Paying For It: Tax Payers Provide Profit Educators with 86% of Revenue

Last week the Senate Health, Education, Labor and Pensions (HELP) committee looking into 'for profit' education released a scathing report into the business practices of many of the brand name education companies operating in the US.  Much of the negative business reporting has been presented over the past several years but this report is a complete catalog of an environment wholly driven by profit rather than outcomes beneficial to tax payers (who indirectly fund many of these operators).  In a press release Chairman Harkin said,

“In this report, you will find overwhelming documentation of overpriced tuition, predatory recruiting practices, sky-high dropout rates, billions of taxpayer dollars spent on aggressive marketing and advertising, and companies gaming regulations to maximize profits.  These practices are not the exception -- they are the norm; they are systemic throughout the industry, with very few exceptions,” Harkin said. 

An executive summary is here (pdf) and the full report here but some of the juicier findings from the executive summary are noted below:

• Committee staff estimates that in 2009 when all sources of Federal taxpayer funds, including military and veterans’ benefits, are included, the 15 publicly traded for-profit education companies received 86 percent of revenues from taxpayers.
• During the same period [2004-2010], the companies examined spent $4.2 billion on marketing and recruiting, or 22.7 percent of all revenue. Publicly traded companies operating for-profit colleges had an average profit margin of 19.7 percent, generated a total of $3.2 billion in pre-tax profit and paid an average of $7.3 million to their chief executive officers in 2009.
• For profit colleges are rapidly increasing their reliance on taxpayer dollars. In 2009-10, the sector received $32 billion, 25 percent of the total Department of Education student aid program funds.
• Pell grants flowing to for-profit colleges increased at twice the rate of the program as a whole, increasing from $1.1 billion in the 2000-1 school year to $7.5 billion in the 2009-10 school year.
• Congress has failed to counterbalance investor demands for increased financial returns with requirements that hold companies accountable to taxpayers for providing quality education, support, and outcomes. Federal law and regulations currently do not align the incentives of for-profit colleges so that the colleges succeed financially when students succeed.
• Many for-profit colleges fail to make the necessary investments in student support services that have been shown to help students succeed in school and afterwards, a deficiency that undoubtedly contributes to high withdrawal rates. In 2010, the for-profit colleges examined employed 35,202 recruiters compared with 3,512 career services staff and 12,452 support services staff, more than two and a half recruiters for each support services employee.
• This may help to explain why more than half a million students who enrolled in 2008-9 left without a degree or Certificate by mid-2010. Among 2-year Associate degree-seekers, 63 percent of students departed without a degree.

There's more,  much more.

MediaWeek (Vol 5, No 30); MOOCs, Online Higher Ed Courses, Library Ideas, Research Needs,

Massive Open Online Courses or MOOCs are really getting some people excited and the sheer numbers are amazing - although is this a fad and or a function of supply?  From the NYTimes an interview with Anant Agarwal of MIT who's first class enrolled 150,000 students (NYTimes)

Did you expect so much demand?

With no marketing dollars, I thought we might get 200 students. When we posted on the Web site that we were taking registration and the course would start in March, my colleague Piotr Mitros called and said, “We’re getting 10,000 registrations a day.” I fell off my seat and said, “Piotr, are you sure you’ve got the decimal point right?” My most fearful moment was when we launched the course. I worried that the system couldn’t handle it, and would keel over and die. 

...

Most students who register for MOOCs don’t complete the course. Of the 154,763 who registered for “Circuits and Electronics,” fewer than half even got as far as looking at the first problem set, and only 7,157 passed the course. What do you make of that?

A large number of the students who sign up for MOOCs are browsing, to see what it’s like. They might not have the right background for the course. They might just do a little bit of the coursework. Our course was M.I.T.-hard and needed a very, very solid background. Other students just don’t have time to do the weekly assignments. One thing we’re thinking of is to offer multiple versions of the course, one that would last a semester and one that could stretch over a year. That would help some people complete.

And from The Atlantic a profile of Coursera which they suggest is the "Single Most Important Experiment in Education" (Altantic):

But the deals Coursera announced Tuesday may well prove to be an inflection point for online education, a sector that has traditionally been dominated by for-profit colleges known mostly for their noxious recruitment practices and poor results. That's because the new partnerships represent an embrace of web-based learning from across the top tier of U.S. universities. And where the elite colleges go, so goes the rest of academia.
Coursera has previously teamed with Stanford, Princeton, University of Pennsylvania, and University of Michigan to offer 43 courses, which according to the New York Times enrolled 680,000 students. It now adds to its roster Duke, Caltech, University of Virginia, Georgia Tech, University of Washington, Rice, Johns Hopkins, University of California San Francisco, University of Illinois Urbana-Champagne, University of Toronto, University of Edinburgh, and Switzerland's École Polytechnique Fédérale de Lausanne.
Only one school, the University of Washington, said it will give credit for its Coursera classes. But two others, University of Pennsylvania and Caltech, said they would invest $3.7 million into the enterprise, bringing the company's venture funding to more than $22 million. Literally, colleges are buying in.

Suggestions that independent bookstore protectionism works in other countries - should it be implemented in the US? (Atlantic)

Here in the U.S., most bookstores survive in tales of grassroots preservation or community campaigns. Price-fixing is undoubtedly the least likely American solution, though as Jason Boog has pointed out at NPR, booksellers and publishers actually did persuade FDR to enforce a price floor to prevent Macy’s from undercutting small book retailers with loss-leader pricing on Gone with the Wind during the Great Depression. (That policy was later declared unconstitutional, but it did throw a wrench in the Macy’s strategy.) This April, though, the U.S. Department of Justice filed a lawsuit accusing Apple and several publishers of colluding to raise the price of e-books to compete with Amazon’s price-discounting. Don’t expect to see federal protection of local bookstores via price-setting anytime soon.

Possibly the worlds most bizarre library carrel but some interesting ideas for the future of libraries (Harvard):

In the seminar’s freewheeling atmosphere, ideas flew like cream pies at a food fight. What if behind-the-scenes work could take place in the open instead, suggested Matthew Battles, a fellow at the Berkman Center. “What if you set up somebody processing medieval manuscripts in Widener or Lamont—a processing station in a public space?” Battles had just come from a used-furniture depository, where he’d been scavenging for shelves that could be repurposed for use as curator stations, places where faculty members or librarians could be asked to curate small collections of books. “What about a mobile, inflatable library?” suggested Goldenson. “What would that do?” Or how about an “Artist in Reference,” he continued. “We could bring in experts in a particular subject to serve as guest reference librarians in their area of expertise.” Schnapp, running with the idea, noted that “Widener contains collections in fields that haven’t been taught at Harvard in a hundred years, where we have the best collections of materials.”

Is wikipedea looking to set up their own travel information and guide site (Skift):

Imagine a free TripAdvisor focused on travel destinations, where masses of travelers could update information during or after their hotel stay, tour or private meanderings around town, and share it with the world under the supervision of seasoned administrators.
The foundation’s board of trustees on July 11 approved a proposal [see Update below] to launch an advertisement-free travel guide [see Update below] and community members noted that 31 of the 48 administrators of the Internet Brands-owned Wikitravel have expressed interest in joining forces with the Wikimedia Foundation’s travel guide website.
Wikitravel is considered the current leader in travel wikis, but its advertisements and monetization efforts may turn off travelers and would-be contributors.
In addition, the introduction to a community discussion about the travel guide proposal argues that Internet Brands has failed to keep pace with the times and that Wikitravel suffers from a “lack of technical support/feature development.”

The Guardian Higher Ed team reports on a JISC study on student research needs 

The report's findings indicate that the greatest challenge to researchers is the difficulty of access to e-journals. It is easy to see why: doctoral students across all subjects told us that they predominantly look for secondary published resources to inform their research, and for over 80% of researchers, this means accessing full text journal articles.
These same materials are often subject to licensing restrictions and other limitations imposed by e-journals publishers and other information service providers. This appears to be an area of sharpening tension in the doctoral and broader research community, with the majority of students surveyed describing it as a 'significant constraint' in the research process, and one of the biggest frustrations affecting their work.
Despite the ongoing debate around open access in the media, the report's findings have told us that there is a significant level of confusion among researchers around what open access means, or even how reliable open access materials are.
Another finding from the report shows that as many as 35% of those researchers surveyed in 2011 did not receive any face-to-face training in research and information-seeking skills in the previous academic year, even though 65% of researchers ranked it as their most important training need. These outcomes are concerning, but fortunately they are also an area where significant improvements can be made, through increasing face-to-face training and support for researchers when they start their PhD programmes, but also much earlier as they enter higher education.

Needless Government Regulation

About four years ago when I realized I was not only running out of book shelf space but that I had many books that I would never touch again, I decided to open a book store.  I do like collecting books and as with many book lovers each title exerts some type of talismanic feeling when you look at them and think about where you were and what you were doing when you were reading said title.  But this post has nothing to do with that.

Rather than throw the books out on the street or donate them (which I've done before) I decided to put them up for sale on Alibris.  For the first few years sales weren't so bad but with the recession and the fact my inventory is less than half what it was I only sell about a book every four months.  It looks like I am now saddled with about 100 books that will probably never sell.  I've been thinking about closing the store for a while but imagine my surprise when I recently visited the Alibris site and I was asked to present my social security id for tax purposes.  I'm selling books for 99c and the IRS want to tax my earnings: I'm not against taxation but this is completely nuts.  My cost of goods are ten times my selling price; do I have to hire an accountant to do my book sales taxes?

I'm pulling the shutters down on the store.  And it's not Alibris' fault by the way.

How to reform copyright

Lewis Hyde in the Chronicle of Higher Ed has some interesting observations and proposals for reforming copyright:

Focusing on the benefits of an initial registration requirement tells only one part of the story. Whenever copyright offers a second term, the renewal formality has even stronger commons-enhancing effects. After all, the commercial value of most creative work is exhausted fairly early. A study done of copyrights registered in 1934 found, for example, that half of them were worthless after 10 years, 90 percent after 43 years, and 99 percent after 65 years. It should consequently come as no surprise that many rights holders did not renew after the initial 28-year term. The numbers vary year to year and by genre (music rights being renewed more often than books, for example), but roughly speaking, for most of the 20th century, when owners were given a right to renew, only 15 percent chose to do so. As with initial registration, a renewal formality serves as a filter, releasing commercially dead work to the public without depriving authors of a longer term if they wish to have it. Put another way, formalities effectively shortened the term of the copyright grant during most of the last century; 85 percent of copyrights lasted only 28 years.

and this,

The last time that Congress added years to the term of copyright, a group of economists, both liberal and conservative (including five Nobel laureates), filed a brief with the U.S. Supreme Court arguing that the extension made no economic sense. (Milton Friedman supposedly asked that the brief contain the phrase "no brainer.") It is patently clear to almost everyone that the term of copyright is now senselessly long. At the same time, it is almost certainly politically impossible to retreat from it; the few who benefit are too well connected, and the many who do not are too thinly spread. To my mind, the greatest appeal of new-style formalities, then, is that they would leave the nominal term untouched (and accord it to all who care) while greatly reducing the effective term. Sprigman calculates that during the 20th century, when the vast majority of rights holders did not avail themselves of the renewal option, the effective term of copyright was only 32 years. That's just four years longer than the nominal term the founders offered in 1790.