AAEA will comment on recent closure of Corinthian Colleges.  In early 2012, the Association has studied the possibility of US college closures in the future.  In this study, we have applied the new Institutional Research Intelligence (IRI) or Education Analytics paradigms, instead of the old approach.  The results have been shared to the American public (1454 pages pdf file) in AAEA’s website.  Detailed of the analyses are also available in the first published Education Analytics (IRI) book ever written in the US i.e., Institutional Research Intelligence: Go beyond Reporting.   We have to mention that what has happened to Corinthian College is not unique or random.  If one looks closely to our published research, she or he might be able to make inference what the future pictures of most US colleges will be.  Instead of reactive, AAEA is proactive.  The Association tries to anticipate what will happen to the US higher education not based on fortune-teller and baseless type of analyses.  Rather, AAEA does and complete the studies (1475 pages pdf file) based on IRI paradigm on real historical data published by US Department of Education/NCES.  These ten-year historical data were reported by each college in the US (Title IV institutions) who has received any type of federal funding such as Pell Grant or federal student loans for their students.  In our paper which was presented at 2012 North Carolina Community Colleges Annual Meetings in Raleigh and at 2012 South Central SAS Users Group Annual Meetings in Houston, TX. We have urged US colleges to use data-driven approaches rather than BAU in the decision making process which is rarely or applied or even thought before.  Needless to say that only a handful people have the background to carry out the comprehensive IRI paradigm.  These big leaps of paradigm shifts in the Institutional Research profession are not supported by enough people with the IRI skills to make it happen.  Realizing such a gap, some US colleges are moving away from the traditional Institutional Research and start to recruit folks that have enough IRI background and name the position as Business Intelligence.  Until the US has enough human resources with the IRI background, its higher education industry, tax payers, parents and college students will possibly and always suffer from sub-optimal decisions made by the college decision makers.

AAEA would like to make continued comments on what the US College Presidents opinion on current and future US education system.  The College Presidents say that reformers pay too much attention on cutting college cost than finding new ways to change the model of teaching and learning as summarized in the Chronicle’s survey results.  The Association believes that both objectives need to be done simultaneously.  Finding the new and improved model of teaching and student learning efficiently is the main goal of reforming and revitalize the US higher education.  Those two objectives are complementary to each other and they are not mutually exclusive.  Reducing cost of education cannot be justified or achieved by lowering quality of teaching and student learning. It is one of the College Presidents’ jobs to achieve such two important objectives at the same time.  However, the Chronicle’s survey confirms AAEA’s previous statistical study in that most, if not all US College administrators did not applying minimum cost mindset in managing their institution.  AAEA has applied econometric analyses to estimate the cost function in the US higher education industry.  However, it does not exist.

The important notes that the Association would like the readers to think about.

1. The fact of the matter is that over many years federal, state and non-profit organizations have sponsored many studies that aimed to find ways or models to improve teaching and learning at US Colleges.  Therefore, the US College Presidents’ opinion as expressed by the Chronicle’s recent study may reflect total failure of those research projects.  In other words, the results of such research are not applicable.  It is just good in theory, but cannot be applied in the real world or are they just another academic exercise?
2. AAEA recent studies found strong positive statistical correlations among administrative or overhead cost, college cost and student loans increases.  While point one above has been handled and given significant attention and research funding in the past, the tax payers are hoping that students’ learning are improving overtime (this is another maintained hypothesis that need to be proved).  On the other hand, college cost increases and the out-of control of student loans growth seem to be ignored for many years.  Only until recently when the Association starts raising the issues; make its analytical studies available to the American public and when the student loans passed the $1 trillion mark, then the interests on such topics are growing.  The American public starts asking the questions and wanted to know the reasons behind student loans and college cost skyrocketed.  AAEA has revealed the results based on Delta Cost data and rigorous statistical analyses.
3. By reading the overall results, it seems that the Presidents are not up-to-date or fully aware on what has happened at the operational level of their institution.  The results could be different if the studies are directed toward the Chief Operating Office, the Provost or person who actually runs the show.
4. Point 3 above may lead one to make a deduction that most College Presidents in the US are holding a PR or a ceremonial position only.   He or she may know the big picture, but may not have hand-on or detailed knowledge to actually manage the institution.  Somebody else might be the “true” administrator.
5. The sampling error could have been committed on the Chronicle’s recent studies such as identifying inappropriate target of audience to answer such important issues.  This may result of inflating the measurement errors.  For example, perhaps, somebody else i.e. the administrative secretary filled out the survey for them?  As said before, it is important to conduct the validity and other tests before publishing the results.  Do the questions asked on the survey measured what they are intended for, or other systematic errors have been done as discussed in the Classical Test Theory?

Please let us know what do you guys think?

The Association obtains survey results on US college administrators’ opinion on the change issues facing by the industry as reported by the Chronicle of Higher Education.  The results of the survey confirm past and recent studies which have been conducted by the Association of American Education Analytics. Some of the general conclusions made by the study may statistically be inappropriate (incorrect).  AAEA also questions if alpha, inter-rated reliability, validity and other forms of standard required tests have been applied on the constructs and the results.  Readers need to be aware of such possible flaws.

Specifically, AAEA would like to make the following comments on the Chronicle’s study, assuming that the methodology research is appropriate and that the sample (20 % response rate) represents the “true” population.

1. Low response rate could reflect many things such as the respondents care less about the importance of the survey or it can reflect that majority of the college administrators (Presidents) do not know what to say or do not want to give the true answers or it could simply show that they are confused and do not have any clue what is going on and where the industry and the country’s higher education system are heading to.  Perhaps, the above mentioned reasons occurred and are motivated by a “play safe” strategy because they are afraid of losing their current position?
2. The results are reported based on four-category of Likert Scale.  However, the report could be made better, more informative and may lead to a better understanding of the respondents’ opinion if more rigorous categorical statistical analyses such as CMH hypothesis tests are conducted on the collected data.
3. Most of the respondents agree that a drastic change needs to be done.  However, it seems very clear that they do not know the direction to go as reflected from their answers.  The majority of US college administrators think that the “politicians” are the true agent of change who can bring change on-campus.  In other words, the majority of them is waiting for the politicians to tell them what needs to be done?  We need to caution readers that the general statement made by the Chronicle may not completely true since the respondents can be classified into two groups of samples i.e., non-profit private and state colleges.  Again, Chi-square hypotheses tests need to be carried out in this case.
4. Point 3 above may tell us that a wait-and-see strategy is adopted in most US campuses.  Lack of initiative may again reflect the “play-safe” strategy.  They just do not want to take even the smallest calculated risk to change the organization that they are managing?
5. Point 4 may tell us that the American public has to be more patience to see significant changes that they have hoped for.  College education cost may keep going up.  It may not be impossible that one may see by the end of 2014 the accumulation of student loans will reach a new record of $2 trillion.
6. Point 5 above may lead one to believe that if no one can and is willing to make a drastic change then the only possible entity that can take the responsibility is the government.  Therefore, the Satisfactory Academic Program, College Affordability Rating and future compliance audit (which relate the compliance test results to college accreditation and/or disbursement of any type of federal funding and financial aids) should be welcomed by the US college administrators.  But, we have all heard that may not be the case?  Then the question that one may have is what does the college administrators really want to do?  Do they have the motivation to make the US higher education to be more affordable and that to make the US as a country to be more competitive in the world or do they try to maximize their own utility function with the expense of others?  Perhaps, the answer is yes.

Please tell us what do you guys think?

Needless to say that while the United States of America will celebrate its 238^th Independence Day, more working class in the country is losing its financial independence.  Positive correlation of college cost and student loans may have created, accelerated, contributed and caused the problems to occur.  If a do-nothing policy continues to be adopted in the future and no policy puts in place to control and redirected higher education cost and student loans problems, then one might expect more citizens of the country will financially be more dependent on the availability of public assistance programs.

Happy Fourth.  Please let us know what you guys think?

Independence Day is celebrated every year on the 4^th of July.  While the Americans enjoy the freedom, it seems that the majority of the population has also lost its financial independence.  The loss of financial freedom can be created by many factors; perhaps the economic system may have played special roles.  While Adam Smith’s concept of invisible hand suggests a free economic system with insignificant of government’s intervention, it may not be completely true in the case of US higher education.  The industry has been let-alone for hundreds of years.  Data suggest that giving too much freedom without rigorous control system will create chaos.  For example, letting the for-profit corporation to participate in the education industry has perhaps created more problems than its expected good.  It surely will cause excess supply of education services.  If the growth of demand for higher education in the US is less than the growth in the supply side, it certainly will cause problems.  Sooner or later, it will increase the risk of college closures or mergers.  In such a case, Adam Smith’s invisible hand paradigm predicts the outcome very well.  Two well-known cases occurred just recently which show how negative impacts might occur.  Apparently the invisible hand does work well in the US higher education system.  Though AAEA has not done statistical analyses, one may have to prove the maintained hypothesis of possible positive relationship between skyrocketed cost of education, student loans and the policy to let the for-profit corporation to participate in the industry.

Happy Fourth.  Please let us know what you guys think?

The Association has discussed the potential of college closures due to future dynamic changes in the industry.  Therefore, AAEA has urged US colleges to promote sound business model.  However, greed is very difficult to control.  It may lead to products and services overpriced and cheating as well as lies are common strategies which have contributed and caused student loans to increase at an out-of-control rate.  As reported in the media today, recently another for-profit institution with 75K students potentially will have to shut down its operation.  This is not a random event.  The American public will hear more of the same stories in the near future.  As the regulator increases its due-diligent, compliance and audit efforts on higher institutions that have received some sort of government funding such as Pell Grant or student loans, more colleges (for-profit or not-for-profit entities) in the US will be forced to close its operation.  It will start with for-profit colleges followed by other types of institutions as well.

AAEA’s assessments pointed out to about 519 institutions which are in obvious trouble for their liabilities (financial obligation) are much higher than their assets (what they actually own and able to pay).

Please write us what do you guys think?

In the last a couple of days, we heard  many comments on how to fix US student loans problem after the Bill on student loans proposed by Senator Elizabeth Warren has been blocked at the Senate floor on June 12, 2014.  The opponents of the bill cited that the proposed bill has no impact to lower college education cost or to lower the borrowing.  AAEA has mentioned the possible flaw of the Bill on its January 30^th,2014 assessment as written in the Association’s blog which is exactly been cited by the opponents of the Bill.  Other comments reported in the media just general comments which may not even touch the substance of the problems.

The rejection to the proposed bill may indirectly show the opponents’ support of the regulator’s CAR (College Affordability Rating) proposed on August 22, 2013 which aimed to curb reckless college spending practices that have driven education cost up uncontrollably.  The Association has completed other studies which statistically show and prove that the US college administrators do not operate and apply minimum cost paradigms in managing their respective institution.  They have their own agenda and unfortunately the agenda may not be in line with the American public’s and students’ interests.

The student loans is such a big mess so it will not and cannot be solved only by one or several bills and it cannot be strategically handled quickly in a pretty short time.  The defeated bill is just a small step to “ease” the problem which may help solving a miniscule part of the existing problems which have been built within an inefficient system in the past hundred years.  The law makers need to work harder and smarter than just concern with short-run problems.  The motivation to write a bill not just to gain the votes needed in the re-election process. Rather it should be based on serving the best interest of the United State of America.

Bailout student loans have been discussed as early as in 2011. In the past few days, the ideas resurfaced again as written by the US media which confirmed that the US taxpayers may have to bailout the loans through different programs introduced by the regulator in dealing with massive current student loans.  Programs such as Student Debts Forgiveness, Pay as You Earn (PAYE) or Income-Based Repayment programs ease some of the financial pressures that college graduates and their family have to deal with.

AAEA has studied the issues and has made its research findings accessible to the American public many months ago.  Sadly, the current repayment (bailout) programs while help lessening family’s financial pressures, they do not however, solve the root of the problems.  The Association has repeatedly mentioned that the colleges’ inefficiency and the old operational mindsets used in managing US colleges are no longer relevant in the new economy.  Given the current economic conditions and dynamic competitive environment changes that are occurring in the global world, the old mindsets need to be improved, revitalized, completely abandoned or changed.  Simply shifting all the inefficiencies to the students while it worked well in the past, will no longer relevant in the new world. 

Please let us know what do you guys think?

AAEA has assessed and shared the results to the American public on finding the driving factors behind student loans crises in the US.  There are three variables which have positive correlation with the skyrocketed of higher education cost as well as student loans increases.  These three factors are administrative/overhead cost, spending on public services and full professors’ salaries. The American Association of University Professors (AAUP) on its recent report has confirmed part if not all of these findings.  Though, the objective of AAUP’s and our studies are geared toward answering a slightly different question, the results pointed out on the growth of administrator’s spending may have caused college education cost to increase uncontrollably.  Our studies went deeper than that of AAUP’s and we found that in addition to the administrator’s salaries, full professors’ salaries have positive correlation on student loans, but not for Associate or Assistant’s Professors salaries.   

These findings have many implications such as:

1. Past regulators and governing bodies have less successful efforts to identify the problems for many years which led to the student loans crises in the US.
2. Both internal and external audit function (as addressed in Generally Accepted Auditing Standards) and other compliance efforts need to be established to prevent such problems to reoccur in the future. This requires each business unit/department/program to develop its owned Standard Operating Procedures (SOP) which is rarely if ever found and practiced by majority US colleges.  Without these guiding principles almost nothing can be done appropriately.
3. School Board members’ responsibility need to be extended not just to rubber stamped any requests from the school’s administrators, but to conduct its own studies to justify any request on increasing tuition or staff and administrative salary.  The Board needs to have its own capable staff members to carry out such tasks.  The members of the board need to deeply understand the business and economics of education.
4. Sound budgeting can be implemented at the Department level using cost center approach as discussed in managerial (cost) accounting.
5. The college education cost increases and students loans rises have triggered the state lawmakers to find ways to solve the problems.  Recent example can be found in Tennessee.

Please let us know what do you guys think?

Legislators in Tennessee are getting closer to pass the law to help all students to attend Community College for free as reported by Yahoo News on April 5, 2014.  AAEA has consistently supported, suggested and promoted the idea in the past.  Therefore, the it applauded such a plan.  The Association is glad to see the progress toward making higher education more affordable for all US citizens.  If this model becomes a reality, then soon other states will follow suit.  Otherwise, they will experience significant population decrease for families will move out and relocate to other states (such as going to Tennessee) where college education is more affordable. AAEA is eagerly waiting to see which state in the US will pioneer free college education, not just for Associate degree programs. But, for all bachelor or undergraduate degrees.

What does this mean to both state-run and private (profit and non-profit) 4-year colleges?

Several consequences will happen:

1. Majority if not all freshmen students will take their GenEd (General Education) courses at community colleges before transferring to a four-year college of choice. This will significantly lower student loans and partially solve current US $1.2 trillion serious student loans problem.
2. Private Liberal Arts, expensive colleges with lower retention and graduation rate will potentially experience and suffer worse financial crises.
3. For-profit colleges could be wiped out from the competition.
4. Reduction (lay-off) of instructors who teach GenEd classes at 4-year colleges are imminent, but the reverse is true at 2-year higher institutions.
5. Freshmen students’ enrollment will drop significantly at 4-year colleges and the opposite is true at Community Colleges.  However, transferred students’ enrollment may increase at 4-year colleges.
6. Four-year colleges’ recruitment effort will no longer be focused on freshmen degree seeking students, but on transferred students.
7. In the near future, the model for higher education will shift significantly as we have predicted months ago.  Undergraduate program in the US will be run by two entities–community colleges and 4-year colleges.  Freshmen and sophomore classes will be offered by two-year institutions while traditional 4-year colleges will only run upper level classes for junior and senior degree seeking students.  These changes will significantly affect the whole organization structure as one ever known in the past.
8. Management team at traditional 4-year colleges will be forced to change their operational mindset if they want to survive.   As the Association has hypothesized again and again, there is no way out now for not to control their spending.
9. Some 4-year colleges will experience reduction on their revenue generated from federal government such Pell Grants or federal student loans due to decreasing enrollment on GenEd classes (see point #4 above).
10. All of these dynamic changes will trigger new regulations including, but not limited to how and to whom data are reported and new skills needed to manage higher education more efficiently.

This is surely an exciting change that will have a strong support from the American Public.  Aside from what has been mentioned above, many families with college aged children will flock to Tennessee, especially in the Nashville area where several community colleges are situated.

Please let us know your comments!