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the PROSPER Act, the price of college, and eroding public goodwill

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The current Congress is decidedly cool toward colleges and the students attending them. The House version of the tax bill that just passed eliminates the deduction on student loan interest and taxes graduate student tuition waivers as income. Both House and Senate bills tax the largest college endowments.

Now we have the PROSPER Act, introduced on Friday. The 500-plus page bill does many things. It kills the Department of Education’s ability to keep aid from going to for-profit schools with very high debt-to-income ratios, or to forgive the loans of defrauded student borrowers . It loosens the rules that keep colleges from steering students into questionable loans in exchange for parties, perks, and other kickbacks.

And it changes the student loan program dramatically, ending subsidized direct loans and replacing them with a program (Federal ONE) that looks more like current unsubsidized loans. Borrowing limits go up for undergrads and down for some grads. The terms for income-based repayment get tougher, with higher monthly payments and no forgiveness after 20 years. Public Service Loan Forgiveness, particularly important to law schools, comes to an end. (See Robert Kelchen’s blog for some highlights and his tweetstorm for a blow-by-blow read of the bill.)

To be honest, this could be worse. Although I dislike many of the provisions, given the Republican higher ed agenda there’s nothing shocking or unexpectedly punitive, like the grad tuition tax was.

Still, between the tax bill and this one, Congress has taken some sharp jabs at nonprofit higher ed. This goes along with a dramatic downward turn in Republican opinion of colleges over the last two years.Capture

Obviously, some of this is a culture war. Noah Smith highlights student protests and the politicization of the humanities and social sciences as the reason opinion has deteriorated. I think there are aspects of this that are problems, but the flames have mostly been fanned by those with a preexisting agenda. There just aren’t that many Reed Colleges out there.

I suspect colleges are also losing support, though, for another reason—one that is much less partisan. That is the cost of college.

I think colleges have ignored just how much goodwill has been burned up by the rise in college costs. For the last couple of weeks, I’ve been buried in data about tuition rates, net prices, and student loans. Although intellectually I knew how much prices risen, it was still shocking to realize how different the world of higher ed was in 1980.

The entire cost of college was $7,000 a year. For everything. At a four-year school. At a time when the value of the maximum Pell Grant was over $5,000, and the median household income was not far off from today’s. Seriously, I can’t begin to imagine.

The change has been long and gradual—the metaphorical boiling of the frog. The big rise in private tuitions took place in the 90s, but it wasn’t until after 2000 that costs at publics (both sticker price and net price—the price paid after scholarships and grant aid) increased dramatically. Unsurprisingly, student borrowing increased dramatically along with it. The Obama administration reforms, which expanded Pell Grants and improved loan repayment terms, haven’t meant lower costs for students and their families.

Picture1What I’m positing is that the rising cost of college and the accompanying reliance on student loans have eroded goodwill toward colleges in difficult-to-measure ways. On the one hand, the big drop in public opinion clearly happened in last two years, and is clearly partisan. Democrats have slightly ticked up in their assessment of college at the same time.

But I suspect that even support among Democrats may be weaker than it appears, particularly when it comes to bread-and-butter issues, rather than culture-war issues. Only a small minority (22%) of people think college is affordable, and only 40% think it provides good value for the money. And this is the case despite the growing wage gap between college grads and high school grads. Sympathy for proposals that hit colleges financially—whether that means taxing endowments, taxing tuition waivers, or anything else that looks like it will force colleges to tighten their belts—is likely to be relatively high, even among those friendly to college as an institution.

This is likely worsened by the common pricing strategy that deemphasizes the importance of sticker price and focuses on net price. But the perception, as well as the reality, of affordability matters. Today, even community college tuition ($3500 a year, on average) feels like a burden.

The point isn’t whether college is “worth it” in terms of the long-run income payoff. In a purely economic sense there’s no question it is and will continue to be. But pushing the burden of cost onto individuals and families, rather than distributing it more broadly, makes it feel unbearable, and makes people think colleges are just in it for the money. (Which sometimes they are.) I’m always surprised that my SUNY students think the mission of the university is to make money off of them.

This perception means that students and their families and the larger public will be reluctant to support higher education, whether in the form of direct funding, more financial aid, or the preservation of weird but mission-critical perks, like not taxing tuition waivers.

The PROSPER Act, should it come to fruition, will provide another test for public institutions. Federal borrowing limits for undergraduates will rise by $2,000 a year, to $7,500 for freshmen, $8,500 for sophomores, and $9,500 for juniors and seniors. If public institutions immediately default to expecting students to take out the new maximum in federal loans each year, they will continue to erode goodwill even among those not invested in the culture wars.

The sad thing is, this is a self-reinforcing cycle. Colleges, especially public institutions, may feel like they have no choice but to allow tuition to climb, then try to make up the difference for the lowest-income students. But by adopting this strategy, they undermine their very claim to public support. Letting borrowing continue to climb may solve budget problems in the short run. In the long run, it’s shooting yourself in the foot.

 

 

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Written by epopp

December 4, 2017 at 3:55 pm

what nonacademics should understand about taxing graduate school

There are many bad provisions in the proposed tax legislation. This isn’t even the worst of them. But it’s the one that most directly affects my corner of the world. And, unlike the tax deduction for private jets, it’s one that can be hard for people outside of that world to understand.

That proposal is to tax tuition waivers for graduate students working as teaching or research assistants. Unlike graduate students in law or medical or business schools, graduate students in PhD programs generally do not pay tuition. Instead, a small number of PhD students are admitted each year. In exchange for working half-time as a TA or RA, they receive a tuition waiver and are also paid a stipend—a modest salary to cover their living expenses.

Right now, graduate students are taxed on the money they actually see—the $20,000 or so they get to live on. The proposal is to also tax them on the tuition the university is not charging them. At most private schools, or at out-of-state rates at most big public schools, this is in the range of $30,000 to $50,000.

I think a lot of people look at this and say hey, that’s a huge benefit. Why shouldn’t they be taxed on it? They’re getting paid to go to school, for goodness sakes! And a lot of news articles are saying they get paid $30,000 a year, which is already more than many people make. So, pretty sweet deal, right?

Here’s another way to think about it.

Imagine you are part of a pretty typical family in the United States, with a household income of $60,000. You have a kid who is smart, and works really hard, and applies to a bunch of colleges. Kid gets into Dream College. But wait! Dream College is expensive. Dream College costs $45,000 a year in tuition, plus another $20,000 for room and board. There is no way your family can pay for a college that costs more than your annual income.

But you are in luck. Dream College has looked at your smart, hardworking kid and said, We will give you a scholarship. We are going to cover $45,000 of the cost. If you can come up with the $20,000 for room and board, you can attend.

This is great, right? All those weekends of extracurriculars and SAT prep have paid off. Your kid has an amazing opportunity. And you scrimp and save and take out some loans and your family comes up with $20,000 a year so your kid can attend Dream College.

But wait. Now the government steps in. Oh, it says. Look. Dream College is giving you something worth $45,000 a year. That’s income. It should be taxed like income. You say your family makes $60,000 a year, and pays $8,000 in federal taxes? Now you make $105,000. Here’s a bill for the extra $12,000.

Geez, you say. That can’t be right. We still only make $60,000 a year. We need to somehow come up with $20,000 so our kid can live at Dream College. And now we have to pay $20,000 a year in federal taxes? Plus the $7000 in state and payroll taxes we were already paying? That only leaves us with $33,000 to live on. That’s a 45% tax rate! Plus we have to come up with another $20,000 to send to Dream College! And we’ve still got a mortgage. No Dream College for you.

This is the right analogy for thinking about how graduate tuition remission works. The large majority of students who are admitted into PhD programs receive full scholarships for tuition. The programs are very selective, and students admitted are independent young adults, who generally can’t pay $45,000 a year. Unlike students entering medical, law, or business school, many are on a path to five-figure careers, so they’re not in a position to borrow heavily. Most of them already have undergraduate loans, anyway.

The university needs them to do the work of teaching and research—the institution couldn’t run without them—so it pays them a modest amount to work half-time while they study. $30,000 is unusually high; only students in the most selective fields and wealthiest universities receive that. At the SUNY campus where I work, TAs make about $20,000 if they are in STEM and $16-18,000 if they are not. At many schools, they make even less. (Here are some examples of TA/RA salaries.)

Right now, those students are taxed on the money they actually see—the $12,000 to $32,000 they’re paid by the university. Accordingly, their tax bills are pretty low—say, $1,000 to $6,000, including state and payroll taxes, if they file as individuals.

What this change would mean is that those students’ incomes would go up dramatically, even though they wouldn’t be seeing any more money. So their tax bills would go up too—to something like $5,000 to $18,000, depending on their university. Some students would literally see their modest incomes cut in half. The worst case scenario is that you go a school with high tuition ($45,000) and moderate stipends ($20,000), in which case your tax bill as an individual would go up about $13,000. Your take-home pay has just dropped from $17,500 a year to $4,500.

What would the effects of such a change be? The very richest universities might be able to make up the difference. If it wanted to, Harvard could increase stipends by $15,000. But most schools can’t do that. Some schools might try to reclassify tuition waivers to avoid the tax hit. But there’s no straightforward way to do that.

Some students would take on more loans, and simply add another $60,000 of graduate school debt to their $40,000 of undergraduate debt before starting their modest-paying careers. But many students would make other choices. They would go into other careers, or pursue jobs that don’t require as much education. International students would be more likely to go to the UK or Europe, where similar penalties would not exist. We would lose many of the world’s brightest students, and we would disproportionately lose students of modest means, who simply couldn’t justify the additional debt to take a relatively high-risk path. The change really would be ugly.

All this would be to extract a modest amount of money—only about 150,000 graduate students receive such waivers each year—as part of a tax bill that is theoretically, though clearly not in reality, aimed at helping the middle class.

It is important for the U.S. to educate PhD students. Historically, we have had the best university system in the world. Very smart people come from all over the globe to train in U.S. graduate programs. Most of them stay, and continue to contribute to this country long after their time in graduate school.

PhD programs are the source of most fundamental scientific breakthroughs, and they educate future researchers, scholars, and teachers. And the majority of PhD students are in STEM fields. There may be specific fields producing too many PhDs, but they are not the norm, and charging all PhD students another $6,000-$11,000 (my estimate of the typical increase) would be an extremely blunt instrument for changing that.

Academia is a strange and relatively small world, and the effects of an arcane tax change are not obvious if you’re not part of it. But I hope that if you don’t think we should charge families tens of thousands of dollars in taxes if their kids are fortunate enough to get a scholarship to college, you don’t think we should charge graduate students tens of thousands of dollars to get what is basically the same thing. Doing so would basically be shooting ourselves, as a country, in the foot.

[Edited to adjust rough estimates of tax increases based on the House version of the bill, which would increase standard deductions. I am assuming payroll taxes would apply to the full amount of the tuition waiver, which is how other taxable tuition waivers are currently treated. Numbers are based on California residence and assume states would continue not to tax tuition waivers. If anyone more tax-wonky than me would like to improve these estimates, feel free.]

Written by epopp

November 18, 2017 at 5:29 pm

Teaching/research/learning opportunity available in Lebanon

Paul Galatowitsch has an announcement for organizational researchers who are looking to integrate their summer/winter break with teaching, research, and/or learning in Lebanon.

This might be of particular interest those with experience or seeking experience with NGOs, health systems, and refugees:

www.socioanalytics.org and the Short Course in Lebanon is up and ready.  I would really like to get some Organizational Sociologists on board…. It’s a great research and service opportunity.

 

Written by katherinechen

October 10, 2017 at 7:38 pm

mental health and graduate school: personal reflections

A few weeks ago, The Chronicle of Higher Education ran an article about the effects of graduate school on mental health. On my Facebook feed, I saw some of the normal contrarian response: “If you think graduate school is bad, wait till you are a professor.” I wrote back, “For me, the tenure track was a cake walk compared to the tenure track. I went to a very toxic graduate program.” I meant that in all honesty.

In this post, I want to elaborate on the effects of graduate programs on individual well being from my own perspective. I do so for two reasons. First, I am an advocate of graduate school reform. I think that graduate programs are poorly designed and I also think that my program at Chicago had some serious challenges. Second, mental health and well being are extremely important. If we can be a little more open about it, we can work to make it better.

Let’s start with self-assessment. I consider myself to be well physically and emotionally. I have never been diagnosed with depression or another disorder. Nor do I have the emotional states that suggest that I am not well. I have had personal success and failure, but I seem to respond constructively.  People who know me tend to say that I seem mellow and balanced most of the time. I think that is accurate.

However, that changed during the last year of graduate school. For the first time in my life, I spent a long period of time in a highly anxious state. I could barely sleep. I experienced such bad nausea that I lost about 30 lbs. It was bad. To me, it was clear I needed help. I turned to the student counseling center at the University of Chicago.

There were obvious and non-obvious aspects of my experience. The obvious: As I was nearing completion of my graduate program, I was experiencing stress. Getting a job in academia is hard. The non-obvious: I had experienced much worse stress in my life, but had not experienced this decline in well being. Previously, I had all sorts of positive coping mechanisms. This time, I couldn’t eat and was on the path to poor health. What was the difference?

What my counselor claimed was that anxiety is often associated with a lack control. Bad events don’t always trigger anxiety, but people feel anxiety when they think the world is happening “at them” and they have no way to assert agency in the situation. This made sense to me and the counselor suggested a series of actions to help me regain agency. Some were simple. For example, my counselor suggested that I drink water everyday at regular intervals. I continue that ritual to this very day.

Other methods of asserting agency were were specific to my situation. For example, one of the major factors in my anxiety was the fact that one of the my dissertation committee members refused to speak to me for a year, another had simply gone “AWOL” and a third refused to write me a letter of recommendation. Any one of these issues could hobble a student. To have all three happen could be a career killer. Obviously, I had lost control of the situation and I was paranoid and bitter. How could all my years of work go down the drain because two or three people refused to do their job?

To counter these events, which I have no control over, my counselor suggested a few good rituals. For example, to deal with the guy who would not speak to me, I would politely show up at his scheduled office hours and ask if he had any comments on my dissertation. If not, I would simply say “thank you, I’ll check in a few weeks” and follow up on email. By doing this, I was doing something small to assert control and, legally, I was preparing a paper trail showing that I actively sought comments.

After a while, I was able to calm down. It took a while for me to get a response from the faculty, but it happened. But more importantly, I learned that I could take an active role in my mental well-being. I could create structures and rituals and not be victimized by circumstances.

Now, I want to return to the bigger point – how the structures of graduate school impinge on mental health. At the very least, I was going to be stressed out no matter what. There are many more graduate students than job openings. Also, academia is driven by prestige. Thus, if you went to the wrong school, you may have an uphill battle compared to people who went to the right school or who had the “right” advisers. Higher education is a tough business.

Then, on top of that, the culture in many programs and labs is simply toxic. That is what my experience taught me. People can abandon each other, harm each other and humiliate each other with little immediate consequence. That is probably why people seem to have such negative experiences in academia. It is a hard business, but it’s also a business with few options and very little accountability. In other sectors of the economy, quitting and moving is easy. If you have a bad boss, you can quit and move. In academia, quitting a job can easily be the end of a career.

Thus, we shouldn’t be surprised if higher education is a work environment that exacerbates mental health challenges. It’s an environment that poses limited options and allows people to act badly with few consequences. People (rightfully) feel as if things are out of control, and, in many cases, they are.

To counter these tendencies, and improve well being, we can do a few simple things. First, in the graduate programs, make sure that “everyone is taken care of.” Plan regular meetings with people. Have norms and concrete benchmarks. You can be critical but supportive as well. Actively make sure that all students are on track. Second, create an environment where people can constructively talk about anxiety, depression and whatever other problems they may have. Third, create rules and norms for students and faculty. Students need to hold up their end of the bargain. But so do faculty. A culture of helping all students, openness about problems, and norms for good behavior and timely work can help make graduate school more of a challenge instead of a health issue.

50+ chapters of grad skool advice goodness: Grad Skool Rulz ($4.44 – cheap!!!!)/Theory for the Working Sociologist (discount code: ROJAS – 30% off!!)/From Black Power/Party in the Street / Read Contexts Magazine– It’s Awesome! 

Written by fabiorojas

August 21, 2017 at 7:59 pm

want to know how academic books are published? listen to eric

Eric Schwartz, of the Columbia University Press, gives a nice summary of how academic publishing works. From the Emory University Center for Faculty Development and Excellence.

50+ chapters of grad skool advice goodness: Grad Skool Rulz ($4.44 – cheap!!!!)/Theory for the Working Sociologist (discount code: ROJAS – 30% off!!)/From Black Power/Party in the Street  

Written by fabiorojas

April 25, 2017 at 12:22 am

class and college

When awareness about the impact of socio-economic class was not as prevalent among the public, one exercise I did with my undergraduates at elite institutions was to ask them to identify their class background.  Typically, students self-identified as being in the middle class, even when their families’ household incomes/net worth placed them in the upper class.  The NYT recently published this article showing the composition of undergraduate students, unveiling the concentration and dispersion of wealth at various higher education institutions.

As a professor who now teaches at the university listed as #2 in economic mobility (second to Vaughn College of Aeronautics and Technology ), I can testify to the issues that make an uneven playing field among undergraduates.  Unlike college students whose parents can “pink helicopter” on their behalf and cushion any challenges, undergraduates at CCNY are supporting their parents (if alive) and other family members, bearing the brunt of crushing challenges. (In a minority of cases, students’ parents might help out, say, with occasional childcare – but more likely, students are caring for sick family members or helping with younger siblings.)

To make the rent and cover other expenses in a high COL city, CCNY students work part-time and full-time, sometime with up to two jobs, in the low-wage retail sector.  They do so while juggling a full load of classes because their financial aid will not cover taking fewer classes.  For some students, these demands can create a vicious cycle of having to drop out of classes or earning low grades.

I always tell students to let me know of issues that might impact their academic performance. Over the years (and just this semester alone), students have described these challenges:

  • long commutes of up to 2 hours
  • landlord or housing problems
  • homelessness
  • repeated absences from class due to hospitalizations, illness/accidents, or doctor visits for prolonged health problems
  • self-medicating because of fear about high health care costs for a treatable illness
  • anxiety and depression
  • childcare issues (CCNY recently closed its on-campus childcare facility for students), such as a sick child who cannot attend school or daycare that day
  • difficulties navigating bureaucratic systems, particularly understaffed ones
  • inflexible work schedules

These are the tip of the iceberg, as students don’t always share what is happening in their lives and instead, just disappear from class.

For me, such inequalities were graphically summed up by a thank you card sent by a graduating undergraduate.  The writer penned the heartfelt wish that among other things (i.e., good health), that I always have a “full belly.”  Reflecting this concern about access to food, with the help of NYPIRG, CCNY now has a food pantry available to students.

Written by katherinechen

March 22, 2017 at 5:18 pm

alumni affairs as institutional stratification

This guest post is by Mikalia Lemonik Arthur, associate professor and chair of sociology at Rhode Island College and a long time friend of the blog. She is an expert in higher education and is the author of Student Activism and Curricular Change in Higher Education.

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My colleague Fran Leazes and I recently released a report “How Higher Education Shapes The Workforce: A Study of Rhode Island College Graduates,” funded by TheCollaborative. Our college—Rhode Island College—is a public comprehensive college at which 85% of students come from within the state, a figure no other college in our state can come close to matching. Our project was spurred by an interest at the state policy level in why graduates of colleges in our state leave Rhode Island. But, we argue, students who were not Rhode Island residents when they began college may not be best understood as “leaving Rhode Island” when they are often really going home.  Thus, tracking our alumni—who really are from Rhode Island—provides a useful window onto both higher education outcomes and workforce development in Rhode Island.

Our project combines data from a number of sources to come to several conclusions about our alumni, including that we actually retain most of them in state. Those who leave often leave in pursuit of graduate degrees. And the majority of our graduates find employment in fields related to their undergraduate major. While the report makes several state-level policy suggestions (invest in public higher education, including expanded graduate degree offerings; better promote the excellent alumni workforce we have available in the state), our research process and findings also highlight the need for comprehensive colleges like ours to invest more substantially in their alumni offices.

Most elite private colleges have robust alumni offices. These offices work hard to maintain alumni connections to the college, largely in order to pursue fundraising opportunities. But elite private colleges know that alumni offices serve other purposes as well. By maintaining excellent databases of their alumni, elite private colleges are easily able to make claims about the percentage of alumni who have earned graduate degrees, the number living in particular geographical areas, and the representation of alumni in key professional fields like medicine or politics. Comprehensive colleges, in contrast, rarely have the resources or staffing in either the alumni office or the institutional research office to gather and maintain such information. Thus, in order to put together our report, we had to employ a team of five undergraduate research assistants, who spent the entire fall semester combing the Internet for biographical data on our sample of alumni.

Of course, it would have made our lives easier if our college already had access to such data. But more importantly, such data would enable our college to tell its story in a more persuasive fashion. Rather than talking about the kinds of outcome measures the performance funding types tend to value (employment and salaries a year after graduation), a robust alumni database would allow us to document the value our college has to our state by highlighting the number of successful professionals, community leaders, volunteers, and others RIC has educated.

Comprehensive colleges are an often-ignored sector of higher education, but we play a vital role in educating the professionals who keep our states moving—the nurses, teachers, social workers, police officers, accountants, small business owners, local politicians, and others. And we are often the most accessible and affordable colleges for working class students who will go on to do great things in our states and beyond. The fact that our alumni affairs offices are under-resourced may not be the type of educational stratification researchers and policymakers pay attention to, but it is a type of educational stratification with consequences for our reputations and our institutions’ funding streams.

50+ chapters of grad skool advice goodness: Grad Skool Rulz ($2!!!!)/From Black Power/Party in the Street 

Written by fabiorojas

August 10, 2016 at 1:51 am