Tuition Tuesday - Tuition Continues to Rise

Some new data released last week by the College Board shows that tuition and fees at both public and private 4-year institutions. A few highlights - or low points - from their research:

• In-state tuition and fees at public four-year institutions averages $8,244 in 2011-12, 8.3% higher than in 2010-11. When you include room and board, this number goes up to $17,131, an increase of 6.0%
• Out of state tuition and fees averages $20,770/year, up 5.7% from 2010-11. Including room and board, total charges are $29,657, up 5.2% from 2010-11.
• Tuition & fees at private, four-year colleges and universities averages $28,500 in 2011-12, up 4.5% from 2010-11. Average charges including room and board are $38,589, up 4.4%.
• While the average increase at public institutions is 8.3% for in-state students, and 5.7% for out-of-state students, 20% of students are attending schools where the cost of attendance rose more than 12%.

It is no wonder that total outstanding student debt has now passed $1 trillion, surpassing even the credit card debt in the US - and it’s rising. The Education Department announced that in September, the student loan rate had risen to 8.8 percent, which apple only to the first two years students are required to make a payment.

The research from the College Board also points out the dilemmas that administration at these colleges and universities wrestle with before raising tuition - declining support at public institutions, and financial aid covering less of the overall cost.

• In 2011-12, full-time undergraduates at public, four-year institutions received an average of $5,750 in financial aid and federal tax benefits.
• Full-time undergraduates at private, four-year institutions received an average of $15,530 in financial aid.
• The average cost of attendance after subtracting aid has outpaced inflation an average rate of 1.4%/year over the last 5 years.
• State funding per FTE student is 23% lower in 2010-11 than it was 10 years ago.

The cost of education remains a significant challenge for practices as they recruit, retain, and promote staff. Here at the Design Futures Council, we are finalizing our 2011-12 Tuition Research, looking at the cost of an architectural education in the US. Look for that in the coming weeks. In the meantime, the entire report from the College Board can be found at here.

Tuition Tuesday - Student Loan Debts & Past Due Rates Increasing

2 notable reports this week already regarding the impact that economic conditions are having on various types of credit (mortgages, credit cards, student loans, etc.), both from the Wall Street Journal and the Federal Reserve Bank of New York.

The first, from the Real Time Economics blog, shows that while U.S. household debt has declined 8.64% since it’s peak in the 3rd quarter of 2008 to $11.42 trillion, student loan debt is up sharply, rising 25% over the same period. This increase from $440 billion to $550 billion might be reflective of more people going back to school in the hopes of increasing their skills and value in a difficult job market. The report doesn’t indicate the reason for the increase, however the drastic increase certainly will affect future spending and compensation expectations. The graphic from this report showing this change is below:

Monday’s news was followed yesterday, by another report showing a steady climb in delinquency rates of student loans. The article says, “11.2% of students loans are more than 90 days past due”, and the delinquency rate steadily increasing. Credit cards are the only type of loan with higher delinquency rates, however those numbers have been declining for the last year.

We’ve set up an educational system - and an employment system - that requires students to take on incredible amounts of schooling, and in many cases the associated debt. It impacts the diversity of our profession and the economic condition of employees of every professional practice in the country.

The question for leaders of professional practices is simply this: Do you know the cost of education at the institutions you typically recruit from? If so, do you know the associated debt load or student loan payments made by graduates coming from that institution to your firm?

Once you know this information, the opportunity is to develop unique strategies for recruitment and retention that help minimize the pressure these individuals feel financially. As competition remains high for talented, committed employees, helping your youngest professionals and recent graduates can lead to significant increases in loyalty and retention. And that, is one of the best investments your practice can make in today’s economy.

Tuition Tuesday - Debt, Compensation, and an Uncertain Future

Third post in this multi-part series on increasing college tuition, with a special emphasis of course on the impact on the design professions. Today’s topic is about the growing disconnect between tuition and salary.

The statement that “there is no money to be made in architecture or design” has long been shared with students, and unfortunately in many cases accepted as fact. For many years, issues of unpaid and underpaid internships caused significant hardship within the profession. Over the last 15 years however, the profession has done an admirable job of nearly ridding itself of the practice - with some exceptions - and recognizing the contributions of young staff. In the most recent DesignIntelligence Compensation & Benefits survey, the mean annual salary for year 3 interns, just finishing IDP, was $44,750 plus a mean bonus of 2.7%. A big jump from 1996 when DesignIntelligence reported a mean salary of $28,760. In fact this growth even beat inflation.

So the good news is, we are slowly making strides in what we pay recent graduates and interns. The not so good news, the cost of education is greatly exceeding these gains. According to the College Board, tuition and fees at public universities have surged over 130% over the last 20 years. At the same time, the maximum amount of government-subsidized loans that a student is eligible to receive for a four-year degree has remained $23,000 since 1992

Median income has remained roughly the same since 1988, while tuition and fees has more than doubled. Source: CNN Money

This post isn’t meant to argue that recent graduates and interns are underpaid - we can save that discussion for another time. However, what is increasingly apparent is the disservice to recent graduates who spend thousands of dollars to get college degrees, and then find themselves in a work force which doesn’t compensate accordingly. A push towards increasing the value and relevancy of the degree is necessary, and requires a joint effort between the academy and professional practices. Then perhaps the conversation can become more about value and less about cost. By recognizing value-in (tuition) and increasing value-out (relevancy), we can grow our profession in more sustainable ways, and support the next generation of leadership.

Tuition Tuesday - The Growing Burden of College Debt

Another post in the Tuition Tuesday series - this time on the ever-increasing debt loan on new graduates.

A recent New York Times article, highlights the problem facing recent graduates with bachelor’s degrees - an average of $24,000 in student loan debt. From 1993 to 2008, the percentage of graduates with debt increased from 50% to nearly two-thirds. In fact, for the first time, student loan debt is now larger than credit card debt, and is projected to top one trillion dollars in 2011.

And this is only for students with a 4-year undergraduate degree. For students with a professional degree in architecture, either a 5 year Bachelor of Architecture degree or a 2-3 year Master of Architecture degree, this debt load is likely to be considerably higher. Recent research from DesignIntelligence and the Design Futures Council on tuition and fees in accredited architecture programs begins to indicate how high this debt load might be. For undergraduates in a 5-year B.Arch program, in-state tuition and fees averages $19,454, and $25,725 for out-of-state students. Annually. Not including housing, medical expenses, books, studio supplies, or the host of other expenses associated with college. For M.Arch students, the numbers are quite similar - $19,186 for in-state, and $25,749 for out-of-state. These M.Arch programs range from 2 to 3 1/2 years, and are on-top of an existing bachelor’s degree, sometimes in architecture, sometimes in another discipline. It is important to note that at every institution, students receive varying degrees of financial assistance, either through grants funded by the federal or state government, or through institutional scholarships.

Lauren Asher, president of the Institute for College Access and Success writes in the New York Times article, “If you have a lot of people finishing or leaving school with a lot of debt, their choices may be very different than the generation before them. Things like buying a home, starting a family, starting a business, saving for their own kids’ education may not be options for people who are paying off a lot of student debt.”

The impact that the increasing strain of college debt has on a willingness of individuals to seek ownership in design practices can not be overstated. We are constraining the opportunities of both leadership and ownership transitions in practices at a time when the generational demographics indicate they are needed the most. This isn’t just an issue for the students of today, but for the owners of the firms of tomorrow.

Tuition Tuesdays - Addressing the rising cost of tuition

For the next few Tuesdays, I’m planning to write a little about the impacts of rising tuition costs on emerging generations of students and young architects. This is a topic that seems to appear more frequently in newspapers, magazines, and online publications as well as a topic of conversation among architects, educators, students, and prospective students.

I and many others believe that if the architecture, design, engineering, and construction industry is to address the serious issues of diversity and talent shortages that we face, we must invest more fully in our education system.

So first, the scale of the problem. Recently, using data from the United States Census Bureau and the U.S. Bureau of Labor Statistics, I compiled data comparing the growth of college tuition and fees, median home prices, and the annual change in the consumer price index. When plotting this annual data from 1978-2009, the following picture results:

College debts are an order of magnitude higher than just a few decades ago (and have risen more than three times as fast as the consumer price index).

Over the coming weeks, I will look at specific examples driving this problem, unique challenges we face, and what others are saying about the topic. I hope this spurs conversation and awareness as well as a willingness on the part of the profession to invest more fully in supporting schools across the country.

Think Differently About Change

Climate change comes bearing gifts. While not welcomed offerings, these changes demand a vastly different approach in the way architects and designers think about their professional practices. Something big is happening.

Moreover, architectural careers have quit working like they used to. Climate change will affect the economy and the underlying tenets of roles and responsibilities in the making of buildings – and urban environments. The challenges brought about by climate change create new puzzles to solve. We can meet these challenges. There are many approaches.

The Design Futures Council will be hosting our 9th Leadership Summit on Sustainable Design Oct. 5-7 in Atlanta. Again this year we will bring together 100 delegates to share case studies, present deep understandings and practical experiences, and chart the future. Invitations were mailed last week to members and fellows of the Design Futures Council.

To be considered for one of the delegate positions, e-mail me at jcramer@di.net or Mary Pereboom at mpereboom@di.net. We are seeking thought leadership and a diversity of talents.

All of us need to catch on to what’s happening. We need to seize the opportunities brought about by change.

Is the Profession of Architecture Corrupt?

The following guest blog is from Victoria Beach, an independent architect and former lecturer in architecture at the Harvard School of Design.

Is the profession of architecture corrupt? According to the definition of “institutional corruption” currently in use at the Center for Ethics at Harvard University, yes.

The Center’s new director, renowned attorney Lawrence Lessig, has defined as “corrupt” organizations that have tragic structural flaws that undermine their own purposes for being. He has recently re-focused the Center’s resources on studying these ineffectual institutions and their corrosive effects.

Now, apply this descriptive framework to the architectural profession. Its purpose for being is to create architecture — that is, to make art out of the science of building. The purpose of this art, if there is one, is often debated but most agree it should engage, if not uplift, the individual mind and body as well as human culture as a whole. What kinds of structural features might be holding back the profession from consistently achieving these results?

Here are some possibilities.

• Though the situation varies from school to school, the design academy tends to attract narrowly educated technicians, often without college degrees or any experience in the humanities, and proceeds to advance that narrow focus. This may be a distant residue of an ancient need for draftsmen and laborers, which is rapidly being made obsolete by computer technology. This vestigial practice can prevent  architects from understanding and engaging their work in the larger social questions and from collaborating with their broadly educated peers in law, medicine, and the like.

• The internship that the architectural profession requires for licensure takes place in un-accredited, un-monitored, private offices across the country. Because this three-year period is mandatory, offices have an incentive to exploit intern labor, using it for self-serving rather than educational ends. Interns have no leverage to change these conditions and thereby further their training. Often they work for little or no pay, in violation of national labor laws, which virtually ensures their permanent economic dependency on this flawed system.

• The examination for architectural licensure does not test for architectural acumen. It is primarily an engineering exam that does not capture qualitative aspects of humane design. The legal title “architect,” on which laypeople rely to find qualified assistance, therefore does not actually ensure any architectural ability.

• The ethical codes that the profession enforces have been diluted over the years to minimal standards of basic citizenship. They no longer require, and often don’t even describe, the actions that would produce architecture. Neither laypeople nor architects could easily discern from these codes what distinct values architects are meant to uphold and what purposes they are meant to serve.

• The primary professional society for architecture, the American Institute of Architects, mainly promotes, as its name suggests, architects rather than architecture. It is organized under section 501(c)(6) of the Internal Revenue Code, which means it is a “business league,” “promoting the common economic interests of … a trade.” The general public can therefore be excused for interpreting this technicality exactly the way the government does: Architects are businesspeople first and professionals or artists second, if at all.

• The building industry has detected, enhanced, and leveraged the public’s confusion over what architects do. As architects surrender their leadership positions, the odds that buildings might serve interests beyond those of their developers worsen. Many architects now sit in the back offices of these developers and are economically dependent upon them – a circumstance that was ethically prohibited a century ago.

• But even without the influences of the building industry, architects are faced with the same ethical conundrums of “agency” that all professionals are. When lawyers are put in the compromising position of knowing information that might clarify the truth of a matter but condemn their own clients, they struggle (one hopes). But at least with the legal system, the zealous advocacy model was designed to provide representatives on more than one side of an issue. Architects, on the other hand, are charged with representing the needs of their paying clients as well as the often contradictory needs of the non-paying users and the non-paying public. There is no other designated agent for these unorganized interest groups.

These seven structural features may indeed be corrupting in Lessig’s sense of undermining the profession’s ability to serve its defining ethical goals. Furthermore, many even stickier ethical conundrums are posed by the very existence of an artistic pursuit structured as a professional and commercial enterprise.

These issues, among many others, have been under intense scrutiny through the ethical research and teaching of professor Carl Sapers and others at the Harvard Graduate School of Design. On April 26, the Carl M. Sapers Ethics in Practice Fund, was established at Harvard to continue and enhance this work. This presents a unique opportunity to raise the discourse of architectural ethics and to address these many challenges.

Raising Our Young

There has never been a time in human history when strategic foresight was more needed. The American Institute of Architecture Students delivered a good dose of it last week. In fact, the AIAS Forum in Minneapolis was an exemplar in several ways.

The Twin Cities’ below-zero temperatures and deep snow did not cool the Forum participants’ expectations that this would be a relevant and dynamic session. More than 500 students participated, 20 of whom were vying for elected office in AIAS.

As the students energetically took over the Hyatt Regency Hotel, there was an organized and spontaneous discussion on meaningful change and overcoming difficulties. Furthermore, there was palpable passion for the future brimming with ingenuity. The emerging environmental leadership was at once sophisticated and convincing.

There is a saying that you can tell a lot about the future of a profession by studying how well that profession is taking care of its young. This meeting is one positive indication. The AIAS experience included leaders of the profession such as the presidents of AIA, ACSA, and NAAB as well as the president-elect of NCARB. All were in attendance providing programs, speaking, coaching, and listening. They were actively engaged in table-top exercises, too. And none of them seemd the least bit inconvenienced by the timing of this event over the holidays. (The meetings began Dec. 29 and ran through Jan. 1.)  They did not dominate but were jump-starting conversations on future opportunities.

George Miller, the president of AIA and a partner at Pei Cobb & Freed architects in New York, illustrated how students can transcend the current economy and get involved in the profession with examples. His was an upbeat assessment of the future of the profession. NCARB President-Elect Ken Naylor pointed out how Intern Development Program credits can be earned under newly revamped NCARB rules. (The new “Emerging Professional Companion” outlines how AIA Learning Units equal one qualifying IDP hour and how in one year online activities and exercises can be used to gain 225 training units — nearly a year’s worth of IDP experience, very helpful for those interns who are currently unemployed.)  NCARB is showing its responsiveness in this economy, and this is a good thing.

The student leaders at AIAS Forum are an impressive lot. Keeping them engaged in the profession is one of the most strategic actions that AIA, NCARB, and the rest of the profession can do. And this is real foresight for the future.

How Long from Intern to Architect?

Today’s guest blogger is Matthew Arnold, who has been examining the duration and success rates of the Intern Development Program.

How long does an architectural internship actually take?

Official estimates range between three and five years, but that didn’t seem to be the case for any of the interns I knew or for that matter, any that they knew. I couldn’t find any hard data published anywhere, so I sent an e-mail to each of the U.S. NCARB-member boards asking what they could tell me.

Three boards — New York, Nebraska, and Oregon — furnished hard data in response to my request. New York provided records for all 15,088 actively licensed architects there. Nebraska and Oregon provided data for the actively licensed architects who had taken and passed the exam in their states, 626 and 800 individuals, respectively.

I made graphs of what they sent me, which you can fine here along with explanatory notes:

http://www.stairwaytoarchitecture.com/images/NY_STATE_REPORT.pdf

http://www.stairwaytoarchitecture.com/images/Nebraska_Report.pdf

http://www.stairwaytoarchitecture.com/images/Oregon_Report.pdf

The data show that the average time elapsed between graduation and licensure for architects licensed in 2009 exceeds public estimates. In New York it was 11.06 years; in Nebraska 10.89 years; in Oregon 8.96 years.

So as best as I can determine, the answer to how long it takes to become a licensed architect is 9 to 11 years. It is a rare intern who finds this surprising.

The trends in the data are disturbing, in particular the percentages of licensed architects whose internship was 5 years or less, between 5 and 10 years, and over 10 years in New York, as shown in this graph:

In New York in 1980, about three out of four internships took less than 5 years; today this is true for less than 10 percent of aspiring architects in that state.

Before 1980 it was rare for an internship to extend a decade or more in New York, but in 2009 it has become the rule: Half of all internships last at least that long. The trends are similar in Nebraska and Oregon.

There are still some states (New York among them) that do not require an NAAB-accredited degree in order to sit for the exam. These states typically require an (ostensibly) longer period of internship in order to compensate. If the duration of average internship for those with NAAB-accredited degrees is indistinguishable from those without one, the question as to the benefit of the degree in this regard is not an unfair one to ask.

Are three states a sufficient sample to enable us to draw any conclusions?

I’m an architect, not a statistician, but I think it is. These charts depict the professional records of slightly more than 16 percent of all currently licensed architects in the United States — about 1 in 6 of us. New York, Nebraska, and Oregon are distinct in population, geography, and economic characteristics.

I welcome additional hard data on this subject and expect it to support rather than contradict what shows up in the statistics from these three states.

Most states appear to rely on NCARB to maintain these records and are unable to provide them. NCARB tells me it cannot provide any information beyond what is posted on its Web site.

Is such an attenuated internship — amounting to more than 20 percent of a typical career — in the best interests of our profession? Why the discrepancy between what is necessary and what is (apparently) sufficient? Is this system functioning as designed? If so, why isn’t it functioning as advertised? Should we make any changes? What should we change? Are we really doing our best in this regard? Can we in good conscience as a profession continue to create false expectations in students and young professionals about their careers? These are only a few of the questions that the facts compel us to ask and answer.

There are more charts and a nascent discussion on this issue at my Web site. I will be happy to provide the raw data at cost to anyone upon request, and you can perform your own analysis.

Early next year, I’ll be asking the architects who sit on our state boards to obtain an accounting on this subject from NCARB. It’s time to take the future seriously. At the very least, we owe the next generation some honesty.

What Are You Doing About Talent Today?

In these times of uncertainty, staff reductions, project cancellations, and clients demanding more for their dollar, what have you done to assure the happiness of your existing talent? The staff who have made it through cuts at your firm are likely among your most valued — that’s why they are still there. But what have you done to be sure they will still be there in the future?

In many organizations today, there are talented people who aren’t happy in their current roles. If the economy had continued to grow at a “normal” pace, they likely wouldn’t be working for you any more. However, because of the downturn, job security has been of utmost importance: Better to have a job you don’t like than not have a job at all. However, once the economy begins to turn, these people will leave at the first opportunity. In some cases it is already too late. Your only option is to encourage their professional growth, and maintain touch with them in coming years in the hopes they may someday return. In other cases, there are opportunities for you to re-energize their passions and talents around the future of your firm. I believe there are three winning strategies to keep these talented staff within your organization:

1. Be very clear with them about their future. With the future as fuzzy as it is, this may be uncomfortable. Times and situations do change. However, if you see people as future leaders in your organization, make sure they know it. Often times, leaders assume their most talented staff know they are valued and have a place in the future vision of the firm, yet this isn’t communicated. Set a clear path for them and provide them the training and development opportunities necessary to grow into the roles you see for them.
2. Embrace the power of mentorship. In the booming economy, senior leadership and key players within your firm were traveling quite frequently — often globally — and have the frequent flier miles to prove it. Now, many leaders are traveling much less, often as a cost-saving measure or perhaps the workload and client opportunities don’t necessitate the travel. This means the leaders in your firm — the talented people who have driven it to success — are now in the office. They have time to sit with younger staff and mentor them. Take younger staff to meetings with clients or community groups that you weren’t attending before. A quick coffee or lunch that wasn’t possible before because of travel is now a chance for mentorship. Senior leadership has a great opportunity today to prepare young leaders for the future.
3. Develop a meritocracy culture. Now more than ever, it is important to reward people for their contributions to your practice, particularly the most talented individuals in the firm who you hope to build your future practice around. Be upfront about your expectations and values and follow through by rewarding those who exceed them. If you challenge your staff to reach for new levels of service, expertise, and design quality you will motivate your stars to shine. This is particularly true for your younger staff. They want very clear expectations and clear outcomes. A challenge for any firm certainly, but those who believe in meritocracy will find great success.

Today’s professional practices require that we develop talent and teamwork both as individual skills and organizational capabilities. It is important to note that these strategies will help you retain and recruit all talent within the organization, not just those who aren’t happy. Firms and leaders who provide mentorship and focus today will be best positioned to win the war on talent tomorrow.