What those in the trade call "head count." There are virtually no incentives for success and no requirements to make institutions accountable for the way they spend their money.

Colleges are not rewarded for how many they graduate and are not penalized for graduating very few. In the heady days of ever-increasing enrollments and flush budgets, all but the selective colleges opened their doors to almost anyone who wanted to enroll, collected the subsidies that were connected to head count, and paid very little attention to what happened to students. In fact, since it costs less to educate freshmen and sophomores and more to provide classes for juniors and seniors (their more specialized classes tend to be smaller than freshmen's and thus the student-teacher ratio is higher and more expensive to run), in many ways college administrators interested primarily in their budgetary bottom lines were happy to see students drop out before becoming upperclassmen.

A few states have begun to experiment with budgeting based less on enrollment count than student progress. West Virginia's basic college scholarship program requires students to make steady progress and graduate in four years. And Indiana has adjusted its higher education funding formulas to give more money to colleges with higher graduation rates.

These could be good models for the federal government to consider. Currently, the Department of Education spends about $45 billion a year on higher education. Much of it to guarantee loans and provide Pell Grants. For the sake of fiscal restraint, institutional improvement, and seeing more young people complete a full education and thereby become more productive citizens and earners (and thus taxpayers), these grants and loans could be tied to student progress; and the subsidies that the federal government provides directly to institutions could, among other things, be tied to how well their students progress.

For example, the feds spend billions each year matching scholarships colleges themselves give to students and that match could be outcomes based. This seems like an obviously good idea--good for students, good for institutions, and of course good for America--and in the current environment overdue.