Dr. Michael Crow, President of ASU, and Ernest Calderon, President of the Arizona Board of Regents, have a lot of fine ideas to bolster higher education in this great state. Affordability is the watch-word of the latest initiatives, and “Amen” to that broad concept. No one appears eager to see further increases in the cost of public education, at least no one wearing the “taxpayer” hat. But-you get what you pay for. That’s my mantra. What I want to “get,” at least as a taxpayer, is value - not merely the appearance of cheaper cost. Value in higher education, I am convinced, is measured by one data point more than any other. It’s called “persistence to graduation.” That’s an edu-word for the percentage of persons who graduate from a 4 year degree program within anything approaching a decent interval. Sometimes it’s referred to as a “graduation rate,” other times by other nomenclature, but the principle is this: Do those who embark on a higher education credential finish in a sufficiently reasonable period that one can say that the effort was justified in its cost?
For a while, perhaps as much as 20 years, it’s been conventional wisdom that the state universities are no longer places where the expression “4-year degree” has any literal meaning. It usually requires 5 years, minimum, to finish such a program of undergraduate studies, and there is a tendency for the undergrad to take as much as 6 academic years to finish all requirements for the degree of bachelor of something or other. This isn’t the forum to debate why that is so (or why, for that matter, graduation rates after 6 academic years of enrollment approach zero percent, although part of the problem is tracking the student’s progress beyond that time frame). That it is a fact, not just in Arizona but in many places, is evidenced by the metric for measuring undergraduate graduation rates: the percentage who graduate in 6 years. You can look that up on the U.S. News & World Report site and elsewhere. The National Center for Educational Statistics earlier this year made this observation: About 58 percent of first-time students seeking a bachelor's degree or its equivalent and attending a 4-year institution full time in 2000-01 completed a bachelor's degree or its equivalent at that institution within 6 years. For public institutions, approximately 58 percent of females seeking a bachelor's degree or its equivalent graduated within 6 years, compared with 51 percent of their male counterparts; for private not-for-profit institutions, 67 percent of females graduated within 6 years, compared with 62 percent of males. At private, for-profit institutions, however, the 6-year graduation rate was higher for males than females (36 vs. 29 percent).
The elite (in their own minds) publics like Berkeley, Michigan (Ann Arbor), UCLA, North Carolina and Virginia have graduation rates over 6-year cohort intervals in the 80-90 percent range. Why is that? Are their students just better equipped for the intellectual challenges posed by higher education than the typical State U? Probably so; but that begs the question whether entry-test scores alone dictate the outcome of persistence to graduation. Of course, the ready answer is “no”; obviously, there’s more to succeeding in getting through a program than native intelligence. There is no measuring stick for sheer grit, for one thing. I’ve watched one of my kids grind half-way through a program that, on test paper, is probably beyond her grasp. We don’t live on paper, thankfully.
So, besides book-smarts and sheer determination, what else determines success in reaching the finish-line? There is plenty of research indicating that a major determinant of success in completing an undergraduate program is driven by engagement in the life of the academic institution, through faculty interactions and through student organizations – together with the quality of student life on the grounds of the institution itself. This militates against the commuter environment, where tires squeal after the last class bell of the day for the driver. The metric used in figuring out the degree of student engagement frequently is “freshman retention” – meaning, how many of the first-year class returns for more. Again, in the elite institutions, the freshman retention rate is in the mid-90s percentile. At the University of Arizona, it runs in the range of 77-78%. It’s about the same percentage at ASU. At NAU, it’s lower. Dr. Crow has admitted that freshmen living on a campus helps to “acculturate” those students to college life, positively impacting their “retention.” (Nov. 7, 2008 story) It’s useful to realize that while student housing represents some additional up-front cost to parents or students surviving on loans, the value proposition is that making new friends and feeling an integral part of the institution sustains velocity toward graduation. This means that the total cost of the student’s education beyond high school could be lower even if housing is a line item in the educational budget. So we need to offer nesting areas for fledglings in these new colleges, if we want to maximize their probability of staying the course.
What we further need, Arizonans, if we are going to justify the additional expense of new campuses with bachelor’s degrees emphases and less emphasis on faculty research, is student engagement and tightly-drawn articulation protocols, so that freshmen retention and graduation rates radically improve, at least to the 85% rate. That’s going to mean that a commuter campus ambience isn’t worth implementing – and that obligatory housing will increase the cost of construction and maintenance of these senior-college campuses, should they come to fruition. President Calderon’s Board of Regents wants to funnel more students through the new campuses using the engine of the community college systems for the initial two to three years of study – about half the period of the current bachelor’s program’s duration. But unless there are specific articulation agreements between the “junior” and “senior” institutions, that make it absolutely clear what course sequence is required to finish in 4 to 6 years with a bachelor’s degree, we’ll have more of the same foundering around that characterizes current public undergraduate programs, no matter how student-focused the faculty is at the new, smaller 4-year colleges. There’s no value proposition here. Arizona requires more college graduates and fewer academic dilettantes. Let’s calibrate the new colleges to make that happen.
Note: The author has three daughters who, among them, hold 5 degrees from institutions of higher learning, going on 6 – a doctorate-level program. His youngest daughter earned an associate of arts degree and a bachelor’s of science degree in 4 years; the trick is, she earned them from institutions 800 miles apart, through two distinct state university systems (neither of them in Arizona). That’s getting after it, friends.
--MNW
Thursday, September 10, 2009
Wednesday, September 2, 2009
Home Ownership: Re-Visioning an American Dream
Tom Sugrue wrote an interesting piece in the WSJ published Saturday, August 15, called “The New American Dream: Renting.” His article is not a prescription but a suggestion that Americans need to return to the notion that there is no disgrace in renting your home. He points out that prior to the Depression Era, few Americans actually owned their own homes, title – wise. It was the explosive growth in the last 50 years of the 20th Century that led to the possibility that any working American could own his own piece of paradise. Sugrue quotes President George W. Bush calling for “an ownership society” of citizens possessing single family bliss. Sugrue’s piece ends with this reflection: “If there's one lesson from the real-estate bust of the last few years, it might be time to downsize the dream, to make it a little more realistic. James Truslow Adams, the historian who coined the phrase "the American dream," one that he defined as "a better, richer, and happier life for all our citizens of every rank" also offered a prescient commentary in the midst of the Great Depression. "That dream," he wrote in 1933, "has always meant more than the accumulation of material goods." Home should be a place to build a household and a life, a respite from the heartless world, not a pot of gold.”
Well, let’s not, in this space, rag on speculators who saw serial, highly leveraged, residential acquisition as the way to sudden and abundant wealth. They have more worries than what a blogger considers their just desserts. Instead, let’s ponder what will become of a 21st Century batch of Americans whose credit ratings are abysmal but who still want to own their own patch of land. Unless the Obama Administration declares a moratorium on bad credit, there’s a gaggle of folks who won’t be financeable for some time except perhaps by rapacious credit card purveyors. And that means there will be a flabby inventory of homes on the market in many SMSAs for a good while. This in turn means that while more homes may be “affordable” in the near future, the universe of potential buyers will take a while to ramp-up, especially if lenders do their “opposing side of the pendulum” over-correction, imposing more stringent underwriting of home loans for some short period of time – well, at least until the temporary insanity cycle resumes in the mortgage-lending community.
Perhaps Americans should contemplate a new housing paradigm, where ownership of a structure they call “home” is divorced from ownership of the land, or a fractional interest in land, upon which the foundation of their residence rests. Land (and infrastructure like curb, gutter, hydrants, sidewalk) cost is a significant component of the total cost of home ownership. If it were possible to have the right to occupy a tract of land with your residence without owning the land itself, in what respects would that be unattractive? Judging by the reluctance of my neighbors in the last couple of weeks to mow their front lawns, I’d guess it’s a phenomenon many could accustom themselves to.
Say you’re wondering, “how would that work?” Or perhaps you’re thinking, “so is he advocating that we all live in mobile home parks?” Nope, I’m not advocating a new era of mobile home fiefdoms. I’m saying that you don’t have to own land in order to use land residentially. There’s no zoning restriction that I know of in the big majority of American communities that requires fee title ownership of an occupied, legally-created and entitled lot. If the opposite were true, there would be no condominium projects, because the owners there own “air space” between the painted, interior surfaces of their walls. The land on which the buildings sit, and the buildings themselves, most times, are common elements that are owned by the condominium owners’ association. This is a very common form of co-housing. Our society needs to take a much closer look at all forms of co-housing, I think, and to develop projects that experiment in new directions with co-housing forms.
An investor will find new incentives to develop co-housing projects of different varieties if it discovers that it can retain title to the land and still generate income from the dwellers on a parcel – without necessarily “renting” anything to those dwellers. Particularly if the dwelling unit is detachable from the moorings of the unit upon the property and transportable elsewhere, retaining the dweller’s continued exclusive ownership (or not, if the dweller decides to sell), a purchaser of a housing unit can still have a long term, perhaps even appreciating, asset without incurring the expense and other burdens of land ownership. (Like mowing your doggone front lawn, for Pete’s sake!) Since lenders already know how to finance the modest acquisition costs of mobile homes or manufactured housing units, this proposal for co-housing featuring the potential for portable dwellings is not impossibly novel or threatening.
I’m going to post in the next few months about alternative forms of co-housing that turn away from fee title ownership divided among the dwellers on a parcel. Some may involve renting land, but others will entail just paying a “parking fee,” with no land ownership incidents or burdens other than those a person voluntarily undertakes. Of course, a paradigm shift will require one to cease thinking of home ownership as a lucrative, or at least steadily appreciating, investment vehicle. This transformation can be achieved, as Sugrue implies:
“Some countries—such as Spain and Italy—have higher rates of home ownership than the U.S., but there, homes are often purchased with the support of extended families and are places to settle for the long term, not to flip to eager buyers or trade up for a McMansion. In France, Germany, and Switzerland, renting is more common than purchasing. There, most people invest their earnings in the stock market or squirrel it away in savings accounts. In those countries, whether you are a renter or an owner, houses have use value, not exchange value.”
Hmmm. Use value - what a concept. France, Germany and Switzerland have fairly high living standards (and by law, grant their workers longer annual leaves than workers in the U.S.); these are not third world countries in their industrial capacities. So perhaps Americans might consider as a society new forms of owning a “piece of the rock” without citizens having their credit standings stoned to pieces. Stay tuned, readers.
-MNW
Well, let’s not, in this space, rag on speculators who saw serial, highly leveraged, residential acquisition as the way to sudden and abundant wealth. They have more worries than what a blogger considers their just desserts. Instead, let’s ponder what will become of a 21st Century batch of Americans whose credit ratings are abysmal but who still want to own their own patch of land. Unless the Obama Administration declares a moratorium on bad credit, there’s a gaggle of folks who won’t be financeable for some time except perhaps by rapacious credit card purveyors. And that means there will be a flabby inventory of homes on the market in many SMSAs for a good while. This in turn means that while more homes may be “affordable” in the near future, the universe of potential buyers will take a while to ramp-up, especially if lenders do their “opposing side of the pendulum” over-correction, imposing more stringent underwriting of home loans for some short period of time – well, at least until the temporary insanity cycle resumes in the mortgage-lending community.
Perhaps Americans should contemplate a new housing paradigm, where ownership of a structure they call “home” is divorced from ownership of the land, or a fractional interest in land, upon which the foundation of their residence rests. Land (and infrastructure like curb, gutter, hydrants, sidewalk) cost is a significant component of the total cost of home ownership. If it were possible to have the right to occupy a tract of land with your residence without owning the land itself, in what respects would that be unattractive? Judging by the reluctance of my neighbors in the last couple of weeks to mow their front lawns, I’d guess it’s a phenomenon many could accustom themselves to.
Say you’re wondering, “how would that work?” Or perhaps you’re thinking, “so is he advocating that we all live in mobile home parks?” Nope, I’m not advocating a new era of mobile home fiefdoms. I’m saying that you don’t have to own land in order to use land residentially. There’s no zoning restriction that I know of in the big majority of American communities that requires fee title ownership of an occupied, legally-created and entitled lot. If the opposite were true, there would be no condominium projects, because the owners there own “air space” between the painted, interior surfaces of their walls. The land on which the buildings sit, and the buildings themselves, most times, are common elements that are owned by the condominium owners’ association. This is a very common form of co-housing. Our society needs to take a much closer look at all forms of co-housing, I think, and to develop projects that experiment in new directions with co-housing forms.
An investor will find new incentives to develop co-housing projects of different varieties if it discovers that it can retain title to the land and still generate income from the dwellers on a parcel – without necessarily “renting” anything to those dwellers. Particularly if the dwelling unit is detachable from the moorings of the unit upon the property and transportable elsewhere, retaining the dweller’s continued exclusive ownership (or not, if the dweller decides to sell), a purchaser of a housing unit can still have a long term, perhaps even appreciating, asset without incurring the expense and other burdens of land ownership. (Like mowing your doggone front lawn, for Pete’s sake!) Since lenders already know how to finance the modest acquisition costs of mobile homes or manufactured housing units, this proposal for co-housing featuring the potential for portable dwellings is not impossibly novel or threatening.
I’m going to post in the next few months about alternative forms of co-housing that turn away from fee title ownership divided among the dwellers on a parcel. Some may involve renting land, but others will entail just paying a “parking fee,” with no land ownership incidents or burdens other than those a person voluntarily undertakes. Of course, a paradigm shift will require one to cease thinking of home ownership as a lucrative, or at least steadily appreciating, investment vehicle. This transformation can be achieved, as Sugrue implies:
“Some countries—such as Spain and Italy—have higher rates of home ownership than the U.S., but there, homes are often purchased with the support of extended families and are places to settle for the long term, not to flip to eager buyers or trade up for a McMansion. In France, Germany, and Switzerland, renting is more common than purchasing. There, most people invest their earnings in the stock market or squirrel it away in savings accounts. In those countries, whether you are a renter or an owner, houses have use value, not exchange value.”
Hmmm. Use value - what a concept. France, Germany and Switzerland have fairly high living standards (and by law, grant their workers longer annual leaves than workers in the U.S.); these are not third world countries in their industrial capacities. So perhaps Americans might consider as a society new forms of owning a “piece of the rock” without citizens having their credit standings stoned to pieces. Stay tuned, readers.
-MNW
Subscribe to:
Posts (Atom)