institutionalfinance

Pricing Pressures Likely to Hurt Private Colleges, S&P Says

Growing consumer reluctance to pay rising tuition rates are threatening to drive up private colleges' tuition discount rates, limit net tuition revenue, and lower matriculation rates and enrollments in ways that could hurt their financial ratings, Standard & Poor's said in a report issued Tuesday. The report, which like most of S&P's reports is available only to subscribers, says that the pressure on institutions will come particularly in the most competitive markets; data in the report find tuition discount rates rising fastest in the Northeast (from 31 to 34 percent since 2008), but net tuition levels and matriculation rates fell most sharply in the West.

New York's tax-free plan puts SUNY at the center of economic development

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The state has created tax-free zones around its universities as part of an effort to stimulate economic development. Officials hope to take academic-corporate partnerships beyond the typical ties.

AAUP Objects to Faculty Layoffs at Purdue Calumet

Purdue University at Calumet’s chapter of the American Association of University Professors alleges potential violations of shared governance in the planned layoffs of seven faculty members members last week, including six tenure-track professors. In a statement posted on its Facebook page Monday, Calumet AAUP President Marcus K. Rogers accuses the university of laying off the professors – which administrators blame on budget woes stemming from lower enrollments – while “actively hiring more administrators, increasing funding to the athletic program and hiring fitness assistants.”

Rogers also alleges that the layoffs “do not appear to have been conducted with the proper faculty input,” and urges university administrators to reconsider their decision.

In a statement to faculty issued Monday, Chancellor Thomas L. Keon said the faculty layoff notices were “regrettable but necessary,” and issued in in response to a $3 million campus revenue shortfall anticipated this fall, based on a 6 percent fall projected enrollment decline. As those layoffs -- including the professors’ would-be retirement funds -- only amount to $1 million, he said, other cuts to the university’s budget likely are forthcoming. “As I reported at the Town Hall meeting, I would be pleased to rescind any or all of the notices should we find that there are alternatives,” Keon said. “Additionally, the senior leadership team is committed to continue working with faculty and the Faculty Senate to explore other options.”

 

Some Nevada faculty question state's decision to reinstate merit pay without ending furloughs

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Nevada faculty members want to know why the state is restoring bonus pay for some while requiring all professors to take 6 days of unpaid leave a year.

Open letter to President Obama on college costs

Dear President Obama:

In higher education policy, you and Secretary Arne Duncan have consistently focused on two goals of critical national importance: 1) Expanding access to higher education and degree completion rates, especially by low-income, minority, and first-generation students, to increase the number of Americans who enter the work force with 21st-century skills; and 2) Making college more affordable to more people. As president of the major service organization for more than 600 private, nonprofit colleges and universities, I want to assure you that the leaders of these institutions share your goals — and have a track record of achieving them.

This truth is often obscured by myths about America’s private colleges — that they cater only to an elite, that they are not affordable, that debt levels for graduates are excessive, that liberal arts degrees are not viable in the workplace. Each of these myths is demonstrably false.

Mr. President, I am confident that your own experience of higher education — as an undergraduate, law student, and faculty member at independent colleges — leads you to understand the engine of opportunity and social mobility that these colleges provide to students and the resource pool of innovation that they provide for our nation. In fact, the effectiveness of this sector of higher education — in providing access, affordability, timely graduation, and employable skills — could provide models for the most valuable use of scarce tax dollars.

Let me first address the question of affordability, which looms so large in today's constrained economy. In private, nonprofit colleges and universities today, students on average pay about half the full cost of their education. The stereotype is entirely false that private colleges enroll students who are much wealthier than those at public universities. In fact — counterintuitively — there is a higher proportion of low-income students at nondoctoral private colleges and universities than at public research universities.

First-generation college-goers account for one-third of all enrolled students, and low-income students account for about 30 percent of all students in private colleges. Moreover, private scholarship funds total six times the amount of federal funds awarded to students — effectively leveraging the value of tax dollars for higher education. Extremely significant as well is the issue of opportunity costs; students of all backgrounds are more likely to graduate on time at private colleges, further reducing the total cost of their education.

In considering the affordability of a college education, much has been made recently about student debt. The fact is that most students have manageable debt and they repay their loans. What is "manageable debt"? The median debt for a four-year degree at a private college or university is $22,380 — about the same as a moderately priced car (and in fact not much more than the median debt at a public university). But the college degree appreciates, while the car depreciates. Estimates for the differential in lifetime earnings for a college degree vs. high school diploma are $700,000–$1,000,000, which is not a bad return on investment.

Recently, the $1 trillion in total student debt has been trumpeted as a "scare quote" in headlines. Not noted is the fact that this large number is a direct result of increased numbers of enrolled students, especially those with modest financial resources — itself an indication of progress in fulfilling Great Society objectives even during a weak economy. Our country has, quite remarkably, increased the number of college-goers — from fewer than half of all high school graduates 50 years ago to almost two-thirds today. This achievement is a result of the commitment by many over two generations — the federal government’s repeated willingness to increase Pell Grants, state governments’ expansion of the number of places at state universities (each heavily subsidized by taxpayers), and private colleges’ aggressive fund-raising for scholarships from nongovernmental sources to keep college affordable. All Americans can take pride in this example of shared responsibility.

This is decidedly not a picture of college costs "out of control" or, as you phrased it recently at Knox College, "an undisciplined system where costs just keep on going up and up and up." That speech referenced tuition increases of up to 7 percent. Perhaps this applies to a few universities. But private colleges, surveyed last year, increased tuition by only 4 percent on average and the trend has been downward. In fact, in recent years the net cost to students at private, nonprofit colleges has declined when adjusted for inflation.

It's also the case that most of the large percentage increases in tuition at state universities are direct results of cuts in state government funding. In addition, nearly every college and university in the country has recently taken measures to cut costs, such as eliminating staff and faculty positions, restricting pay increases, and delaying maintenance and construction projects.

Mr. President, on numerous occasions you and Secretary Duncan have encouraged colleges and universities to use technology to achieve cost savings in instruction. I am certain you recognize that more than two-thirds of colleges are already active in efforts to blend online with face-to-face learning. But an entirely online education, while better than no education, does not provide a student with the same learning outcomes and lifelong advantages as a live education on a campus with frequent interaction among students and between students and full-time professors.

It’s this distinctively American form of education — with room for questioning, discussion, creativity, interpersonal dynamics, and supportive faculty — that has made American colleges and universities the envy of the world and widely imitated.

Impartial research literature overwhelmingly shows that students at traditional institutions learn more, finish their degrees faster, and exhibit more postgraduate success in such aspects of life as civic participation. The reputation for innovation and educational quality — enjoyed by both America’s research universities and our small colleges — is well-deserved. Our national goal, therefore, should be to make the best form of American education — face to face — available and affordable for as many people as possible, to use blended approaches carefully, and not to make a less effective form — online only — the norm for everyone except a fortunate few. Indeed, such a prospect of a two-tiered system (to put it crudely: personal instruction for the few, online instruction for many) would pose serious threats to our democracy.

In the same week that you spoke at Knox College, Forbes magazine issued its survey of "top performing" colleges, and shortly thereafter Georgetown University’s Anthony Carnevale released an analysis of the affordability of college and the low percentages of low-income students at many “selective” universities. Curiously, both analyses chose to focus on only the "best" institutions but defined the group of selective institutions broadly. If the goal of such studies is to increase college participation among low-income students, it is odd to examine the effectiveness of only a fraction of America’s 4,000 colleges and universities. Forbes’s analysis starts with 650 of what it considers the best-performing institutions, and Carnevale’s begins with 468. (Most observers would argue that only about 100 colleges and universities are truly selective — that is, able to assemble a freshman class from an overabundance of well-qualified applicants, giving weight to virtually any factor of merit or need it chooses, and most able to meet every dollar of financial need.)

While there are few surprises near the top of Forbes’s list, more interesting details can be found farther down the list because they offer hints for the design of public policies. First, the top 217 colleges (or one-third of the 650) include every kind of college and university — large and small, public and private. Second, among the 117 colleges just below the top 100 are 40 smaller, private colleges that are not well-known beyond their regions. These colleges are market-sensitive, have room to expand, spend large amounts of their own resources as financial aid in order to enroll many low-income and first-generation students, and graduate students quickly. The vast majority of their graduates remain in-state.

While the top 100 colleges enroll 17 percent of their students from low-income backgrounds, smaller, private, nondoctoral colleges and universities, despite smaller endowments and less selective admissions, enroll approximately one-third of their students from low-income backgrounds. Most impressive is that the numbers of graduates of small, private colleges who enter careers in high-priority fields such as STEM are proportionally much higher (although small in absolute numbers) than the percentage who start their studies in these fields at many larger universities. In short, even within the second 100 of the “top” 650 institutions, the patterns of institutional performance differ from the myth of higher education’s unresponsiveness to your objectives. A great deal more could be achieved by harnessing the commitment of all 4,000 colleges and universities.

Your twin national policy goals of access and affordability could be advanced most rapidly if private colleges and universities, especially those at the middle levels of selectivity, were given a larger role. Their track records point to educational practices that could easily be brought to a larger scale. Their demonstrated cost-effectiveness as agents of upward mobility argues for reinforcement by public policy. In the difficult budget choices that lie ahead, these institutions offer the most value in the use of scarce tax dollars. To ignore the dedication of traditional institutions, both public and private, to your goals and the resulting benefits to the country would be to forego a major opportunity.

Richard Ekman is president of the Council of Independent Colleges.

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Faculty Layoffs at a Purdue Regional Campus

Purdue University's Calumet regional campus is planning layoffs for seven faculty members, most of them assistant professors, The Journal and Courier reported. At least another 12 faculty members have accepted early retirement packages. The size of the faculty will shrink by about 7 percent, as part of a response to a deficit brought on by lower than expected enrollments.

 

New Football Center at 'University of Nike'

An article in The New York Times provides an overview of the new Football Performance Center at the University of Oregon. Among the features noted by the Times: rugs woven in Nepal, couches made in Italy, a weight room featuring a floor of Brazilian hardwood and a barbershop where utensils are from Milan. The center was originally projected to cost $68 million, but the Times reporter found that to be "conservative" based on a tour. The university claims not to know the full cost. Donations from Phil Knight, a founder of Nike, paid for the facility (which has Nike-themed features). University officials said that they were proud to be associated with Nike. "We are the University of Nike,” said Jeff Hawkins, senior associate athletic director of football administration and operations. "We embrace it. We tell that to our recruits."

$250M for Merit Scholarships at Centre College

Centre College on Tuesday announced a $250 million gift -- believed to be the largest ever to a liberal arts college -- that will support merit scholarships. Starting in the fall of 2014, 40 students a year will receive what the college is calling "full ride plus" scholarships, to cover tuition, room and board, all fees and additional money to support study abroad, research or internships. The funds will be available only to students majoring in the natural sciences, computational sciences and economics.

Gee Will Make $5.8M in 5 Years as President Emeritus

E. Gordon Gee, who stepped down as president of Ohio State University on July 1, will make $5.8 million over the next five years as part of a new contract with the university. According to the contract, Gee will serve as a tenured professor in Ohio State's law school and his responsibilities will include "completion of his research on 21st Century Education Policy and will include research, writing and national speaking as well as teaching or lecturing" in the law school, the school of public affairs and the college of education. Gee's annual base salary will be $410,000, and he will receive retirement contributions and a grant of $300,000 to fund his research. After the five years are up, Gee's salary will be equivalent to the highest-paid non-administrative faculty member in the law school.

The new contract waives any compensation Gee would have been entitled to under his previous contract with the university, which would have paid out approximately $6 million in supplemental and deferred compensation over the next four years.

Penn State announces new health insurance surcharges for smokers, others

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Penn State angered faculty when it mandated biometric tests for those on health insurance. Now it's charging extra to those who use tobacco. Faculty members -- including those who don't smoke -- are furious.

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