Monday, January 2, 2012

Note to students - economics laws apply, even in the Inland Empire

College is the time when many people transition into what is known as "the real world" - one in which you have to pay bills, and in which bad things happen if you don't.

But the college experience itself is giving many students a hard lesson in the intricacies of economics.

The Huffington Post recently ran a report on for-profit colleges and the nursing profession, and focused some of its story on two Inland Empire educational institutions - Riverside Community College, a public institution, and Ontario's Everest College, a private one.

The opening of the article sets the stage:

ONTARIO, Calif. -- Just after she started working for an ambulance company in this suburban enclave east of Los Angeles, Cierra Nelson came to admire the quick decision making and street smarts of the nurses she met on runs to local hospitals. She soon opted to pursue a nursing degree, settling on a low-cost, two-year program at a nearby community college that has an excellent job placement record.

But despite her efforts to complete the coursework in the ensuing four years, Nelson is still not a nurse. California's budget cuts have forced the state's community college system to scale back the availability of crucial science classes. Nelson found herself repeatedly turned away from the oversubscribed courses required for her degree.

Frustrated and seeking an alternative, she took out more than $50,000 in student loans to enroll last winter in a nursing program at Everest College, one of many for-profit institutions that have sprung up in the area amid massive cutbacks in public funding for higher education.

Nelson's experience is not unique. I know of a college student who spent last year at an out-of-state university. The student decided to come home and take courses at Rancho Cucamonga's Chaffey College - but couldn't get any courses. Next year, he's heading back out of state.

Many local students are facing this decision - pay more money by going somewhere where you can get courses, or staying in California's community college system and not getting the courses for years, if ever?

Some condemn the private institutions (Everest, University of Phoenix, DeVry, etc.) for several reasons. First, their students do not pass tests such as the nursing tests as much as public college students.

More than 90 percent of the nursing students at nearby community colleges last year passed state licensing exams, which are required to practice in California. Fewer than 70 percent of Everest students passed the exams, registering the lowest success rate of all nursing programs in the state.

Second, their more expensive tuition costs affect the use of Federal monies:

The Obama administration has significantly boosted funding for Pell Grants, which are available to low-income students. Over the last three years of the program, the federal government has more than doubled spending on Pell grants, budgeting $20 billion more this year than in the 2007-08 school year. For-profit colleges have captured an outsized share of this pool -- roughly 25 percent -- despite educating only 12 percent of college students nationwide, according to the most recent federal data.

Third, this translates into less money for public colleges:

Had the $7.5 billion that for-profit institutions received via Pell Grants during the 2009-2010 school year gone instead to fund community college systems nationwide, that money could have created capacity for an additional 629,000 community college students, The Huffington Post calculated, using available estimates for the average expenditure per student. That would represent a 20 percent increase in the number of full-time community college students currently enrolled nationwide.

Yet, anyone who has a basic understanding of economics would realize that this scenario is easily predictable. When a market good - in this case, a public community college education - is offered for less than the market rate, there will be scarcities of the good, and competitors will enter the market to meet the demand. And strange behaviors will result to provide economic benefit. One community college student uses various tactics to get registered for required courses:

Izaak Ramirez, a biochemistry major from Riverside, remembers stocking his first semester schedule with loads of unneeded electives, just to get courses under his belt. Having more credits means higher priority registration the next time....

As a science major, Ramirez has among the toughest times getting the courses he needs. For many of the classes, which require lab components, there are only about 40 seats for hundreds trying to get in. He eventually decided to join student government, partially to get involved, but also because it would move him up the chain for priority registration.

Even the community college administrators, such realize that the days of rock-bottom tuition may need to end:

Gray said that eliminating costs for students was an admirable goal decades ago, but no longer makes sense due to disinvestment in the system. He advocates raising fees to a level more in line with other states, or perhaps differentiating fees so that higher-cost programs, such as nursing, cost more than lecture classes like English or history.

However, Gray does not have the power to set tuition for Riverside Community College. That power rests several hundred miles away, in Sacramento. And any talk of a tuition increase results in hundreds of students protesting, so politicians are leery to raise fees - unintentionally resulting in the promotion of the cause of the private institutions.

Once you start analyzing the various players in the game and their economic interests, you can paint a pretty fascinating picture. The students who have classes. The students who don't have classes. The faculty members at public colleges. The faculty members at private colleges. The administrators at both types of institutions. The state politicians. The federal politicians. Other entities who are affected, such as the hospitals that want to hire nurses, the prison guards that want to keep their jobs, and the taxpayers.

So even when they can't get courses, California students are getting a real education.

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