Akademos_Blog

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

Is the word "Textbook" obsolete?

Posted by Brian Jacobs on May 8, 2012

Matt Greenfield posted a blog entry yesterday on the Huff Post on whether it’s appropriate to continue using the word “textbook,” now that the digital transition is upon us.

It’s interesting that the word in English is the only one (that I’m aware of, at least) that doesn’t designate the book specifically as an educational object. In French, for example, “textbook” would be translated as “manuel scolaire,” scholarly manual; in German, it’s “Lehrbuch,” teaching/instruction book (the Spanish “libro de texto” is likely a neologism derived from the contemporary English word). Perhaps the origin of the word “text” stems from the use of primary source materials (that makes sense to me) but the openness of the word may actually be helpful as we make the digital transition. Precisely because it has an etymological relation to weaving, blending together, it could be flexible enough for repurposing (as it has done so already in the digital realm, as, for example, “hypertext.”) There’s also a minimalist and direct sense of the word “text”: It’s clean and dry and unencumbered.  And regardless of the many ways in which the digital transition will play out, and despite the use of video, audio, 3D simulations, and other “learning objects,” who would deny that “text,” as the written word, is still the foundation of learning and will continue to be? “Visual learning” can be a great complement that helps reinforce concepts but there’s no substitute for grasping them at a textual level.

The form of the book, called a “codex” or “block of wood” at its origin in the first century AD, is really what’s at stake here—and likely much more so than it is for general reading and novels.  The core text in digital learning inevitably, and by design, points beyond the work’s container, its borders. That’s not been the case in the early going of general reading materials, especially novels—the content that’s propelling the growth of eBooks generally. These latter are usually self-contained, mimicking the physical book experience.

One could argue that the success of digital reading in the areas of general reading, novels, etc. and its lack of success thus far in most educational circles actually mirrors that extent to which the book form holds up in the digital medium. That is, Kindles, Nooks, and the like can offer satisfying reading experiences when the content fits neatly, and in a linear way, into a discrete package—whether that package is physical or virtual. Studying in a subject area, instead, is not usually linear and so well contained in a progressive narrative. One flips back and forth between sections, writes annotations in the margins, writes out notes elsewhere.

In this sense, the textbook might be the foundation but it is always physically interactive for the student; the trick, which no one has yet shown successfully, is to create a new kind of immersive experience that isn’t merely as good as physical interactivity but actually better for learning outcomes (otherwise, why bother?). And when that emerges, which is likely but not immediate, we will indeed need to dispense with that odd construction, the textbook.

Topics: Commentary

Amazon, Apple, and the Priority of the Platform

Posted by Brian Jacobs on May 1, 2012

The federal antitrust lawsuit initiated late last month against Apple and major publishers is indeed the boon to Amazon that most view it as. As a book publishing analyst put it in a NY Times article on the story, “Amazon must be unbelievably happy…Had they been puppeteering this whole play, it could not have worked out better for them.” He and others from the publishing industry see this, however, as not just a boost for Amazon but a development that portends darker days for publishers and ultimately for the reading public: “Publishers and booksellers argue that any victory for consumers will be short-lived, and that the ultimate effect of the antitrust suit will be to exchange a perceived monopoly for a real one. Amazon, already the dominant force in the industry, will hold all the cards.”

Such a suggestion, I think, is misplaced because it underestimates the depth of the changes now afoot in the publishing industry. Lower eBook prices may be one effect of Amazon’s successful drive to dominate the market for eReader devices, but the company’s comprehensive distribution platform (which includes the capacity to create and manage content) helps to raise the very question of what it means to be a publisher. “Content is king” is the cliché so often used by owners of content, and new media businesses have turned that on its head. Distribution, the “platform,” now takes priority—for a sufficiently developed and mature one will attract the highest quality content available. We’re already at the point where authors, collaborators, editors—people who create content generally—no longer require the independent services of a publisher to achieve their goals. These needs—editing, distribution, marketing—can now be handled by the distribution companies themselves, as Amazon has already demonstrated with the launch of CreateSpace and its related Kindle Publishing arm. And as supportive as Apple has been of traditional publishers, it also now operates its own self-publishing unit, ibooks Author, designed especially with the educational textbook market in mind. Publishers and their analysts may one day look at this period, in which they’re worried about pricing controls within the context of traditional publisher and bookseller relations, as the last of their halcyon days.

Amazon will be dominant, to be sure, but it certainly won’t “hold all the cards.” Instead, a multiplicity of channels will emerge that allows all kinds of content creators, and the infrastructure that supports them, to have direct access to their readers and users. As announced yesterday, Barnes & Noble has enticed Microsoft to work together toward this end. While there’s good reason to be skeptical about the fruitfulness of this particular partnership, there will clearly be alternatives to Amazon. This is good news, not only for readers but for creators of content and their supporters, and for those who are excited to see human creativity channel itself into new forms of expression, as it is now beginning to do.

Topics: Commentary