Morton Schapiro: Surveying the Economic Landscape of Higher Education

With college costs rising each year, the economics of higher education is a crucial topic for study. And that’s exactly the area of expertise for Northwestern’s new president, Morton Schapiro, who is also a faculty member in the School of Education and Social Policy.

During his visit to campus in the spring, Northwestern president Morton Schapiro met with student leaders. An expert on the economics of higher education, Schapiro says the recession hits students at both public and private colleges.
During his visit to campus in the spring, Northwestern president Morton Schapiro met with student leaders. An expert on the economics of higher education, Schapiro says the recession hits students at both public and private colleges.
PHOTO BY BILL ARSENAULT


How is the recession affecting today’s college students? What are the greatest economic problems facing higher education today? What are the trends in financial aid and the best ways to improve access to college?

These are some of the questions Schapiro addresses as an economist with a specialty in the statistical analysis of public policy issues related to higher education. While he sees the recession creating “increased vulnerability” for today’s college students, he also envisions an array of solutions to critical economic problems in higher education, including how to increase access to college for low-income students.

Recession roadblocks
The current economic downturn sets up roadblocks for students at both public and private colleges, he finds. The problem at public universities is that they have been getting a decreasing amount of state budgets. Because the recession has been devastating to state finances, the 78 percent of college students who attend public universities feel the impact strongly in various ways, Schapiro explains. These range from having greater difficulty graduating because of limits on course offerings to being less able to afford tuition. “From a public policy point of view, it’s really unfortunate — I worry a lot about this,” he says.

For private institutions, the impact of the recession depends largely on the school’s endowment. “The vast majority of private schools are ‘need-aware’ or don’t fully meet need, and in a bad recession the number that are ‘need-blind’ will shrink,” says Schapiro, referring to schools that take students’ ability to pay into consideration in admission decisions as need-aware and schools that do not as need-blind.

Only a small number of private school students are at schools that won’t have to pull back, according to Schapiro. The end result is a squeeze on students in tight financial circumstances at a time when financial need is soaring. “What happens in a recession is that the privates become more need-aware, … and really talented low-income students’ opportunities become smaller and smaller,” he summarizes.

Still, it’s unfair to expect colleges and universities to fully meet financial need unless the schools have the resources, according to Schapiro. “When times get tough, you test your principles,” he notes, explaining how private schools grapple with many challenges and competing demands. However, “you can’t be held accountable for what you can’t do, and you can’t say colleges ought to be need-blind unless they have the resources to do it.”

If there is a bright side to the gloom of the recession, it’s that setting priorities in tough times helps an institution to determine what makes it special, Schapiro says. As universities prioritize, affordability is weighed against all the other attributes that distinguish a university — from the quality of the dorms to the size of the classes.

Top two economic challenges
Whether economic times are tough or not, the greatest problems facing higher education continue to be access and affordability, says Schapiro, adding, “although we do a much better job than most people give us credit for.” Still, he cites statistics showing that too many students fall through the system by dropping out of high school, enrolling in the wrong school or floundering at the right school.

Access and affordability are now the most critical economic issues for higher education, according to Schapiro, an economist who has researched topics ranging from financial aid to ethics. During an economic downturn, supporting the goal of mobility for the most talented students regardless of income becomes harder, he says.
Access and affordability are now the most critical economic issues for higher education, according to Schapiro, an economist who has researched topics ranging from financial aid to ethics. During an economic downturn, supporting the goal of mobility for the most talented students regardless of income becomes harder, he says.
PHOTO BY ANDREW CAMPBELL


One factor behind the problem of college access is lack of preparation for college. “There are many more students who would do better if there were more investment in K–12,” he asserts. Another factor is that historically American education has not been an instrument of mobility: “It should be a force towards equalization, not a force toward stratification,” he says.

“Being the source of mobility for the most talented students regardless of income is the main challenge. With the economic downturn, it becomes harder for institutions to support that worthy goal.”

As a solution to the problem of college access, focusing federal aid on low-income students is strongly supported by the research data. The current practice of directing most federal aid to needy and academically deserving students is good policy, Schapiro maintains in his book College Success.

Over the years he and co-author Michael McPherson have extensively analyzed trends in financial aid policies and their effects. They find that cost influences whether low-income students go to college while it influences where, not whether, middle-income students go to college. “‘Whether’ matters heavily for people at the bottom half of the American income distribution. If policy doesn’t support serious discounts on the sticker price, they’re not going anywhere,” Schapiro says.

Because institutions are trying to prepare students to succeed in today’s complex and diverse world, it’s in the institutional interest to provide these discounts. “In this ‘flattened world,’ as Thomas Friedman describes in his book, you really have to expose people to difference,” says Schapiro, who emphasizes that universities must be engines of mobility rather than bastions of privilege. In the long run, what’s best for students is best for institutions of higher education, he explains.

Accordingly, the tax deductions that universities receive carry with them the responsibility to act in the public interest. “Not only is education better as a result, but we’re also fulfilling our public mission.”

Research revelations
To attain the goal of improving college access, research shows that federal Pell grants supply “more bang for the buck” than anything else, says Schapiro, who appreciates President Obama’s support for increased funding of these need-based grants. He credits the research of Northwestern economics professor Charles Manski with demonstrating the enormous impact of these federal grants for low-income students.

Beyond Pell grants, research by Schapiro and others shows the value of a range of different measures. Especially effective tactics include simplifying financial aid forms and starting early in the school years to prepare students for college admission. In College Access and College Success, Schapiro and McPherson represent the most effective ways of getting people into college and getting them through successfully.

The co-authors have researched and written on many subjects related to the economics of higher education. Their topics have ranged from productivity to merit aid, tenure to outcome measures, indirect cost recovery to what makes people get PhDs. The latest topic of interest for Schapiro is the intersection of economics and ethics. “How do you do what’s right and what makes sense economically?” he asks.

One of the studies Schapiro sees as especially enlightening is Melissa Roderick’s research on Chicago Public School students, which examines why minority students seldom realize their goal of completing college. It concludes that a high percentage of students go to the wrong college because they fail to stretch enough. According to the study, only 22 percent of Chicago Public Schools students who are eligible for a selective college actually attend one.

“The probability of getting a bachelor’s degree depends critically on where you go,” Schapiro explains. “Going to the optimal school where you get challenged puts you on the path to success.” Peer effects matter, and at a well-resourced school students have the advantage of top peers, along with advising, counseling and other services students need, especially students from vulnerable backgrounds, he notes.

Now president at Northwestern after nine years as president of Williams College, Schapiro is proud that Northwestern, like Williams, is one of only 28 schools in the nation certified by the government as need-blind for U.S. students. He has served as president of the 568 Presidents’ Group, whose member schools are need-blind and do not consider students’ financial circumstances during the admissions process. This group is named after Section 568 of the Improving American Schools Act, which addresses policies regarding need-based financial aid.

Schapiro says, “Need-blind is extraordinarily important, as is giving generous financial aid packages. I’m happy to continue that.” As the economics of higher education remains an issue of import, Northwestern has the assurance of having not only a tradition of fully meeting financial need but also an expert in higher education economics at its helm.

By Marilyn Sherman