Higher education has a long and fraught relationship with the labor market. From colonial colleges training clergymen to the Morrill Act, normal schools, and the great 20th-century expansion of mass higher education, colleges have always been in the business of training people for careers. The oldest university in the Western world, in Bologna, started as a law school. Ask students today why they’re going to college and the most common answer is, by far, “to get a job.”
But most colleges don’t like to see themselves that way. In educators’ own minds, they are communities of scholars above all else. Colleges tend to locate their educational missions among the lofty ideals of the humanities and liberal arts, not the pedestrian tasks of imparting marketable skills.
In part, this reflects the legitimate complexity of some institutional missions. But the fact remains that most professors were hired primarily to teach, most institutions are not research universities, most students are enrolled in preprofessional programs, and, it seems, few colleges have undergraduate curricula that match their supposed commitment to the liberal-arts ideal.
It’s a nice trick—colleges and the people who work for them enjoy both the status associated with the exalted purposes of scholarship and the money that comes from playing a crucial role in building the nation’s store of human capital. Within that contradiction is a suffocating elitism and a disrespect for people engaged in the necessary, difficult task of preparing diverse students for the increasingly volatile world of work.
Historically, this attitude has led colleges to neglect the growing market for adult students who need to enhance or retool their marketable skills. For-profit colleges entered the void. According to recently released data from the U.S. Department of Education, some of them are doing an abominable job.
To take one example: Over a 12-month period in 2008 and 2009, nearly 27,500 people began repaying student loans taken out to attend the University of Phoenix’s online associate-degree program in what the U.S. Department of Education calls “office management and supervision,” in which students learn about such things as the culture of the modern business environment and how to write memos. By the fall of 2012, 9,800 of those students—more than one-third—had defaulted on those loans, with more sure to come. Phoenix alone has 20 programs with default rates over 30 percent. Other for-profit chains are just as bad, or worse.
The scale of these programs is mind-boggling—27,500 students attempting to earn associate degrees in office management from one institution? That’s more than six times the total number of bachelor’s degrees granted annually in classics, linguistics, and comparative literature by every college and university in America.
Phoenix is clearly taking advantage of the tremendous trust and credibility that Americans have put into any organization that identifies itself as an accredited college, along with enormous sums of federal grant and loan dollars. Combining “associate degree” with “office management” is credentialism run amok. It amounts to tricking people into borrowing large amounts of money for basic white-collar skills they should be learning on the job, and which often don’t yield enough money in the labor market to pay those loans back.
This is the point in the conversation where public and private nonprofit colleges like to feel superior to those pretenders in the for-profit sector. They shouldn’t. Other new numbers from the Department of Education suggest that traditional colleges, too, have dived headfirst into the business of inventing and selling overpriced two-year credentials backed by government debt. They just call them “master’s degrees.”
Every four years, the federal government conducts a comprehensive survey of college financial aid. According to the latest results, the median debt accrued by students completing master’s degrees in 2012 was $57,600, a 31-percent increase from just four years earlier, after adjusting for inflation. The amount of debt at the 90th percentile grew even more: $153,000, up from less than $113,000 in 2008.
Some of this growth came in familiar professional fields. Medical students still borrow a lot of money, and the scandal of law-school debt continues. But some of biggest increases came in fields that nobody associates with wealth and fortune. The median debt for master’s degrees in education, for example, grew from $33,910 to $50,879 in four years. Public-school teachers didn’t exactly make out like bandits after the recession. Many took pay cuts or lost their jobs. University-based schools of education appear to be diverting the automatic raises that most teachers receive upon earning a master’s degree into their own coffers.
Median debt for people in the broad fields that grant master-of-arts degrees grew from $43,247 to nearly $59,000. Do you know any recent M.A. graduates with lots of money to burn? Similar numbers appear in the catch-all category of “other” master’s degrees. Many of these have—just like “office management"—weak ties to established professions. Medical schools and history-Ph.D. programs are accountable to the communities of doctors and historians. A one-year master’s program in something like “government” is accountable to no one.
Colleges with selective undergraduate admissions can monetize that prestige by running expensive “professional” master’s programs with lenient admission criteria that are hidden from the public eye. And because there are no hard limits on how much graduate students can borrow from the federal government, the sky’s the limit when it comes to price.
So if you’re a college president overseeing a portfolio of lucrative, heavily marketed, largely unaccountable terminal master’s-degree programs that offer little or no financial aid and charge market prices financed by debt, congratulations: You, too, own a for-profit college! And, unlike your peers at the University of Phoenix, you don’t have to pay taxes on your earnings.
The federal government should treat these programs as what they clearly are and regulate them using the same standards being applied to more obvious for-profit colleges. That would help students who navigate a stealthily treacherous education market that too often values easy money over a genuine commitment to preparing people for satisfying and productive lives.
