How to fix higher education

By Reihan Salam
March 17, 2014

America’s elite higher education institutions are the envy of the world. Foreign students flock to the oldest and wealthiest U.S. research universities to take advantage of resources that are unparalleled, thanks to the deep pockets of many centuries’ worth of captains of industry.

Yet when we consider the post-secondary institutions that educate the typical American high school grad, we see a very different picture. While the share of Americans who enroll in higher education has grown substantially in recent decades, graduation rates have been stagnant.

Community colleges promise an affordable education to millions of students, but they often fail to offer the courses students need to complete a degree in a reasonable amount of time. Public colleges and universities churn out graduates who are forced to take jobs that don’t actually require a four-year post-secondary education. Most private non-profits do the same, and they’re also notorious for charging obscene tuition that their graduates can scarcely afford. And private for-profits, which have grown enormously by taking on some of the hardest-to-accommodate students, stand accused of loading up their students with debt without offering them marketable skills.

It is hard not to sympathize with the Obama administration, which last week launched a new effort to ensure that career training programs are meeting the needs of their students. The problem with the new White House push, however, is that it focuses on a too-narrow aspect of America’s higher education crisis: about 8,000 vocational programs at community colleges, state universities, and for-profit colleges, which train students in subjects like business administration, nursing and automotive repair.

The basic problem that the Obama administration hopes to tackle is that while a large and growing number of students enroll in vocational post-secondary schools, most of whom make use of federal grant aid and subsidized loans to meet the cost of tuition, an alarmingly high share of them are failing to find well-paying jobs. And students who can’t find well-paying jobs struggle to meet the cost of servicing their loans, let alone pay them off.

The Department of Education plans to identify vocational programs that leave their average graduate paying a high share of their earnings in loan payments (8 percent or more of total earnings, 20 percent or more of discretionary earnings) as well as those with a high average loan default rate (of 30 percent or more). Programs that cross these red lines in two out of three years will lose the right to offer their students federal financial aid.

Curbing the abuses of this sector could do some good. But career training programs represent a small subset of the higher education universe. If we take a somewhat wider view, it seems pretty puzzling that, say, business or engineering majors at four-year colleges and universities aren’t being treated as enrollees in vocational programs.

Why not? Given the epidemic of underemployment among recent college graduates, it might make sense to apply the same standard to all post-secondary institutions, not just those that are explicitly labeled career training colleges.

Steve Gunderson, president of the Association of Private Sector Colleges and Universities, the trade association that represents the for-profit higher education sector, observes in a tart press release that “if the regulation were applied to all of higher education, programs like a bachelor’s degree in journalism from Northwestern University, a law degree from George Washington University Law School and a bachelor’s degree in social work from Virginia Commonwealth University, would all be penalized.”

My reply to Gunderson would be that, well, yes, let’s penalize these programs too. It makes perfect sense to establish a regulatory floor to protect consumers from the least effective post-secondary programs, whether they’re at vocational schools or standard-issue colleges and universities.

Even if we denied federal financial aid dollars to these programs, however, we’d still have students in need of post-secondary education options. The for-profit higher education sector often emphasizes that it serves students that community colleges and private nonprofits fail to reach, like working adults who need flexible schedules. It could be that wiping out the low-performing vocational schools will allow a new wave of high-performing vocational schools to flourish. Yet it’s also possible that vocational schools will stay on the right side of the new regulations by refusing to take on challenging students.

There are two really deep problems that plague U.S. higher education. The first is the absence of useful and reliable data that students and parents can use to evaluate programs of all kinds. In “College Blackout: How the Higher Education Lobby Fought to Keep Students in the Dark,” Amy Laitinen and Clare McCann of the New America Foundation recount how the private nonprofit higher education lobby has fought against efforts to create a federal student unit record system.

As obscure as this sounds, the lack of such a system makes it extremely difficult for higher education consumers to answer basic questions like which schools do the best job of preparing their graduates for the workforce and which leave their students drowning in debt. Making this data easily accessible would force the weakest performing schools to either change their ways or face steep enrollment declines. But if the students who turn away from the bottom of the barrel have nowhere else to go, as the best schools have only so many seats, we’ll still find ourselves in a bind.

This leads us to the second problem. While transparency would help expose the worst schools, it won’t necessarily improve the average quality of America’s higher education institutions. It’s true that in a world of greater transparency, schools would be more likely to offer a high-quality education at an affordable cost, but that’s not enough.

Andrew Kelly of the conservative American Enterprise Institute has emphasized that we need a supply-side strategy designed to increase the availability of affordable, high-quality college opportunities. This could mean making it easier for new schools to gain accreditation, or incentivizing existing high-quality schools to become more inclusive rather than more selective. Over time, increasing the supply of affordable, high-quality college opportunities will raise the average quality of higher education by driving the worst schools out of business and forcing the best schools to continually raise the bar.

By combining these strategies — greater transparency plus more entry of good schools and exit of bad schools — we can see to it that our entire higher education sector, and not just the elite slice at the top, is one that we can be proud of. That change advances upward mobility for all.

PHOTOS: A student in flip flops and shorts (C) watches as U.S. President Barack Obama (not pictured) receives an honorary degree during the spring commencement ceremony at Ohio State University in Columbus, May 5, 2013. REUTERS/Jason Reed

Anita Linton (L), from DeVry University, talks to job seeker Mario Juevara, 27, at a job fair in Los Angeles, California, November 18, 2013. REUTERS/Lucy Nicholson 

11 comments

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Was there a point in there somewhere?

Posted by tmc | Report as abusive

The problem with American universities is they are surreptitiously (or sometimes explicitly) for profit and so offer way more useless artsy-type courses that are utterly without merit to try and extract more rents from students. If universities were actually utilitarian (which is what so many on both sides say they’d like) then about 50% of all courses would get scrapped tomorrow. I’m not saying everyone needs to be a STEM major; teachers, writers, musicians, et al deserve the chance to take multiple arts classes since it actually pertains to their discipline. But there are not that many in college that are actually going towards those goals. They might as well call an Arts Major a Starbucks Major because that’s where they’ll end up…

The other big problem (somewhat related to the first) is that maybe 30-40% of jobs in America don’t require post-secondary education. So if you have say 80% of the population in college fighting for only 60% of the jobs available there are bound to be guys and gals that get the shaft and are left wondering why. I have nothing against women’s studies or black studies, but there are only so many professional jobs that would require that kind of background. For the rest left behind that degree is as good as toilet paper unfortunately. Kids should be taught the reality of THAT! and that trades pay quite well actually.

Posted by CDN_Rebel | Report as abusive

The most logical place to start is with law schools, where the demand for JD’s in the marketplace is well below what the schools are turning out–with massive loans in tow.

Then we can begin to eliminate the social-engineering “studies” programs in both private and public universities. These programs should easily be incorporated into the standard liberal arts programs. (In fact, most only serve to reinforce a 1970′s of catering to the “oppressed classes” but are really structured for the professors who can only rationalize their existence through their radicalism.)

Posted by COindependent | Report as abusive

Wall of text article on an important topic. How about requiring a study of entrepreneurship basics if the course is a non-trade course.

Posted by BidnisMan | Report as abusive

The world today is in denial as to the effect inexpensive computers and increasingly capable software is having on present and future employment. Untold thousands of “good middle class jobs” such as draftsmen, designers, clerks (retail, office, warehouse, bookkeeping), secretaries, administrative assistants, the bulk of “middle management” have disappeared since the last quarter of the twentieth century. They won’t “be back” EVER!

Recent Oxford University research projects that within the next 20 years 45% of existing U.S. jobs can be replaced by computers. For every country in the world this means that the children of those still doing well today may have little chance of finding a “good job” themselves.

This economic “tsunami” can only produce a job market in which an ever-decreasing number of those who are “the best” in terms of connections, abilities or potential will find “productive employment”. Many of those who do will be entrepeneurs who “create their own jobs”.
“Higher education” will inevitably collapse in upon itself to a capacity more in line with demand. Those institutions and personnel who survive will be the “best of the best”, much as today’s sports stars and entertainers.

These will pick and choose from the “best of the best” students. The inevitable result will no longer be a society in which someone on the bottom rung can lift themselves to the top. It will be one in which none but the very best even get hired.

No one will tell this truth publicly because the bearer(s) of such bad tidings tend not to survive long. We already have a whole generations of which a high percentage are already “dead enders”. One-third of our young today do not meet current physical or mental standards for military service.

Society is going to have to re-invent itself and re-think it’s incentives and rewards. Education must leave the facts and figures to the computers and educate youngsters in strategy and flexible “out-of the box” perception.

Perceiving a genuine business opportunity is an art no different from recognizing a singer with the potential to be a star. In each case, development, promotion, production and distribution are skills that can be taught like math or bookkeeping.

We must harness the emerging capabilities of computers to provide for mankind, for they do what we can do so much faster and better. If we cannot define a contest in terms that keep humans in charge of what is and is not done and relevant to such process there is no good future beyond.

Posted by OneOfTheSheep | Report as abusive

TO add to @OOTS statement, robotics combined with software are now capable of replacing the average 100 IQ person. It has the smarts and dexterity. Very soon, like the next five to ten years, it will ready for mass manufacturing (by other robotics).
We (humanity) are going to go through a tough period as the economic countries will have severe unemployment and the emerging and third world economies struggle to catch up but having to skip the industrial revolution portion. Economics must be rethought from the bottom up and be prepared to make a fifty or seventy five year transition into the next human society.

Posted by tmc | Report as abusive

Our Universities Are Businesses

Good universities take risks because they must change. New ideas are risky business. Risk and progress are siblings. And don’t be fooled: Universities are serious businesses and many are on life-support. Healthy institutions learnfrom exercised risk and mission focus.

“Recently, I was asked if I was going to fire an employee who made a mistake that cost the company $600,000. No, I replied, I just spent $600,000 training him. Why would I want somebody to hire his experience?” Thomas J. Watson, Former IBM Chief

Universities that don’t see themselves as businesses are
disadvantaged. A business-like approach does not undermine missions of teaching, scholarship and serving students, but enhances them if core purpose
is central and manifest. Many fear corporatization of universities, mistaking a buzzword for healthy organizational discipline. Fear of business-sensible practices causes function and purpose to wither on the vine.

Universities receive tax dollars at noteworthy rates. Of the 896 institutions receiving federal research funds last year, 10 universities collected 20% of the $40 billion dollars dispensed. Of these 10 universities John’s Hopkins received $1.9 billion, the largest amount, and Duke $585 million, the smallest amount of the top 10. Half of the leading beneficiaries of federal subsidies are private, according to a recent report by 24/7 Wall Street. Such cash flow is either business or absolute folly.

Athletics revenues also create an undeniable business environment on public university campuses. The top 10 athletic revenue generators total one billion dollars annually. The University of Texas at $163.3 million tops the list. Number 10 Auburn spawns $106 million. Of these top 10 athletics enterprises, 5 operate at deficit, defying common wisdom, and require subsidies, from student fees usually, ranging from $250,000 to $5 million annually, according to USA Today. Of 228 universities only 7 required no subsidies. New Jersey Tech spent little, $11 million, but 91.5% came from subsidies, leading the nation. Maybe the question is, “What business are we in?

Arizona State University has over 60,000 students leading the “size” race. Number 10 on the list is the University of South Florida with 48,000 students. If students were customers, serving this many would qualify universities as serious businesses.

A December 13, 2013 U.S. News post lists the top 10 universities regarding student indebtedness: not a pretty picture. Wheelock College leads with $49,000 on average for the students who borrowed and graduated. Mount Ida College, number 10 on the list, posted an average of over $42,000 in debt for the 80% who graduate, according to Kelsey Sheehy’s December report in U.S. News. Most of the debt-burdened graduates are from private schools; however, they are dependent on taxpayer-backed student loans. Of course, there are growing ranks of angry students, a.k.a. customers, who borrowed and flunked out or left with degrees of little value, economic or academic. Too many universities are seen as social service providers and act corporately, rather than opportunity engines that behave in a businesslike fashion. The long-term burden of educational debt demands businesslike attention.

Being a business is straightforward. What’s the mission and how is it attained? Who is served? Why is someone willing to pay? What defines quality? These business questions should be regarded carefully: purpose, cash flow, efficiencies, projections of expenses and revenues, and measured results all require a business mindset. An entrepreneur.com post of February 12, 2010, addresses business start-up requirements like these.
And universities are in a perpetual “start-up mode.” They should behave like it.

Some universities are addicted to failure. A Tyler Basu piece, 10 Signs You are Addicted to Failure, has applicability to educational institutions. Purpose and
intelligent risk-taking to meet the fluid demands of changing demographics are essential. The need for appearance of oversight and seemingly responsible behavior creates a fear of failure and drives institutions to herald what works and hide the rest. Risk aversion stymies effectiveness, and the appearance of success may be just that, a facade.

Without intelligent business conviction our universities
lose relevance; and relevance is the only insurance against failure in any
business.

http://walterwendler.com/.

Posted by walterwendler | Report as abusive

The way to fix secondary education is to forstall entry into the system. Most people should wait to go to college until they are about 25. Go get a job and find out what the real world is about. The way to fix elementary and highschool education is to teach the truth. Do not try to make the students good little corporate citizens. That is a slavery process. All education should give up on the ideological indoctrination which is so prevalent.

I hear so many older people talk about how the kids just don’t understand what the real world is like, and that may be true. However, in my opinion, most 50 year olds don’t know what the real world is like because they think what they are told to think. If your a good little corporate citizen you should be banned from influencing children, because you are brainwashed and not a free thinking free individual. Why should anyone take advice from a voluntary slave?

Posted by brotherkenny4 | Report as abusive

The problem with fixing education are all of these people that think there is one or two things wrong with it that can be fixed. It is not the case. It is a very complex subject as education is part of a very complex and ever changing society. I understand peoples need for simplicity, but this kind of thinking has done sever damage to our educational system.

Posted by tmc | Report as abusive

@brotherkenny4,

“Most people should wait to go to college until they are about 25. Go get a job and find out what the real world is about.” Agree completely, but for most potential employers there is little “need” for the functionally unskilled.

Employers can/will not pay minimum wage to teach them, and yet our politicians are trying once again to raise the minimum wage. Clearly counter-productive in the overall for our society.

Perhaps a government CCC-type program for those with no other choice to bridge those years that cannot get into the service. Unfortunately, I suspect you might deem that a “slavery process”.

Indeed, any process that produces capable, CIVIL citizens you might deem a “slavery process”. You seem to deem being uncivil either the “normal” or desirable human condition. I think the great majority of productive society would strongly disagree.

The very survival of “the rest” are financial parasites living off of productive society and resentful of that reality. Ain’t gonna change, so go with the flow or go to jail. Choices have consequences.

Posted by OneOfTheSheep | Report as abusive

If one of the goals is to prepare graduates for the workforce, why not greatly expand co-op programs (work/study programs)?

Posted by MarkMcE | Report as abusive