Inn-O-Vate

Yesterday the U.S. Education Department released proposed regulations to govern the $650 million Investing in Innovation Fund, part of the American Reinvestment and Recovery Act, along with the $4 billion Race to the Top fund.

Education Week's Politics K-12 blog has a good summary of the proposed regulations, and the New York Times and Washington Post have articles worth reading as well.

Individual school districts or groups of districts can apply for the i3 grants, and entrepreneurial nonprofits can join with school districts to submit applications.

Under the proposed priorities, grants would be awarded in three categories:

• Scale-up Grants: The largest possible grant category is focused on programs and practices with the potential to reach hundreds of thousands of students. Applicants must have a strong base of evidence that their program has had a significant effect on improving student achievement.
• Validation Grants: Existing, promising programs that have good evidence of their impact and are ready to improve their evidence base while expanding in their own and other communities.
• Development Grants: The smallest grant level designed to support new and high-potential practices whose impact should be studied further.

Here is the link to the Education Department press release.

New Tune, Same Stupid Key

Well, it had to happen sometime. Faced with a thoughtful, responsive piece of federal legislation to reform the financial aid system, some ideologue had to come forward with a proposal to end federal student aid entirely. Yep, you heard me right-- get rid of financial aid. Throw out the baby with the bathwater.

The Chronicle is reporting that a director of the Cato Institute's Center for Education Freedom -- aka the freedom not to be helped by the government-- is purporting that "student aid explains the pain" of rising tuition. This "higher education expert" (honestly, some people are way too kind) argues that phasing out aid will make colleges more responsive to people who pay "with their own money."

Too bad this expert, Neal McCluskey, didn't bother to do his homework. If he'd cracked a book, he would've learned--fast-- how wrong he is. Not to mention unoriginal. Back in 1987 then-Secretary of Education Bill Bennett made the same argument in a New York Times op-ed titled "Our Greedy Colleges." And economists including Ron Ehrenberg, Caroline Hoxby, and Sandy Baum flatly rejected it--on empirical grounds-- as simplistic and ideologically convenient (much as Kevin Carey apparently did today). Since that time, plenty of studies have tested the hypothesis. As one (real) expert, Harvard's Bridget Terry Long, puts it, "Of the many studies that have tried to identify whether colleges react to federal financial aid, most find little to no response. While several studies do find a college price response, their overall results are mixed and often contradictory. In summary, none of the numerous studies on the subject have found a "smoking gun" in terms of college pricing behavior....the fact that these two trends (rising tuition and rising aid) move in similar directions does not mean that one caused the other." Heck, even Rich Vedder's shop has moved past the simplicity of the idea, instead developing a (somewhat) more nuanced twist in which aid contributes to rising spending, not rising tuition (the latter could occur, but isn't inevitable).

Yet the Bennett hypothesis keeps on rearing its ugly head. I think after more than 20 years of this nonsense it's time to call the idea what it is-- just plain stupid-- and stop giving ink to the people who repeat it.

Surprise! Public Support Boosts Public Enrollment

As I've described in several posts this year, there's an ongoing debate over the role, value, and outcomes of the private for-profit sector of higher education, particularly the 2-year schools. Community colleges are often compared to their for-profit counterparts, many times unfavorably. For example, their graduation rates are notably lower. And enrollment in the for-profits continues to rise rapidly, suggesting that consumers are voting with their feet, regardless of any hesitation on the part of academic researchers. The students, some say, are the best judge of institutional quality.

But a new study suggests that student behavior may reflect another factor: institutional resources. Community colleges are historically underfunded, and as I've argued elsewhere, this seriously affects their capacity to serve students. It's one thing to point to differences in practices between the community colleges and for-profit colleges, and another thing to attribute those differences to variation in the "will" or intentions of practitioners, rather than attribute them to under-funding and all that comes with it.

Stephanie Riegg Cellini, an assistant professor at George Washington University, has conducted a rigorous analysis of enrollment in California that tackles these hypotheses from a useful angle. She asks: What happens to enrollment when public support for community colleges increases? Does enrollment shift from private to public? Does the number of proprietary colleges decline?

Cellini examines what happens after local community college bond referenda are passed in the state, and uses an econometric approach (regression discontinuity) that allows her to mostly rule out the potential that enrollment is endogenous to the decisions of those referenda (e.g. that a desired increase in community college enrollment induces passage of the referenda, rather than the referenda inducing increases in enrollment). Her results, published in a peer-reviewed journal (American Economic Journal: Economic Policy), indicate that an "increase of $100 million in funding for a local community college causes approximately 700 students per county, or about 2 percent of sub-baccalaureate students, to switch from the private to the public sector in the first year after bond passage, crowding out two proprietary schools in that county."

This suggests that students really do consider public and private 2-year colleges alternatives to one another (Jim Rosenbaum has also provided evidence of this), that they compete in overlapping markets, and that students' enrollment decisions may reflect the ability of one sector or another to work to attract them. In other words, when community colleges have more resources, students respond by enrolling-- in fact, until the bond-financed changes take place those schools may become quite crowded. As Cellini writes, "Potential two-year college students may simply be unaware of their public sector options. With limited budgets and virtually no advertising-a particular disadvantage relative to the private sector-community colleges may be overlooked by many local residents. Fewer still may know the extent of the programs and courses offered by the public sector, particularly considering that the growth in vocational fields has been relatively recent for many colleges. In the presence of this type of market failure, bond passage may generate a temporary surge in awareness of these institutions. The positive media attention elicited after bond passage may increase demand for institutions that were previously overlooked."

Of course, these results are most intriguing when considering the potential effects of the pending higher education legislation, which would give community colleges many more resources.Will any corresponding increases in enrollment, coming from the private sector, be sustained? How might this change the debate about what community colleges should learn from for-profits? These are important questions in need of answers-- let's hope researchers pay close attention.