There are a number of preliminary conclusions that one can possibly extract from the AAEA’s research results on College Affordability Rating (CAR).

1.      State or flag universities tend to perform well on two components–lower tuition and smaller amount of their student debt compared to other private colleges.

2.      State-run institutions’ graduation rate tends to be higher compared to others’.

These findings have very important consequences for private institutions, both for-profit and not-for-profit higher education institutions.  The negative impact on the survival and going-concern will be greater on privately managed colleges when the federal funding gets smaller.  One may see that some of these colleges may have downsized their learning centers or campuses before the implementation of the CAR in 2015.  Some may keep denying that such regulations may finally impact their operation.  However, those that keep ignoring possible decreasing future federal financial assistance may face greater risk of financial failures compared to their counterpart.  Learn what is happening at Harvard University.

The CAR regulation then can be interpreted as one of the effective means for the regulator to shut down inefficient and dying institutions which is in-line with the American’s public interests.

Please let us know what do you guys think?

A while back, we have heard from the industry on the importance of utilizing big data in making strategic decisions.  However, the industry is struggling to find the right people with a set of skills who can make the “data talk”.  The minimum required skills include, but not limited to knowledge of statistics, computer programming, managerial economics, research methods, financial and managerial accounting and analytical thinking.  On March 26, 2014, Harvard Gazette wrote an article on the big data class which is just recently introduced and being taught to Harvard students at the Department of Statistics.  In this class, the students were introduced to the world of big data.  AAEA has written many months ago, that this expertise can help US colleges to study internal, external and competitive environments which will help them to improve both institutional and student metrics such as debt-to-equity ratio, students’ drop-out  risk, enrollment management, retention rate and graduation rate.  Needless to say that currently, the majority of US colleges’ efforts and resources are focused on supplying or reporting data to both federal (IPEDS) and state agencies, as well as to other private institutions such as US News, Barron’s, Paterson or Best Colleges.  Therefore, less time is available to analyze both institution’s and students’ and other competitive environment data to generate strategic and meaningful information in the decision making process.  Lack of statistical knowledge and its application on different type of data, fear of making any new changes as well as rejection on the new reality also contribute to the inability to conduct analyses beyond simple graphs generated by Excel.

Please let us know what do you guys think?_

Almost every day, one can find articles written on student loans.  Let us deepen the analyses and check what portion of $1.00 taken by the students will be used for?  AAEA has pulled a ten-year data, and based on this data set, the Association has broken down the loans and checked how they were spent.  Fortunately, the regulator has calculated the share and made them available to use without further need to recalculate each component.  The components are (1). Instruction share; (2). Student service share and (3). Administrative share.  The Association has checked that the sum of these components is 100 percent. 

We take the information and apply it to US colleges.  Cost component one and two have direct relationship with student education activities while component category (3) includes the portion of spending on academic support, institutional support, and operations and maintenance ascribed to the education function.  In other words, component number 3 does not have direct relationship with the student class room activities.  As shown in Table 1 (click here: read the whole article), these unrelated expenses make up the largest portion.  On average and for the whole colleges in the US, the overhead cost is about 40%.  What does it mean is that for every $1.00 that the students borrow about $0.40 will go to pay the overhead cost?

Let us work together and make every effort possible to lower the cost of education simply because we are the one that can make this country a better place for everyone, every single family, and future generations~~we are the United State of America.

Please click here to read the whole article.  Please let us know what do you guys think?

The article points out how the student loans borrowers are the winners on recent decision of the Department of Education on letting them to access rankings of loan specialists.  To read detail of the news, please click here.  Readers need to be careful while reading the article.  The borrowers will not win until they only have to take a fair amount of student loans.  The cause of the problem is not about who the providers or lenders of the student loans are.  Rather, why they have to take loans?  Do they have to take a fair amount of loans?  One needs to critically think that the loans are the result.  The higher the operating inefficiency or the more inefficient higher education institutions are managed the higher the amount of loans that the “trapped” students have to take to finish their studies.  In other words, they have to bail the inefficiency out which simply passes to them by the school’s management.  In the statistical jargon, there is a clear positive correlation between the cost of education, the student loans, the overhead (administrative expenses) and salaries received by the full professor.  Each links above showed and reported the results of AAEA studied in the past months on such topics.  While it is easy to get distracted, the American public has to understand the cause-and-effect logic behind all of the student loans and cost of education issues.

As reported by the media on February 26, 2014, CFPB (Consumer Financial Protection Bureau) has filed a lawsuit against a for-profit education institution.

The court ruling will have significant consequences not only for other for-profit institutions, but also for its sister institutions (not-for-profit).  Moreover, if the court finds any inappropriate policies, the next questions would be what kind of consequences, either jail-time or monetary fines will be imposed to the institution or both?  If it is the jail-time, who will stay in the big house?  Would it be the School’s Board members, or the management (what level, president and its cabinet members?) or both or all?

This case may tell us that, in the future, being a president of a higher institution will be as riskier as any other management position at other industries.

Please let us know what do you guys think and why?

Well, more regulations on student loans.  This time the issue touches Parent PLUS loans.  To read more about the article, please click here.  When parents’ ability to borrow money is reduced, it will certainly affect demand for higher education services.  Meaning, students have to take more loans or colleges have to award more scholarships or financial aids so that the students are able to finish their program.  Consequently, any new regulations on student loans which may affect the amount of loans that borrowers can take may put more pressures on students’ ability to enroll for classes.  It then will decrease colleges’ ability to survive, especially for tuition-dependent colleges such as small private Liberal Arts Colleges or other for-profit institutions.

Please let us know what do you guy think?

We are pleased to see how the US public and people around the world responded to the Association of American Education Analytics’ new ideas to manage higher education more efficiently.  In its first anniversary, there are over 50K visitors to the AAEA’s website.  The Association is encouraged by the number of viewers and will continue conducting unbiased research and disseminate the information to the public.  This is the commitment that the AAEA has and the reason why the Association is established.  If we may reiterate, there are three main purposes why AAEA was established (1). To share our research to the general population, school decision makers such that college cost can be minimized and to serve the communities (2). To introduce new IRI paradigms, mindsets and tools as alternatives to what have been used and applied in the past in managing US colleges and (3). To raise money to help talented, but economically disadvantaged student to reach their dreams through education (please visit www.ghth.org to make a donation).

Thank you for your support!!

Given the massive amount of student loans accumulation in the US (more than $1.2 trillion), one can only predict that the regulator will do something about it.  As reported by the media, CFPB (Consumer Financial Protection Bureau) has conducted due diligence on student loans and on February 26, 2014, the Bureau filed a lawsuit against a for-profit institution.

The court rulling will have significant consequences not only for-profit institutions, but also for its sister institutions (not-for-profit).  Moreover, If the court finds any inapproprite policies, the questions would be what kind of consequences, either jail-time or monetary fines will be imposed to the institution or both?.  If it is jail-time, who will stay in the big house?  Would it be the School’s Board members, the management (what level, president and its cabinet members?) or both or all?

The Bureau also stated that its action serves as a warning to other for-profit institutions.  As the Association has said in many occasions, the root of the problem has something to do with college efficiency.  If the lawsuit has been filed against a for-profit entity, then it is also likely that on-going investigations on not-for-profit higher institutions are happening right now.  AAEA has tried to convey the message to the industry to control their spending and not to pass the inefficiency to the students by increasing the tuition.  If this business model and “old” paradigm worked in the past, it will not work in the new economy.  If colleges ignore the new reality, one only can expect that they, the colleges have to deal with more regulations in the future. 

Please let us know what do you guys think?

The Association has mentioned in many occasions that US colleges need to have data scientists to help navigating both the “new world of competition” and “the new world of regulation”.  However, there are only limited human resources with research and computer programming skills, the right background in statistics, econometrics, competitive strategies, managerial finance, accounting, education policy, managerial economics and knowledge of data integrity who can carry out these important tasks efficiently, timely and effectively.  Right at this moment there are over 100 open positions as can be seen at HigherEdJob.com.  Almost every day we heard the US media mentions, discusses and talks about unemployment.  This may not be true for folks that have the IRI-education analytics expertise and data scientist with education background.  AAEA is ready to help passing the knowledge to those who are serious about looking for new possibilities, new adventure, those who are so ready to embrace the changes.

Rarely did the American press openly admit how the regulator’s assessment on student loans are correct.  Part of the most recent article can be read here.  The AAEA has mentioned in many articles written based on statistical analyses that the national ecionomy may negatively get affected by the student loans.  The bottom line of the problems rest on colleges’ inefficiently in their operation.  In the past several months the Association has mentioned the source of such problems.  However, for whatever reasons, there are no real interest of US colleges to make self correction. Or perhaps, most of them assume that government will help, if bad thing happens.  The problem witll not get better in the future because some of them do not even know how to get out of the traps that they have set in the past.  Therefore, the US public just needs to wait until the buble occurs which may bring even worse consequences to the national economy compared to those of 2008 housing and financial crises.  For example, how many of the administrators are willing to get pay cut to make the tuiton more affordable?  Make things worse, most of the investment are directed toward fix assets (building …etc) and unbreakable labor contract (tanure system).

Please write us what do you guys think?