Moody’s ‘Special Comment’ report on the global recession and public/private universities

They say a year is a long time in politics. This last year has been a particularly long one, not only in political and policy circles, but for whole nations and their institutions. The sub-prime mortgage collapse quickly turned into a fiscal meltdown and is now a full-blown global recession.  ‘Hunkering down’, weathering the effects, and practicing ‘recession-style prudence and risk management’ is now the new game in town.

So how are universities doing in this highly uncertain, fiscally-brutal environment? Clearly there are many kinds of stories which can and are being told — from departments closing to new ventures being advanced.

One story being put forward is by Moody’s — one of the two big global rating agencies whose pronouncements on the creditworthiness of nations and institutions makes them particularly powerful and worth noting (see also our earlier background report on rating agencies and higher education).

In June, Moody’s released a Special Comment report on higher education called Global Recession and Universities: Funding Strains to Keep Up with Rising Demand which makes for particularly interesting reading. The lead author of the report is Roger Goodman, Vice President-Senior Credit Officer, Moody’s Investors Service, New York.  Our thanks to University World News for bringing the report to our attention in their 5 July story ‘US: Universities fair well in recession, says Moody’s‘), and to Moody’s for permission to publish the figure below.

Essentially their argument is that (particularly public):

…universities are proving to be appealing investments for government stimulus efforts due to the sector’s stabilising, countercyclical nature in the short term as well as its potential to stimulate long term economic growth.

…Most universities demonstrate countercyclical ability to increase student enrollments during recessions, receive relatively strong support from sponsoring governments, and offer long term potential for increasing revenue diversity.

On page 3 of their report, Moody’s offer a useful graphic on the enrollment impact of recessions (see Fig 1 below).

MoodysFig1

In other words, as the economy nose-dives, individuals are more likely to consider investing in more education as a means of waiting out the recession, and positioning themselves for the labour market when it revives. For Moody’s this all means a possible ‘tail-wind’ for universities as student demand increases — particularly those who have an access oriented agenda.

Moody’s Report outlines 5 key ideas:

  1. While universities will experience some stress, they will be more sheltered than other sectors.
  2. Public university ‘credit quality’ will be steadier than that of private universities
  3. Private universities can achieve a high rating if they are able to show evidence of sustained demand, financial strength and liquidity is clear
  4. Universities are likely to seek more alternative sources of funding to offset the pressure on government balance sheets and limitations on public funding growth
  5. Despite efforts at diversifying, the public sector will continue to play a central role

There are several issues worth noting here. The first is that individuals have been encouraged to invest in a graduate education, very often at considerable personal expense (loans and so on) with the promise of future earnings that outpace non-graduate earnings. If wages are depressed across the public and the private sectors because governments and firms are having to manage the consequences of bailing out the banks, then a graduate education might not be as appealing as it once was.

Second, aside from the stark black and white categorizing of ‘public’ and ‘private’ in this report (for instance, is the University of Sydney, or the University of Wisconsin-Madison, public or private given that both receive around 14-18% of their core budget from government funding?),  Moody’s also offers us something of a paradox.

To weather the storm, public universities are going to have to become more ‘private’ in order to augment meagre government budgets.  However, the more private a once public university is, the greater the risk. Is this not a classic case of catch-22?

Susan Robertson

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Higher education policy-making, stake-holder democracy and the economics of attention

In August (2008), the Beerkens’ Blog carried an interesting report on a new format being mobilized by both the Australian and UK governments respectively; to enable the public to have a say on the future of higher education. The format – a blog – is a new departure for government departments, and it clearly is a promising tool for governments in gathering together new ideas, promoting debates, and opening up spaces for stakeholders to offer perspectives.

However, though the nature of their projects were similar—to generate a Higher Education Debate about where higher education should go over the next decade or so—Beerkens’ comparison suggests that each of the two departments involved, the Australian’ Department of Education, Employment and Workplace Relations (DEST) and the UK’ Department of Innovation, Universities and Skills (DIUS), were experiencing rather different levels of engagement with their publics. 

The question of why this should be the case, when the topic is important and widely debated, bears reflecting upon more closely. Is it because DEST commissioned an initial paper from an Expert Panel, with the result that the wider Australian public had something to get their teeth into compared with DIUS’s invitation to articulate a perspective? Or, was it a result of the fact that DIUS, a relatively new Department constructed when Gordon Brown took over from Tony Blair as UK Prime Minister in 2007, has yet to be picked up on wider public’s radar? Is the Australian public more used to having their say using new web-based interactive tools, and therefore not phased when invited to do so? Or is the wider public in UK less willing to participate in a public airing of views?

Put another way, how and why is it that the wider Australian public pay attention to, and act upon, an invitation to participate, when their UK counterparts do not?

Whatever the reasons for the differences, or the merits of each of the initiatives, what is clear is that the deployment of new technologies, in themselves, do not necessarily generate participation by a wider polity. Participation is the outcome of the various players being aware of, and prioritizing, interactions of this kind. In other words, new technologies operate within an ‘economy of attention’ – a point well made by Richard Latham in his influential 2006 book The Economics of Attention: Style and Substance in the Age of Information.

Now the essential point Latham is making is that we live in an information economy, and information is not in short supply. In fact, argues Latham, we are “drowning in it”. What is in short supply is ‘attention’! To grab attention, we need stylistic devices and strategies so that what Latham calls ‘stuff’—like debating the future directions for higher education—moves from the periphery to the center of attention.

This raises the interesting question of what stylistic devices and strategies government departments might use to ensure that they grab attention. In our GlobalHigherEd experience, simply ‘being a blog’ out there in the sea of information is not sufficient to generate attention? Moving ‘stuff’ from the periphery to the center takes thought and time; of how to catch and perhaps ride currents of interest. It means paying attention to the unique economy of attention and attempting to direct it in some way. Tags, categories, inter-textual links, networks and search engines all make up this complex terrain of attention getting/attention receiving. In this way, GlobalHigherEd (as well as the Beerkens’ Blog) has managed to contribute, to a degree, to structuring the field of attention – at least in the field of global higher education debates. This point is exemplified in Eric’s pump priming entry, loaded up today, regarding the Times Higher Education World University Ranking of 2008 that will be released tomorrow, and covered in the Beerkens’ Blog amongst several other outlets.

So, to all of you out there who really do have something to add to DIUS’s invitation to participate in wider public debates about the future of Higher Education in the UK on themes that range from part-time studies, demographic challenges, teaching and student experiences, internationalizing higher education, intellectual property, research careers and institutional performance – the soapbox is yours! DIUS really does want to hear from you.

References

Latham, R. (2006) The Economics of Attention: Style and Substance in the Age of Information, Chicago and London: The University of Chicago Press.

Susan Robertson

China: from ‘emerging contender’ to ‘serious player’ in cross-border student mobility

Last year we carried a series of reports (see here, here and here) on the global distribution of student mobility. While the US and the UK had the lion’s share of this market, with 22% and 12% respectively, we noted China had made big gains. With 7% of the global market and in 6th place overall, it was an ’emerging contender’ to be taken seriously, with trends suggesting that it was a serious player as a net ‘exporter’ and importer of education services.

So it was with great interest I read today’s Chronicle of Higher Education report by reporter Mara Hvistendahl, on China now being ranked in 5th place (behind the US, UK, France and Germany) as an “importer” of foreign students. See this OECD chart, from its new Education at a Glance 2008 report, to situate this development trend and China’s current position [recall that China is not an OECD member country].

As the Chronicle report notes, this is a far cry from China’s 33 overseas students in 1950.

Given, too, that in 1997 there were only 39,000 foreign students whilst in 2007 there were some 195,000, this 5-fold increase in numbers in 10 years (Chinese Ministry of Education and the China Scholarship Council) represents a staggering achievement and the one that is likely to continue. So, how has China achieved this. According to the Chronicle report:

To attract students, China offers competitive packages, replete with living stipends, health insurance, and, sometimes, travel expenses. In 2007 the China Scholarship Council awarded 10,000 full scholarships — at a cost of 360 million yuan ($52-million) — to international students. By 2010 the council aims to double the number of awards.

Two-fifths of the 2007 grants went to students in Asia. In a separate scholarship program that reflects its global political strategy, China is using its strengths in science and technology to appeal to students in the Middle East, Africa, and Central Asia, forming partnerships with governments in those regions to sponsor students in medicine, engineering, and agriculture.

But there are other factors as well pushing China up the ladder as an education destination. China is increasing regarded as a strategic destination by American students and the US government for study abroad. Figures reported by Institute of International Education fact-sheet on student mobility to and from the US show an increase of 38% in US students going to China in just 1 year (2005/2006). This also represents a profound shift in Sino-American educational relations.

In sum, these figures reflect the outcome of an overall strategy by China (perversely aided by the US’s own global trade and diplomacy agenda):

  • to develop a world class higher education system;
  • to internationalize Chinese higher education;
  • to stem the tide of students flowing out of China;
  • to attract half a million students to China by 2020; and
  • to advance Chinese interests through higher education diplomacy.

If realized, this would put China at the top of the exporting nations along with the US. It will also register China as a global higher education player with global impact. Without doubt this will change the geo-politics of global higher education.

Susan Robertson

OECD’s Education at a Glance 2008: a ‘problem/solution toolkit’ with problems?

Last week, or to be precise – on the 9th September at 11.00 Paris time, the Organization for Economic and Cooperative Development (OECD), launched its ‘annual snapshot’ of the sector, Education at a Glance 2008. Within hours, the wheels of the media industry around the globe were pouring out stories of shame, fame, defeat and victory, whilst politicians in their respective countries were galvanized into action – either defending their own decisions or blaming a previous regime.

As previous entries in GlobalHigherEd (see here and here and here, as examples) argue, global indicators increasingly matter, not because they are always able to tell us much that is useful, but they work as a powerful disciplinary tool on nations. This, in turn, provides the issuing agent, in this case the OECD – ostensibly a ‘collective learning machinery’ – with an important mechanism for influencing the form and scope of education policies and programs around the globe. This is the tangible stuff of globalization – but this problem/solution toolkit is not without its own epistemological problems. Let’s take a look at two countries reported on this week – which headlined the OECD’s Report in the following way.

In the UK, the BBC and the Telegraph focused on the graduate league table, and the fact that the UK has not fared particularly well. The evidence? In 2000, the UK ranked 4th in the world in the number of school-leavers going to university. By 2006, this had plummeted to 12th.

Graeme Paton of the Telegraph reported on an interview with Andreas Schliecher, the OECD’s architect of Education at a Glance. According to Dr. Schliecher, the UK has major problems in producing school leavers with sufficient quality of credentials, whilst other countries have managed to sort out these problems and were already in the fast lane, leaving the UK behind.

Ministers canvassed by the Telegraph, however, insist that they were tackling the shortfall by encouraging more pupils to go to university and by pointing out the OECD good news story for the UK, that university graduates in the UK aged 25-64 earned 59 per cent more than other people – well above the national average.

In Canada, the influential Macleans magazine reported that in the OECD Education at a Glance comparisons, Canada was one of the few countries with the highest percentage of its population having completed post-secondary education. However, we are also given another statistic, and that is that the earnings advantage gained from completing post-secondary education in Canada had decreased in recent years and was quite low compared to other OECD countries. This is reflected in the lower average private rate-of-return on investment in post-secondary education relative to other nations in the OECD.

Let’s dwell, and not just ‘glance’, at these figures for a moment, and ask what is being reported here by the OECD:

  • competitive economies need a more highly educated workplace to perform more demanding work;
  • all countries need to encourage their young people to go to university and complete a degree; and
  • the incentives for this expenditure (which is increasingly being paid by families) are that there will be a higher rate-of-return to the student than if the student had not gone to university.

However, as we can see from our example above, countries with high levels of graduation (which the OECD says is good) report increasingly lower returns to graduates (ah…and is this not bad?).

Now, this is where the underlying human capital/homo-economicus rationale underpinning the OECD’s Education at a Glance begins to falter – for it cannot explain why it is that following the OECD’s prescriptions – of a high level of enrolment in higher education – reduces the overall earnings to the individual rather than increasing it.

While not one that is acknowledged in the repertoire of the OECD’s ‘problem/solution toolkit’ approach, this is where a sociological analysis is particularly helpful. As sociologists of education (see Phil Brown and Simon Marginson) have shown using Fred Hirsch’s insights on ‘positional goods’ tied to social status in his book The Social Limits to Growth, an advantage will only have economic value when no-one else has it. That is, its value depends on its scarcity. In other words, if we all have a graduate degree, then its value is diminished in the marketplace compared with when only half of us have one. This is part of the dynamic, for example, underlying degree inflation.

There’s also another issue, and this is the assumption that jobs in the ‘new knowledge economy’ will require us all to have graduate qualifications. However, the Confederation of British Industries (reported in the UK Guardian newspaper on the 17th Sept), disagrees, arguing that universities were producing far too many graduates leaving more than a million people in jobs for which they were overqualified. They argue that there are currently 10.1 million graduates in the UK, but only 9 million graduate jobs.

The deeper, and more tricky, question for policymakers now becomes: do we encourage everyone to hop onto the same credential treadmill with fewer and fewer returns and potentially higher levels of indebtedness? To be sure, there are important outcomes for individuals of a university education. However this experience is becoming more and more expensive, and the promised lifetime earnings are likely to be less and less. And who will shoulder the cost? Families? Employers? The State? And, how might the state and interrnational organizations, like the OECD, legitimate more and more credential inflation when the current ‘knowledge economy’ discourse is showing it to be somewhat hollow?

Or, ought we not think through what a range of trajectories might be that distributes talent/skills/training and investments over a wider portfolio of education/training/career options than is currently being presented to us?

Susan Robertson

Ministers of Education and fora for thinking beyond the nation

One of the features of the globalization of higher education and research is the bringing together of ministers of education from various countries to think beyond the nation at regional, inter-regional, and global scales, as well as in a comparative sense. Thus we are seeing the nation-state creating internal competencies for statecraft via extra-territorial fora.

This is, of course, nothing new in some ways: ministries of trade and industry, or ministries of immigration, have done this for decades. But this is really the first era when ministers of education have become much more involved in strategizing about how to adjust education systems, especially the higher education and research elements, so as to engage with broader shifts in economy and society.

Here are links to some recent meetings, with associated reports:

Let me know if you know of any more that I should include – I am happy to add them to the list above.

Scaling up need not only work at the regional or interregional scale. In Latin America, for example, five higher education ministers from Bolivia, Cuba, Dominica, Nicaragua, Venezuela signed the Cochabamba Declaration to further ALBA – the “Bolivarian Alternative for the peoples of Our America”, a regional intergration initiative that is anti-capitalist in nature, for the most part.

Or in Canada, the Council of Ministers of Education of Canada (CMEC), made up on all provincial ministers of education (as education, including higher education, is a provincial responsibility), frames its international activities along a variety of other regional, interregional, and multilateral axes:

CMEC’s international activities have traditionally involved three major international organizations, the Organisation for Economic Co-operation and Development (OECD), the United Nations Educational, Scientific and Cultural Organization (UNESCO), and the Commonwealth. While other partnerships have been formed with the Southeast Asian Ministers of Education Organization (SEAMEO), the Council of Europe, the Asia-Pacific Economic Cooperation (APEC) Education Forum, the Organization of American States (OAS), and the Summit of the Americas process, both OECD and UNESCO, as well as the Commonwealth, continue to play a prominent role.

Assessments of the efficacy of such fora in facilitating new ways of thinking, innovative forms of statecraft, and extended networks of support, are lacking.  Yet it is clear that some, such as the biannual Bologna Process summit (the London 2007 event is pictured to the left), are effective in facilitating action.

In conclusion, we are seeing, via the lens of such fora:

  1. Enhanced extra-territorial agendas and networks being built up by ministries that have not traditionally been so interested, nor obligated, in thinking beyond the nation, nor even beyond the province/state scale, in some countries.
  2. Meeting agendas and joint concluding statements that are framed around adjusting education systems to mediate and especially advance economic interdependence.
  3. Evidence of the enhanced intertwining of higher education with regional and interregional R&D strategies (especially with respect to science and technology).
  4. The desire to continue advancing longstanding social and cultural agendas (given the core nation-building function of higher education), though these socio-cultural agendas brush up against economic and international migration dynamics.
  5. The inclusion of some associated voices in the ministerial-centred deliberations, and the exclusion, by design or accident, of others that have clearly not started to think beyond the nation. On this point I see the voices of some students (e.g., the European Students’ Union) included, but faculty voices (via associations, unions, etc), are remarkably absent.

In the end, it is uncertain how far these initiatives will go. The addition of new mandates is perhaps to be expected in these globalizing times, but the challenges of thinking beyond the nation for the nation (and the region) is not a simple one to face, conceptually nor organizationally. This said, these are noteworthy events, and well worth engaging with on a number of levels.

Kris Olds

Changing higher education and the claimed educational paradigm shift – sobering up educational optimism with some sociological scepticism

If there is a consensus on the recognition that higher education governance and organization are being transformed, the same does not occur with regard to the impact of that transformation on the ‘educational’ dimension of higher education.

Under the traveling influence of the diverse versions of New Public Management (NPM), European public sectors are being molded by market-like and client-driven perspectives. Continental higher education is no exception. Austria and Portugal, to mention only these two countries, have recently re-organized their higher education system explicitly under this perspective. The basic assumptions are that the more autonomous institutions are, the more responsive they are to changes in their organizational environment, and that academic collegial governance must be replaced by managerial expertise.

Simultaneously, the EU is enforcing discourses and developing policies based on the competitive advantages of a ‘Europe of knowledge’. ‘Knowledge societies’ appear as depending on the production of new knowledge, its transmission through education and training, its dissemination through ICT, and on its use through new industrial processes and services.

By means of ‘soft instruments’ [such as the European Qualification Framework (EQF) and the Tuning I and II projects (see here and here), the EU is inducing an educational turn or, as some argue, an emergent educational paradigm. The educational concepts of ‘learning’, ‘knowledge’, ‘skills’, ‘competences’, ‘learning outcomes’ and ‘qualifications’, re-emerge in the framework of the EHEA this time as core educational perspectives.

From the analysis of the documents of the European Commission and its diverse agencies and bodies, one can see that a central educational role is now attributed to the concept of ‘learning outcomes’ and to the ‘competences’ students are supposed to possess in the end of the learning process.

In this respect, the EQF is central to advancing the envisaged educational change. It claims to provide common reference levels on how to describe learning, from basic skills up to the PhD level. The 2007 European Parliament recommendation defines “competence” as the proven ability to use knowledge, skills and personal, social and/or methodological abilities, in work or study situations and in professional and personal development”.

The shift from ‘knowledge content’ as the organizer of learning to ‘competences’, with a focus on the capacity to use knowledge(s) to know and to act technically, socially and morally, moves the role of knowledge from one where it is a formative process based on ‘traditional’ approaches to subjects and mastery of content, to one where the primary interest is in the learner achieving as an outcome of the learning process. In this new model, knowledge content is mediated by competences and translated into learning outcomes, linking together ‘understanding’, ‘skills’ and ‘abilities’.

However, the issue of knowledge content is passed over and left aside, as if the educational goal of competence building can be assigned without discussion about the need to develop procedural competencies based more on content rather than on ‘learning styles’. Indeed it can be argued that the knowledge content carried out in the process of competence building is somehow neutralized in its educational role.

In higher education, “where learning outcomes are considered as essential elements of ongoing reforms” (CEC: 8), there are not many data sources available on the educational impact of the implementation of competence-based perspectives in higher education. And while it is too early to draw conclusions about the real impact on higher education students’ experiences of the so called ‘paradigm shift’ in higher education brought by the implementation of the competence-based educational approach, the analysis of the educational concepts is, nonetheless, an interesting starting point.

The founding educational idea of Western higher education was based on the transforming potential of knowledge both at the individual and social level. Educational categories (teaching, learning, students, professors, classes, etc.) were grounded in the formative role attributed to knowledge, and so were the curriculum and the teaching and learning processes. Reconfiguring the educational role of knowledge from its once formative role in mobilizing the potential to act socially (in particular in the world of work), induces important changes in educational categories.

As higher education institutions are held to be sensitive and responsive to social and economic change, the need to design ‘learning outcomes’ on the ‘basis of internal and external stakeholders’ perceptions (as we see with Tuning: 1) grows in proportion. The ‘student’ appears simultaneously as an internal stakeholder, a client of educational services, a person moving from education to labor market and a ‘learner’ of competences. The professor, rather than vanishing, is being reinvented as a provider of learning opportunities. Illuminated by the new educational paradigm and pushed by the diktat of efficiency in a context of mass higher education, he/she is no more the ‘center’ of knowledge flux and delivery but the provider of learning opportunities for ‘learners’. Moreover, as an academic, he/she is giving up his/her ultimate responsibility to exercise quality judgments on teaching-learning processes in favor of managerial expertise on that.

As ‘learning outcomes’ are what a learner is expected to know, understand and/or be able to demonstrate on completion of learning, and given these can be represented by indicators, assessment of the educational process can move from inside to outside higher education institutions to assessment by evaluation technicians. With regard to the lecture theater as the educational locus par excellence, ICT instruments and ideographs de-localize classes to the ether of ‘www’, ‘face-to-face’ teaching-learning being a minor proportion of the ‘learner’ activities. E-learning is not the ‘death’ of the professor but his/her metamorphosis into a ‘learning monitor’. Additionally, the rise of virtual campuses introduce a new kind of academic life whose educational consequences are still to be identified.

The learner-centered model that is emerging has the educational potential foreseen by many educationalists (e.g. John Dewey, Paulo Freire, Ivan Illich, among others) to deal with the needs of post-industrial societies and with new forms of citizenship. The emerging educational paradigm promises a lot: the empowerment of the student, the enhancement of his/her capacity and responsibility to express his/her difference, the enhancement of team work, the mutual help, learning by doing, etc.

One might underline the emancipatory potential that this perspective assumes – and some educationalists are quite optimist about it. However, education does not occur in a social vacuum, as some sociologists rightly point out. In a context where HEIs are increasingly assuming the features of ‘complete organizations’ and where knowledge is indicated as the major competitive factor in the world-wide economy, educational optimism should/must be sobered up with some sociological scepticism.

In fact the risk is that knowledge, by evolving away from a central ‘formative’ input to a series of competencies, may simply pass – like money – through the individuals without transforming them (see the work of Basil Bernstein for an elaboration of this idea). By easing the frontiers between the academic and work competencies, and between education and training, higher education runs the risk of sacrificing too much to the gods of relevance, to (short term) labor market needs. Contemporary labor markets require competencies that are supposed to be easily recognized by the employers and with the potential of being continuously reformed. The educational risk is that of reducing the formation of the ‘critical self’ of the student to the ‘corporate self’ of the learner.

António M. Magalhães