student return on investment

The Rise of the Informed Consumer and Student Return on Investment

Todd Bloom, Ph.D.

July 17, 2013

Welcome & OverviewThe 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

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The Higher Education Marketplace

Macro Factors

Demography

Fewer high school graduates nationally

Demographic shifts having different impacts in different parts of the country

Greater racial and ethnic diversity

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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

Student Demographics

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National Center for Education Statistics. (2013). Projections of Education Statistics to 2021. Washington DC: National Center for Education Statistics.

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21.6 millionundergrads 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?


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.


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

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Overview of Students’ College Attendance Decisions

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“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…

College Attendance Decisions

Other important factors in a student’s decision to enroll, such as:

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The decisions of peersFamily expectations

theop.princeton.edu/reports/wp/Fletcher%20THEOP.pdf


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http://www.gallup.com/poll/163268/americans-say-graduates-jobs-status-key-college-choice.aspx

0%

10%

20%

30%

40%

50%

60%

41%

16%

37%32%

22%

40%43%

14%

40%

51%

13%

33%

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)


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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?*

No amount of tuition is affordable

<$5,000 $5,000 - <$10,000

$10,000 - <$20,000

$20,000 - <$30,000

$30,000+0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

2%

15%

18%

26%

10%

5%3%

20%

9%

17%

8%

3%1%

17%

28% 27%

11%

3%1%

7%

21%

39%

12%

9%

All respondents<$3,000/mo.$3,000-$7,499/mo.>$7,500/mo.

*Responses were open-ended and coded into the ranges

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Generally speaking, the higher the tuition at a college or university, the better the quality of the education.

5 4 3 2 1Strongly agree Strongly disagree

10% 13% 29% 20% 25%


A Closer Look at Choices and the Choice Process

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Students have more choices than ever…

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TRADE SCHOOL?FOR-PROFIT?

LIBERAL ARTS?

ONLINE? BLENDED LEARNING?

MOOC?

IN-STATE?OUT-OF-STATE?

FOUR-YEAR?TWO-YEAR?

PUBLIC?PRIVATE?

Can people have too much choice?

Study #1: Jam StudyResearchers 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

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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.


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.

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Study #3: Chocolate StudyCustomers 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.

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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.

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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.

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www.nytimes.com/2010/02/27/your-money/27shortcuts.html?_r=0

A Closer Look at Information

Where do students turn for information about college? People

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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/

Where do students turn for information about college? Tools

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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

Another perspective (Tim Ranzetta)

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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

Default Rate – Not Grad Rate?

25 http://www.educationsector.org/sites/default/files/publications/Defaults_CYCT-F_JULY.pdf

Student Return on Investment Framework

Assessing Return on Investment

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What information should students know when making decisions about college?


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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


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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

SROI

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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.

Thank You!

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Todd BloomChief Academic OfficerHobsons [email protected](952) 807-5345

@Todd_Bloom

mailto:[email protected]


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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?


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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?


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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?


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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?


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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?


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When making decisions about attending college…

What other factors do students consider?

Partner, Discuss, Share

student return on investment

Education

digest of education

national center

washington dc

economic decisions

undergraduate college

important factors

higher ed today

types of families