Seven Challenges Facing Higher Education

For more than 15 years, I have redirected my academic career away from economic history, labor economics, and public finance towards the economics of higher education, and have made, with frequent urgency, several arguments, all pointing to a growing, unsustainable crisis that is requiring solutions. I am aging and tiring of making the same points, so very soon will disband the Center for College Affordability and Productivity. Gratifying, however, what were once highly contrarian views are now increasingly accepted, and other able scholars and writers can continue to carry on the call for reform and change.

Paraphrasing Gen. Douglas MacArthur, “old scholars never die, they just fade away.” Before I “fade away,” however, let me review seven of the biggest problems the nation faces with respect to its universities.

First, the huge increase in the costs of universities are starting to seriously turn off potential customers and alienate the public, whose support of colleges is waning. For the past five years, aggregate college enrollments have fallen. Rising college costs and stagnant or declining pecuniary benefits have led more persons to ask: “is college worth it?” or, “do I get a good return on my college investment?”. While many college administrators and professors decry it, most Americans go to college primarily to enhance the probability of vocational success. As enrollments have grown faster than the number of good high paying jobs, more students are “underemployed”, suggesting we are overinvested in higher education.

Second, the vast increase in federal student financial aid, and also intrusive federal regulation, has caused much of the tuition price inflation and has reduced a distinctive advantage of American universities: their diversity, competitiveness, and freedom from central direction. The evidence is clear that much of federal student aid ends up supporting higher tuition fees, benefiting universities and their staffs more than students. Regulations like the 2011 “dear colleague” so-called  “guidance” with respect to treatment of sexual assault cases prevent individual schools the freedom to set their own standards, forge a distinctive identity, all the while trampling due process and basic American concepts of fair play.

Third, new, much cheaper approaches to certifying vocational competence are on the horizon that offer an existential threat to the lower end of the higher education market. Already, more and more students are taking courses and sometimes whole degrees on-line, bypassing the expensive non-academic expenses that most universities impose on their students: high room and board charges, fees to support intercollegiate athletics and other extraneous things. State and private schools with indifferent to poor reputations are increasingly in precarious shape. New forms of certifying competence such as a national college exit examination could ultimately disrupt the market.

Fourth, the core fundamental feature of colleges — their role as an oasis where widely divergent ideas are discussed and peacefully argued — is increasingly under attack. Universities presidents kowtow to protesters who try to impose their often warped set of values upon others.

Fifth, the combination of anemic economic growth and an aging population are reducing the capacity to increase resources provided for higher education. Economic growth has fallen by nearly one-third over the past generation, reducing both our ability and tolerance for funding our exceedingly inefficient higher education network. Health care expenditures are crowding out funding for other items in state budgets, leading to an almost de facto privatization of some so-called “state” universities.

Sixth, the value of a college degree as a device to signal knowledge, intelligence, discipline, ambition, and integrity is fraying, jeopardizing the economic advantages of a university education. The earnings advantage of college graduates relative to high school diploma holders is not rising as previously, as employers find that too many college graduates lack the positive distinctive qualities they want in new employees. Too many students of meager academic performance attend college; grade inflation allows nearly everyone to graduate who persists. The prestige elite schools are increasing viewed as altogether superior institutions to less selective colleges and universities.

Seventh, at dozens of large campuses, intercollegiate athletics is costly financially and often scandalously immoral and exploitive. Growing evidence of long term health problems from football add to the problems from the exploitation of students (by paying them less than their work contribution would warrant in a competitive labor market) by extremely wealthy adults. Sex scandals and academic cheating revelations hurt the prestige of higher education and the perception that it is a noble and uplifting enterprise of any progressive society.

The list above does not touch on many problems, such as the inefficient use of physical facilities, the abuses of the tenure system, or the failure of colleges to make their students work very hard (and, by implication, learn very much). College is increasingly more of a gap period of socialization before young individuals join the real world. The list goes on and on.

To be sure, the expensive residential schools that are highly selective in their admissions will continue for decades if not centuries to come. Also, for many, college is as much a socialization device, a consumption good, as it an investment to prepare young students for adulthood. However, the future public subsidization of this enterprise is, rightly, increasingly being questioned.