Wintery Knight

…integrating Christian faith and knowledge in the public square

Implications of Georgia Tech’s new $7,000-per-year Masters degree in computer science

The Wall Street Journal reports on something that is of interest to all Christians.

Excerpt:

Anyone who cares about America’s shortage of computer-science experts should cheer the recent news out of Georgia Tech. The Atlanta university is making major waves in business and higher education with its May 14 announcement that the college will offer the first online master’s degree in computer science—and that the degree can be had for a quarter of the cost of a typical on-campus degree. Many other universities are experimenting with open online courses, or MOOCs, but Georgia Tech’s move raises the bar significantly by offering full credit in a graduate program.

It comes just in time. A shortfall of computer-science graduates is a constant refrain in Silicon Valley, and by 2020 some one million high-tech job openings will remain unfilled, according to the Commerce Department.

That’s why Georgia Tech’s online degree, powered by Udacity, is such a game-changer. For the same $7,000 a year that New York City spends per student on school buses, you can now get a master’s from one of the most well-respected programs in the country. Moore’s Law says these fees should drop to $1,000 by 2020—a boon for students and for the economy.

Wouldn’t it be great if we could fire the majority of college professors and just keep the ones who are actually good at teaching students? Online education puts the focus back on teaching students – not on doing research, which may not be very useful for finding a job in any case. I had to do a lot of research for my Masters degree in computer science, and I applied little of what I researched to real life. The course work was far more useful to me in my career, and that’s why I went to university.

More:

MOOCs will inevitably come to K-12 education too. Everyone knows great public school teachers. But we also all know the tenured type who has been mailing it in for years. Parents spend sleepless nights trying to rearrange schedules to get out of Mr. Bleh’s fourth-period math class. Online education is about taking the “best in class” teachers and scaling them to thousands or millions of students rather than 25-30 at a time.

The union-dominated teaching corps can be expected to be just as hostile as college professors to moving K-12 to MOOCs. But a certain financial incentive will exist nonetheless. I noted this in a talk recently at an education conference where the audience was filled with people who create education software and services.

I began by pointing out that in 2011 only 7.9% of 11th graders in Chicago public schools tested “college ready.” That’s failure, and it’s worse when you realize how much money is wasted on these abysmal results. Chicago’s 23,290 teachers—who make an average salary of $74,839, triple U.S. per capita income and 50% more than median U.S. household income—cost Chicago taxpayers $1.75 billion out of the city’s $5.11 billion budget.

Why not forget the teachers and issue all 404,151 students an iPad or Android tablet? At a cost of $161 million, that’s less than 10% of the expense of paying teachers’ salaries. Add online software, tutors and a $2,000 graduation bonus, and you still don’t come close to the cost of teachers. You can’t possibly do worse than a 7.9% college readiness level.

When I made this proposal, only slightly facetiously, in a roomful of self-described education entrepreneurs, it was if I’d said that Dewey had plagiarized his decimal system. I was upbraided for not understanding the plight of teachers. The plight of students, as is too often the case in discussions of education, didn’t seem to rate the same concern.

Online education is one of the forces that gives me hope for the future. The faster we take money away from leftists in the academy, the better things will be. Right now, a whole lot of people are buying useless degrees for far too much money. It’s even worse when you consider university administrators and other educational bureaucrats, who have inflated salaries and contribute nothing to a student’s real capabilities. The humanities are dominated by secular leftists, and should be totally overthrown by online competitors who will be more responsive to customers than left-wing tenured radicals.

Filed under: News, , , , , , , , , ,

Hope: California set to offer college credit for online courses

There are forces in motion that could turn the tide against the secular left, and one of them is online education.

Excerpt:

A bill in California’s Legislature would force public colleges to award students credit for taking some outside online courses. It looks likely to pass, and its implications for higher education are vast.

A successful monopoly has an impregnable wall around some much-desired good, such as education, and controls the only door.

The higher education establishment in America has always operated this way. But cracks are starting to appear in its wall. A significant one opened this week.

On Wednesday, a bill was introduced in California’s state Senate to require public colleges to give students credit for online courses from outside providers.

If students can’t take an introductory or remedial class in the traditional way, they can turn to offerings from businesses such as Coursera, Udacity and StraighterLine, or the nonprofit EdX, a joint project of Harvard and MIT.

The bill looks likely to pass in some form.

[...]For the first time, colleges would have to offer credit for courses outside the academic establishment. As StraighterLine founder Burck Smith told the New York Times, “This would be a big change, acknowledging that colleges aren’t the only ones who can offer college courses.”

Up to now, online teaching could offer plenty of knowledge but not the credits leading to degrees.

Colleges could refuse to recognize the courses, and most did. That balance of power would shift if Steinberg’s bill becomes law.

That would be the start of real competition.

If online courses can teach more students just as well and cost the public less, the professors behind the walls will have to change their hidebound ways or lose more business to outsiders.

Either way, the public would be well served.

The faster we can disrupt the current higher education monopoly and focus students back on getting marketable skills at a reasonable price, the better off we’ll be. The financial crisis actually helps with this, because young people now have to be more serious about what they are choosing to study and how much they are paying to study. We have a chance here to turn the tide. It’s good news!

Filed under: News, , , , , , , , , , , , , , , , ,

Student debt forcing college graduates to put their plans on hold

First, from Yahoo News, some anecdotes to help everyone understand what faces young people trying to get an education and find a job. (H/T Captain Capitalism)

Excerpt:

We asked Yahoo News readers to tell us their experiences with student loan debt. Over 600 graduates (and not-quite graduates) of all ages emailed to share their stories. We’ll be sharing more of their stories in the next week over at our Tumblr.

Overwhelmingly, Yahoo News readers told us they felt burdened by their debt. “We do not like debt,” wrote Katelyn Fagan, who graduated from Brigham Young University in 2011. She and her husband have a combined student loan debt of just under $70,000. Fagan tried to work while in college, but wanted to focus on her academics. “Maybe I could have sought out other employment options (and I sometimes did) but school was my top priority.”

“Student loans have basically ruined my life,” says Tanya Carter, who graduated from the University of Toledo in 2008. She went to community college for two years before transferring, and attended classes part-time so she could also work. When Carter maxed out on federal loans, she turned to private loans to finish her degree. As a result of all that debt, she writes: “I never see myself owning a home, vehicle, or maybe not even getting married.”

The need to delay starting a family because of financial worries was a common concern. Lauren Dollard graduated from Fordham University in 2008 with $157,000 in debt, including interest. “My boyfriend won’t marry me because of my debt,” she says. “He doesn’t want it attached to his name (I know, this could also be an excuse).” She said she would trade her “fancy private school education” in a heartbeat to live “as an independent adult.”

April Flores graduated from San Diego State in 2008 with $80,000 in private loans and $30,000 in subsidized loans. “It is going to be hard to buy a house and start a family with our debt,” she writes. “We joke and say that our baby is Sallie Mae, but it is true! Education is invaluable, but I was not wise in my early 20s and did not make the right decisions when it came to my private loans.”

Flores was far from alone in bemoaning her failure to understand the implications of those promissory notes. Salvatore Aiello graduated from the University of South Carolina in 2009 with $68,000 in debt. “I blame ignorance in my pursuit of loans; my high school did a terrible job explaining our options when it came to financial aid,” he told us. “They made it seem that if I wasn’t rich or beyond poverty I would not have been able to go to college.” Aiello followed up with a second email—he and his girlfriend are now expecting their first child. They are, in his words, “very excited at the unexpected blessing but terrified.”

Here’s an article from the New York Times in which a professor explains what causes tuition rates to rise: (H/T Cato Institute)

ACADEMIC economists like to make fun of businesspeople: they want competition when they enter a new market but are quick to lobby for subsidies and barriers to competitors once they get in. Yet scholars like me are no better. We work in the least competitive and most subsidized industry of all: higher education.

We criticize predatory loans by mortgage brokers, when student loans can be just as abusive. To avoid the next credit bubble and debt crisis, we need to eliminate government subsidies and link tuition financing to the incomes of college graduates.

Nearly eight million students received Pell grants in 2010, costing $28 billion. In addition, the federal direct loan program, which allows nonaffluent students to get government-guaranteed loans at low interest rates, cost taxpayers $13 billion in 2010-11. Total subsidies to university education amount to $43 billion a year, including around $2 billion in Congressional earmarks — and that does not even include tax subsidies (for college funds); tax breaks (for university endowments, for example); and subsidies dedicated to research.

Just as subsidies for homeownership have increased the price of houses, so have education subsidies contributed to the soaring price of college. Between 1977 and 2009 the real average cost of university tuition more than doubled.

These subsidies also distort the credit market. Since the government guarantees student loans, lenders have no incentive to lend wisely. All the burden of making the right decision falls on the borrowers. Unfortunately, 18-year-olds aren’t particularly good at judging the profitability of an investment without expert advice, and when they do get such advice, it generally counsels taking the largest possible loan. The stock of student loans has reached $1 trillion, while the percentage of borrowers in default jumped to 8.8 percent in 2009 from 6.7 percent in 2007.

Last but not least, these subsidized loans keep afloat colleges that do not add much value for their students, preventing people from accumulating useful skills.

That article also contains the solution:

Investors could finance students’ education with equity rather than debt. In exchange for their capital, the investors would receive a fraction of a student’s future income — or, even better, a fraction of the increase in her income that derives from college attendance. (This increase can be easily calculated as the difference between the actual income and the average income of high school graduates in the same area.)

The solution is to privatize the entire student loan system, and make the loans conditional on future earnings. That way, universities will be chosen based on their ability to provide jobs to students, and students will have to justify to banks (who represent ordinary people who put money on deposit with an expectation of a return!) why they should get a loan and how they expect to pay it back.

But what has Obama actually done?

Let’s see:

The president, by way of administrative fiat, plans to continue redefining the federal student-loan industry, making taxpayers absorb the financial risks of federal direct lending and leading the country over a cliff into future funding shortfalls. On Wednesday, the president announced his executive order to reduce monthly student-loan payments, consolidate loans into direct loans, and offer loan forgiveness after 20 years, all in the name of college access.

President Obama’s executive action would cap monthly repayment at 10 percent of discretionary income and offer students an incentive for consolidating Federal Family Education Loans (FFEL) and direct loans into the direct-loan program, which administers loans directly to students, instead of having them issued by banks. Students will be given a 0.5 percent interest-rate reduction for switching to the direct-loan program.

But why the urgency to employ executive action to shift to the direct-loan program now? The federal government is currently lending to students at an interest rate of 6.8 percent while it is borrowing at less than 1 percent, and the difference is kept by the federal government and spent on other programs, like converting the popular Pell Grant program into an entitlement. The president is lobbying for more students to move to direct loans so that the government can spend the money elsewhere. As Rep. John Kline, chairman of the House Committee on Education and the Workforce, said, “It’s a pretty big slush fund.” Under the Healthcare and Education Reconciliation Act, all new federal student loans are now direct loans, but there are still $400 billion outstanding loans that are not.

But these “savings” are misleading, as future shortfalls are inevitable. These loans are riddled with risk. When pressed by a reporter about why students would want to pay back the loan if they will be forgiven anyway, Secretary Duncan simply said that “people want to do the right thing.” However, student-loan default rates have been increasing for nearly ten years and are now at 8.8 percent. On top of these high defaults, the jobless rate for Americans with at least a bachelor’s degree is now 5.1 percent, the highest since 1970.

As former CBO director Doug Holtz-Eakin wrote, “The Secretary of Education is now one of the top financial executives in the U.S., and Congress spent nearly all of the over-estimated ‘savings’ on the President’s health care reform and unaffordable education entitlements and will add more than a trillion dollars of risky loans to the national balance sheet by 2017.”

Just like the housing bubble, the Democrats have again made it easier for a certain segment of the population whose votes they wanted to borrow money – money that they now don’t have to pay back. Being a leftist means taking money away from people who earned it and giving it to others (students, universities) who don’t have to pay it back.

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