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College Textbooks: The Need For a New Approach

Posted by Nicole Cimo on August 19, 2015

Since 1978, college textbook prices have grown 945%, increasing 3.5x times faster than the Consumer Price Index. Administrators, faculty, and students are increasingly concerned about the escalating cost of textbooks. Colleges are now searching for new solutions to lower costs and support their core mission of educating students.

Textbooks_versus_CPI_August_2015

Recent studies have shown that many students are opting not to buy textbooks for at least one of their courses due to these high prices, leading to students being less prepared for class, and negatively impacting their academic performance. Left unchecked, these factors may undermine the fundamental mission of many colleges and universities.

According to Naomi Baron, Executive Director of the Center for Teaching, Research, and Learning at American University, faculty members and students are in a predicament over how to handle high textbook costs. In her recent article, A Smarter Approach to College Textbooks, she goes deep into this concern, as well as spotlights how students are opting to do away with purchasing or renting textbooks all together.

The article also makes some interesting suggestions on how to start addressing these issues, and the need for collaboration across faculty, students, administrators, and textbook publishers. We also think that the college bookstore service should play a key role in driving this collaboration across all campus stakeholders, and facilitating a win-win solution for each institution.

The good news for students is that many institutions across the country have acknowledged that solving the challenge of providing affordable textbooks is a key priority. In fact, a growing number of institutions have already taken action and are starting to see positive results in saving students money, improving bookstore utilization, and increasing student satisfaction. To learn more about best practices these institutions have implemented, download any of our free white papers or register today for a personalized 1:1 discussion

 

Topics: Commentary

What we can learn from UMass Amherst’s decision to select Amazon as its bookstore provider

Posted by John Squires on January 14, 2015

This week the University of Massachusetts’ flagship Amherst campus selected Amazon to provide textbooks and other learning materials for students beginning this fall.

This is a bold move from a major university. It recognizes that textbooks are a major and increasing expense for students, adding to the already growing problem of student debt. If these rising costs are not quickly addressed this will ultimately have a material impact on student performance and retention.

It also recognizes today’s students demand for transparency, value and convenience with everything they purchase. They want to know that they are buying the right product, at the right price, and want to place their order quickly, across any device, at any time.

There are few companies in the college bookstore business that focus on student value and we are delighted to welcome Amazon to this list. We think this development should raise the question of student value and service for every college administrator who faces mounting student complaints about the cost of their learning materials and is concerned about their bookstore sales declining.

We are delighted to see UMass at the forefront of this movement. Similar to forward thinking Akademos partners like the City Colleges of Chicago, Davenport University and John Jay College, UMass understands that students are already moving online to seek value and in order to align the goals of the institution, they needed to pick an innovative bookstore provider to meet the future needs of its students.

Here are a few specifics of what colleges can learn from the UMass decision:

  • UMass has chosen to view providing textbooks and course materials as a core service to its students, opting to take only a small commission of 2.5% on sales. This is a welcome development in a market where school commissions can often run above 10%, directly contributing to the increasing cost of books for students. UMass has prioritized the success of its students over retail profits.
  • The college separated the sale of merchandise and apparel from the sale of textbooks. Students will not be forced to pay steep prices for books to support the sale of other materials on campus.

Here are other important factors for colleges and universities to consider, based upon our 15 years of providing high-quality service to students across the country –

  • State of the art textbook adoption tools and a customer service staff that can provide personalized solutions to faculty on book selections and course material fulfillment is a critical component of the successful bookstore operation of the future.
  • Faculty having access to the full electronic catalog of learning products from publishers is also important. As instructional labs and testing resources build online it’s critical that the library of products for any bookstore moves well beyond the textbook.
  • Seamless financial aid integration is a must. Combining an easy to use, customized shopping experience for students with financial aid is the winning formula to bring students back to a school sanctioned bookstore website and purchasing all their course materials in a timely manner.

We think this is a wonderful development for higher education. It is squarely a student-focused decision and any institution that follows this lead, whether with Amazon, Akademos, or another like company, will be putting the needs of educating students first. In the end, this is good for education and great for companies like Akademos that focus single-mindedly on reducing costs for students and improving service for educators.

To learn more about expanding affordable textbook options for students at your school we would be happy to set-up a personalized 1:1 consultation.

Topics: Commentary

Lower the Cost of College Operations or Else: Ideas on Preparing for Digital Textbook Delivery

Posted by John Squires on June 25, 2014

The higher education conference season is in full effect. I attended an ed tech conference called UBTech held by University Business magazine earlier this month in Orlando, Florida. This was my first time attending UBTech, having formerly mainly focused on the CampusTech conference. UBTech had a good mix of college and university chief technology officers, chief information officers, chief financial officers, and similar roles. It also attracted ed tech companies, textbook publishers, bookstore services providers, and other organizations in the industry.

A central theme in Orlando this year was reducing college operating costs to manage net revenue. Speakers called out that the higher education business model and delivery system appears broken. Particularly at those institutions that are struggling with revenue generation. Why do we continue to push a traditional college delivery model in areas where technology is clearly positioned to disrupt (yes, it is overused, but you get the idea) business-as-usual? For my part, I spoke at a session about trends in bookstore services and textbook delivery. My session attracted a diverse mix of college CTOs, CIOs and CFOs, as well as publishers, our textbook rental partners CampusBookRentals, and some friendly competition by way of bookstore service operators like Follett and Rafter.

The data I presented contrasted how college technology officers and financial officers see the future of the college bookstore. For example, while only 18% of college business officers in our textbook delivery survey stated college bookstores will sell textbooks completely via their online store, 95% of college technology officers we (more informally) surveyed at UBTech see the future of textbooks as delivered completely in an online bookstore. Now, given we were at a tech conference, I am not surprised. But the technology folks also noted they are 'not so much' involved in decisions about the bookstore. Which leads me to the question, Why are our CTOs and CIOs not more involved in the selection of bookstore service operators and strategies?

I usually approach conferences as an opportunity to listen. I might come prepared with a leading question or a thesis I am trying to get feedback on. This year, it was definitely about asking how involved college CTOs and CIOs are in textbook delivery and bookstore services. But also, and perhaps more nuanced, how much do they want to be involved, to be included in the textbook dialogue?

Those that attended our UBTech session were self-selected in that they chose to attend a session about bookstore services, so with that, are telling us they want to be more involved. But overall at the conference, most tech folks I spoke with shared that they were somewhat neutral on the topic of bookstore services. But they were quick to offer that online delivery is the way to go. In my session’s group discussion, the majority of schools shared that they have brick-and-mortar components to their textbook sales process. They also said that one of the biggest drivers to building out bookstores in the future is the eventual adoption of digital texts by students and faculty. Our contemporary at Follett estimated that number at an average of 10%, while Rafter and CampusBookRenters had less information on digital text adoption, likely because the rental market focuses more on physical textbook delivery. Everyone from vendors to schools agreed that eTextbook adoption was doubling each year, though still at small numbers.

But if eBook adoption is doubling year-over-year at colleges, when eTextbooks do indeed reach the tipping point, the mass adoption of digital texts by college students will happen "fast and furiously" (to quote the keynote speaker...more on that in a minute). The colleges and universities in my session said this was one of their biggest concerns—they want to be prepared when 'digital happens.' So while competition by third party sites selling textbooks (such as Amazon) was a dominant concern for CFOs, digital textbook adoption was the clear driving issue for our information technology officers.

Now on to that keynote address I mentioned. The opening keynote was delivered by Gene Wade, co-founder and CEO of UniversityNow, was well received. I’d heard of UniversityNow before but didn't really know what they did. Here is the gist:

  • UniversityNow identify themselves as a social venture whose mission it is to ensure that a quality higher education is available to people everywhere. They manage Patten University and New Charter University, both online institutions serving predominantly working adults and offering course delivery within a somewhat new paradigm. For example, one set of instructors teaches you, while a different set grades you (anonymously). Tuition is based on how long it takes to complete your program (typically about 2-3K a semester for as many classes as you can muster). Learning is self-paced. Exams aren't "unlocked" until students can show within the LMS that they have mastered the skill sets needed to pass them. Classes are held completely online. Course materials are digital.
  • Mr. Wade shared that MOOCs have made going to school online "sexier," but that they are not addressing the market need (eg., a call center employee who is getting left behind because he or she does not have a bachelor's degree; and needs a convenient, affordable degree that represents key learning competencies learned). According to the speaker, UniversityNow's flagship school, Patten University, costs 11x less than a 4-year private school. At some schools, cost of operation, of delivery, is higher than net tuition coming in. His point was that we need to lower the cost of delivery or else.
  • His most powerful message? That five years from now, most colleges and universities will be dealing with "the wreckage." Schools like UniversityNow are happening (as its namesake suggests) now. His metaphor...the rest of world will go straight to cell phones while 'old schools' will be dealing with their outdated land-line systems. And, of course, what is that cost of that?

If college bookstore administrators want to be ready for the move to online textbook delivery, they might consider the parallels of planning for online course delivery. The MOOCs and SOOCs are indeed coming. If schools can equate online course delivery with online textbook delivery, and maybe capitalize on the popularity (and hysteria) of MOOCs in order to frame the strategies for digital textbook delivery, we think they can be well prepared to build an innovative yet practical vision for the college bookstore of the future.

UBTech_2013_logo

Topics: Webinars & Events, Commentary

Should College Bookstores Sell Books?

Posted by John Squires on April 30, 2013

You may have seen the recent post on the Akademos blog summarizing outcomes from our survey of college and university CFOs about textbook trends and bookstore services practices. Many of our findings were not a surprise—such as the idea that students are leaving the college bookstore to shop at third-party retailers because of perceived better pricing. Others were a bit confounding—like the desire to offer students lower-cost textbooks, while simultaneously hesitating to sell textbooks from anywhere but brick-and-mortar college bookstores.

As college administrators search for the right direction regarding bookstore operations, I think lessons from changes in the trade bookstore business are worth considering in this discussion of how college bookstores may evolve. Today’s trade book consumer is fiercely value-conscious, and the brick-and-mortar bookstore business has been revolutionized by the selection, price, and speed of delivery offered by online retailers. Local bookstores that have survived have done so by offering unique services and products not readily available from online sellers.

Are college students any less concerned about value? A recent article published by The Chronicle of Higher Education ("Students Get Savvier About Textbook Buying") shows that students are also diligent bargain-hunters. We see little evidence that college bookstores are adapting quickly to this challenge of providing superior value to their students. In fact, the trends we see from examining RFPs and college bookstore contracts suggest the opposite.

Bookstore contracts are too frequently awarded to service providers who promise double-digit commissions to schools, or multi-million dollar capital commitments to rebuild student centers or other campus facilities. Yet aren't students the ones really paying for these high-cost contract commitments? And what of the corresponding business practices resulting from these agreements that conflict with the mission of higher education?

Here are a few consequences that give us concern:

  • Financial aid dollars are tied to use at the college bookstore, so students face the dilemma of using out-of-pocket funds to purchase low-cost textbooks outside the college bookstore, or running up their already high debt burden by overpaying for their course materials in their college bookstore.
  • Custom textbooks that offer little incremental value beyond the standard editions are developed in a coordinated effort between publishers, faculty, and bookstore operators. These books are often priced extremely high, and their exclusive availability in the college bookstores thwarts students from renting or purchasing used editions of these textbooks elsewhere.

We think it’s time to focus on how this cycle impacts student outcomes and drives up the cost of education, particularly with regard to attrition. It is estimated that "as many as one in three [students] frequently opt not to purchase required academic materials due to cost" (National Survey of Student Engagement, 2012). We know that for many community college students, the cost of learning materials can be as much as the cost of tuition. How is this cycle burdening schools with unintended costs from poorly prepared and under-performing students who don’t persist to completion?

It is only a matter of time before colleges must actively consider more efficient ways of meeting their students’ needs through alternative textbook and course material delivery platforms. If it is possible to provide complete availability of course materials, a robust used and rental marketplace, and access to free teaching materials like Open Educational Resources, then why are college administrators not more engaged in exploring alternatives to stocking textbooks in their physical stores?

In the end, we see the conversation about textbook costs as moving into a broader circle, involving the college CFO, provost, and president. College presidents have not been fully engaged in considering how schools meet this critical student need more efficiently. But since they are also under enormous pressure to cut costs and improve educational outcomes, the day when college presidents turn their attention to this key piece of student performance is surely close at hand.

We will soon share a comparable survey of college presidents and provosts to explore how their impressions of the issues raised here compare to those who, understandably, are primarily focused on the financial interests of their schools.

To learn more, sign up for our textbook delivery and bookstore services alerts.

Topics: Commentary

Welcome to Textbook Affordability Month

Posted by John Squires on January 30, 2013

 

The Chronicle of Higher Education released a four part series on textbooks this week:

  • Students Get Savvier About Textbook Buying, When They Buy at All
  • Don't Call Them Textbooks
  • For Many Students, Print Is Still King
  • Can Textbooks Ever Really Be Free?

It is February, after all--the season of textbook adoption! Faculty across the US are rushing to their computers as we speak to search, discover, compare and adopt their course materials for the Fall 2013 term. So it truly is a good time to spotlight textbook affordability.

Back to The Chronicle. While all of the articles they published relate to our business here at Akademos and TextbookX.com, student-buying habits are especially of interest. In Students Get Savvier About Textbook Buying, When They Buy at All, The Chronicle "talked with students and found that having more choices in how to get books hasn't solved the main problem: cost." Among the workarounds--not buying texts at all (as 1/3 of seniors and 1/4 of freshmen reported not having done), and stealing in the form of pirating texts.

I'm not the first to say we are in a sad state of affairs when students are not buying textbooks at all, or stealing them; or when the cost of textbooks is more than the cost of a course. While I think students need to better educate themselves about the total cost of an education, there must be more we can do, especially to help our under-represented students, our financially-challenged students, and our community college students.

I think what is most frustrating, and comments posted on The Chronicle webpage underneath the article allude to this, is that the conversation keeps going round and round, with little appearance of reaching a solution. Now, I know this is not so--I have personally seen actions on the part of many schools, CFO's, Provosts, faculty, and both not-for-profit and for-profit companies--to help bring visibility and action to this problem. But, we all need to do more.

What if every key stakeholder did one thing, right now, to help make textbooks more affordable for our students? Can't we gather for a call to action? A call to service? Do we need to name a month, a day, in order to remind us? Then let's do it. I hereby declare February "National Textbook Affordability Month". Should we pick a day too--like the don't buy gas days? National Textbook Affordability Day is...OK, I might need some support on this one people.

So to throw my 10 cents into the ring, here are my top recommendations to help fix the 'cost' problem of textbooks:

  1. Schools need more used book inventory - Contrary to a point made in the article, an increase in the supply of used books helps decrease costs for students. Especially if the used books are available from national sources, not just local ones.
  2. Students and their families should comparison shop - Students should always check prices as they would for other items they buy. A good comparison widget is www.campusbooks.com and, of course, a quick plug for our own TextbookX.com.
  3. Administrators - Can consider new business models aimed at lowering the cost of textbooks for students (and forgo margins on course materials).
  4. Governments - Should follow California's example of developing Open Educational Resource materials for top core courses. Florida has done some important work on this too.
  5. Last but by no means least, faculty can do some comparisons of their own--they can consider the cost of textbooks and other course materials very seriously in their textbook adoptions. One tool we developed to help faculty do this is our textbook adoption tool (yes, it is a plug, but it is a free website open to any faculty).

So what did I do today to help textbook affordability (besides huffing and puffing through this blog)? I finished a white paper summarizing what college CFO's think about textbooks, especially their costs; and, I tested a new feature of our Akademos Textbook Adoption Tool due to launch any day now, which will rank schools by the affordability of their textbooks. I know it is not much, but it is something. Stay tuned.

What did you do today to help textbook affordability?

Topics: Textbook Affordability, Commentary

The eTextbook Bust

Posted by Brian Jacobs on September 24, 2012

The final report on a major digital textbook pilot appeared recently and, because I wanted to study the document closely, mark it up with scribble unintelligible to anyone but its author, I immediately printed it out. And as I did that, I felt strangely self-conscious of the act, as if I were prejudicing the report's conclusions before turning a page.

The pilot, which took place in the spring of this year and included Cornell, Indiana University at Bloomington, and the Universities of Minnesota, Virginia, and Wisconsin at Madison, was pretty close to a complete failure. Certainly there are nuggets of encouragement but these were far outnumbered by student criticisms. One could almost sense the report’s authors straining to put the best face on the results. It’s admirable that they did not flinch from conveying students’ frustrations and disappointments with the reading materials, but the results really were worse than their concluding comments suggest.

Nowhere, for example, do the authors tell us that the pilot was financially artificial. They tell us that in all but one case—Indiana—students were actually given free access to the eTextbooks, yet this subsidy doesn’t weigh in their conclusions. Instead, we learn that the number one reason why students had any interest at all in using the eTexts is because of they were “lower cost.” Really? Low costs implies some cost and the fact that they actually had no cost only serves to make the result look better than they are. For if price is the major motivation for students, as they conclude, moving from "free" to even "low cost" will only increase resistance to their use.

The finding that cost was the top motivator for students is itself deeply problematic, not only for those heralding digital textbooks as a learning advancement, but also for commercial publishers who are striving to preserve the legacy cost structures of physical books as they turn to digital. Price alone is rarely a sufficient condition for a technological change and I don’t expect it will be one here. Instead, a panoply of learning benefits will need to accompany the economic one if digital materials are to come into their own.

The student survey results make clear that this is still some way off. Did use of an eTextbook increase engagement with course content? 21% said either “quite a bit” or “a great deal.” 35% said “somewhat” and 45% said “a little” or “not at all.” What about allowing students “to better organize and structure [student] learning”? About 25% of students thought it did. The rest, not so much. In question after question—from whether eTextbooks inspired students to read more to whether they even valued their own digital highlighting and annotations—the results are almost uniformly negative. One wonders what students would have said if they actually had to pay for the privilege.

Interestingly, the lead research finding is that only a minority of students—12%--elected to purchase physical copies. This is, however, hardly a comforting statistic for the proponents of this digital model. First, the choice for students was not likely between a free digital and a low cost print alternative, but between a free version and an expensive one (as a standard commercial textbook). Second, the 12% figure is misleading since it implies that the universe of student purchasers is 100%; but, those in the industry know that 100% sell-through is never an option unless the materials are included in the course fees. Instead, most people believe that about 1/3 of students do not buy textbooks. They borrow, share, photocopy, or simply try to do without. Remove those students from the pool of possible student buyers and it turns out that more than 18% of students who buy textbooks would have purchased a print copy if they were part of this study. Given the huge price disparity between the two options, and that price is the primary motivator, this is not supporting evidence.

Do the results of the pilot leave me pessimistic about digital course materials? Not at all. What they underscore, instead, is that several developments need still to occur for digital materials to demonstrate their pedagogical superiority over print text (for if they don’t have this what’s really the purpose?).

First, as I noted in a blog post this May, digital interactivity needs to match or exceed the physical interactivity that students enjoy. That’s not simply a matter of offering the capability to make digital highlights and annotations—which invariably feel like inadequate imitations of the real thing—but instead offering interactivity that simply isn’t available in the print world. And central to accomplishing this is faculty involvement. One of the few bright spots in the study is that students’ appreciation for the digital version shot up considerably when faculty were offering their own annotations and highlights in the texts. The problem was that few faculty actually did this. A successful digital initiative will be one in which the faculty are strongly committed to active participation in working with the course materials--when the course materials act not as passive appendages to classroom teaching but rather as direct extensions of that teaching itself; when they are less interchangeable commodities and more directly reflective of the learning environment itself (the institution or the classroom).

Second, conventional thinking about digital rights management (DRM) has to change. As a general rule, the tighter the DRM restrictions, the less appealing the technology from the user’s standpoint. In the case of digital textbooks, it likely precludes mainstream adoption. Expiration dates, and strict limitations on printing, sharing, and remixing content, are all dissuasive to students and faculty.

Third, lower pricing is not a sufficient condition for technological change--but it is a necessary one. By itself, an alternative price structure will not usher in a new era; but, there’s no doubt that it will be a critical ingredient to such change. Look at the success of the Kindle. Price discounts have been important, but if the Kindle didn’t also provide a satisfying experience for general readers, those discounts would have been irrelevant (and, in fact, the discounts were irrelevant in Amazon’s own failed pilot pairing the device with digital textbooks).

It’s uncertain whether commercial publishers have the will and the ability to change their business models sufficiently to meet these new needs. While they continue to experiment with institutionally-direct distribution models (and this digital textbook pilot is an example of that), there’s still little evidence to suggest that it represents the required fundamental change in thinking regarding DRM and costs. The lack of publisher movement in these areas has created an opening for alternative models, especially Open Educational Resources, to emerge that are now challenging the commercial model. But these alternatives have demonstrated no ability to address anything beyond cost. As such, open texts may be successfully adopted in classrooms, but they will not in their present state inspire mainstream use of digital learning materials.

What this e-textbook study and others like it tell us is that the technology of the textbook--with its physical interactivity, rich graphics, and tactile experience--raises the digital transition threshold for study materials well beyond what it is for general reading books. And that’s probably a good thing, for when the transition comes (and it will) it should be one that fundamentally changes not only course materials but the very relations of teacher, student, and text.

eTextbook-Pilot-Do-they-work

Topics: Commentary

The Battle for Higher Ed's Future: Wall Streeters v. Academics (Point, Academics)

Posted by John Squires on September 21, 2012

Torn down the middle. That's how the NY Times Magazine's September Education Issue portrayed UVA's campus on its cover page, along with a dramatic title: Anatomy of a Campus Coup: The inside story of the failed ouster of the University of Virginia's president--and what it means for the future of higher education.

By now, many of us know the story of UVA president Teresa Sullivan's forced resignation and subsequent reinstatement. In fact, it took me a few days to read the Times Magazine cover story because, well, I thought I already knew what had happened. It turns out there was still more to the soap opera, and a little bit of journalistic digging has helped uncover some lessons learned and a conspiracy theory or two. Allow me to summarize the article for you...

At the heart of the drama seemed to be philosophical differences in how to run an elite institution between those that have more of a not-for-profit/higher ed/government background and those that have more of a business/corporate/Wall Street resume. Where these two groups see the future of education heading caused a rift at UVA's campus that likely revealed schisms happening at institutions all across the country and the world. To the UVA Board of Visitors, an appointed body that oversees the university, Ms. Sullivan was not "CEO" enough in her actions or her image. The drama played out in the media as potential sexism, political jockeying, and fiscal philosophical differences.

But put succinctly, UVA's board did not think Ms. Sullivan was building enough long term fiscal bets into the strategic plan, such as online programming, and was most certainly not acting fast enough in experimenting with trends like MOOCs (Massive Online Open Courses) along with the MITs of the world. The board had been influenced, in addition to their MBA-ness, by Clayton M. Christensen's book "The Innovative University," which focuses on "disruptive innovation" in higher education. Talk to any private equity wonk and he or she will animatedly tell you how education is poised for disruption--the kind of disruption that could make someone a lot money. So why wasn't UVA taking advantage of its brand name and keeping up with the times?

Well, let's set the scene. UVA is considered a top ranked university, right up there with the Ivy Leagues. What sets it apart from these schools though is that UVA is a public school. So already we are not comparing apples to apples. UVA also has a smaller enrollment than many of its peer institutions. And finally, UVA is committed to keeping a higher mix of in-state students than, say, a University of Michigan (state schools typically charge out-of-state students a much higher tuition, thus those schools that have a higher percentage of in-state students cannot depend on out-of-state students to line the coffers). UVA's president, Teresa Sullivan, has been called a technocrat, an incrementalist, a consensus builder...all those terms that read slow-moving. Some questioned whether she had the inspired spirit needed to run an institution at the presidential level (president's are well known for helping to raise funds/endowments and acting as the face of the university).

So what does a not-for-profit-type administrator with a background in sociology bring to the table at a place like UVA? Well, we know Ms. Sullivan previously worked as the University of Michigan's provost, and before that, conducted sociology research at the University of Texas. Her post at Michigan is supposedly one of the reasons she was hired at UVA--she knew how to work in an environment where the state budget was consistently being cut; she knew how to do more with less. While at Texas, where she was "a demographer" and a "numbers cruncher," she worked on middle class-debt research with Elizabeth Warren, a bankruptcy law  professor who has taught at several institutions, including Harvard, has been a Special Advisor for the Consumer Financial Protection Bureau under President Obama, and overall, is considered an expert on middle-class finance policy. Ms. Warren is something of a Wall Street-watchdog, advocating for the middle class in a system she feels is "rigged," (according to her 2012 Democratic National Convention speech delivered just before former President Bill Clinton's). Warren is also currently running for US Senate in Massachusetts against incumbent Senator Scott Brown. I mention all this because the NY Times article referred to Warren as a "liberal icon" and touches on conspiracy theories that Teresa Sullivan was singled out because of her associations with anti-Wall Street and/or pro-middle-class fiscal policies. The Times points out that, in hindsight, this seems unlikely, though at the time, it may have fueled some of the flames. But because the Governor of Virginia is responsible for appointing the board, and he happened to be Republican, and because members of the board also happened to be some of UVA's biggest donors, political suspicions abounded.

Many people believe the UVA board used a faculty letter as a proxy to oust Sullivan. Faculty, tired of flat salaries they considered uncompetitive, wrote a letter asking for "urgent and immediate action." Helen Dragas, rector/leader of the board, began lobbying for support to remove Sullivan. She wrote the following to a fellow board member: "I am growing increasingly nervous that others are thinking about big trends and long term prospects for higher education delivery and funding." She reached out to board members one-by-one, some say to avoid attracting attention (in Virginia, university board member meetings of more than two persons are public record). She then advised Virginia's Governor McDonnell of her plans. All systems seemed to be on go for Dragas. What is ultimately interesting about this faculty letter is that the faculty of UVA joined the reinstate-Sullivan-camp after the ouster. The Times summed it up by suggesting that faculty may voice gripes, but when it comes down to it, they prefer an academic in charge over a business person.

The faculty, the students, and a former (and influential) board member, all mounted a counterattack. The Times reported that vandals had spray-painted the six front columns of the school’s neoclassical Rotunda with the letters “G-R-E-E-E-D.” And the more the board tried to tell faculty this change was a good thing, the more faculty became "paranoid" that big money donors were controlling the strings at UVA. When Sullivan gave her goodbye speech to the board, people gathered on the lawn to protest her departure. The public relations mess that followed only further riled Sullivan's supporters. "The national news media seized onto the story, which seemed to dramatize a broader conflict between big money and public education," according to the Times; and further, "the conservative editorial page of The Wall Street Journal accused the protesting faculty of trying to create 'an academic Green Zone separated from economic reality,' while liberal publications held up Sullivan as a symbol of a beleaguered egalitarian ideal." Ms. Dragas, the leader of the board, lost many of her backers after the decision to remove Sullivan, and Governor McDonnell called on the board to figure this mess out or resign. Sullivan was reinstated as UVA's president on June 26, 2012. And ironically, on July 17th, it was reported that UVA would participate in a MOOC initiative with Coursera via Stanford University.

So what really happened at UVA? Was it sexism in reaction to UVA's first female president, was it a Republican conspiracy fueled by big donors and a Republican governor, was it MBA/Wall Street bravado? We may never really know. But I think it is an important lesson in public administration. As the public sector adopts the more useful fiscal practices of the private sector, we must remember that feeding the needs of a public entity is a balancing act, even more so than sustaining a corporation. While business courses try and teach leaders how to run a company that treats its employees as more than just human resources, as a part of the company as a whole, in the public sector,  the people are our shareholders. And in education, which is a Public Good, whether the school be private or public, we have an obligation to run institutions in a manner that helps our investments--the students who are our future and the faculty who are showing them the way--best flourish.

I will end on a final note that I think captures a major schism between public and private business management as related to the UVA story. A UVA board member who considers himself more an entrepreneur than a Wall Streeter provided this analysis: "This board comes predominantly from the corporate sector, and they were not used to dealing with people who have academic tenure and can say whatever they want. They are used to being able to fire people who do that."

NY-Times-University-of-Virginia-Cover-Story3-246x300

Topics: Commentary

In Response to Debt Collector's Cashing in on Student Loan Roundup

Posted by John Squires on September 19, 2012

This September, the NY Times ran a front page article in their Sunday paper on college student loan defaults and the organizations that attempt to collect on defaulted loans. Look, if you take out a loan, my expectation is that it gets paid back. But what to do in the case of exigent circumstances? (And what exactly qualifies as exigent--that's a whole other blog post.) My focal point today--how hard is it becoming to watch students fall deeper under water?

When credit card debt becomes beyond-overwhelming, bankruptcy offers a solution. But the majority of student loans cannot be erased by bankruptcy. And it has become increasingly difficult to watch our college educated fall behind in repayment of loan debt, plus interest. The college-bound go to school to help improve their lot in life, and watching them try and climb out of a sink hole of college debt doesn't strike me as the best way to build our economy. Though for some companies, the more students that default, the better for that company's bottom line. (Sound familiar mortgage lenders?)

The Times article shines a spotlight on those companies who are profiting from student loan default. With 5.9 million people in default, someone has to service the lenders. The Department of Education paid $1.4 billion to collection agencies last fiscal year alone. According to one founder of a debt collection agency, the DOE contract has become "THE most sought after contract" within the industry.

The same Times article notes the monetary amount of defaulted loans is believed to be "greater than the yearly tuition bill for all students at public two-year and four-year colleges and universities."  This strikes me as obscene! (Though I would like to see some more data supporting the claim). But the idea that the amount of money in student loan defaults could pay for every student attending community college and state school is crazy. The for-profit institutions (who tend to serve an under-represented student population), seem over-represented in the list of schools with the highest default numbers. Granted they often have higher enrollment rates and more challenging struggles with retention and persistence (in part due to their online programs), but when our under-represented college population-- who is already most at-risk--is in such high default, it does not bode well for our economic future.

The US government has noted that student borrowers need to be made more aware of their college loan options. The article notes that "the companies hired to administer federal student loans are not paid enough for lengthy conversations to walk borrowers through payment options," according to critics. In fact, one program, called "income-based repayment," where students pay a percentage of their income toward loan debt, seems underutilized. Further, because letting students go into default brings in so much revenue, third party collectors have little incentive to help the government with their programs to educate borrowers in this regard.

What can we do to help solve these problems? To start we can make a college education more affordable in this country. Additionally, we should do a better job at matching students to the right education for them. This also means keeping the standards high at our public institutions. We all know you get what you pay for, but in the case of higher education, much more is at stake. We can't treat college as we would a flat screen TV. By keeping tuition at an affordable rate, one that does not egregiously outpace inflation, and by reducing the cost of course materials, such as textbooks, we can improve persistence rates and contribute to a better opportunity for students to graduate, find a good job and pay back their student loans.

Topics: Commentary

The Changing Landscape for Bookstore Services

Posted by Kirk Bodick on September 1, 2012

The bookstore services landscape for educational institutions, both public and private, has been radically transformed in the past five years. More and more operations have been outsourced or restructured to resemble businesses in the private sector while bookstore operations at the majority of colleges and universities still operate under a model from a time that has come and gone.

The primary reason for a bookstore’s existence—the textbook—has seen many changes, from the delivery of content (online and eBook) to the soaring rise of new textbook pricing (due in part to the increase of the used textbook market including textbook rentals) to the Higher Education Opportunity Act (HEOA), which among other policy changes allows students to become informed consumers of textbooks with the right to have ISBNs identified prior to course enrollment.

HEOA empowered students to not only shop at their local bookstore but also shop via non-traditional sources (online, used and rental) to find their course content at the lowest possible cost. Many students abandoned their local bookstores finding lower pricing off campus while giving up the opportunity to apply financial aid to their textbook purchases. And this in turn eroded the campus bookstore’s operating margins at a time when all institutions were feeling the pressure of decreased funding and budget cuts.

Traditionally bookstores were the domain of the self-operated store or contracted to nationally known bookstore operators that were an extension of their commercial operations. From a business perspective there have been many changes in the bookstore industry. There have been consolidations, spin-offs, bankruptcies, liquidations, and start-ups that higher education administrators had to consider when reviewing bookstore provider options.

Yet, when it comes to the scoping, reviewing and awarding of bookstore services it seems that the landscape has not evolved as much as other educational services on campus. Most bookstore operating contracts are awarded similarly to the process 10 years ago. Administrators either negotiate and renew with their existing provider, maintaining the status quo, or prepare an RFP for release and then evaluate with a grading rubric based on a traditional on-ground bookstore services model.

Where does that leave the bookstore and student? The bookstore continues its downward spiral of decreased revenue by supporting an operating model with high textbook margins so that they can provide sufficient commission return to the institution. And the student will continue to flee to off-campus booksellers who don’t have the artificially high markups without any commission payments due to the institution.

So, how can this cycle be broken? If higher education administrators will consider the following factors when considering, specifying and evaluating bookstore operators, the institution will win by having students return to the institution-sanctioned bookstore (physical or virtual) to purchase their textbooks. This will in turn drive additional merchandise and other purchases thus stabilizing and in most cases increasing revenue. Students can purchase reasonably priced textbooks with a choice of delivery options (new, used, rental or eBook) and with the option of applying financial aid to any textbook purchase by buying at the institution’s bookstore.

Savvy administrators are recognizing that there is a paradigm shift for bookstore services criteria, evaluation and contract negotiations. Here are a few things for administrators to consider when specifying, evaluating and awarding bookstore contracts:

Things to Consider When Specifying and Contracting for Bookstore Services:

  1. Long Term Contracts: Can anyone predict what any bookstore will be selling five years from now? With the gradual increase of eBook and online content delivery, physical bookstore space requirements for textbook delivery will become less and less. Yet many institutions are signing 7 to 15 year bookstore operations agreements. Don’t sign bookstore contracts longer than 5 years and consider 2-3 year contracts so that you have options for repurposing physical space.
  2. Commissions: Don’t sign contracts with high commissions and long term periods to finance bookstore renovations or garner high commissions. High commissions mean students will continue to abandon the bookstore and purchase off campus. Find other means (student usage fees, etc.) to fund renovation and capital improvement projects, not via textbook commissions.  Consider commission fees between zero and five percent to retain and increase bookstore volume and lower textbook costs.
  3. Exclusivity & Online Programs: Why sign a contract with a bookstore provider to be the exclusive provider for bookstore services at all? Consider awarding multiple contracts to keep textbook prices competitive. Similarly, why have the same contract for both on-ground and online students? Most institutions see online as a way to grow student populations and revenue without the physical plant costs (including bookstore costs). An online student may rarely if at all go on campus. Doesn’t it make sense to have a bookstore operator with lower margins and commissions who pass on textbook savings for online students?
  4. Financial Aid: Does your bookstore operator allow a student to purchase content via any delivery method (new, used, rental or eBook) and apply financial aid and grants towards their purchase? If not, you are doing your students a disservice while also denying your institution revenue stream opportunities.
  5. Supply Chain: Are textbook purchases limited to the inventory of your local bookstore or the national chain operator’s inventory? Why not have a bookstore that can rapidly deliver content in a variety of formats from a national network of content providers in variety of formats. Buybacks can also be conducted anytime virtually beyond the traditional on-campus buyback periods.
  6. Innovative Technology: Are faculty dependent upon their publisher representatives and/or bookstore personnel to aid in the selection of course materials? Work with bookstore operators who provide self-service textbook adoption tools, open education resources and custom course packs to aid in the selection of appropriate, lower cost content.

These are a few of the points to consider the next time institutions are considering a bookstore operator and negotiating contracts. With some out-of-the-box thinking everyone involved in the process will prosper. Students will return to the institution-sanctioned bookstore for price, service and financial aid considerations. Institutions will benefit by having more satisfied customers while increasing volume and recapturing lost revenue.

 

Download the full white paper Changing Landscape of Bookstore Services for Higher Education - http://www.akademos.com/resources/

Topics: Commentary

Stop the Presses! College Debt is now Affecting the Upper-Middle Class

Posted by Jen Slemp on August 20, 2012

An article on the cover of Thursday’s Wall Street Journal headlined with: College Debt Hits Well-Off. I had to think about it for a moment, mostly because I expected to see something more like “college debt hits record highs.” But it means what it says—college debt is now impacting the upper-middle class financially more than before.

The article focuses on families making between approximately $95,000 and $205,000 in annual income. This population experienced an increase in student loan debt from 2007 to 2010. The data came from the College Board while the analysis was provided by WSJ using data from the Federal Reserve Survey of Consumer Finance.

For the group that WSJ defines as upper-middle class households, the percentage of student loan debt increased at a higher rate than for the group that encompasses all households. Additionally, there are now a higher percentage of upper-middle class households with student loan debt vs. all households.

 
Upper-middle class households % of student debt
All households % of student debt
2010
25.6%
19.7%
2007
19.5%
15.2%

 

 

 

The article attributes some of the disparity to the supposition that lower income families tend to send their children to “lower-cost schools,” and quoting data from Sallie Mae, advises that lower-income families receive 36% in educational grants and scholarships vs. 21% for higher-income families. A parent is quoted as saying that upper-middle class families are getting “squeezed” in between lower-income families who get more subsidies and the “truly affluent” who can afford any university.

This is an issue that is definitely affecting the entire country and beyond. As I write this from my home in New York, I wonder, who are the families that will remain unaffected by rising costs in tuition—who are the “truly affluent”? According to a NY Times article that outlines where the 1% live across our country (One Percent, Many Variations, 1/15/12), the region in the United States that requires the lowest income to belong to the 1% is Jamestown, NY, located in western New York state, near Buffalo. While Stamford, CT, less than 45 minutes north of Manhattan and historically a NYC commuter town, requires the highest income in the country to be part of the 1%. Here is a link to an interactive that can help you determine what percent you fall into - http://www.nytimes.com/interactive/2012/01/15/business/one-percent-map.html?ref=business.

For the other 99%, it is disconcerting that The College Board notes the sticker price of college has more than doubled since 1985. And WSJ reports that more than 3 million households currently owe at least $50,000 in student debt. So will this increase in student loan debt contribute to an overall trend in the market toward choosing more affordable colleges, even among affluent families who previously went for prestige over affordability? Given how much harder it is to get into state universities than when I was applying to colleges, I imagine a trend where students are choosing lower tuition colleges will impact the entire spectrum of college enrollment choices (from how admissions officers make decisions to where students ultimately get admitted to college). The article also touches on the hypothesis that some upper-middle class families might be asking their children to take on higher student debt to pay for school. Will that build strength and character in our students or will that simply weigh them down with quicksands of debt-load and depression?

Topics: Commentary