Analysis of ACSFA Textbook Affordability Report

Analysis of the Advisory Committee on Student Financial Assistance’s Turn the Page: Making College Textbooks More Affordable

Contact: Dave Rosenfeld, daver@studentpirgs.org, 503-231-4181 x311

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SUMMARY

The Advisory Committee on Student Financial Assistance, which advises the Department of Education and Congress on student financial aid policy, has completed a yearlong report to Congress on potential solutions to the problem of skyrocketing college textbook prices. The study was requested by Congressmen David Wu (D-OR) and Buck McKeon (R-CA), part of a follow up to last year’s Government Accountability Office study that confirmed much of the Make Textbooks Affordable campaign’s own research on the problem.

Overall, this is a very well done report. It confirms much of what we know about the burden of textbook prices on students, but also offers a smart package of solutions that can introduce real competition into the publishing industry and free students from the stranglehold that traditional publishers have on the market.

ITEMS OF NOTE

1. Confirmation that textbook prices “represent a significant barrier to access and persistence.” The report confirms the undue burden textbooks pose on low and moderate income students. The report concludes that textbooks cost between $700-$1000 per year; textbook prices have risen much faster than other commodities; and that college aid fails to cover textbook expenses (and many other college costs). The report notes that although textbook prices have only risen slightly as a percentage of family income over the last 20 years, the steep rise in prices combined with the failure of college aid to keep pace mean that textbook prices “represent a significant barrier to access and persistence.”

2. A clear analysis of the market which correctly recognizes the disproportionate amount of power that publishers have in the market, and the need to restructure the market so that it is ‘student-centric’. The report’s analysis of the inherent flaws of the textbook market lead it to acknowledge that publishers will continue to engage in practices that drive up prices until there is real competition in the market. Specifically, the report recognizes the fact that the person who orders the textbook (faculty) is not the same person who must purchase the textbook (students), thereby removing price as the primary consideration behind a textbook order and putting a disproportionate amount of power in the hands of the supplier (publishers) to drive the market. The report also recognizes that traditional regulatory solutions do not work in this context because they would either infringe on the academic freedom of faculty to choose learning content, or on the First Amendment rights of publishers. Subsequently, the report concludes that solutions must be inherently market-based, and focused on making the market more ‘student-centric’.

3. There is a large basket of ‘short-term solutions to the problem. The report provides a comprehensive look at the plethora of short term solutions available, many of which we have advocated for at the campus level. The list includes:

• Implement a Textbook Rental Program, which is outlined in our Guide to Establishing Textbook Rental Services.
• Strengthen the Market for Used Textbooks, through used textbook initiatives such as those recommended by the State of Connecticut and implemented by the San Mateo County Community College District Bookstores.
• Increase Library Resources.
• Adopt Lower Price Alternatives to Textbooks. Our report, Textbooks for the 21st Century, outlines the pros and cons of different kinds of low cost books.
• Develop Faculty Textbook Guidelines, which include many of the provisions adopted by the California State University Academic Senate, and the price disclosure policies passed by Washington and Connecticut.
• Provide Information on Prices and Options to Students/Parents.
• Improve Related Financial Aid Policies.
• Utilize 21^st Century Technology, see more directly in #4 below.

4. There are many 21st Century Technologies that are dramatically less expensive and more flexible than traditionally licensed books. The report correctly identifies many of the alternatives to high-priced textbooks. It is our view that many of these options represent the single greatest path to real competition in the textbooks market, a view recently endorsed by the New York Times and examined in more depth in our recent report, Textbooks for the 21st Century.

We believe that in the Internet age, there’s little reason for the cost of a textbook to be so high. There are hundreds of thousands of professors able and willing to create learning content and the argument that royalties are needed is a myth; very few professors who publish ever see royalties; the incentive to publish is predominantly for reputation building, not financial enhancement.

There are a few models for providing this content, we believe that the most viable have two key principles:

• The content is peer-reviewed or otherwise evaluated by faculty and housed on a university or faculty-sanctioned site. This is the model for Rice University Press, Connexions, California State University’s MERLOT program, and the Global Text Project.
• Second, that the content is Creative Commons licensed or equivalent. This is an alternative licensing system that content providers may use to allow their work to be more openly utilized by others with less restriction. This licensing program retains many of the most powerful publishing incentives (recognition and attribution among peers).

This is not just about ‘online’ vs. ‘paper’ textbooks. The content that most of these repositories offer can be used in both digital and print only formats, depending on the proclivities of the faculty and students who use them. What is unique is that the offerings are much less expensive than traditional textbooks.

5. A call to create a "national digital marketplace" where all content - commercial and non-commercial - can compete against each other on one platform. The report offers up an intriguing "big idea" - the "national digital marketplace" - that could potentially expand the number of learning content choices and hasten mainstream academia's development and adoption of less expensive learning content. The digital marketplace would be a national, institutionally-sanctioned, internet-based platform where all content providers can centrally sell or distribute their content.

The idea of the digital marketplace is to create a place where all of the various content-delivery models can compete against each other on a level playing field. As we understand it, there are four key elements to the idea:

• First, the digital marketplace platform would be created and sanctioned by the all the "stakeholders" (faculty, administration, students, publishers).
• Second, the digital marketplace platform would include both fee-based and no-cost content from both traditional publishers and newer content providers. For example, a traditionally-licensed calculus book (produced by a company like Pearson) might exist side by side with a Creative Commons licensed calculus book (produced by, for example, Rice University Press or by an independent author).
• Third, the report envisions much greater degrees of "content granularity" than ever before. Using the above calculus example, a professor could potentially put together a product that uses some chapters from the hypothetical Pearson calculus book, and some chapters from the hypothetical Creative Commons calculus book, and some chapters that the professor writes on her own. The final cost of this hypothetical product would be whatever the cost of the Pearson chapters were, plus any binding and shipping costs (unless the professor opts for the book to reside online only).
• Finally, faculty could choose the format they want to textbook to be in. Some faculty will still want the textbook to be traditionally bound and sold at the bookstore. Others will opt to have the book reside online only.

All of this, of course, would depend on what the content providers actually offer, but the assumption is that if you create a neutral forum to sell learning content, the market would evolve to more choices and far more price elasticity than under the current system.

The report envisions that the digital marketplace would be nationally constructed under one protocol, but the interface for faculty/students would be localized to a particular school so that it conformed to whatever additional rules and systems a college wanted to set up.

The report acknowledges the challenges involved with putting such a system together including: it will be difficult to get enough higher education institutions to collaborate on such a project to the point that a critical mass of institutions use it, and that both smaller market players and big traditional publishers must have adequate incentive to participate.

There is no such system in place currently. However, the report suggests that a program about to launch at California State University could serve as a good example of the institutional component of such a marketplace, and that the overall marketplace could build off the work that CSU has already done.

At first blush, this idea holds great promise for reducing textbooks prices for students. The key, however, lies in how the system gets constructed, and what kinds of bottom lines the individual stakeholders maintain as a condition of participating in the digital marketplace. Therefore, it is essential that students and their advocacy organizations are included in any and all discussions concerning the development of a digital marketplace.

CRITICISMS

In general, this report presents an excellent set of solutions. We have two criticisms of the report.

1. "E-books" are much less ideal than other "21st century" alternatives. The report should have made a clearer distinction between alternative-licensed content and traditionally-licensed "E-Books" offered by traditional publishers, since there are significant differences in both price and use restrictions and many people do not understand those distinctions very well.

Our recently release Required Reading report found that ‘E-Books’ can be more expensive than traditional books. For example, the print version of McGraw-Hill’s Organic Chemistry 6e has a list price of $135.47. The eBook, with a list price of $87.66, amounts to an initial savings of 35 percent, or $47.81. Unfortunately, students cannot sell back eBooks to recoup any of the initial expense, while a student with a standard edition can typically sell it back for $67.73 (50 percent of its original price) - spending $19.93 less overall.

Moreover, the traditional licensing schemes of ‘E-Books’ pose considerable restrictions on usage.

In contrast, Creative Commons, Open Educational Resources and other similar content are already available for much less, and with few significant usage restrictions. From an affordability and usage perspective, these products are vastly superior to E-books.

Obviously, traditional E-books are and will be an important part of an emerging digital-based market. But the readers should consider E-Books with caution, only after considering the net price after buyback and after considering similar, open licensed content. .

2. Critique of used book market unproven, might have chilling effect on implementation. Although the report strongly advocates for strengthening the used book market, the report weakens this stance by repeatedly cautioning that a successful used book market automatically results in more new editions and higher prices. This argument assumes that the used book market harms publishers’ bottom lines enough to force them to both increase prices and issue superfluous editions simply to recoup their costs.

We have three concerns with this argument. First, we have not seen evidence to back up the claim that the used book market hurts publishers’ bottom lines. Second, there are many commodity markets which accommodate both reasonably priced, profitable new products directly alongside their less expensive used counterparts, such as automobiles. A counterargument is that unlike publishers, the automobile industry controls the used car market, so they profit for both used and new cars. However, this is not the case in the clothing market, where stores like Buffalo Exchange appear to do no harm to clothing manufacturers. Moreover, there are no obvious market barriers preventing publishers from becoming used book market players themselves. Finally, there is ample evidence showing that publishers are making record profits off the current system, calling into question the underlying assumption that the used book market puts a serious financial squeeze on the industry.

These criticisms aside, the overall thrust of this report is on-target and should play a major role in moving the debate forward. We encourage faculty, university officials and policy-makers to pay close attention to the report’s recommendations.