Wednesday, May 23, 2012

What is the Answer to High Student Debt?

HigheredThis question is coming up a lot these days, but the nation's best minds are swinging and missing.

  • The New York Times asked it today, and suggested that "full disclosure" is the answer.  That is just crazy -- students are going to college or graduate school so they have the skills and knowledge to do complex things like conduct a reliable cost-benefit analysis. 
  • In the column in The New Yorker titled "The Cost of College," Nichlas Lehman, Dean of the Columbia School of Journalism, wonders whether higher education is suffering from a pricing bubble. Then, remarkably, he goes on declare that "higher education is actually underpriced .... in the top-tier schools" because "price is determined by what people are willing to pay." [Yes, and the highest bid will be accepted right before the bubble bursts.]  Regardless, Lehman is pleased that both Obama and Romney will try to keep interest rates low on undergraduate Stafford loans -- which just kicks the can down the road without imposing any pricing pressure on colleges or universities. 
  • In contrast to Lehman's conclusion that top-tier schools are a bargain, in the Washington Post, Jennifer Rubin consults with two policy wonks from conservative think tanks who argue that institutions like Harvard are gouging students due to misguided federal subsidies and tax policies that shelter massive multi-billion dollar endowments.  This analysis is long on blame but short on solutions.
  • As noted in my prior post, entrepenuer Peter Thiel is offering $100K fellowships for students to "stop" their formal education to pursue ideas that may contribute to viable new businesses.  Love the idea, but it is a tiny niche solution. 

My own belief is that educational quality is the next great frontier. If we can put a man on the moon in the 1960s, surely with four years and $120K we can turn a reasonably able and motivated 22 year old into a critical thinker who can reliably communicate, collaborate, gather facts, assess data, lead, follow, and approach problems with both empathy and objectivity.  Further, improving quality changes the debate from "how much does higher education cost?" to "how much is higher education worth?"  And if the worth is sufficiently high, both public and private employers would be willing to subsidize it in exchange for preferred access to graduates.  

The only barrier is institutional focus.  To make this happen, a university has to take an "Apollo Project" approach that focuses purely on education.  After figuring out the "how high" and "how fast" possibilities, an institution could then focus on controlling costs through process improvements and building modules.  First quality (worth), then cost.  This is not trade school education; this is about fully exploring human potential.

The first university to break into this space will have a profoundly disruptive effect the rest of higher education. The future of higher education is education. 

[posted by Bill Henderson]

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As you know, I agree with many if not most of your assessments as to the changes in the legal profession and the various crises in legal education. But I am not convinced in this post that you have identified the problem you discuss here with precision. What makes you think that we DON'T know what works to produce the high quality legal education you allude to? I'm not convinced that we don't know what to do to train law students to be excellent new lawyers (and, yes, people who have more fully realized their human potential)right out of school. But it's hard and it costs a lot.

My own urban, regional school, with a very diverse mix of students, has an Honors Lawyering program that very successfully trains students (using all of the techniques that we all know work, including experiential learning, clinical training, etc.) One of the measures of its success is the high bar passage rate of program grads--about 90% first time passage rate in the difficult CA bar. But the Program is resource-intensive, so is not currently how we train all of our students (although that is a dream/goal). There are other examples of excellent teaching and learning outcomes both here and surely at lots of other schools.

So I would love to hear more about your assumptions that (1) we need the Apollo-program model to create change, (2) excellent legal training is not already taking place at many schools, (3) costs can be contained significantly in providing this type of education (I have listened to those pushing some reforms that they claim can lower costs, but I don't have enough concrete examples and details to be convinced), and (4) employers would recognize the value of this training and be willing to subsidize it. (Legal employers are not a fully rational set of actors--lots of other factors come into play!)


Posted by: William Gallagher | May 24, 2012 10:38:38 AM

Bill, thanks for your comment. Your Honors Lawyering program sounds impressive. What I would like to know is:

(a) do employers know much about it? If so, what has the been the reaction? What would it take to get their attention and better address their needs?

(b) How was the program designed? Was the Honors program criteria designed with a set of core competencies that map onto the skill set of highly successful lawyers, including Golden Gate graduates?

(c) Are the skills sufficiently versatile and adaptable? E.g.,is emphasis on briefs and oral argument rather than modes of communications, methods of persuasion, and the listener/reader perspective.

(d) What happens to Honors graduates two to four years after graduation? What address do they have to make program better?

High bar passage is important and, in CA, impressive. But is the program being evaluated by professors, or is it being evaluated by employers and graduates? If the latter, are they convinced the program could not be better? In industry, there is entire methodology called "The voice of the customer". Everything is reverse engineered from the stated and unstated needs of the customer, unstated being a dimension that enables product or service innovation.

Once you get the outcomes that you want, then the question becomes, how can we make this program become easier to teach? This is also design issue. Can technology be leveraged? Can feedback mechanisms be redesigned? For example, I have found that having students deliver feedback in groups (a) improves collaboration skills, (b) requires critical engagement, (c) improves retention, (d) dramatically reduces demands on instructor.

When quality = expensive, what assumptions are being made? Are those assumptions 100% accurate, or can some be relaxed?

Posted by: William Henderson | May 24, 2012 7:01:03 PM

Why not a job futures market? Companies bid on students while they are in college, and students get an idea of their worth to companies, which might cause them to control their student loan indebtedness.
It could be held in virtual reality on the Web.

Posted by: PacRim Jim | May 25, 2012 12:15:53 PM

PacRim Jim, I love your idea. Bill H.

Posted by: Bill Henderson | May 25, 2012 12:43:48 PM

I love Lehman's response. If the subject of some controversy over the pricing of say, arugula, repeated his rationale, it would be greeted with derision about the fallacies of capitalism.

The problem with law school is that the production of more lawyers is a dead weight loss to society. Perhaps we could make a deal where lawyers get to turn in their degrees and their licenses to practice law in exchange for discharge of their student loan debts.

As for your idea of a $120,000 four year degree, I will go you one better, a two year program at community colleges for $12,000 leading to a certificate that would allow the student to apprentice for an experienced A rated lawyer for four years. The apprentice would be paid $1,000/mo. in the first year, $2,000/mo. in the 2nd, and so on. After four years of Apprenticeship, and an examination on ethics and the rules of civil and criminal procedure, the apprentice could become a lawyer, legally allowed to handle cases in courts.

Posted by: Walter Sobchak | May 25, 2012 1:22:14 PM

A few reforms that would help.

1. Make college loans discharble on bankruptcy. This would in some way make things worse, because taxpayers would pay for default costs, but it would prevent students from having their whole lives crippled by student debt, and would increase pressure for programs to make sure loans only went to students that could probably pay them back.

2. Make the college responsible for 50% of the cost in a loan default. When combined with reform 1, this would provide bigtime pressure to colleges to not take students that are not likely to graduate and find good employment. The college would be allowed to add a charge for this, based on their own assessment of that students default risk, just like an insurance company. This would force the colleges to increase costs for students not likely to graduate, or students that are in unemployable majors, which would tend to favor better students in better majors. It also gives the colleges a real incentive to make sure students graduate and learn employable skills.

Posted by: richard40 | May 25, 2012 3:01:04 PM

The futures market sounds good. You could also have a sort of equity market. A company pays for all or part of a students college costs in exchange for a % of their future earnings. Sort of like venture capital, but for students rather than companies. Once again, the students with the best abilities and majors would attract the best terms, exactly what we want to happen.

Posted by: richard40 | May 25, 2012 3:06:41 PM


I agree that your questions are right on the mark. My biggest concern is that, just as there is no single legal profession, but really many segments of the profession that often have little to do with the others, there is no single market for legal services. And we know very little about these markets, including what the various structural and cultural factors are that influence lawyer hiring. That's my main basis for being dubious as to the strong version of your claims/predictions as to what may result if your proposed teaching reforms are put into place in any particular school. I like your proposed reforms, which you have mostly alluded to here but discussed more elsewhere. I guess I am just less sanguine that they will be game-changers. But your thoughts are provoking necessary thnking and discussion.

As for your specific questions re my school, quick response:

(a) It's mixed. Some employers know about the program and think it's great. many don't (and it's not new). So one thing I am interested in is which ones know/value it and why.

(b) I actually don't teach in the program and it predates my coming aboard here 7 years ago. But my understanding is that there were multiple sources that went into designing it as it is. I think that at least indirectly, the core competencies were modeled on thoughts as to what skills good lawyers need.

(c) Here, yes I think we were quite successful in making sure we are flexible and creative in not just focusing on "traditional" and more narrow notions of lawyer comptencies. But that's also an ongoing issue and people are open to making sure we get this right.

(d) I am not sure how systematically we do this, so your question raises an issue I would like t discuss with my colleagues.

In the abstract, your analogy to "voice of the customer" approaches makes sense. But, frankly,based on my practice experiences, I have assumed that I know the kinds of deep (and varied) skills legal clients need. Your point is that this can and should be investigated rather than assumed. I don't disagree with that. But I still have the confidence (conceit? hubris?)that I know when someone has the skills needed to be a good lawyer.

And I also struggle to think creatively about how technology might help make some of this easier.

Thanks for generating much food for thought.

Posted by: William Gallagher | May 25, 2012 3:24:23 PM

I agree for your typical Land Grant college, but aren't the Ivyies about getting to know people you will be meeting in your 30s and 40s? This would justify the cost, due to the long term payoff when you and your classmates are running Gov't and Business, would it not?

Regards — Cliff

Posted by: C R Krieger | May 25, 2012 5:15:03 PM

To Bill Gallagher: My main idea here is that law school can accelerate lawyer development, and that acceleration has value to both students and employers. I see a lot of good law school courses. I know a lot of dedicated teachers. But I don't see much in the way of systematic use of data, nor inquiries to employer that ask a simple question: "What would make your life easier in terms of the talent you hire?" Then work backwards from that.

Ask that question to several employers and look for commonalities in the responses. Then ask, "How could I teach this? How would I know that my students are reaching the level of skills and proficiency requested by employers?"

What I am getting at is that, if given three years and $150K in tuition, we ought be able to accomplish quite a bit in terms of skill development. If that were our sole focus (hence the Apollo Project reference), what would it look like? Something different than what we are doing now. It would be coordinated and focused and based on the data from students and employers.

Posted by: Bill Henderson | May 25, 2012 7:19:49 PM

I like half of Walter Sobchack's comment. Simply discharging loans on bankruptcy of the student puts no pressure on the student to show prudence in the attempts at acquiring financial help. Some way must be found to both allow for the ultimate discharge with some form of mandatory penalty for betting badly on one's self. I do like very much the idea of going after the money where it ends up: in the hands of the university.

Posted by: teapartydoc | May 25, 2012 7:53:54 PM

To Bill Henderson:

OK, I agree completely with your main point. The key, as you point out, is to get the data and to be coordinated and systematic in developing the necessary skills to be a lawyer in the 21st century. Programs and individuals may be doing some of this, but I don't know of a law school that does it to the extent you (and I) think is ideal.

Posted by: Bill Gallagher | May 29, 2012 8:07:07 AM

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