In the Washington Examiner, Glenn Reynolds lays out some arguments that higher-ed financing is about to go soft. First of all, he cites the reasons why colleges have been able to raise tuition much faster than rates of inflation.
“First—as with the housing bubble—cheap and readily available credit has let people borrow to finance education. They’re willing to do so because of (1) consumer ignorance, as students (and, often, their parents) don’t fully grasp just how harsh the impact of student loan payments will be after graduation; and (2) a belief that, whatever the cost, a college education is a necessary ticket to future prosperity.”
If people start to become, first of all, more pessimistic and, next, more knowledgeable about the actual benefits of a college degree, or rather an expensive college degree as opposed to a (relatively) cheap college degree, the system is in trouble.
Reynolds:
“College is often described as a path to prosperity, but is it? A college education can help people make more money in three different ways.
“First, it may actually make them more economically productive by teaching them skills valued in the workplace: Computer programming, nursing or engineering, say. (Religious and women’s studies, not so much.)
“Second, it may provide a credential that employers want, not because it represents actual skills, but because it’s a weeding tool that doesn’t produce civil-rights suits as, say, IQ tests might. A four-year college degree, even if its holder acquired no actual skills, at least indicates some ability to show up on time and perform as instructed.
“And, third, a college degree—at least an elite one—may hook its holder up with a useful social network that can provide jobs and opportunities in the future. (This is more true if it’s a degree from Yale than if it’s one from Eastern Kentucky, but it’s true everywhere to some degree).
“While an individual might rationally pursue all three of these, only the first one—actual added skills—produces a net benefit for society. The other two are just distributional—about who gets the goodies, not about making more of them.
“Yet today’s college education system seems to be in the business of selling parts two and three to a much greater degree than part one, along with selling the even-harder-to-quantify ‘college experience,’ which as often as not boils down to four (or more) years of partying.”
As we hear more stories such as the New York Times profile of the NYU student who ran up $100,000 in student loans and majored in religion and women’s studies, more teenagers and parents will increasingly disregard the latter two benefits and focus on the first one. Higher ed better be ready for the adjustment, Reynolds warns.
5 Responses to Glenn Reynolds on the Next Bubble Burst: Higher Ed
akafka - June 7, 2010 at 11:20 am
Hi, Mark. Thanks for the pointer. Just want to call your attention to a similarly themed piece that ran in The Chron last year:May 22, 2009Will Higher Education Be the Next Bubble to Burst?By Joseph Marr Cronin and Howard E. HortonHere’s the free link:http://chronicle.com/article/Will-Higher-Education-Be-th/44400/
From Mark Bauerlein: - June 7, 2010 at 11:35 am
Let me add a salient paragraph from the Cronin/Horton piece on market share:
“In the meantime, online, nontraditional institutions are becoming increasingly successful at challenging high-priced private colleges and those public universities that charge $25,000 or more per year. The best known is the for-profit University of Phoenix, which now teaches courses to more than 300,000 students a year–including traditional-age college students — half of them online. But other competitors are emerging. In collaboration with an organization called Higher Ed Holdings–which is affiliated with Whitney International University, owner of New England College of Business and Finance, where one of us is president and the other a trustee–some state universities have begun taking back market share by attracting thousands of students to online programs at reduced tuition rates. One such institution is Lamar University, in Texas, which has seen its enrollment mushroom since working with Higher Ed Holdings to increase access to some of its programs.”
newsoffice - June 8, 2010 at 8:49 am
A few things are hapening:1) Parents are shopping — looking for the best education for the best price. This means that kids won’t necessarily be going to their first or even second choice. Instead of your kid applying to four schools, he/she will apply to eight to 10 schools. The kid will end up at school he/she likes — moms and dads aren’t that cruel — but also with the least amount of financial hardship or heartache for the student or parents. Full pay kids with fewer accomplishments will (and already do) have a muich higher rate of acceptance than middle class kids. The real low income kids — particularly if your kid is African_American — will still get in with lots of financial aid. In the end, as with anything it will be the very top and the very bottom that benefits and the vast middle class will go under.
richardtaborgreene - June 14, 2010 at 9:44 am
1. John Seely Brown and Duguid said that eLearning eColleges have lots of info lacking lots of social life so face to face class results will out-class emediated classes. Perhaps. 2. Then they wrote a bigger book about open learning—a top ten global body of courseware anyone in the world could master. Perhaps. This much resembles the initial fears and arguments about having social clubs and fraternities on campus, centuries ago. AND European arguments about students that commute from home versus resident in dorm ones.What is the demand side of learning in colleges?1. one part of it, exponentially growing, is keeping up with technical systems as they evolve, and jerking social and commercial imaginations and practices along to keep up with technology2. one part of it, is educating people—getting blue collar people and American people out of their birth-collar-color and birth-nationality-mindset and into HAVING themselves instead of blindly BEING themselves (Kegan at Harvard).3> one part of it is training each generation to preserve freedom and democracy from the same old human passions and weaknesses that US founding fathers so carefully worked to invent a form of government capable of mitigatingetc. etc. etc.For each of O’Neil’s 40+ educational ideologies there is another rabid single pure purpose of education to impose on all the rest of us. I choose no one ideology, no one person (Whitehead and Arendt and god knows Gadamer included) to take the views of and impose them on all the world arrogantly and dictatorally. I choose to ask 8000 people in 41 nations, and 63 professions who is the most educated-acting person you know and what makes them that way and what makes being that way of worth. Their answers, carefully analyzed and categorized, formed 64 capabilities shared by most (not all) highly educated-acting persons. THAT is my definition. How many of these 64 does Harvard now install in its expensive students? How many does U of Phoenix now install in its 300,000+ students? Surprisingly, Harvard and U of Phoenix test out on these 64 about the same—amazing.
nakliye - July 4, 2010 at 7:24 am
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