A New Deal for Higher Education

Next week, I will be going to DC to meet with the United States Students Association, AFT higher education leadership, and members of Congress to discuss a new funding model for higher education.  Here are the main talking points:

1.     We need an integrated plan to deal with student debt, higher ed funding, contingent faculty, and quality higher education. This requires a new compact among institutions, students, federal government, and state governments.

2.     The current system is an incoherent combination of institutional aid, state aid, federal aid, student loans, federal tax breaks, and state tax breaks.  We are currently spending enough on higher ed from all sources to make it free to the students, but we need a comprehensive plan.

3.     The proposed plan is to tie state and federal aid to the requirement that each university and college receiving funding generates at least 75% of its student credit hours in classes taught by full-time faculty.  Another possible requirement would be to tie this support to a certain level of direct instructional spending and to demand that at least 75% of the courses be taught in classes of less than 26 students. This policy would not only force schools to put more resources into undergraduate education, but it would also motivate universities and colleges to have more effective learning environments. There would also be a requirement that states maintain their support for higher education. 

4.     Currently, we are spending more per student, but fewer students are earning degrees.  The overall graduation rate for higher education is under 40%.  A major cause for not graduating is the high cost and the need for students to work while in school.

5.     The biggest cost for students is not tuition but related student expenses (room, board, books, etc).  Politicians and school officials only talk about tuition, and this hides the true cause of debt and dropping out.

6.     Students also do not graduate in a timely fashion because some schools spend most of their funds on non-instructional activities. To make up for a loss of funding, schools have increased their use of large lecture classes, decreased their number of courses, and have increased the use of insecure, part-time faculty, which has lowered the quality of education and has decreased graduation rates.

7.     The more students have to finance their own education, the more the public sees higher ed as a private good and not a public good.  Although college does provide preparation for work, if this is seen as the main goal, it becomes a private good without public support.

8.     We need to build a broad collation of students, parents, teachers, faculty, and concerned students.   

Understanding Financial Aid in the UC and Beyond

The California Legislative Analyst has a recent report on higher education that clarifies many issues concerning the state of financial aid in the UC system. One of the key findings is that while tuition is being covered by state, federal, and institutional aid for many students, these different sources of support are not keeping up with the other expenses college students encounter: ?Living expenses, including food and housing, transportation, and personal expenses, make up the majority of undergraduate student budgets . . . These costs are relatively high in California?about 20 percent higher than the national averages.?  One of the effects of this high cost of living in California is that even though UC has kept tuition flat for the last two years, students continue to graduate with high levels of debt, and while in school, many students are forced to work long hours to pay for their living expenses. 

As I have pointed out before, most politicians and higher ed officials only talk about the cost of tuition when they discuss student debt, but the biggest reason for student indebtedness is not tuition.  For example, Tennessee, Mississippi, and Oregon have received a lot of press coverage for proposing that community college should be free; however, this proposal would in reality increase student debt for low- and middle-income student as it would funnel money to wealthier students.  Since most of the lower-income students are already paying no tuition because of need-based institutional and federal aid, it is only the wealthier students who will be the major benefactors of eliminating tuition; meanwhile, the money spent on giving free tuition to wealthy students will prevent the state from giving aid to the lower income students to pay for books, room, board, and other living expenses.  Not only will the low-income students have to borrow more money to stay in school, but they will also have to work more to support their education, and this combination of increased debt and increased student work is a recipe for students dropping out of higher education. So if we want to stop a generation of students from being plagued by life-crippling debt, and if we want to increase our graduation rates, we need to find a way to pay for the total cost of attendance. 

I have recently updated my calculation of how much it would cost to pay for the total cost of attendance for each undergraduate student at a public university and college in America.   In 2011-12, there were 6.7 million full-time-equivalent undergraduate students enrolled in public universities and 4.2 million enrolled in community colleges. Since the average cost of tuition, room, board, books, and living expenses for undergraduates at public four-year institutions was $20,612, and at two-year public colleges, it was $13,237, the total cost was $195 billion. 

Of course $195 billion is a lot of money, but if we look at how much the U.S. spent in 2011 on financial aid and higher ed tax breaks, we come up with $201 billion:

$35 Billion  Pell Grants

$10 Billion  State Financial Aid

$27 Billion  Student Loan Subsidization

$40 Billion  Federal Tax Breaks

$12 billion Veteran Higher Ed Benefits

@$17 Billion  529 College Savings Plans

@$10 Billion  State Tax Breaks (estimated)

@$40 Billion  Institutional Aid and Tuition Discounting

@$10 Billion   Federal and State Work Study Funding

We are therefore spending enough to make public undergraduate higher education free; however, we are not allocating these resources in an organized and coherent manner.  For example, the federal government is currently spending $25 billion on low-performing for-profit colleges that have very low graduation rates and generate high student loan default rates.  Moreover, colleges and universities inflate their tuition price in order to pay for financial aid at the same time more schools are moving from need-based aid to merit-based aid, which privileges the wealthiest students. 

It should be clear that we need a national solution to a national problem, and his would entail a new compact among schools, state governments, and the federal government.  While some may say that this is a new role for the federal government, we must remember that the government already has strict requirements related to research grants and financial aid; what we need to do now is to tie aid to the institutions and force them to make the right decisions regarding access, affordability, and quality.  

Congress Notices the Loss of Tenure

The US Congress has released an important study on the use and abuse of contingent faculty at American institutions of higher education. Although many people inside and outside of higher ed are starting to know something about this issue, this report places the loss of tenure and the use of part-time faculty on the national political agenda. 

The introduction to the report locates the growth of non-tenure-track faculty within a historical perspective: ?The post-secondary academic workforce has undergone a remarkable change over the last several decades. The tenure-track college professor with a stable salary, firmly grounded in the middle or upper-middle class, is becoming rare. Taking her place is the contingent faculty: non-tenure-track teachers, such as part-time adjuncts or graduate instructors, with no job security from one semester to the next, working at a piece rate with few or no benefits across multiple workplaces, and far too often struggling to make ends meet.?  Just as so many other professional middle-class jobs are being downsized and casualized, the government is beginning to see how higher education has also been reshaped by neo-liberal policies.

The report highlights the contradiction of relying on colleges to prepare people for good jobs, while the people teaching at these institutions have bad jobs: ?Increasing the number of Americans who obtain a college degree or other post-secondary credentials is a key to growing and strengthening the middle class and ensuring the country?s global competitiveness. Yet the expanding use of contingent faculty to achieve this goal presents a paradox. These instructors are highly educated workers who overwhelmingly have post-graduate degrees. They perform work critical to our national efforts to lift the next generation?s economic prospects. In 2009, CNN Money ranked college professor as the third best job in America, citing increasing job growth prospects. The Bureau of Labor Statistics predicts post-secondary teachers as having faster than average employment growth over the next decade. Having played by the rules and obtained employment in a highly skilled, in-demand field, these workers should be living middle-class lives.?

Although in the popular imagination, professors still represent one of the most attractive careers, the reality of this labor market is far from ideal: ?More than one million people are now working as contingent faculty and instructors at U.S. institutions of higher education, providing a cheap labor source even while students? tuition has skyrocketed. Traditionally, adjuncts were experienced professionals who were still working in or recently retired from their industry outside of academia, with time on their hands to teach a class or two at the university or community college. Adjunct work supplemented their income; teaching was not their main job. Such adjuncts still exist. But national trends indicate that schools are increasingly relying on adjuncts and other contingent faculty members, rather than full-time, tenure-track professors, to do the bulk of the work of educating students. Today, being a part-time adjunct at several schools is the way many instructors cobble together full-time employment in higher education.? Part-time and contingent faculty are thus a symptom of the more general dismantling of the middle-class professions.

The congressional report also ties the casualization of the academic labor force to the question of educational quality:  ?contingent faculty earn low salaries with few or no benefits, are forced to carry on harried schedules to make ends meet, have no clear path for career growth, and enjoy little to no job security. The contingent faculty trend appears to mirror trends in the general labor market toward a flexible, ?just-in-time? workforce, with lower compensation and unpredictable schedules for what were once considered middle-class jobs. The trend should be of concern to policymakers both because of what it means for the living standards and work lives of those individuals we expect to educate the next generation of scientists, entrepreneurs, and other highly skilled workers, and what it may mean for the quality of higher education itself.?  While the report does argue that many non-tenure-track faculty bend over backwards to provide the best education possible, their working conditions often prevent them from performing to their full potential.

This report grew out of an open online forum at the behest of Rep. George Miller.  He asked contingent faculty to write in and respond to a series of questions, and then his staff analyzed some of the trends.  For instance, they found that the average annual salary of the people responding was $24,926 and that 75% did not have benefits. One respondent added the following: ?Considering that students pay $565 per course, and that there are approximately 20 students per class, adjuncts are paid approximately 4% of what the university takes in even though we execute the core requirements of the university. As an open enrollment university with 86% Title IV students, dedicated adjuncts must provide extensive, time-consuming feedback frequently up to 20 hours per week, which averages a wage of less than $10 per hour.? As my own research has consistently shown, higher tuition often results in less money going into instructors? salaries; instead undergraduates are forced to secretly subsidize administrative growth, sponsored research, graduate and professional education, and expensive extra-curricular activities.

To its credit, the report does acknowledge some of the reasons why undergrads are paying more for lees as faculty are forced to work for poverty wages: ?In today?s lean era, schools have often chosen to balance their budgets on the backs of adjuncts. Outsized administrator salaries, marketing operations, and campus frills recently have received significant attention. Increased budget transparency for institutions of higher education would be a critical step in understanding the nature and necessity of this now-pervasive labor practice and whether and how it may be changed.?

Let us hope that this report forces the government to look seriously at my plan to tie full funding for public higher education to a requirement that 75% of the faculty are full-time and at least 50% of the state and federal funding goes to direct instructional spending.  Although we can make some improvements on the campus level, we need a national solution to a national problem.  

The High Cost of Research

In response to state budget cuts for higher education and new laws regulating the selling of academic patents, universities since 1980 have increased their spending on research.  Although many people believe that research brings extra revenue to these institutions, a recent study reveals how research activities rarely cover their true costs. In ?Understandingthe high Cost of Success in University Research,"Karen Holbrook and Paul Sanberg show how in the case of two university systems, ?the findings demonstrated that 40 cents was spent from university funds for each one dollar of external funding received.? If we apply this same math to the University of California?s research budget of $5.2 billion, we can assume that UC had to find an additional $2 billion from other sources to make up for the additional costs. 

One of the main reasons why research grants rarely cover their full costs is that the federal government only allows 26% of the indirect costs to go to administration, but this amount rarely covers the full administrative cost: ?In 1991, the administrative component of the F&A rate was capped at 26% for universities only. Now, more than 20 years later, the 26% remains as a cap even though virtually every research university can easily document the real cost of administration at a significantly higher level.? As we know from the UC system, over the last thirty years the salaries and number of administrators has grown significantly.

Another reason why grants do not pay for their own activities is that universities, like the UC system, tend to receive much of their funding from sources that do not pay even the average federal rate of 52%: ?A significant consequence of accepting a large number of awards with low F&A rates of reimbursement is that the effective F&A rate for universities is nowhere close to their federally negotiated rate. The effective rate for top research universities nationally is in the range of 20?25% of awards.?  In fact, in a study of UC research, it was found that state and corporate grants bring the average UC indirect cost recovery rate to 26%.

Research also loses money because of the need for new technology and increased regulation: ?the costs continue to escalate with more federal and state mandates for compliance with new regulations and with the general rising costs of facilities and equipment, personnel support, and the need to turn over high-tech equipment that is rapidly outdated.? Due to the arcane nature of university budgeting, these escalating costs are rarely acknowledged.

Another related issue is the question of what is considered to be the direct costs versus the indirect costs of a grant: ?many of the activities that are necessary to support research (such as administrative and clerical support, computers, postage, subscriptions, telephone service, and office supplies), once covered among the direct costs of a research grant budget, can no longer be considered direct charges and must be paid for by the overhead dollars (indirect costs) that accompany a grant award or by some institutional source.? Thus, as the definition of what can be called a direct cost changed, universities were forced to spend more of their money on indirect costs, but these indirect charges were unable to keep up with the real costs. 

Meanwhile, as states cut their funding for higher education, money that was formely used to support research has disappeared: ?A survey conducted by the Association of Public and Land-grant Universities (APLU) (5) revealed that reduced state appropriations impact several areas of the research enterprise: loss of faculty and staff, diminished ability to maintain campus infrastructure, limited support for graduate students, reduced support for public/private partnerships, and cuts in externally supported research, as well as ongoing research projects.? In a perverse feedback loop, the more states cut their funding for research, the more universities look for funding from outside sources, which results in the research mission losing even more money.

The conclusion from this study should not be that we abandon the research mission of research universities, but we need to find ways of paying for it, and non-transparent budgeting does not help the process.  Some possible solutions are to negotiate a much better indirect cost recovery rate for all grants.  Another needed reform is to reduce the number of highly paid administrators attached to the research mission.

Student Debt, Free Public Higher Ed, and Federal Loan Sharks

As I go around the country talking to different groups about my book on how to make public higher education free, I continue to encounter student debt horror stories, but there is perhaps no story more horrible than the recent Congressional Budget Office report on how the federal government raked in over $50 billion last year in profits from student loans. It turns out that after the feds took over the destructive private loan industry, the result was not to give students the best deal possible, but to cash in on the fact that the government can borrow money at virtually no interest and lend it to students at a much higher rate (of course the government profits go up much higher when students default or are penalized for late payments).  In fact, the average student loan defaulter pays a penalty of over 100% of the principal, and the federal government is very good at collecting these debts.  

Although I do not think it was the intention of the Obama administration to turn indebted students into cash cows, a systemic analysis tells us that the federal government is profiting from the state reduction of funding for public higher education, which in turn has helped to cause the increase in student tuition at public institutions, which increases student debt, and at the same time, increases in the number of students going to high-cost, low-performing for-profit colleges. 

I recently had the opportunity to talk to the new UC president Janet Napolitano about the fact that what we need is a new compact among the federal government, state governments, and public institutions of higher education. I believe she is dedicated to working on this issue, but it is hard to imagine the feds walking away from their new profit center ? indebted students.   

If there was ever a sign that we need a totally new model for funding public higher education, we now have it in the extraction of profit from indebted students.     

The Higher Ed STEM Myth

In Malcolm Gladwell?s recent book David and Goliath, he repeats the following common claim: ?At a time when students with liberal arts degrees struggle to find jobs, students with STEM degrees are almost assured of good careers.? The only problem with this idea is that it is at best misleading and possibly completely false. Looking at recent labor data and multiple research studies, it appears that at the very moment the Obama administration and most state officials are pushing for a rapid increase in students holding college degrees in Science, Technology, Engineering, and Math, most jobs in these areas have faced stagnant wages and decreased job opportunities.

According to the article, ?The STEM Crisis is a Myth?, ?there are more STEM workers than suitable jobs. One study found, for example, that wages for U.S. workers in computer and math fields have largely stagnated since 2000. Even as the Great Recession slowly recedes, STEM workers at every stage of the career pipeline, from freshly minted grads to mid- and late-career Ph.D.s, still struggle to find employment as many companies, including Boeing, IBM, and Symantec, continue to lay off thousands of STEM workers.?  In face of this decrease in STEM-related job opportunities, we are reminded that, ?President Obama has called for government and industry to train 10,000 new U.S. engineers every year as well as 100,000 additional STEM teachers by 2020. And until those new recruits enter the workforce, tech companies like Facebook, IBM, and Microsoft are lobbying to boost the number of H-1B visas?temporary immigration permits for skilled workers?from 65,000 per year to as many as 180,000.?  In other words, high-tech companies are pushing for increased access to high-skilled foreign workers in order to drive down labor costs and produce a more competitive labor market.  Meanwhile, government officials are calling for a massive increase in funding to educate people for jobs that do not exist.

One of the major reasons why the government seems to have it all wrong is the way STEM jobs are defined: ?According to Commerce, 7.6 million individuals worked in STEM jobs in 2010, or about 5.5 percent of the U.S. workforce. That number includes professional and technical support occupations in the fields of computer science and mathematics, engineering, and life and physical sciences as well as management. The NSF, by contrast, counts 12.4 millionscience and engineering jobs in the United States, including a number of areas that the Commerce Department excludes, such as health-care workers (4.3 million) and psychologists and social scientists (518,000).?  The first problem is then the US government itself has conflicting ways of defining who is working in a STEM job, and thus the National Science Foundation is able to call for more STEM funding by including in its ranks, healthcare workers, psychologists, and social scientists.  However, if we look at the more traditional understanding of STEM jobs, which is used by the Commerce Department, only 5.5% of all current US jobs fall into this area. 

Not only is the STEM crisis being pushed by bad data and loose definitions, but it is also being fueled by a massive misunderstanding regarding the relationship between college degrees and future employment: ?Of the 7.6 million STEM workers counted by the Commerce Department, only 3.3 million possess STEM degrees. Viewed another way, about 15 million U.S. residents hold at least a bachelor?s degree in a STEM discipline, but three-fourths of them?11.4 million?work outside of STEM.? Thus, not only are there limited employment opportunities in the STEM areas, but most of the people with STEM degrees do not work in STEM jobs, and most of the people working in STEM jobs do not have STEM degrees. This mismatch between degrees and jobs means that there is not a pressing need to produce more people with STEM degrees, and non-STEM degree holders often end up being employed in STEM jobs. 

One reason why the STEM labor market is hard to predict and plan for is because of the business and labor practices dominating these areas: ?Highly competitive science- and technology-driven industries are volatile, where radical restructurings and boom-and-bust cycles have been the norm for decades. Many STEM jobs today are also targets for outsourcingor replacement by automation.? It turns out that the celebrated jobs in the STEM areas are highly susceptible to downsizing, outsourcing, and boom-and-bust business cycles. 

The unstable nature of STEM jobs is matched by the short-term thinking of many high-tech companies: ?In engineering, for instance, your job is no longer linked to a company but to a funded project. Long-term employment with a single company has been replaced by a series of de facto temporary positions that can quickly end when a project ends or the market shifts. To be sure, engineers in the 1950s were sometimes laid off during recessions, but they expected to be hired back when the economy picked up. That rarely happens today. And unlike in decades past, employers seldom offer generous education and training benefits to engineers to keep them current, so out-of-work engineers find they quickly become technologically obsolete.? Like so many other fields and professions, the older model of career employment has been replaced by a new system of just-in-time flexible labor, which in turn, reduces the opportunity for job advancement since companies do not want to invest in workers who have no future with their corporations.

Like the employment practices in higher education, wages in the STEM areas are being pushed down by an over-supply of future workers and an under-supply of new good jobs: ?if you apply the Commerce Department?s definition of STEM to the NSF?s annual count of science and engineering bachelor?s degrees, that means about 252,000 STEM graduates emerged in 2009. So even if all the STEM openings were entry-level positions and even if only new STEM bachelor?s holders could compete for them, that still leaves 70,000 graduates unable to get a job in their chosen field. Of course, the pool of U.S. STEM workers is much bigger than that: It includes new STEM master?s and Ph.D. graduates (in 2009, around 80 000 and 25 000, respectively), STEM associate degree graduates (about 40 000), H-1B visa holders (more than 50 000), other immigrants and visa holders with STEM degrees, technical certificate holders, and non-STEM degree recipients looking to find STEM-related work. And then there?s the vast number of STEM degree holders who graduated in previous years or decades.?  If you work at a university and college, this story should be very familiar; in the face of decreased job opportunities, colleges continue to flood the market with new workers, which then functions to drive down wages and create a class of underemployed and unemployed degree-holders.  

Protesting, Dissent, and Unionization

November ^20th was a perplexing day for some on the UC campuses.  As AFSCME and UAW held a joint strike, many students and media people wanted to know why graduate students would go out on strike to support mostly manual workers.  Of course, the reason for this support was that both unions were protesting against the sense that the UC administration does not respect collective action and collective bargaining.  Moreover, what really scares and confuses many people in power is the sight of seeing both service and professional workers protesting together.

People in power must know that a coalition of organized professional and service workers could be one of the only groups strong enough to stop the neoliberal political economy, and when you throw recent immigrants and indebted students into the mix, a very threatening progressive coalition emerges. Although some may say that the protests and strike were really only about pensions and pay, it is clear that a more fundamental democratic yearning was evident in these actions. Not only do workers and students feel that they do not have a voice at their own institutions, but they also feel alienated by the silent forces of global capitalism and austerity politics.

AFSCME did a very smart thing by working with various student groups to form a diverse coalition of workers, students, and faculty, and while the peaceful demonstrations did not generate much police presence, recent trends suggest that once organized dissent becomes visible and disruptive, it will be countered in a forceful way.  Let us hope that this is the beginning of a more forceful organization of the people who make this university work.