Sunday, April 12, 2015

The Urban Institute's Sandy Baum: Is She a Bag Man for the Higher Education Industry?

My favorite scene in the movie Michael Clayton is a dialogue between Michael Clayton (played by George Clooney), who is a lawyer in a 600-person law firm, and Arthur Edens (played by Tom Wilkinson), a senior partner in the same firm.

Edens is a manic depressive handling a major piece of litigation for an international corporation accused of intentionally marketing a product that causes people to get cancer. During depositions, Edens has a manic episode and his continuing bizarre behavior threatens to expose the corporate client's skulduggery, potentially costing it billions.

The firm's senior partner directs Clayton to get Edens under control, and Clayton talks to him very persuasively, while implicitly threatening to have him committed to a mental institution.

But Edens is having none of it.

"Michael," Tom Wilkinson's character kindly says to George Clooney's character, "I have great affection for you and you live a very rich and interesting life, but you're a bag man not an attorney."

If I ever meet Sandy Baum, I'm tempted to say very much the same thing. Baum is a senior fellow at the Urban Institute and a highly respected analyst of higher-education finance. For many years, she has co-authored the College Board's annual publications Trends in Student Aid and Trends in College Pricing; and she has conducted studies on college costs for the Brookings Institution. She has a Ph.D. in economics and is a research professor at George Washington University, a position she holds while working with the Urban Institute. Very impressive.

Over the years, Sandy Baum has emerged as one of the leading apologists for the higher education industry. Everyone knows that college costs have skyrocketed and that the federal student loan program is totally out of control. Millions of people have defaulted on their loans and millions more have obtained economic hardship deferments that excuse them from making student-loan payments.

Nevertheless, Sandy Baum coos soothingly that college costs are really not as high as they seem to be and, in any event, rising costs are not the fault of the colleges and universities. In 2013, Baum co-authored a report for the College Board that actually argued that college costs have not gone up much at all. It is true, the College Board acknowledged, that the sticker price for attending college has gone up significantly over the past ten years. But when discounts, grants and tax benefits are calculated, the real cost that students pay has remained virtually steady over the past decade. In fact, according to the College Board (as reported in the New York Times), when adjusted for inflation, the net cost of attending college (looking only at tuition and fees) has actually gone down over the past ten years.

Indeed, as Sandy Baum told the New York Times, "I think the hand-wringing about the trend [in college costs] is greatly exaggerated."

And--if there has been an increase in college costs, it is because the states have cut back on their support for higher education. "So it's not that colleges are spending more money to educate students," Baum told NPR radio. "It's that they have to get that money from someplace to replace their lost state funding--and that's from tuition and fees from students and families."

So which is it, Sandy? Has college tuition gone up due to reduced state funding or have costs not gone up after adjusting for inflation, grants, and tax benefits?

And if everything is under control, why did Baum praise President Obama for encouraging students to sign up for long-term income-based repayment plans--plans that can extend the student-loan repayment period to 20 or 25 years? In fact, Baum even recommended that long-term repayment plans be the "default option" for college students who take out student loans.

Paul Campos, in a New York Times op ed essay, challenged the notion that the states' support for higher education has gone down, which is the standard reason the higher education industry gives for rising college costs. According to Campos, "[P]ublic investment in higher education in America is vastly larger today, in inflation-adjusted dollars, than it was during the supposed golden age of public funding in the 1960s." 

Campos thinks a major explanation for rising college costs is "the constant expansion of university administration." Campos cites data that administrative positions at colleges and universities grew by 60 percent between 1993 and 2009, which is reportedly 10 times the rate of growth for tenured faculty positions.

In my opinion, Campos' analysis of college costs is more accurate and helpful than the self-serving explanations that are offered by the higher education industry and the entities that issue reports that align with its interests--the College Board, the Urban Institute, and the Brookings Institution.

Campos is right. An increase in the number of administrators is at least part of the reason for rising college costs. And a lot of those administrators are making too much money, particularly when their salaries are compared to the salaries of the faculty members who are actually teaching students.

References

Sandy Baum & Michael McPherson. Obama's Aid Proposals Could Use a Reality Check. Chronicle of Higher Education, August 26, 2013. Accessible at: http://chronicle.com/article/Obamas-Aid-Proposals-Could/141265/

Paul Campos. The Real Reason College Costs So Much. New York Times, April 5, 2015, Sunday Review Section, p. 4.

College Board. Trends in College Pricing 2013. Accessible at: http://trends.collegeboard.org/college-pricing

Andrew P. Kelly(2013, October 24. New data on tuition prices: Is it possible it's even worse than we thought? AEI Ideas blog. Accessible at: http://www.aei-ideas.org/2013/10/new-data-on-tuition-prices-is-it-possible-its-even-worse-than-we-thought/

Richard Perez-Pena (2013, October 25). Despite Risking Stick Prices, Actual College Costs Stable Over the Decade, Study Says. New York Times, p. A14.

Note: Quotes by Sandy Baum come from the Perez-Pena article or the Campos essay, both of which appeared in the New York Times and are cited in the references.

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