There have been a number of calls during the current term of this Government for the reintroduction of interest rates on student loans.  The Prime Minister has, however, been adamant that he would not make changes to the interest rate policy.  For example back in April 2011 he said that “while interest-free student loans were bad economic policy” he would “stick with them”.

In ordinary times, no opposition party – particularly one to the left of centre – would advocate for the reintroduction of interest rates on NZ student loans.  After all, there are now hundreds of thousands of constituents who are student loan borrowers.  But as they say, “desperate times call for desperate measures”.  With a credit-downgrading, a massive budget deficit, and a blow out in government debt, maybe some “nice-to-haves” just have to go?

In the fine print of last week’s agreement whereby the US Congress raised America’s debt ceiling, over US$900 billion was cut out of the Federal budget.  And this was only Round One of two rounds. One of the targets turned out to be interest free loans for students while studying.

There is no NZ parallel.  While there may be a current account deficit, which everybody agrees is essential in getting Christchurch back on its feet, the NZ public debt as a proportion of GDP  is one of the lowest in the developed world.  There are also signs of a healthy recovery just around the corner, assisted perhaps by increased export revenue as the Kiwi dollar falls.

Having stable policy settings for student loans is important because changes to policy settings inevitably cause changes in borrower behavior and this impacts on take up of tertiary education. Loans are not paid back overnight. The median repayment time for a Kiwi student is 7.2 years.  Clearly the Government is conscious of the need for stability in interest rate settings, and has concentrated instead on tightening up access to student loans and allowances. Incentives have been put in place to encourage early repayment and to increase compliance in repayment of loans, particularly for those borrowers living overseas.

The 2010 Student Loan Scheme Report, while showing some uplift in the total amount being borrowed, hasn’t shown a corresponding collapse in repayments or even a collapse in voluntary repayments.  I doubt that there will be any great change in this trend when the 2011 report is released around October.

There would appear to be no urgency, therefore, in adjusting current policy settings.  That’s not to say that an interest-free loans policy makes economic sense.   Nor does it suggest that if there were to be an ongoing fiscal crisis in NZ, market interest rates couldn’t be slapped right back on student loans to lower the costs of debt servicing to taxpayers.  Recent experience in America proves that interest subsidies present an easy target for politicians looking for savings items.

This guest post is by Mike Woods, of Mike Woods & Associates. Mike has had a long involvement in tertiary education and international education policy issues.

• Journal of Universal Rejection My friend Evan Roberts sent me a link to the wonderful Journal of Universal Rejection site. As they write: “The founding principle of the Journal of Universal Rejection (JofUR) is rejection. Universal rejection. … You may claim to have submitted to the most prestigious journal (judged by acceptance rate). … You retain complete rights to your work, and are free to resubmit to other journals even before our review process is complete…. Decisions are often (though not always) rendered within hours of submission.” You can check out their blog too.
• Academic Freedom A few weeks back Sandra Grey of the TEU did a guest post for ED Blog on academic freedom and there was a good debate, but Stanley Fish showed how good he is in this NY Times post on academic freedom – you can agree or disagree with him, but he is a great thinker and writer (there’s a profile on Fish here).
• Profitable Courses A UK consultancy has pointed out the obvious fact that some courses make money and others lose it, but went on to argue that the shift to much higher student fees leaves providers’ cross-subsidisation vulnerable to specialist (private) providers focusing just on the profitable courses. Obviously you could offer a cheaper price on nursing if you weren’t cross-subsidising five other courses.
• NZ Research Ako Aotearoa has just held its Tertiary Research in Progress Colloquium. You may be wondering why you weren’t invited and it’s probably because you weren’t doing any research on teaching and learning in tertiary education funded by Ako Aotearoa. Luckily you can find out what is being worked on at the Ako Aotearoa website. There are short briefs on the various projects and some presentations. Well worth a look.
• Bait and Switch I liked this NY Times article about law schools in the US that offered generous scholarships contingent upon high grades – and then rationed the high grades so people ended up having to pay full fees towards the end of their study!
• Student News Wintec student journalists are now publishing their work on The Waikato Independent, their own news site.
• Quake Recovery Some time back I was sent this video about using drama and art to help children recover from quakes – in China and Christchurch. It involves Assoc Prof Peter O’Connor from Auckland Uni’s Faculty of Education.

In a great example of what you can do when you have more money than you know what to do with, the University of Chicago has designed a new library for seldom-used books. It is very cool, if somewhat less cost-effective than an off-campus warehouse.

If you’re really keen, there’s also a video on the construction. HT Inside Higher Ed

He showed how an institution could see how much the recruitment of a single Nobel prizewinner could change its ranking position.

Institutions could also decide whether it would be better, in terms of a ranking position, to allocate resources to the hiring of highly cited researchers from other institutions, to focus on having a single article published in Science or Nature, or to provide incentives to staff to publish more in prominent journals.

The software could be moderately useful. Most rankings rely on some generally accepted proxies for university performance (along with some quirky interpretations) and a tool that could help a university to test how plans would affect those proxies could have some use.

What I found funny though, was the following quote from the article, where a reporter from THE (one of the most prominent ranking bodies) asks whether the software might cause people to focus on rankings ahead of ‘genuine improvement’. Pots and kettles come to mind.

Professor Li was asked by Times Higher Education, which presented details of its new World University Rankings methodology at the event, whether he is concerned that such a tool would encourage universities to focus on their rankings position against the interests of genuine improvement, to the detriment of real local and national needs.

Anyway, while the researchers think that “drinking while abroad is a concern warranting further investigation, especially regarding how changes in drinking may contribute to the experience of alcohol-related consequences abroad”, I’d suggest that there’s a simpler explanation. Students studying abroad are more focused on social, than academic, activities when overseas, because, quite rightly they recognise that the point of the experience is not to visit a new lecture theatre, but to interact with local people. Many of those local people drink in social settings, so the students do too, and they do it more often because they are in social settings more.

But if you want to rark it up, you could print a headline like “Americans getting drunk in New Zealand” as the NZ Herald did today. The Chronicle of Higher Education had the more sober “Many Students Double Alcohol Consumption While Studying Abroad“.

One thing’s for sure anyway – University of Washington study abroad students will have a to read a new safe drinking pamphlet soon.

The US Dept of Education has recently introduced new rules that will change the game (rules are out for consultation). The following explanation comes from a Chronicle of Higher Education article and shows how eligibility for Federal loans will be tightened.

“programs whose graduates carried debt-to-earnings ratios of less than 20 percent of discretionary income or 8 percent of total income, or where at least 45 percent of former students (graduates and nongraduates) were paying down the principal on their loans, would be fully eligible for aid.

Programs whose graduates carried debt-to-earnings ratios above 30 percent of discretionary income and 12 percent of total income, and where fewer than 35 percent of former students were paying down principal on their loans, would be ineligible for aid.

Programs that fell somewhere in between would face restrictions on enrollment growth, would be required to demonstrate that employers support their program, and would have to warn consumers and current students of high debt levels.”

Imagine if such measures were put in place in NZ? It would cause disquiet for some people, to put it mildly. But imagine once more if you could develop such a measure and simply publish it, so that people had a real feel for graduate outcomes?

One thing that I really like about the measure is that it includes all former students, not just graduates – everyone bears the costs of tertiary education, but only some gain the income premium of a graduate.

PS If you are a real geek on these issues, here is much more in-depth analysis of the regulations.

PPS I’ll run another post tomorrow on some more up to date info from the US about some providers’ misdeeds.

US website ProPublica (“Journalism in the public interest”) explored a recent complaint about for-profit colleges recruiting homeless people from night shelters and so on. While there’s no reason homeless people shouldn’t participate in higher education, it seems pretty obvious to all the people close to the action that a lot of the homeless people don’t study or complete, but do access a lot of federal student loan funds.

Now, the complaint to the Secretary of Education about these activities was signed by a group of 20 night shelter managers around the US. Each of the managers was approached by a private investigator, who wrote the letter. The problem is that the PI was paid for by “an investment firm”, but did not disclose that to any of the night shelter managers, who are now justifiably upset. You might wonder why an investment firm matters in this scenario (don’t they invest in listed firms?). Well, over the last month or two there has been increasing criticism from some fund managers (and Steven Eisman in particular) that for-profit colleges are using dubious practices and are the next sub-prime mortgage disaster. Eisman has even testified in a Senate hearing.

The twist is, of course, that Eisman has invested in the industry and it is reasonably suspected that he is short-selling the big for-profit colleges’ shares (ie predicting that the price will go down). Short selling of these companies’ shares has boomed in recent times as people have picked that the shares are over-valued as increasing regulation looms. What is most interesting about this case is that the short-sellers appear to be getting actively involved in the political debate as well. It certainly makes the NZ situation look tame.

If you want an alternative view on the ProPublica position, read this Reuters blog.

1. English UK, a body representing English language schools, have won a High Court battle over entry restrictions. The previous Labour government required people to have a higher level of English before they came into the country, seeking to deter immigration fraud. It seems that they didn’t follow due process and the regulations have been struck down. Obviously any restriction on English entry levels has a big impact on enrolment numbers and study length, so the schools had a strong motivation to challenge the rule, but some restrictions are probably still likely. We don’t have any such formal restrictions in NZ (unlike Australia) but it is hard to get visas for people from markets considered a high immigration risk (I can recall problems in India in particular, but also Turkey and other places).
2. There’s an academic in China who is still going strong at 110. His alma mater, the University of Ohio, just gave him a medal to mark his achievements since he completed his Master’s degree in…1931.
3. Last week, the NY Times had a story on cheating and the various technological fixes used to counter it. One of the most successful was actually an online tutorial upon enrolment educating people about how to avoid plagiarism. The best example of cheating was someone who was heavily tattooed and worked notes in between them! (HT Pauline La Rooy)
4. A few weeks back the Scientific American ran a piece on experiential learning, looking at whether experts’ practices could be picked up by viewing what they do, rather than do the thousands of hours that it can take to become proficient in some occupations. As a scientist says: “”We know a lot about how to educate people on facts, but we know almost nothing about how to educate people on acquiring perceptual skills other than lots of repetition, which can be very time-consuming and expensive”. (HT Dean Carroll)
5. In mid-June, the University of Pennsylvania was moving to cut 80 degree programmes across its 14 state-owned universities, and encouraging students to study in collaboratively-run programmes across campuses. The story is from the Chronicle of Higher Educationand goes over some pros and cons of the move. What interest me is that we’re entering a period of qualification consolidation in NZ, and states in the US have been doing this at community college and university level for decades – we can learn a lot from them about what works and what doesn’t. We can often get tunnel vision about looking to England for policy ideas, whereas the US has 50 different systems against which we could compare our proposals.