Wednesday, November 16, 2011

 

Subscriptions and Attrition

What if college got cheaper as you went along?

Because I am a Big Giant Nerd, I’ve been reviewing literature on financial aid programs in various states. Most of them are either need-based or merit-based, and they tend to fall victim to the predictable pathologies of either genre. The need-based ones can’t keep up with real need, and they’re hard to sell politically. The merit-based ones are easy to sell politically, but they tend to flow disproportionately to the most affluent. Worse, both tend to fall behind rising costs over time.

A few years ago I toyed with the idea of a graduation deposit, like a security deposit: you hand over a chunk of money when you enroll, and if/when you graduate, you get it back with interest. If you don’t graduate, you don’t get it back. While I still like the concept, it’s increasingly clear to me that it, too, would wind up being regressive. The folks who would most need the refund would be the ones least able to cough up the deposit in the first place.

Then I thought of subscriptions.

A typical magazine subscription offer will look something like this: $30 for one year, $50 for two years, and $65 for three years. The idea is to entice readers to commit for longer periods by making the marginal cost of additional years lower. If you want to go year-to-year, you can, but it costs more; by committing upfront to a longer run, you get a lower price.

And I thought, hmm.

In higher ed, we do the polar opposite. We charge by the semester or year, and each year costs more than the year before it. Then we wonder why students leave.

The magazine model comes closer to reflecting actual costs, in some ways. It costs more to recruit a new student than it does to keep a current one, for example. By the time a student is well-ensconced, use of services tends to be more routinized and less catastrophic. It’s the newbies who are the highest-maintenance.

The parallel isn’t perfect, obviously. Upper-level classes tend to be smaller than intro courses -- at least once you get past the remedial level -- so they have higher costs. But that’s really a function of attrition. If sticking around got easier, attrition might decrease, and the upper-level classes would be more fully populated (and therefore more economically sustainable).

Better, students could gradually decrease their paid work hours as they immerse themselves more deeply in a given subject. Unpaid internships and/or co-ops would be less exclusionary than they are now.

The major issue I could foresee would be transfer. If a four-year college adopted this model, it would basically ship its entire freshman class to nearby community colleges. The savvy students would load up on cheap cc credits, then transfer to the newly-affordable third and fourth years. The obvious way around that would be to treat funding for community colleges and state four-year colleges as a single system, and to put the funding where it needs to go for that to work.

Which would involve putting economic value on teaching.

The loss-leader model works well when the issue is attracting people in the first place. That’s not the problem that most of higher ed currently faces. Given the ever-growing wage gap between the college-educated and the high-school educated, I don’t foresee a huge dropoff in overall national demand anytime soon. (Regional dropoffs are another story.) The issue at this point isn’t generating demand or creating access; it’s turning prospective dropouts into prospective graduates. Our issue isn’t recruitment, really; it’s retention.

I’m pretty sure that an idea this big and hairy has some perfectly awful unintended consequences, but I’m not sure what they are just yet. Wise and worldly readers, what say you? What would happen if college got cheaper as you went along?

Comments:
I worked as a receptionist for a small company my first three years of college. My fourth year, I worked as a TA, leading labs for freshmen. (No grad students at my school). I did more of that, plus some discussion section work and then lots of paid research, as a grad student (paying no tuition).

So in a sense this is exactly how it worked for me, except the "discounts" came in return for doing work in my field, which also provided valuable experience and was an important part of my education in itself.

It would be nice if we could extend that model to other disciplines and start it earlier. It might be that college sophmores could get reduced tuition for tutoring high school students, even. That would be an efficient use of state funds, for sure, to improve secondary and higher education outcomes for the same small amount of money...
 
I like it. Although we provide some subsidies in the form of scholarships, this would be more visible. It would have to exclude transfer and reverse transfer students, basing it on college credits earned at that specific college.

"The obvious way around that would be to treat funding for community colleges and state four-year colleges as a single system ...."

With the same appropriation per student for lower division classes for both schools? (Makes sense, since sometimes they are taught by the same adjunct.) That would be either a gold mine for us or mean huge cuts at the university, where they don't want to admit that those classes subsidize research. They already capture the added cost of major's classes with higher tuition for juniors and seniors.

PS -
One consequence of it getting cheaper might be students would never leave! Sort of like grad school.
 
From the department perspective, this would be a disaster. The upper level courses in science have more small lab classes that are extremely expensive. If we got less money in the later years, enormous pressure would be exerted to make those classes cost effective (even if from a total cost perspective, the money would be the same). Most administrations I've dealt with want every section to breakeven - not just the freshman classes.
 
The biggest problem I see is this assumes level funding otherwise. In the current climate, a guaranteed 4 year rate would be similar...and to encourage graduation, after 4 years you would pay the same rate as the first years, with 5 years of tuition increases.
 
Since the main cost of college is foregone wages, and since students get more employable every year (by definition), this is more or less physically impossible.
 
At the University of Kansas, this is sort of what we put in place. Basically, we sign a contract with you that for four years, you would pay X in tuition. So, if you graduate in four years (as we would like for a whole host of reasons), you will never see your tuition increase. However, each year tuition for entering students DOES rise, so the incoming students in year two get a deal that is X plus increase for four years, and so on. So, students from year one would be paying substantially less than their peers who just entered as first year students.

The kicker was, if you take longer than 4 years, you will pay the going rate for incoming students in year 5+. This provides an incentive to get done on time and gives us some more stable sense of tuition. Parents and students really liked having a stable sense of tuition for four years, as well.
 
Thinking about core educational issue--attrition--it seems to me that students drop out for three reasons: they lack the supporting resources to continue; they lack the personal capacity to continue; and they have lost confidence that the outcome of continuing will be worth overcoming the first two. Loyalty program methods like progressive cost reduction can rebalance the calculations they make, but the most substantial challenge is to tackle the confidence directly.

To the extent that we have high quality data on what students will definitely gain on completing college, we should promote this. But more worrying is the prospect that some of these promises are forward-looking statements. We think there will be jobs in this region, in this discipline, etc etc because there have been before. The problem we face is that we really can't predict the rate of churn in different sectors.

So the recalculation of the risk of quitting vs the risk of staying might be on the basis of fresher feedback on the jobs market than we gave them when they chose to enrol. One fix might therefore be to take a second look at the programs on offer in final year, to ensure that they really are worth staying on for.
 
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