Parents Finding New Ways to Pay for College

The cost of education has been hitting national airways for some time. Tuition and boarding costs are rising and parents are trying to find new ways of paying for their kid’s education. Changes have occurred over the past decade indicating additional reliance on tax benefits and grants. A 2013 report entitled Trends in Higher Education by the College Advocacy and Policy Board helps highlight how parents and students are paying for education and making ends meet. 

The report outlines the results of a study analyzing trends of how parents and students are paying for college. An average of 2002/03 fees and tuition for full-time students were $8,760 and rose to $11,960 in 2012/2013 marking a 37% increase. The addition of room and board raised the cost from $16,480 to $21,030 respectively.

In 2012/1013 tax benefits and grants covered 36% of total charges, 26% were covered from student loans, 38% of the costs were covered from other sources. Over the past decade their out-of-pocket costs raised $1,330 and loans covered an additional 2% of costs.  The use of federal unsubsidized loans increased while the use of private loans decreased.

The cost of public four-year public colleges increased dramatically over the past decade. With 40% of students enrolling in public four-year colleges the costs of tuition and fees raised $5,210 in 2002/2003 to $8,660 in 2012/2013 marking a 66% increase. Room and board costs increased 45% over this period. The report indicated that public four-year colleges had the largest increase in cost when compared to 2-year colleges, private colleges and for-profit colleges.  

The study summarizes its findings by indicating that parents and students are relying more heavily on grant aid and tax benefits to pay for most of their college expenses when compared to a decade ago.  The use of loans increased slightly but was not the main source of funding. By understanding the trends it helps to make adjustments to ensure that college education is within affordable reach for most students. It is this access to higher education and the use of that knowledge in beneficial ways that help society create new knowledge for advancement and growth. 

You may Read the Report HERE

The Benefits of Executive Compensation Metrics

Much has been written about executive pay and there appears to be a natural distrust of rapid growth in compensation during a recessive period of history. Some may argue that executive pay has risen too far in recent decades while others argue that the pay is warranted based upon performance. We can be sure that pay has risen substantially over the past few decades and this is not necessarily a bad thing as long as the performance metrics are accurate and reflective of actual performance. How that performance is measured becomes a key concern.

Like employees, executives need motivation and incentives to perform at their optimal level. However, such performance should be based on their actual contribution to the organization versus a quick in and out strategy. Improper metrics can lead to high pay and low performance situations that damage the financial performance of an organization and the employ-ability of those who work for them.

Because there is a natural distrust of higher income individuals it is beneficial to use transparency in executive compensation to reduce this resentment. To be transparent helps people understand how and why the pay was earned and the overall criteria that must be fulfilled to earn it. People who generally understand why and how people earn certain income feel a greater sense of equity and less frustration. Few would have a problem if the executive left a firm stronger than when he or she was hired.

Some tips on executive pay have been offered (Research and Markets, 2010):

-Ensure that pay is linked to long-term firm value.
-Compensation should not encourage high risk decisions nor limit risk-taking when warranted.
-Performance measures should reflect quality and quantity of earnings.
-Choose proper criteria for the metrics.
-Understand the benefits and detractors of stock-based incentive pay.

Sankey (2011) states that including a comparative analysis of peer groups by size, revenue, industry, geography and other factors would help in balancing out compensation. Using a battery of compensation based upon stock value, short and long term revenue streams, debt ratios, comparative firm performance, and industry analysis helps round out the performance metrics. The problem associated with using multiple metrics is its complexity.

Over reliance on stocks in the analysis fosters short-term thinking. For example, if a firm runs into problems the first decision an executive may make is to cut overhead as quickly as possible. Even though this may be necessary to stabilize a firm, waste and inefficiency should have been removed from a well-run organization long before the crisis developed. Operational improvements should have been a continuous process and embedded within the workplace expectations.

The other problem is that dramatic cost cutting should occur in the case of realignment to market realities. It is not a strong solution in and of itself. Cost cutting when necessary, operational improvements, and then building of new revenue streams is a stronger marker of proactive thinking. Shareholders should be rewarding long-term thinking and proactive problem solving. An executive that can stay ahead of the curve and can limit the negative influences of market difficulties is certainly well worth his or her pay.

It is possible to use the comparative industry analysis for base salary development. Incentives are offered for improvements in stock performance, revenue stream generation, debt ratio improvement, and overall firm growth when compared to other companies in the industry. A battery is more difficult to develop but offers a balanced approach to compensation based a wider analysis. Yet using a strong analysis of performance will help ensure that pay reflects performance and creates greater levels of trust that decisions being made are truly in the best interest of the organization and its stakeholders.

Research and markets offers report: The new standards: Methods for linking business performance and executive incentive pay. (2010). Manufacturing Close - Up, Retrieved from http://search.proquest.com/docview/746331985?accountid=35812

Sankey, D. (2011, Aug 18). Executive pay under the microscope; corporations have become more open about salaries. Prince George Citizen. Retrieved from http://search.proquest.com/docview/884442609?accountid=35812

Can NASA's Vegetation Map Encourage Efficient Legislation?

The world’s vegetation is beneficial for sustaining life, growing food, and encouraging diversity of animal species. With 75% of the world covered in water and 25% in vegetation a total of 25% of the earth is relatively barren of sustainable plant life. You can see in the video how vegetation changes throughout a particular year to have a better perspective of the cycles of the seasons. The possibilities for proper analysis of the benefits and detractors of certain legislative actions is enhanced. 

The data was collected using Visible-Infrared Imager/Radiometer Suite (VIRS) on a NASA satellite that uses reflections of light to determine overall vegetation. The results will allow for monitoring as part of the Herbal Earth project and will be used to index vegetation overtime. The use of satellites will allow a more global perspective on what areas are suffering and what areas are doing well.

 There are obvious advantages to the use of such technology that include forest fire risk monitoring, climate change monitoring, weather pattern prediction, and vegetation loss risk. Where obvious changes and vegetation stress occur legislation may be beneficial and where vegetation is at an optimal level a reduction in legislation may be beneficial to encourage economic growth. The difference is that it can be monitored on a global scale for recent discussions on climate change and problems can be pinpointed.

To make effective legislation often requires a better analysis of the data as it is being presented. This technology now affords a greater understanding of climate change on a global scale and can further better approaches that put environmental laws where they are most beneficial without creating undue restrictions on areas that are growing fine. The protection of species, climate, and diversity can be more pinpointed and effective. Areas of concern can be monitored to see the actual benefit or detractors of certain legislative decisions that allows for the finding of a balance between economic and environmental needs.  

Other Reading:

The Verge

Daily Mail

Washington Post

Traditional Colleges Collaborate for Online Education

Traditional colleges are seeking ways to develop their own online programs in an effort to cut costs and create more relevant programs that fit the lifestyles of their students. A consortium of universities called the Committee of Institutional Cooperation consists of 13 research colleges made up of the big ten universities in the U.S. It has met and presented a positional paper on possible efforts to develop their own online platforms. 

Some of the reasons beyond the economic need and decreased state funding is that they purchase products from third party vendors. There is a feeling that they are not in control of the platform and that they could develop something that better suits their needs. The decision to collaborate has not been finalized but they are moving in that direction. 

Their vision for online collaboration includes the following:

1.) Majority of members indicate that collaborative online learning would be of benefit to them.

2.) The CourseShare program where universities share courses that do not have high student attendance rates such as rare languages has significant benefits.

3.) To pursue a bigger and bolder online strategy that suits the needs of their population.

The need to follow non-traditional universities in online endeavors and extend opportunities has become apparent. The positional paper indicates that the U.S. ranks 13^th out of the G20 in higher education and the failure of traditional colleges to keep pace has become concerning. The paper also indicates that in the future the fastest growing population will be the non-traditional students that traditional universities currently do not support well. 

The members recognize that there are advantages and disadvantages to online education just the same as there is within traditional face-to-face instruction. The largest factors in educational value variances are centered in the capabilities of the students. They cite student learning outcomes, motivation, engagement, satisfaction, confidence, social interaction, etc… as some of the biggest predictors of outcomes. 

The embracing of online education has been time in coming. New technologies are often considered disruptive and thwarted by established positions. Yet as these technologies develop they become adapted into larger organization and take on a new "normal". This normal lends perceived credibility to programs that were once deemed of less educational value. Research and experience has highlighted that different is not worse. With more experience comes better programs and collaborative learning processes.

You may read the CIC paper HERE

Focusing on Selling Experiences versus Products in the New Economy

Service dominated logic or S-D Logic may be a better viewpoint to train managers and teach college students about the nature of modern business. Considering how much society has changed over the past few decades the movement from tangible goods to service offerings creates a fundamental shift in the economic system. This fundamental shift should be incorporated into training and education so that decision-makers can master new economic conditions.

A total of 75% of all business revenue is currently service oriented while 80% of the GNP is service related (Ford & Bowen, 2008). That is a huge number! With this fundamental change from agricultural, products, and commodities to service oriented offerings it is necessary to train managers on the new S-D vantage point of seeing and perceiving their operations in a new light. Such an approach will help decision makers view organizations and problems from a perspective that actually reflects current economic activities.

The differences in technique are significant. According to Vargo and Lusch (2004), a shift from products to intangibles, specialized skills, knowledge and processes requires companies to focus more on marketing and integrate of operational processes. If an organization is selling experiences (i.e. service) then their approach to management would be completely different and decisions would focus closely on enhancing that perceived value.

The selling of experiences occurs whenever a company uses services as the stage and products as the prop (Pine & Gilmore, 1999). Where companies once showcased their products and earned revenue they are now making the majority of their revenue from the services attached to those products. There is a fundamental shift in thinking that focuses on the intangible but extremely important psychological experiences of services while less on the give market value of products.

Let us put this to an example. An organization sells an electric toothbrush and earns a few dollars of revenue. Under traditional economic models the sale is made when the transaction is completed. Yet in a service economy it is possible to sell the experience of being beautiful with white teeth. The selling of the toothbrush may be part of a beauty makeover service that transforms a person’s image and comes with teeth whitening, cosmetics, hair products and other related offerings. The products are secondary to the service.

Changing the perspective creates greater opportunities to maximize revenue generation streams. The economic approach adjusts to better reflect modern economic conditions. Operations become more of a support and enhancer to experiences than a logistical path of selling products. The very way people are trained, the type of systems used, and the marketing mix adjust to enhance the experiences and positive feelings of customers.

Tips:

-View experiences as service.

-Sell products that enhance that experience.

-Adjust management styles, organizational structure, and operations to enhance experiences of customers.

-Focus on the total customer experience.

-Raise the perceived value of products with service.

-Integrate operations into the marketing strategy.

Ford, R. & Bowen, D. (2008). A service-dominant logic for management education: its time. Academy of Management Learning and Education, 7 (2).

Pine, B. & Gilmore, J. (1999). The experience economy. Boston, MA: HBS Press.

Vargo, S.  & Lusch, R.(2004). Evolving to a new dominant logic for marketing. Journal of Marketing, 68 (1)