On the Nature of Change in Higher Ed (Part II): Education and the New Economy

November 13, 2011, 4:55 pm

We return to guest blogger, historian and former Zenith provost Judith C. Brown.  Her full biography and Part I of this series can be viewed here.  Brown ended the first section of her essay by reflecting: “in the early 19th century, it was in the relative ‘backwater’ of the German universities as well as in the newer universities of Europe, where imagination and flexibility with regard to change were able to flourish, that we see the beginnings of the modern research university.”  She then asked: “Are we in that kind of turning point in American higher education?”  The answer is yes.

American higher education is at a major turning point. We are in the midst of enormous social, political, economic, and technological changes that are part of big long-term shifts in the economic and political position of the U.S. in the world, shifts that began several decades ago. While the U.S. is likely to recover from the current recession (technically no longer a recession, but it sure feels like one to the 99%), it will probably not occupy the same prominent place that it once did and the structure of its economy will be considerably different. In the new world that is emerging, the nature of jobs and how they are compensated is changing, mostly not for the better of employees. Many of the professional jobs that college and university alumni have traditionally held, including those in higher education, are likely to be more precarious and less well paid. Some will even be partly automated, as we’re already seeing in some professions. Others will be structured as temporary jobs, contract jobs, or part-time jobs. The signs are all around us, as evident in the real decline in median household incomes among nearly all income groups below the top 1 percent, but particularly among the poorest fifth of households in 8 out of 11 years since 1999. This dismal picture follows tepid growth in the last three decades of the 20th century. (See; and for the causes, see David Leonhardt, “Reader Response: Falling Incomes,” New York Times, Sept. 10, 2009.)

The economic and technological changes affecting the economy are also affecting higher education and will do so all the more in the future. This is obvious in the extraordinarily rapid growth of for-profit colleges and universities, which are now primarily online. In fall 1990 for-profit institutions enrolled fewer than 214,000 full and part-time students. By fall 2008, they enrolled nearly 1.47 million and the following year over 1.85 million, reflecting an increasing rate of growth that far outpaced that of public and private non-profit educational institutions.  In 1990, they accounted for 1.5% of enrollments; by 2009 they accounted for 9.1% (See Table 197, U.S. Dept. of Education’s 2010 Digest of Education Statistics.)

Whether we like it or not, the digital revolution is changing how large numbers of people throughout the world, including the U.S., are accessing information, education, and job training. Admittedly, much of what passes for education in this process is not education; and some of the online offerings that have the potential to be less expensive to students, have been a rip off because of permissive federal laws and lax enforcement of the laws that exist.  But we would be ostriches if we assumed that many students and their families will not be attracted by the potentially lower cost and flexible hours of many online education options or if we assumed that all online education offerings are either bad or worse than some of what takes place and passes for education in some traditional higher education classrooms. There are excellent courses and terrible courses in both settings. There is no ideal one-size-fits-all model, as I’ll discuss further in the next installment. Moreover, as technological changes continue and as the feds, I hope, will impose more effective financial and consumer oversight on the for-profit education sector, courses will be available at lower costs to students while still giving the for-profit education corporations considerable profits, though perhaps smaller ones than the rip-roaring times they’ve enjoyed until now.

All of this seems a long way from the type of education offered at the best traditional colleges and universities, and sought after by the many students who vie for the limited openings in them. Yet even these institutions will likely feel the ripple effects. Up to recently we could demonstrate that, on average, the cost to a family of sending a student to a college of this type would be worth it not only for the intellectual rewards, but for the financial rewards to be reaped later. Data show that over the years, a college degree has consistently opened professional doors, as well as opportunities for a higher income and other benefits.

The question, however, is at what price is it worth it?  A recent report for the College Board, College Pays 2010, is highly optimistic about the continuing economic and other benefits. It finds that by about age 33 — after 11 years of full-time work — the higher earnings of the average degree recipient of a 4-year college who graduates in four years compensate not only for the years out of the labor force, but also for repaying the principal and interest (at 6.85%) on loans taken to pay the full average tuition and fees at a public 4-year institution. Graduates of two-year public colleges also break even at age 33.

A less rosy scenario, however, emerges when we consider some other financial aspects of obtaining a college degree. The average break-even point for graduates of private non-profit 4-year institutions who finish in four years comes only at age 40.  But only 65% of students at such institutions and 57% at public 4-year institutions graduate within 6 years, while those attending 2-year degree institutions have even lower completion rates and longer than expected times to graduation (See tables 341 and 343 at the U.S. Dept. of Education’s 2010 Digest). To make matters worse, the length of time to complete baccalaureate degrees at public institutions has been increasing  because of budget-related limitations on course access and longer working hours for students (See John Bound et al., “Increasing Time to the Baccalaureate Degree in the U.S.” National Bureau of Economic Research Working Paper, April 2010).  And as time to degree and tuition increases have grown, particularly at public institutions in response to declining state government support, students have been borrowing increasingly large amounts (See Kevin Cary, “The Meaning of Manageable Student DebtCHE, August 12 2009).  Relief for many will not come until long after graduation also because the break-even point varies enormously by major (See Anthony Carnevale et al., What’s It Worth: The Economic Value of Majors, Georgetown University Center of Education and the Workforce, 2010) and regardless of major, many will not be fully employed at all times, as assumed in the optimistic break-even scenario.

The longer time to degree, higher debt, and somewhat higher unemployment and underemployment rates all mean that the break-even point for a larger proportion of college graduates will take them to middle-age. By then, such graduates will be looking at how to finance the upcoming college education of their children and, just as daunting, soon after they’ll be looking at how to finance their retirements in an era when it is reasonable to expect cuts in social security and Medicare benefits and when their employers’ contributions to their retirement plans will likely be shrinking.

What I’m arguing by noting these challenges is not that students will or should forego a higher education. There are many reasons, both intellectual and material, for why a college or university degree is a still a good deal. But students and their families will make decisions about which college or university to attend based on their calculations of the comparative costs and benefits of each type of institution and the extent to which they think that the education they will get will prepare them well for the world they’ll face upon graduation. They and others in society, especially the politicians, will put a lot of pressure on all higher education institutions, which will manifest itself in a variety of ways:

  • Many private non-profit colleges and universities will find it harder to attract highly qualified students – A larger proportion of students who might consider attending a non-profit college or university will opt for public institutions instead. Although public institutions have been raising tuition at a faster rate than private non-profit institutions, many high quality prospective students from the middle class, who don’t qualify for Pell grants or for grant aid at private institutions with middling or smaller endowments, will calculate the real costs closely and will end up in public institutions. These will enroll more students because they are a source of revenues, no matter what effect this may have on the size of classes and the quality of education. The public option will be particularly attractive to students in states that have flagship campuses with high national reputations that offer degrees of reasonable quality at a lower net cost to the students than some of the private non-profit alternatives. Quite a few public institutions have created honors programs that resemble course offerings at top non-profit liberal arts colleges and that despite the odds to the contrary, offer the hope to prospective students of obtaining the benefits of a more individualized private college experience at the lower cost of a public education.
  • A larger proportion of students will opt entirely or in part for non-profit and for-profit online institutions – Not all online institutions of higher education are for-profit (e.g. Excelsior College, Charter Oak State College, the Western Governors University) and not all for-profit institutions are shady operations (though at the moment many surely are).Most online institutions currently focus on developing narrow skills and training because this is the low-hanging fruit in terms of demand, but there is nothing inherent in the on-line models to limit them to this. Some online institutions, such as Excelsior (named Regents College before 2001), have offered liberal arts courses and degrees for many years.
  • Increased pressure to accept transfer credits from other, less expensive institutions – most private non-profit colleges and universities have for a long time accepted the concept that they will accept only a very limited number of credits from other institutions and that every department can decide which courses from other institutions to accept towards their majors. Families, the federal government, politicians, and accrediting agencies are increasingly questioning such policies, arguing that there is an inherent conflict of interest in this process for recognizing transfer credits. Critics emphasize that whether a student should receive credit or not should be based on demonstrated competency in a field or a skill rather than on seat time at a particular institution. With students having increased access to information and sources of knowledge, whether online or not, there will be increased pressure to regulate the transfer of credits process so as to minimize redundancy among colleges and to speed up the time to degree.
  • Increased pressure to use all legitimate means to reduce the time to degree – most private colleges and universities require the completion of a minimum number of credits, half of  which or more must be completed at the institution or its sponsored programs. To the above pressures regarding transfer credits there will be pressure to devise creative ways to use online technology or competency-based means so that students may not have to be present on campus to take more courses at the college or university in which they are enrolled. This might enable them to graduate in 3 or 3.5 years. Experiments with summer school or short courses during semester breaks could enable some high-demand lecture courses to be offered online at non-traditional times without diluting their quality; other courses might be offered in person but away from campus in large urban areas where large numbers of students live and work to earn income between semesters and where some faculty reside as well. Yet other courses could be blended courses, online and in-person, offered in partnership among several institutions. There are many potential ways to reach this goal, through changes in scheduling, technology, etc., without compromising quality.  A growing number of students, their families, accreditation boards, the federal government, and politicians will insist on it.
  • Increased pressure to demonstrate that the way we educate students really does improve critical thinking and the fundamental skills needed for any kind of professional education – Many of us who are teaching or have taught at colleges and universities have talked a good line about how we do a great job in teaching critical thinking, and we think that if we say it often enough we and others will believe it (For a recent critique by someone who doesn’t, see, Richard Arum, Academically Adrift: Limited Learning on College Campuses). But we have not been able to demonstrate that when we control for an incoming student’s socioeconomic characteristics and educational abilities and attainment, the value-added of a college or university education as we’ve known it is due to what the institution provides.  [For an overview of the issues, see Richard Shavelson, Measuring College Learning Responsibly: Accountability in a New Era, although I’m not enthusiastic about the uninspiring Collegiate Learning Assessment test (CLA) which he helped develop, and am even less so about the National Survey of Student Engagement (NSSE), which has come under well-deserved questioning, as reported most recently in the Chronicle of Higher Education.] While I feel deeply, based on the institutions that I’ve been in, that we do improve critical thinking above and beyond what students would gain on their own, we have not set in place mechanisms to demonstrate this and until we do, the sirens of what seem on the surface to be cheaper and equally good solutions will keep singing their song.

What is to be done? [To be continued.]

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