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Student return on investment

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Assuming most or all of you have a college degree or two and that your degree was the second or third biggest purchase of your life…

Was your degree a good value? Do you feel like you got what you paid for? Anyone want a refund???

Are you still deriving benefits from the degree – or has the dividends shrunk over time?

Do any of you wish you had shopped around more before attending the institution? What additional questions would you have asked?

This presentation examines the rise of students as informed consumers.

Published in: Education

Student return on investment

  1. 1. The Rise of the Informed Consumer and Student Return on Investment Todd Bloom, Ph.D. July 17, 2013
  2. 2. Welcome & Overview The Higher Education Marketplace Overview of Students’ College Attendance Decisions A Closer Look at Choices and Choice Process A Closer Look at Information Student Return on Investment Framework 2
  3. 3. The Higher Education Marketplace
  4. 4. Macro Factors Demography Fewer high school graduates nationally Demographic shifts having different impacts in different parts of the country Greater racial and ethnic diversity 4 McGee, Jon, (2012). Disruptive Adaptation: The New Market for Higher Education. Eden Prairie, MN: Lawlor Perspective. Unemployment Affected all types of families during recession Continues to influence economic behavior and choices Family Income Median income now similar to 1996 Real income declined for all family types Home Values Source of financial risk for many families An anchor to mobility Family Debt & Savings Families change in habits during recession (saved more) Behaviors are changing, however
  5. 5. Student Demographics 5 National Center for Education Statistics. (2013). Projections of Education Statistics to 2021. Washington DC: National Center for Education Statistics.
  6. 6. 6 21.6 million undergrads in U.S. higher ed today. 38% enroll part-time 20% work full-time 38% graduate from 4 year institutions in 4 years Who is your student? National Center for Education Statistics. (2013). Projections of Education Statistics to 2021. Washington DC: National Center for Education Statistics. U.S. Census Bureau. (2012). School Enrollment and Work Status: 2011. Washington, DC: Census Bureau. National Center for Education Statistics. (2012). Digest of Education Statistics 2011. Washington, DC: National Center for Education Statistics. National Center for Education Statistics. (2013). Projections of Education Statistics to 2021. Washington DC: National Center for Education Statistics.
  7. 7. Factors that Impact the Higher Education Marketplace What other macro factors do you believe are dramatically influencing the higher education marketplace and how? Partner, Discuss, Share 7
  8. 8. Overview of Students’ College Attendance Decisions
  9. 9. 9 “A consumer is making a choice to maximize expected utility or minimize expected cost.” Hal R. Varian, UC Berkeley Economist people.ischool.berkeley.edu/~hal/Papers/sigir/sigir.html When making economic decisions…
  10. 10. College Attendance Decisions Other important factors in a student’s decision to enroll, such as: 10 The decisions of peersFamily expectations theop.princeton.edu/reports/wp/Fletcher%20THEOP.pdf
  11. 11. College Attendance Decisions 11 http://www.gallup.com/poll/163268/americans-say-graduates- jobs-status-key-college-choice.aspx 41% 16% 37% 32% 22% 40% 43% 14% 40% 51% 13% 33% 0% 10% 20% 30% 40% 50% 60% % grads able to get a good job % students who graduate Price of college/university All respondents <$3,000/mo. $3,000-$7,499/mo. >$7,500/mo. In your opinion, which of the following is the MOST important factor in choosing which college or university to attend? (general population response)
  12. 12. College Attendance Decisions 12 http://www.gallup.com/poll/163268/americans-say-graduates- jobs-status-key-college-choice.aspx In your opinion, what amount of tuition is affordable for ONE year of full-time study at an undergraduate college or university, not including room, board, or books?* 2% 15% 18% 26% 10% 5% 3% 20% 9% 17% 8% 3% 1% 17% 28% 27% 11% 3% 1% 7% 21% 39% 12% 9% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% No amount of tuition is affordable <$5,000 $5,000 - <$10,000 $10,000 - <$20,000 $20,000 - <$30,000 $30,000+ All respondents <$3,000/mo. $3,000-$7,499/mo. >$7,500/mo. *Responses were open-ended and coded into the ranges
  13. 13. 13 College Attendance Decisions Generally speaking, the higher the tuition at a college or university, the better the quality of the education. 5 4 3 2 1 Strongly agree Strongly disagree 10% 13% 29% 20% 25% http://www.gallup.com/poll/163268/americans-say-graduates- jobs-status-key-college-choice.aspx
  14. 14. A Closer Look at Choices and the Choice Process
  15. 15. 15 Students have more choices than ever… 15 TRADE SCHOOL? FOR-PROFIT? LIBERAL ARTS? ONLINE? BLENDED LEARNING? MOOC? IN-STATE? OUT-OF-STATE? FOUR-YEAR? TWO-YEAR? PUBLIC? PRIVATE?
  16. 16. Can people have too much choice? Study #1: Jam Study Researchers set up two tasting booths for jam – one with 24 different flavors and one with 6 60% of customers went to the booth with 24 choices, and 40% went to the booth with 6 choices 30% of the customers with 6 options bought jam, while only 3% of the customers with 24 options made a purchase 16 Iyengar, Sheena S., & Lepper, Mark R. (2000). When Choice Is Demotivating: Can One Desire Too Much of a Good Thing? Journal of Personality and Social Psychology, 79(6), 995-1006.
  17. 17. Can people have too much choice? Study #2: Essay Study Students in an introductory college-level course were given the option of writing an extra credit essay. Half the students were given a list of 30 possible topics, the other half a list of 6. Students with the list of 6 topics were more likely to write the essay than the group given the list of 30. Students given fewer choices for topics wrote higher quality essays. 17 Iyengar, Sheena S., & Lepper, Mark R. (2000). When Choice Is Demotivating: Can One Desire Too Much of a Good Thing? Journal of Personality and Social Psychology, 79(6), 995-1006.
  18. 18. Can people have too much choice? Study #3: Chocolate Study Customers chose chocolates either from a display of 30 or 6. Customers reported greater enjoyment selecting from the display of 30 chocolates. Later, however, customers who selected from the display of 30 chocolates were more dissatisfied and regretful of their choices than the customers who chose from the display of 6 chocolates. 18 Iyengar, Sheena S., & Lepper, Mark R. (2000). When Choice Is Demotivating: Can One Desire Too Much of a Good Thing? Journal of Personality and Social Psychology, 79(6), 995-1006.
  19. 19. Can people have too much choice? Conclusions: Having extensive choices in a trivial context can be de-motivating (perhaps even more so in the context of significant decisions). The only context in which people are more comfortable with extensive choice is when they have previous experience with some of the options. 19 Iyengar, Sheena S., & Lepper, Mark R. (2000). When Choice Is Demotivating: Can One Desire Too Much of a Good Thing? Journal of Personality and Social Psychology, 79(6), 995-1006.
  20. 20. Can people have too much choice? Information can add to the problems of choice overload: Too much Varying quality Too little Trustworthiness But high quality information can overcome the negatives of choice overload. 20 www.nytimes.com/2010/02/27/your-money/27shortcuts.html?_r=0
  21. 21. A Closer Look at Information
  22. 22. Where do students turn for information about college? People 22 Peers: One study showed that conversations with friends increase the probability of college enrollment. But if a student’s preferred college isn’t popular with peers, the student is less likely to enroll in that particular college. theop.princeton.edu/reports/wp/Fletcher%20THEOP.pdf School Counselors & Admission Officers: College choice can be shaped by data. In one study, providing graduation data increased enrollment by 15% in the college with the higher graduation rate. www.aei.org/papers/education/k-12/filling-in-the-blanks/
  23. 23. Where do students turn for information about college? Tools 23 Online tools: Financial Aid Shopping Sheet: helps students and families understand college costs Net Price Calculator: helps students and families estimate their out-of-pocket cost to attend college College Confidential: helps students and families navigate the admissions process Payscale: helps students and families investigate the ROI of colleges, degree programs, and professions Naviance: complete ILP functionality for middle and HS with college and career research, includes transcript sender
  24. 24. Another perspective (Tim Ranzetta) 24 1. Completion rates 2. Placement rates 3. Avg starting wages upon completion (with high and low ranges, too) 4. Avg student debt at completion 5. Student loan default rates 6. Student satisfaction based on: Would you recommend this institution's program to a friend? 7. Job retention (did student still have job 6-12 months after completion?) http://studentlendinganalytics.typepad.com/student_lending_analytics/2009/10/its-time-for-truth-in-educating
  25. 25. Default Rate – Not Grad Rate? 25 http://www.educationsector.org/sites/default/files/publications/Defaults_CYCT-F_JULY.pdf
  26. 26. Student Return on Investment Framework
  27. 27. Assessing Return on Investment 27 What information should students know when making decisions about college?
  28. 28. Assessing Return on Investment 28 What do you think? Please brainstorm in small groups: • What are good measures of student return on investment? Consider… - Student Body Profile - Finances & Financial Aid - Learning Environment - Non-cognitive Benefits - Alumni Profile
  29. 29. Assessing Return on Investment 29 What factors are most important to the student? Please discuss in small groups: • Prioritize the factors – rank order • Distribute 100 points among the factors Report back to whole group
  30. 30. SROI 30 Are you interested in continuing this conversation? Hobsons is interested… Assembling group of interested institutions in developing an SROI index. Contact me for more information.
  31. 31. Thank You! 31 Todd Bloom Chief Academic Officer Hobsons tbloom@hobsons.com (952) 807-5345 @Todd_Bloom
  32. 32. Assessing Return on Investment 32 What is the student body like? Four-year graduation rate? 6 year graduation rate? Average GPA? Average GPA in major? Retention rate? Levels of student engagement? Percent participating in international study? Levels of civic engagement?
  33. 33. Assessing Return on Investment 33 What is the learning environment like? How will I be supported? – Will I have an advisor? How often will I meet with him/her – What tools are provided to me to plan for my courses, track my progress, and build a portfolio of performance artifacts? – What is the effectiveness of the career placement service? Is this a healthy place to learn? – How safe are students on campus? – Does the school value healthcare and lifestyle?
  34. 34. Assessing Return on Investment 34 How will I develop non-academic skills? Will I have opportunities to develop skills like problem-solving and conflict resolution? Are mentoring and internship programs available? Are students held accountable for their own outcomes? What support is available for improving study and social skills?
  35. 35. Assessing Return on Investment 35 What are the costs, and what financial aid is available? Amount of tuition and fees? Amount of need-based awards? Amount of non-need-based awards? Percent of students with loans? Average student loan amount? Loan default rate?
  36. 36. Assessing Return on Investment 36 What are the alumni like? What does the first year compensation of graduates look like? In the major I am considering? Levels of satisfaction? Percent who go on to graduate study? Rates of career placement? Levels of civic engagement? Rate of alumni giving?
  37. 37. College Attendance Decisions 37 When making decisions about attending college… What other factors do students consider? Partner, Discuss, Share

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