The political and economic worlds are still reeling from last week's election results and frankly they should be. Donald Trump was a candidate remarkably few expected to win and as such most were wholly caught off-guard about what would happen next if he did. Higher education experts were no exception though they can be forgiven somewhat given how little and how vaguely the President-elect spent discussing it.
That the fiction's become reality has pundits and the press scrambling to say something, anything really, that helps put what a Trump presidency means into perspective when it comes to a higher education infrastructure that manages thousands of institutions, millions of students and billions of state and federal taxpayer dollars.
One week later and given all that's been written to this point it's hard to find an angle not covered or prediction not proposed. Thanks Internet.
In general the higher education community's reaction has been visceral and swift and let's be clear, there are certainly issues where whomever ends up running the Department of Education could definitely raise eyebrows like tinkering with Title IX and the Department's Office of Civil Rights as well as unionization efforts and limitations on overtime rules.
On other things though, like taxing endowments, his ideas are just plain silly and it's clear from the ten minutes he famously devoted to colleges and universities over the past 15 months that he probably hasn't given higher education much thought or even sees it as a priority. Where the meat of federal education policy sits - almost $150 billion a year in student aid - his most detailed plan involves piggybacking off of a Democratic student loan repayment plan, which shouldn't necessarily be cause for alarm.
The conventional wisdom is that higher education takes its lead more from Congress in Republican administrations than the Department of Education. It's evident in the dire predictions and worries littering my Twitter feed right now that folks in the know already get this. From deregulation to private sector involvement in student aid to more corporate and vocational education (read: for-profit education), these aren't "Trump-clamations" as much as they're traditional, and very generic, Republican positions.
Presidents and their cabinet secretaries need a receptive Congress to move agendas. For as much disdain as Trump has generated, at least where higher education is concerned it's clear he's only a proxy for the real target. It's the idea that Republicans will now control both houses of Congress in addition to the White House - and that Democrats never saw it coming - that's the real root of chattering class disdain.
An unexpected shove off the cliffFor a decade now, on some level or another Democrats have controlled the public dialogue around higher education. They've set the agenda, pushed the priorities and found the dollars to implement some pretty far-reaching initiatives.
That's a pedestal that comes with a lot of privilege and power, and the longer it's held the more reaching and powerful it becomes. Everything you say or do is news, the press is constantly seeking your views and printing them, keynote conference speeches abound and every CEO and industry leader with a stake or interest in higher education wants to be your friend because having access to the folks who dictate and implement policy matter.
There can also be some pretty long coattails. Advocating or supporting those commanding the narrative get a special seat at the table that gives them similar benefits. They not only get an outsized voice but also the kind of legitimacy that comes with knowing that even if you're wrong, your ideas still matter more because they actually have the chance of becoming actions.
Even if you just believe in the cause or stand to be a direct beneficiary, it's immensely satisfying to know you're lending a voice to potentially real change.
I'm not saying anything new here. Politics is, and has always been, about power and influence. Yet it's also a career path not known for its stability and anybody who's ever made a go of it will tell you that climbing up the perch is a far more enjoyable trip than the climb down. For democrats, the 2016 election wasn't your typical climb-down event though. It was more like a blindsided shove off the top.
Ten years of defining the higher education industry's rules of play and managing the public narrative around what matters is practically a lifetime in politics and up until Tuesday morning nearly everyone was positioning themselves for at least four or possibly even eight more years. Democrats had overseen the dismantling of the bank-based student lending system, implemented massive income-based loan repayment and public service loan forgiveness programs and were on the verge of crushing the for-profit education market. Two years of groundwork had even put the Holy Grail of liberal higher education policy - free public college - actually within reach.
And just like that a veritable cottage industry of political appointees, advocates and activists - some of whom built or made their careers on that agenda - woke up Wednesday morning to the reality that many of the causes they'd worked so hard to advance would instantly become ideas collecting dust on shelves and that policies they'd worked so hard to pass could very likely be de-prioritized, defunded or outright dismantled.
It was like spending years nurturing the home garden of your dreams only to find you'd suddenly been evicted and the new homeowner had already parked a bulldozer out front.
They woke up to the reality that their narrative about what was important to higher education was no longer the one that would dominate newspaper headlines or presidential summits. To add insult to injury, the issues that would be replacing theirs and getting the outsized attention now would be those that they fundamentally opposed or disagreed with.
In the end, Donald Trump's antagonistic campaign style and moral misgivings gave those who fell a clear public target to direct their angst at. Social media, with its penchant for snark and dramatic proclamations, has given them an outsized public forum to grieve.
The words may be coming out as tirades about what's coming but the underlying message is frustration over what won't. It's the price folks pay for inheriting the mantle of being the political minority.
And the wheels on the bus...None of this is an indictment against Democrats or their policies; wave elections happen to both parties and it'd be crazy to think Republicans didn't endure a very similar humbling when President Obama first took office and Democrats held majorities in both chambers of Congress. That there were already signs of dissatisfaction with the incumbent party leading up to the 2008 election and social media hadn't yet evolved to be such a force for expressing opinion probably worked to dampen the response. Still, in that case most would probably agree that folks could see, and plan for, the climb down that Democrats didn't get this time around.
We can't predict what a Trump presidency will mean for higher education though all signs point to a financial and social rethink about institutions' and students' roles and responsibilities in the education process. The only things we can comfortably predict right now is that change is coming and that nobody gets to sit on the perch indefinitely.
Originally posted on Linked IN by: Carlo Salerno
The stunning election of Donald Trump last week left many shocked, saddened and feeling uncertain about the future. It also left the fate of federal education policy unclear. Will he shut down the Department of Education completely? Will he expand charter and private school options? Will he roll back the federal government’s role in the student loan business?
I asked experts and LinkedIn members to weigh in on what Trump’s impending presidency might mean for education––and the economy more broadly. Here’s a roundup of the best responses.
Clued In: Influencer and Times Higher Education editor Chris Parr examines the clues we have so far on Trump’s higher education plans.
K-12 Impact: A school principal in Denver weighs in on what Trump’s victory will mean for public education, including Common Core and school choice.
U.S. Brexit: Wharton Dean Geoffrey Garrett called Trump’s election “Brexit on steroids” and offered insight into the impact his presidency could have on trade and the economy.
Finding a Fix: A marketing director at Willamette University interviews the business school’s dean who has some advice for Trump on how to fix issues in education.
Parental Advice: A columnist and father of three offers tips on how parents should speak to children about the outcome of the election and the importance of education.
Free Speech: A LinkedIn Campus Editor and Cal Poly San Luis Obispo student says Trump’s win shows a lack of freedom of expression on his college campus.
What impact will Trump’s election have on education policy? What does this mean for such issues as college affordability, student debt and school choice? How would you advise him to proceed? Weigh in by writing a post using #ElectionHigherEd
Catch up on the previous education roundup here. #EdInsights
Originally posted on Linked IN by:Maya Pope-Chappell
Can Impact Investors do Good and do Well
(as published in Education Investor October 2016)
Impact investment was a novelty a few years ago, an attempt to manage philanthropic intent within the context of commercial reality. It is viewed by some family investment offices as a means to nurture capital in a self-managed portfolio, enabling a philanthropic mission while avoiding more risk-orientated approaches. But as this class of investment has risen, so have the related challenges.
It would make sense to investigate some of the key themes that this type of capital relies on and/or imposes, based on differing viewpoints. Do impact investors follow traditional investment disciplines? At what stage of a company’s development should they invest? Is there a natural tension between return on investment and social impact?
First it is important to distinguish philanthropic investment from impact investment. In the philanthropic investment space, the likes of the Bill & Melinda Gates Foundation have led the way in deploying impact capital in charitable concerns as well as through grants to commercial entities. Their focus is more on outcomes, less on the measurable financial returns.
Over the years the Gates Foundation has invested over $28 billion (£21.3 billion) in socially beneficial ventures, while the Omidyar Network (founded by an E-bay founder) is following suit with its $976 million fund. In the context of education, some of the largest technology players have also entered the space aiming to ‘give back’ to the community.
I was in a meeting recently with the head of education at a truly global technology behemoth in Silicon Valley, discussing the challenges of deploying technology to support education globally. The organisation is not necessarily known for its participation in education or ed tech, but there was a genuine passion on his part about making a difference and having a direct impact on education. He set out a plan to roll out a learning management and content platform for schools, which I must admit sounded very well thought out and funded.
But as we chatted, it dawned on me that what was being proposed as a philanthropic gesture – to roll this platform out for free – would no doubt be a death knell for many ed tech businesses. The gesture of giving this platform to schools and educators would, based on brand name alone, ensure rapid take-up. Free on its own rarely appeals to educators but free from a brand they know, and probably have a personal relationship with, is an entirely different matter.
Noble though this intent may be, it is often to the detriment of smaller education innovators who will not survive the onslaught of ‘free’ products or services from global technology and media giants. The users (read ‘new users for the giants’) in turn will inevitably go through a term/curriculum year cycle and realise that the previously paid-for services had more pedagogical depth. By which stage the smaller companies providing that depth may well have gone under.
Impact investors on the other hand have to have a more balanced view about outcomes and returns. However, another set of issues tends to arise ahead of, and during the course of, the relationship with an investee company. Impact investors see the social outcomes from investments – be they educative, in terms of health or well-being, or community-based – as the key drivers for investing. If they cannot firmly justify that these outcomes can be achieved, they may decide not to invest.
If they do invest a key challenge is to uphold their impact intent while supporting the investee. This is a delicate balance, and I have seen few that have mastered it. Impact investors who set up funds a few years ago started with a deep sense of purpose and the teams reflected that. It was all about making a difference while ensuring the return on investment was good. They were neither hunting for unicorns nor out to be private equity junkies, racing to raise the next fund. That was reflected in a shared vision with investee companies.
But inevitably the deal flow and the commercial pressures have swayed the mix of requirements along with the structure of the teams. The drive for social impact started to play second fiddle to the desire to behave like traditional private equity firms; passionate teams slowly have been replaced by private equity teams mid-way through investments and without continuity of vision.
At the same time an inherent flaw began to surface among early-stage impact investors. Entrepreneurs are all about seeking opportunities and being adaptable. Having to change quickly to survive is the mantra. So when a company is driven by changing market circumstances to pivot, possibly away from the impact metrics, there is a natural conflict. The impact investor is left stranded. Unless they have a structure in place to easily allow for an exit – which is rare – they are left with a stake in a company that may now be driven more by commercial rather than outcome metrics. That leaves both sides in a pickle.
They would do well to solve that conundrum soon. It can mean that the investee company ends up with a capital structure that inevitably becomes a hurdle for other investors. Maybe the impact investors should consider keeping their powder dry until companies reach a more sustainable scale and earning base, with less likelihood of a pivot. That would probably be less traumatic for companies and more fulfilling for investors.
This situation could become quite untenable for a business that wants to seek corporate/strategic investment where the corporate’s relatively inflexible commercial objectives may contrast with the impact investor’s relatively inflexible social objectives. This would place unnecessary restrictions on sources of capital, a scenario that leaves an entrepreneur stranded.
What determines success?
Even if the above are all dealt with, one needs to have a clear and unambiguous view of what the impact metrics are. What determines success? This is where it gets quite tricky.
In the context, say, of an ed tech business that is looking to improve outcomes for primary school students, one can fairly easily create control groups and compare impact outcomes based on testing and assessment. There would be some subjectivity involved but one would expect mainly quantitative metrics. As soon as this starts to touch on more senior learners where outcomes are more nuanced and/or sophisticated, the impact investor needs to take a step back and look at more holistic impacts. Job outcomes rather than test scores, of course, best measure employability. The contribution towards vocational qualifications and the consequent ability for skilled workers to participate in the economy should be quite clear-cut. Alas, this simplicity seems to fail to impress investors who are looking for the ‘box’ to tick for investment committees.
So in summary, maybe companies in the sector should be more wary of the larger philanthropic investors. Though at a macro level they may be expanding the market and doing some real good, from an entrepreneur’s perspective, philanthropic foundations may inadvertently be one of their largest competitive threats. Impact investment funds equally need to be wary about when they invest in early stage businesses and how they retain the flexibility in the capital structure.
Finally, collectively both sides need to be very clear that it’s not about binary impact outcomes but a considered balance which delivers on the promise to investors, learners and the community.
Originally posted on Linked IN by:Dan Sandhu
When the jobs report for October is released on Friday, most of the commentary will focus on the two headline numbers: new jobs created and the unemployment rate. Yet those won’t be the best indicators of the underlying health of the labor market and its prospects. Developments in wage growth and the participation rate will provide more information and reveal the seriousness of the structural headwinds undermining U.S. economic growth and inclusive prosperity.
Intense focus on the two headline numbers is understandable because they have historically provided important insights into the functioning of the labor market and its significance for policy, especially cyclical monetary measures. And those data points played that role in recent years as the U.S. economy climbed out of the deep hole caused by the 2008 global financial crisis and the recession that followed.
After an impressive string of consecutive months of strong performances amounting to the creation of about 14 million jobs, monthly employment growth is likely to slow to an average monthly rate of around 150,000 in the next few months. Together with an unemployment rate that has hovered around 5 percent for quite a few months, this pace of job creation, under normal circumstances, would have resulted in a Federal Reserve hiking cycle that was well underway. Instead, the Fed has raised rates only once, almost a year ago.
The other two labor market indicators -- wage growth and the participation rate -- explain this historical anomaly, as well as why so many Americans still feel economically insecure, despite the robust job creation and the relatively low unemployment rate.
Even though it has improved somewhat in recent months, the labor participation rate is stuck close to multi-decade levels because only a relatively small number of Americans have re-entered the workforce. Meanwhile, wage growth has been significantly lower than historical models would have predicted on the basis of the sharp fall in the unemployment rate.
It is not yet possible to be fully certain whether it is just a matter of time before both indicators head decisively higher or whether they have been impaired by structural factors such as demographics, globalization and robot displacement, which would be far more worrisome. It will take a string of jobs reports, together with other economic data, to arrive at a conclusive answer.
In the meantime, here are some guideposts for analyzing the major combinations that could materialize in the months ahead.
The hope is that the jobs reports will show upticks from the 2.6 percent annual wage growth and 62.9 percent participation rate of the September data. Such increases would suggest that there is further slack in the labor market and, importantly, that the economy continues to respond to Fed stimulus. Under such circumstances, there would be no need for the central banks to hit the brakes hard, nor would there be cause to worry about durable and consequential damage to the responsiveness and flexibility of the labor market, the economy as a whole and the scope for higher living standards over time.
The second-best scenario would be a rising labor participation rate, which would suggest that previously discouraged workers are being encouraged to return to the market, thereby increasing the overall level of economic activity. Higher wage growth without a concurrent increase in the labor participation is a trickier proposition. It would suggest that the bulk of the labor market slack has already been absorbed and that the U.S. has to get used to functioning with a durably lower employment-to-population ratio (currently 59.8 percent). And if the wage increase is too rapid, the Fed could also fear the potential return of excessive inflationary pressures.
The worse of all outcomes would be stagnation in both of these labor market measures. This would suggest not only declining Fed effectiveness but also an unfortunate changed reality for the labor market as a whole. It also would confirm that Congress’s failure to step in with comprehensive measures has allowed anti-growth rigidities to become more deeply -- and painfully -- embedded in the structure of the economy.
This jobs report, together with those that follow, will tell a lot about the longer-term dynamism of the economy. But gleaning that information requires a shift away from the headline numbers to indicators that often get less attention than they should.
This post originally appeared on Bloomberg View.
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