April 20, 2024

Economix Blog: Jeffrey Selingo on Curing the College Dropout Syndrome

Book Chat

Talking with authors about their work.

Jeffrey Selingo, the former editor of The Chronicle of Higher Education and currently an editor at large there, is the author of a new book, “College (Un)Bound.” In it, he argues that the higher-education system is both vital to the American economy and “broken.” My exchange with him, edited slightly, follows.

You start your book by telling the story of a young woman named Samantha Dietz and describing the widespread phenomenon of enrolling in college without graduating. You write: “Only slightly more than 50 percent of American students who enter college leave with a bachelor’s degree. Among wealthy countries, only Italy ranks lower.” Why does the United States do a worse job of getting people through college than enrolling them in it?

Jeffrey Selingo, author of “College (Un)Bound.”Jay Premack Photography Jeffrey Selingo, author of “College (Un)Bound.”

College is one of the biggest financial investments we make in our lifetime, yet many families largely make their decision based on emotion. Prospective students start touring colleges in high school, well before they know how much a particular school might actually cost them. They are distracted by the bells and whistles on campus tours, fall in love with a campus and fail to ask the right questions. (Tools like collegerealitycheck.com and the Obama administration’s College Scorecard can help.)

So many students end up poorly matching to their campus. That’s why a third of students now transfer before earning a degree, and many unfortunately simply drop out.

At the same time, we have this fascination with the bachelor’s degree in the United States, and we think everyone needs to earn one at the same point in their lifetime, enrolling at 18 years old. The economy demands that more students have an education after high school, but not everyone is ready for college at 18. Many of them end up in college because we have few maturing alternatives after high school, whether it’s national service, apprenticeships or structured “gap year” experiences.

Finally, campus culture and money play a role. If you go to a college with a low graduation rate, your peers have an impact on your thinking: if no one else is graduating in four years, why should I? Others drop out because their financial situation changes while they are there and they can no longer afford it.

There is an economic reason we have a fascination with the bachelor’s degree, isn’t there? It brings a huge economic return. The jobless rate for four-year college grads is less than 4 percent, and the wage premium is very large — much larger than it once was. As you write, “By almost every measure, college graduates lead healthier and longer lives, have better working conditions, have healthier children who perform better in school, have more interest in art and reading, speak and write more clearly, have a greater acceptance of differences in people and are more civically active.”

How would you respond to the argument that everyone should aspire to a bachelor’s degree? Not everyone will make it. Many would need to start at a community college or with remedial work. But I can’t help but notice that most of the people arguing that “college isn’t for everyone” insist that their own kids go.

I’m not arguing that you shouldn’t aspire to a bachelor’s degree because, as you note, it does bring great economic returns. But why does it need to happen for everyone at 18?

Jacket design by Archie Ferguson; jacket art by Alessandroiryna/iStock photon

For some, a two-year degree might be more appropriate at 18. And recent studies of wage data of college graduates in Virginia, Tennessee and a few other states show that the wage returns of technical two-year degrees are greater than many bachelor’s degrees in the first year after college.

Someone who isn’t ready for a four-year college at 18 and ends up dropping out is in some ways worse off than a high-school graduate who never went to college at all. Sure, college dropouts have some credits, but still no degree, and it’s likely that they have debt.

Let’s think of extending the period for a bachelor’s to be sure more students succeed in getting one. We don’t need alternatives to the bachelor’s degree, just more constructive detours on the pathway to college for those who are not ready at 18.

That’s a fascinating way of thinking about it: different paths, more than a different destination. (And whatever that study of Tennessee and Virginia shows about the first year after college, I have yet to see evidence that any alternative beats the long-term returns of a bachelor’s degree.)

Given how problematic it is for people to have college debt without a college degree — as many people unfortunately do — what do you think federal and state policy makers should do to change colleges with low graduation rates?

Well, the first thing federal and state policy makers can do is come up with a better way to measure graduation rates. The current rate counts only first-time students who enroll in the fall and complete degrees in “150 percent of normal time” – six years, for students seeking bachelor’s degrees. It doesn’t include students who transfer to other colleges and then graduate or those who transfer in and graduate. By one estimate, it excludes up to 50 percent of enrolled students.

A national student record database would allow policy makers to track students as they move among colleges. Once we have a better measure, then colleges that do well in actually graduating students should be rewarded, especially for those students who are not expected to complete college. For example, colleges that graduate Pell Grant recipients above the national average or students who are first in their family to go to college should get access to more federal aid for those students.

And all colleges need more skin in the student-loan game. Students are being saddled with higher amounts of debt, and the schools have little responsibility as they encourage more and more families to take on more debt. Right now, the only punishment is that colleges with high default rates are thrown out of the federal program. But that rarely happens. Colleges need to put some of their own dollars at risk if they are asking students and their parents to take on loans above certain amounts.

The last major section of your book is called “The Future.” So let me ask you to look ahead and predict one significant way in which a typical campus experience at a four-year college will be significantly different in 2023 than it is in 2013.

The biggest difference will be the injection of technology into the curriculum, with more courses taught in hybrid format, meaning a mix of face to face and online. That will allow for a more personalized experience for students so they can learn at their own pace and break the traditional idea of the academic calendar where everyone needs to start in September and end in May.

Article source: http://economix.blogs.nytimes.com/2013/05/31/how-to-cure-the-college-dropout-syndrome/?partner=rss&emc=rss

Corner Office: LivePerson’s Chief, on Removing Organizational Walls

Q. What were some early leadership lessons for you?

A. I got out of college in 1990. We were in the middle of a recession, and I got a job at a trading company. I was there for six months, and they fired me because they needed to lay people off. I remember they took me to lunch, and they asked me what I took away from the experience. And I said, “I’ll never work for anybody again.”

And then I started my first company. I put $50,000 on credit cards, and I had the idea of bringing interactive kiosks with touch screens to college campuses and selling advertising on them. It was working, but it was a struggle. And the Internet spread quickly, and I had to shut the company down. I lost everything. It was a humbling experience, and I ended up coming to New York. I rented about 400 or 500 square feet from a guy who was making T-shirts down in TriBeCa.

This was the point where everything changed. I was 27, I failed and I was pretty down, and I went to see a therapist named Frank Maurio. He didn’t charge me because he knew I didn’t have money. For two years he worked with me and changed how I perceive the world. And when I took LivePerson public on April 7, 2000, I gave him some shares in the company and thanked him.

Q. What lessons did he teach you?

A. There were a couple of things. One is that, usually, nothing is as bad as it seems. As entrepreneurs, we tend to react to a situation. So if you panic and you bring that emotion, it’ll wear you down. So it was really important to just be centered during the day. The second thing is surrounding yourself with the right people, but I think he changed my understanding of who the right people are. Entrepreneurs in particular want high control. It can be wonderful, and it can be disastrous. He taught me that you don’t want to have people you can control, but you can still control your future and have people who can help you build the company.

The other one is that you have to evolve and change at all times. We have a tendency to be lazy, especially when things are good. So the concept was, you should be in a constant state of evolution as a person, because if you stop, you will end up having to leave, or what entrepreneurs tend to do is they basically self-destruct and hurt the company. They start making bad deals. They hire bad people.

Q. What are lessons you’ve learned from running LivePerson?

A. The last two years have been a real change. We have approximately $160 million in revenue, but when we hit about $100 million in revenue and 500 employees, I could see things evolving in the company that could really hurt us in the long term. We started to become bureaucratic a little bit. You start to add middle management layers. So this dead-weight layer comes in, and their job is just to make sure everyone does their stuff. And then what happens is you become very siloed in many ways, and the managers want control. Then you get infighting, and people are more focused on getting offices and titles, because they ask, “It’s very hierarchical here, so how do I get up the chain?”

Q. Was there a moment when you really felt that culture taking hold?

A. I remember one moment. We had the cubicles in the middle and offices on the outside, and I walked past a small office and noticed two people shoved inside. And I asked them: “Why are you guys shoving yourselves in an office? You were just in cubes out here.” And they said, “Well, we’re directors now, and directors get offices.”

I’d never believed in culture and core values up to that point. But I really became very reflective because I wasn’t so happy with what was happening with the company. I’d seen things that had made me realize we were becoming very traditional. I started to spend more time with a couple other companies, and it made me realize, as a founder, that if I left the company, it could be a totally different place because of the next set of leaders. And that’s what kills companies. So I thought that values were the way to have a long-term sustainable company. I finally said, “It’s time to start making the change in the company.” I came in one day and asked all the leaders to move out of their offices, and that was the start of a painful process of change.

Article source: http://www.nytimes.com/2013/02/10/business/livepersons-chief-on-removing-organizational-walls.html?partner=rss&emc=rss

Bucks Blog: How Rebalancing Takes Emotion Out of Investing

Carl Richards

Carl Richards is a certified financial planner in Park City, Utah. His sketches are archived here on the Bucks blog and on his personal Web site, BehaviorGap.com.

The idea behind rebalancing is that you periodically reset your portfolio back to the original split between stocks, bonds and other investments.

Most people seem to follow two rebalancing philosophies: do it according to the calendar, say once a year, or do it when you reach a certain trigger point, when one portion of your portfolio grows or shrinks outside of a predetermined range.

Here’s an example of how rebalancing might work:

Let’s say you sat down in 2006 and decided that based on your goals, the right portfolio for you was 50 percent in stocks and 50 percent in bonds (high quality, short-term bonds). As part of that process, let’s also assume that you committed to rebalancing your portfolio back to that original 50/50 allocation whenever your portfolio balance strayed too far from it.

At 50/50, your portfolio allocation represented the amount of risk that you felt you needed in order to achieve the return necessary to achieve your long-term goals. Thirty percent in stocks would be too little to meet your goals, but 70 percent in stocks represented more risk than you felt you could take.

Fast forward a few years to the meltdown of 2008-9. If you went into 2008 with 50 percent of your money in stocks and 50 percent in bonds, then as the market dropped, the composition of your portfolio would have changed from the original 50/50 allocation to something different. We’ll also assume that nothing else in your life changed and your goals remained the same. The only thing that changed was the market.

For our example, let’s assume that you’re using a trigger point to rebalance. Since it’s pretty common to rebalance when your portfolio allocation strays more than five percentage points off of your target, when the market fell in 2008 you would have rebalanced when your portfolio hit 55 percent bonds an 45 percent stocks. That would have meant selling bonds to buy more stocks.

Rebalancing is not a scientific way to time the market, nor is it a magic bullet to increase your returns. It is true that disciplined rebalancing could result in slightly higher returns, but it could also lead to slightly lower returns depending on what the market does. Rebalancing also does not automatically decrease your investment risk, but again, depending on market conditions, it may slightly increase or slightly decrease your risk over shorter periods of time.

While there is plenty of debate about how to rebalance and the pros and cons of rebalancing, there is one clear benefit to employing a disciplined rebalancing strategy: it prevents you from making the classic behavioral mistake of buying high and selling low. Warren Buffett has said that the key to investment success is to be greedy when everyone else is fearful and fearful when everyone else is greedy. As we all know that is super hard to do.

It was really hard to buy in March 2009. It was also hard to get yourself to sell in December 1999 or October 2007. But if you had committed to rebalance that is exactly what you would have done. Not because you were a market whiz, and not because you knew what the market was going to do. Instead you rebalanced because it made sense to stick with your plan. Rebalancing is the only way I know of to give yourself the highest likelihood of buying low and selling high in a disciplined, unemotional way.

Rebalancing reminds me a bit of the simple checklists used by doctors. I remember going in for a routine surgery that was going to be done on the left side of my body. When I went in for surgery, I met with the doctor who knew exactly what side of my body she was operating on, but as part of her checklist, she asked me again during pre-op. After she left, no fewer than four different people came in with my chart and asked me which side they were operating on.

Each time I answered the left side, but I became increasingly curious about why they were asking me so many times. Then, as I was on the operating table and before I was put under, the doctor who I had just seen the day before asked me which side she was operating on and then handed me a Sharpie and asked me to mark the side.

When I saw her a few days later as part of my post-op visit, I asked her why they had followed such a procedure. She told me that it was a simple checklist to keep them from doing something really stupid, like operating on the wrong side. It took them an extra minute or two and a Sharpie to avoid what would obviously be a huge mistake.

And that’s the real magic of of rebalancing; it becomes our investment Sharpie.

Article source: http://feeds.nytimes.com/click.phdo?i=a4654dd47286f9ca0a8b0370bba3a14c