In a post on the for-profit Phoenix University, John Quiggin argues that:

The unimpressive performance of Phoenix and Edison, along with the complete failure of other for-profit initiatives and the absence of any significant success stories in the for-profit sector over many centuries and many different countries and institutional environments suggests that the for-profit model is fundamentally defective as a way of providing education.

Why is this so? The obvious reason is that educational institutions must build up reputations over decades, since the consequences of cutting corners take decades to emerge. This makes no sense in terms of profit maximization and individual incentives, so it requires a professional/academic ethos which at least in part, overrides narrow forms of individual rationality. Such an ethos cannot survive in a for-profit firm.

I don’t know the Edison story, but Phoenix itself has been pretty successful – 300,000 students and a fairly good stock market performance, though the index of listed for-profits published annually by the Chronicle of Higher Education shows the sector trending down since its 2004 peak, but still well above where it was when it started in 2000. Phoenix says its graduation rate is 50-60%, which is probably comparable to the similar client group (mature age students) in Australia, for whom the <a href="http://www.dest.gov.au/sectors/higher_education/publications_resources/statistics/higher_education_attrition_rates_1994_2002.htm#The_findings_in_more_detail

[This post was mostly lost in a server change, and has been restored from the National Library archive.]

I knew that sensible Labor higher education policy could not last. Today’s policy announcement on maths and science education contains another HECS remission initiative that could be worthwhile, by encouraging graduates with science or maths expertise to enter teaching. But another proposal is a waste of money:

Labor???s New Directions for Maths and Science Policy will:

* Reduce the HECS contribution for new maths and science students from the current annual student contribution rate of $7,118 to $3,998 from 1 January 2009.

What is the theory behind this? The press release (which is all we have) is rather vague, but there are two hints. The first is that:

Australia needs the best maths and science teachers in the world so that they can educate the next generation of Australians in the skills required to build our economy and our future prosperity.

At the moment, the funding system is not directly based on what course a student enrols in. It is based on how particular units of study are classified. This means that people studying teaching or education pay a lot more for units classified as ’science’ or ‘maths’ than they do for units classified as ‘education’ or for other disciplines such as the humanities in which a teaching student may enrol to build subject-specific expertise. At the margins, it is possible that this puts some teaching students off specialising in science.

But why does everyone studying maths or science need to get a discount? Lucrative health-related courses include units classified as ’science’, and ‘maths’ classified units can be included in a variety of courses. The people who go off and used sophisticated maths to play the financial markets will get this discount as much as the people headed off to teach at schools. At most, the cost should be reduced to those enrolled in teaching courses.

The second hint is that:

Investment in critical areas of expertise such as maths and science has stagnated while our economic competitors have surged ahead. Today only 0.4% of Australian university students graduate with maths and statistics qualifications, compared with an OECD average of 1%.

But this policy in itself will not create a single extra graduate in maths or science. As regular readers of this blog will know, the number of places isn’t set by student demand. It is set by the bureaucracy. And Labor’s policy makes no mention of creating any extra places.

Perhaps Labor is proposing a voucher system, with the hope that extra demand will translate into extra supply. Even then the policy is not likely to work, as there is already excess supply in science. Also, universities are at long last waking up the need to understand their costs, so Labor may need to send them a price signal as well as sending one to possible students.

A voucher system seems unlikely. So at most the policy can change who enrols in maths and science subjects, not how many enrol in maths and science subjects. As I noted in yesterday’s post, interests are the main driver of course choices. So if there is an effect from this policy change, it will be to shift demand away from other courses that draw on people with science or maths interests, such as the health-related courses or engineering. It’s hard to see that there is any value in doing that; these occupations have more serious workforce shortages than any science-related field. Indeed, only in secondary school science and maths teaching is there evidence of an under-supply of people with science backgrounds.

So this policy is not, as Labor claims, an ‘investment’ in ‘critical areas of expertise’. It will not provide a single extra dollar or a single extra student to science or maths. It will simply be a handout to people who are going to study those disciplines anyway.

As reported in this morning’s papers, Labor’s early childhood policy includes 50% HECS remissions for:

10,000 early childhood graduates working in areas of specific need, such as rural and regional areas, indigenous communities, and areas of socio-economic disadvantage.

This is a considerable improvement on previous Labor suggestions that HECS be cut across the board to attract students to particular disciplines. That policy is doomed to failure because students’ course preferences are driven by their interests, and not by money. The share of applications received by each discipline has generally been quite stable over time, despite the introduction of differential HECS in 1997 and widely varying salaries on completion. Also, people tend to discount the value of financial transactions in the future. An 18 year old isn’t going to be strongly influenced by a few thousand dollars they will have to repay when they are 30.

Though the current Labor policy does not provide large financial incentives – on their own figures only about $20 a week to begin with – it has the benefit of being received immediately on the desired behaviour occurring and does not require the student to alter their fundamental interests or career plans; just where they put their skills to use.

Indeed, the way it is framed may mean that is has a greater incentive effect than simply paying people working in these locations an extra $20 a week. A 50% remission sounds like more than (for example, I have not done the actual sums) a 3% wage increase. And loss aversion psychology may mean that people perceive avoiding a loss (debt repayment) as more valuable than the equivalent gain (a pay increase).

The main criticism of HECS remission schemes is that the incentives are effectively restricted to the least experienced workers, when dealing with the toughest cases would preferably be dealt with by workers who had been in the industry for a longer period of time. But given that the Commonwealth would be reluctant to get directly involved in paying early childhood staff, and this scheme may have incentive effects beyond its actual monetary value, as higher ed interventions go this seems to have more promise than most.

There, I have said something positive about an ALP education policy:)

According to today’s lead story in the SMH:

THE universities admissions index system is in crisis, with many fee-paying students qualifying for places with HSC scores well below official cut-off marks. ….

Until now the UAI was regarded as a national standard to determine university entry,

This is fanciful. The newspapers obsess over the school leavers, but less than half of commencing students are admitted based on their Year 12 results. The latest published figures are 2003, when 43.24% of bachelor degree commencing students entered based on their school results. A quarter started their course based on previous university results, about 8% based on ‘mature age or other special provisions’, and 6.5% on tests prescribed by the university (such as the test the ANU is now using).

This is nothing novel; I have a table (in a pre-Internet publication, sorry) showing school leavers were a minority of commencing students in the late 1970s. So obviously universities have had to use many different ways of assessing who should be admitted. The great virtue of the UAI (or ENTER, as it is called elsewhere), from the universities’ perspective, is not that it creates a ‘standard’ (let alone a ‘national’ one) but that it is cheap, outsourcing most of the costs to the schools and enabling selection by computer.

The correlation between Year 12 results and first-year university results is, in the few published studies, around .3 or .4, making it only a moderately good predictor of how well an applicant will do in his or her university studies. Apparently, the correlation between previous university results and future university results is much higher, which would explain why so many applicants are accepted on this basis (especially now that the government is penalising universities for not hitting ther enrolment targets there is an incentive to take people with more predictable success rates).
Continue reading “Is the uni admissions system in ‘crisis’?” →

And a further update: Theory saved! If I take out the private providers that have been added to the statistics, low SES commencing students go up from 15.16% in 2004 to 15.20% in 2005. Of the total student population, they increase from 14.62% to 14.67%. These are extremely small differences, but in the direction I predicted.

——–

The trouble with using evidence is that sometimes you have to admit that you could be wrong. In making the argument below, I compared the 2005 Higher Education Report with the 2004 version (pdf). The 2005 report said that low SES students were 14.5% of the total in 2005 and the 2004 version said 14.1% in 2004, so I concluded that the proportion of low SES students had increased between the two years.

But now the equity group spreadsheets are available. It says that the 2004 figure is 14.62%, not 14.1%. The fine print of the 2004 report says the numbers are not affected by changes of scope to enrolments – which they don’t explain, but which I think is a reference to a change in the way students are counted that was implemented a few years ago. Essentially, the earlier system was a snapshot in time at 31 March each year. But as more students enrolled mid-year, concern increased that this was inaccurate and the system was changed. The spreadsheet data, which I presume uses the now standard method of counting students, records 2,000 more low SES students than what I presume is a 31 March snapshot in the 2004 report. So I was not comparing like with like – though I will have to think about why you would get a higher percentage later in the year than earlier.

The next issue is commencing students. In absolute numbers, commencing low SES students are up by 2%. But in percentage terms, they are down 15.16% to 15.12%, contrary to my theory. However, the 2005 data includes private higher education providers that were not in the 2004 count. As they mostly charge full fees, perhaps they are less attractive to low SES students. It will take me a while to do a same institution 2004-2005 comparison, but I was almost certainly over-confident in my analysis yesterday.

Yesterday’s post:

I know evidence is but a flea on the elephant of intuition and ideology. But one aspect of the DEST Higher Education Report 2005, quietly put on the web late yesterday, is worth noting. This is the annual calculation of the proportion of domestic university students from a low socioeconomic background. The measure is, it should be pointed out, only a proxy. It is a postcode analysis, with anyone whose permanent home address is in a postcode in the lowest 25% as determined by the ABS Index of Education and Occupationdefined as ‘low SES’. Obviously, there are poor people in well-off areas and well-off people in poor areas. This limits it as an absolute measure of SES background of university students, but it is probably a reasonable trend measure, especially over the short term.
Continue reading “Fees and the poor, again” →

When students buy their way into public universities through full-fee places it is described as an ‘inequity’, but when public universities buy students – as many of them are busy trying to do now with scholarships – it is reported by newspapers without negative comment and I suspect with very little tut-tutting among readers.

The SMH tells the story of former North Sydney Girls High student Jie Gao who, because she received 99.95 as her Year 12 score,

was offered a $10,000 annual scholarship by the University of Sydney and the University of NSW, a $4000 annual scholarship from Macquarie University and a $13,000 scholarship – funded by business – to attend the University of Technology, Sydney.

Yet which practice is really more objectionable? The full-fee students don’t make anyone worse off – indeed they generally make life better for other students by easing the financial pressure on universities and (usually) by giving up a HECS place in their second preference course. But the main effect of the scholarships is to provide further reward to people who are already very fortunate simply by virtue of their academic ability, and many of whom will also come from the privileged backgrounds that tend to produce very high school results. Though many universities have donations and endowment income that they have to spend on scholarships anyway, surely need would be a better basis for distributing it? And if the money comes out of general revenue, scholarships deprive cash-starved teaching activities of much-needed resources.

‘Merit’ scholarships are offered because of status competition between universities, as status partly comes from enrolling the best school leavers. But scholarships probably aren’t highly effective in doing this. As Jie Gao sensibly says:

she would make her decision according to which university and course she preferred.

I’d guess her choice is between UNSW and Sydney, which offer identical scholarship packages. So the scholarship will be a neutral factor, as it will be for other very bright students. Both universities, and their other students, would be better off if they had never started this status competition and instead spent the money on something that would make a difference.

Only UTS really has anything to gain by trying to push its way into the NSW higher education status game, and this is presumably why it is out-bidding UNSW and the University of Sydney. But how prestigious can you be if you have to pay bright students to attend? Isn’t this just a relationship of convenience, like the ugly but rich old guy with the attractive young woman who is really only after his money? And if the student is ambitious, what makes more sense – an extra $3,000 a year (less tax) or being with other very bright students at UNSW or Sydney, where the long-term networking could be worth much more than the added scholarship?

Perhaps the better measure of prestige is not 99.95 students, but how much the full-fee students are prepared to pay. If students are willing to pay top dollar, universities know they have something that people really want.