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The Problems With the “Undereducated American”

July 3, 2011, 12:44 pm

Anthony R. Carnevale and Stephen J. Rose of Georgetown University’s Center for Education and the Workforce recently published a report entitled “The Undereducated American,” which, I have to say, I find extraordinarily misleading.

Their recommendation is simple—they call for in increase of 20 million American college students by the year 2025: “15 million would hold Bachelor’s degrees; 1 million would hold Associates degrees; 4 million would have attended some college but earned no degree.” They claim that if this goal were achieved, U.S. GDP would be boosted by $500-billion dollars, and our country would once again be on top of both the educational and economic worlds. In my opinion, even if this goal could be achieved, we’d be “on top of the world” much as Cody Jarrett found himself at the end of White Heat than in any sense we’d want to be.

I scarcely know where to begin critiquing this report. A useful start might be a comment posted on my last blog by “dvacchi.” While he or she claims that “there’s nothing new” in my post (right about that—I often feel that I’m simply restating what should be obvious), s/he restates it far more succinctly than I do. What’s wrong?

1. College costs too much
2. There are people who can/should be going to college but are not for a whole host of reasons.
3.  There are people who can/are getting into college who should not.

“dvacchi” is right on all counts. Bizarrely, though, “The Undereducated American” barely touches on these obvious problems about which all parents and students are keenly aware. Instead, the report’s centerpiece is an odd extrapolation of the supply-and-demand theory to college education. Here’s the essence: “If qualified workers are in short supply relative to employer demand for them, the rational response on the part of employers is to bid up wages for the workers they want—in this case, college educated workers.” I’ll leave it to my fellow blogger, economist Rich Vedder, to tackle that claim.

To be fair, the report acknowledges a political dimension to the relationship between college education and employment. The authors admit, for example, that “the labor market is not a perfect market. It is based on personal decisions, not easily produced products. Furthermore, in the real world, politics often intrude on the labor market. State and federal governments, for example, set minimum wages, and workers can organize into unions to engage in collective bargaining relationships. Government trade policies can affect the labor market, too, through the importation of goods from abroad produced by workers who are paid lower wages.”

But they never follow up on these factors, even though they override all others. Employers don’t have to “bid up wages for workers they want;” they can in many cases simply “bid out” those wages, paying workers in India, China, the Philippines a fraction of what they would have to pay American college graduates.

Another factor in the success or failure of American higher education is buried deep within the recesses of the report. Not until p. 34 of a 48-page report do the authors admit the following: “Any strategy to increase the number of college graduates must be based on improving the quality of graduating high school seniors; otherwise, we cannot produce the additional college graduates needed to meet the desired goal.” This corresponds exactly to “dvacchi’s” third point and it’s a monumental problem. America’s public K through 12 education system has been disintegrating for generations.

That’s fodder for another post to be sure, but the system is unethically funded, based on property taxes, so wealthy children are guaranteed a much better primary and secondary education than are poor children. In my early years at Ohio State I taught a very bright student from a very poor town in the state. She graduated from high school in 1988, and the science textbook she used that year actually said, “Some day, man will walk on the moon.” How she made it to Ohio State with such a grossly deficient high school education is a miracle, but her situation is thoroughly representative of Appalachia and inner-city America. And it’s a problem that would take generations to remedy—even if enough people cared.

Finally, there’s the “college costs too much” component. Tucked away in the final appendix of the report are the following jaw-dropping claims. First, “The National Center for Education Statistics reports that in the academic year ending in June 2008, the average out-of-pocket expenses for a ‘lower middle-class’ family was $10,000 while the comparable figure was $17,300 for a family in the highest income group. All of these figures include room and board, expenses that a young adult might face regardless of whether they are enrolled in school or not (if they are not living at home).”

I don’t know how much money Carnevale and Katz make or how many children they have, but for a lower middle-class family, one in which (in the present economy) the jobs of both parents are in constant jeopardy, $10,000 per year/per child is a devastating economic burden. What if a hypothetical couple, say making a combined total of $55,000 a year, wants to send all three of their children to college? The answer: they can’t—they can’t be expected to give up more than half of their income to educate their kids. The implication that $10,000 a year in tuition, room, and board for a lower-middle-class family is somehow a trifling and easily affordable amount is not only wrong but deeply condescending.

The second claim: “Finally, the numbers on total debt of graduating seniors are not as dire as some make them out to be. Fully 34 percent of young bachelor’s degree holders have no debt at all, while the median debt value of all graduating students is about $12,000. Heavier debt loads apply to progressively smaller shares of student: only one in four have debts over $30,000 and only ten percent have debts over $40,000.”

Two points, and then I’m out of space for today. First, if student-loan debts are so manageable, then why are default rates constantly on the rise? Why do students feel that it’s impossible for them to pay back their loans? From the Huffington Post: “According to a new study by the Higher Education Policy, in Washington DC, an astounding 41% of recent borrowers face delinquency or default on their federal student loans. That makes the mortgage default and foreclosure rate, even at the height of the housing crisis, look like child’s play. In fact, student loan default rates have been rising over the last few years, according to a September 2010 report from the Department of Education. And it’s no wonder, since tuition has been rising above the rate of inflation for decades now.”

I hope this triggers a debate. The Georgetown report echoes the exhortations of the Obama administration, and the whole, the uncritical notion that everyone should go to college deserves serious scrutiny.

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  • megginson

    Concerning that link labeled “3 Institutions Will Share $13.5-Million Ohio Training Facility”…. Uh, folks, that’s Columbus, *Indiana*. While I’m sure the Buckeyes would magnanimously agree to let branch campuses of their two Big Ten partners share their city, it hasn’t yet happened.

  • lizziec

    One thing that we seem to miss in these posts is that no parent in this country (USA) stares lovingly into the baby bassinet and dreams that their child will grow up to become a car mechanic, or waste management technician. While these are honorable and necessary professions, this country suffers from the fairy tales that emerge from the lives of those like Bill Gates, Mark Zuckerburg and others of similar fame.

    The truth, however, is that most of us are average and while dreaming BIG is admirable, we Americans take it to a new height and the colleges and universities have seized upon this strong urge to believe that our children will be different, and so we line up year after year to purchase what we believe will be our family’s ticket to the American Dream. (If you don’t believe me, Google Law School Debt sometime and ask yourself why all these people borrow up to $250k to go to law school when there is ample evidence that there are already too many lawyers and increasingly fewer each year will land lucrative partner-track positions)

    This is, in my opinion, exaggerated greatly on the for-profit side, but it is not missing from the non-profit side. We see too many boringly average, unbright students file into college classrooms each year and spend 10s of thousands of dollars for their chance at that dream, and while most will do OK as compared with what they would do with only a HS diploma, they are not paying skyrocketing tuitions to “do OK”.

    I’ve said it before and it bears repeating: this country needs to reestablish some sort of manufacturing base, Congress needs to pull its head out of Wall Street’s back side, and enact penalties for off-shoring work that can be done here, and we need to dramatically pare back these monstrosities (otherwise known as colleges and universities) to their original missions, which was to educate the literate classes, and stop trying to pretend that everyone can (or should!) go to college because the cold hard truth is that many don’t belong there and are never going to reap the benefits of the time or money they spent getting that piece of paper.

    Then we need to start telling people that it is not only OK to “not go to college”, but that there are respectable jobs and careers that people can aspire to when they are not academically inclined and these jobs need to pay family-sustaining wages. (of course we need to create these as a society, first)

    The rush to college idiocy will not go away until there is some semblance of a work life that is a reasonable alternative to the college degree, and that’s not going to happen without a national commitment to stop this insanity.

    And don’t expect the colleges and universities to line up to stop the tide of borrowing fools, either. 

    We need a MAJOR national reset that begins with improving and supporting K-12 education, In my opinion, if this means that the colleges are “on their own”, then so be it because without high quality inputs from the nation’s K-12 systems, college is a waste of time anyway.

  • AlanCollinge

    Frankly, this piece does too much!  I cannot get past #1.  Too often lately, the conversation goes right past this without stopping…

    What this piece (and what all pieces on this topic) fail to understand is that this is an inherently, structurally predatory lending system, where not only do the large lenders (who also own collection companies) and guarantors stand to make far more money from defaulted loans…even the Department of Education gets back $1.22 for every dollar it pays out in FFELP default claims (and no, collection costs and the Department’s “cost of money” do not come close to taking this surplus away).

    So the Department of Education is also making, not losing money on defaulted loans. This is the problem.  This is a defect.  This is a defining feature of a predatory lending system that explains the anti-student, pro-bank culture that seems to be so deeply ingrained there.  Imagine if JP Morgan Chase, Fannie Mae, and even the FHA were wringing tidy profits from defaulted subprime loans (more, even, than healthy loans)…this is essentially what we are faced with.  Where is the bipartisan, unanimous acknowledgement that this is simply not tolerable, not right, must not be allowed to persist? 

     This predatory dynamic is extremely important to understanding the problem…Therein lies the enabling factors for the inflation, the high default rate, the silence about this default rate (as the author exposes), and others…

     As long as this is the case, the Department won’t take any strong
    actions to compel the schools to improve quality, and reduce cost (and
    this applies broadly to all schools, not just the for-profits).

  • http://twitter.com/MakeCollegePay MakingCollegePay

    About student debt: translate that into payment from “take home pay” after graduation! For some it will be 20 years before payoff!

  • facdevelop

    What never ceases to amaze me is that too may reports and commentaries neglect to point out that the cost of public higher education is increasing as a direct result of the current obsession of the electorate with ‘no-new-taxes’ and ‘no tax increases’.  Many public higher ed institutions were funded by states at 80% in the 1970s & 80s, but now are funded at less than 10%.  No wonder tuition and fees are more expensive!  Education is a worthy use of taxes.  Taxes are a lot more fair to lower income folks than are endless fees and add-ons for services that used to be covered by taxes.  Enough!

  • marka

    Count me as a skeptic of all the talk about ‘more education’ is an unalloyed good.

    Typical is the view that we all need to spend even more $ – via taxes, grants, scholarships, etc. – on education.

    Sigh … this is precisely what got us into trouble with home-ownership.  Even with these ‘lessons’ slapping us in the face, we still don’t learn … Talk about education being over-rated, here is a perfect example.

    Subsidizing more home-ownership ultimately boomerangs.  The availability of a subsidy ultimately drives prices up – not down – making home ownership less affordable – not more.  Sooner or later, the pyramid scheme collapses – we run out of ‘greater fools’ at last.  Similarly with education.

    When I graduated in the 70s, teachers & others were still compensated towards the bottom of the degreed population.   Since then, with more & more ‘investment’ in education, we have higher compensated teachers, et al, but hardly any better product.

    High schools still fail large numbers of disadvantaged, and our postsecondary institutions aren’t doing much better for this demographic.  Sure, many previously disadvantaged have gotten a hand & leg up, but they’ve left many others behind. 

    Pouring more $ into this system is =not= a guarantee of anything, other than skewing cost even more, making it =less= affordable.  And we should heed the numerous studies of high school finance to determine that $ alone does =not= correlate with improved performance.  We need to work smarter, not harder.

  • xhzhang

    Agreed. I’m from Canada and I’m expecting no different situation here. I do not believe the US and Canada have such significant different culture toward education that what it being said here for the US is not applicable to the Canadian “system” as well.

  • trendisnotdestiny

    This is where I tend to look at history as means of explaining these phenomena:

    First, we know that the US used to be the largest creditor nation in the world.  Part and parcel to this was a system of education that funded mainly from tax payer dollars at public institutions.  College prices in the early 70′s were anything but exorbitant or prohibitive.  So the macro, meso and micro were aligned stabilizing the product of higher education.

    Second, we transitioned from the largest creditor to the world’s largest debtor nation in less than a few years (starting 1982).  Our country adjusted to this influx of capital and shifted from a manufacture-based economy to one predicated on consumption and the “financialization” or privatization of industry.  As a result, debt (revolving consumer, student loan, mortgage) became the growth engines of our economic GDP jettisoning our economy, stock markets and consumer assets to levels unseen. GE & GM developed finance arms of their companies.  Bubbles in industry we being inflated (due to deregulation), expanded (due to systemic consumption) and burst (due to speculation).  The privatized competition among larger institutions (universities, churches, entertainment, media) for dollars led to huge marketing efforts aimed at selling us more expensive, prestigious products.  Our economy grew quickly as did the inflation of the product to be sold in higher education — tuition.   There were asymmetries to our debt based growth and the solution was to take on more debt.  These are the origins of debt for diploma where the tuition inflation rate was largely ignored since asset prices rose and created a false sense of security.

    And lastly, the final phase of our history starting in the early 1990′s and to present, involves the predator state.  We have casinos in every state, payday lenders saturating military bases and impoverished neighborhoods looking for their credit addicts and then there was the repeal of the 1933 Glass Steagall Act (which prohibited the merger of investment and commercial banking) essentially making a delineation between saving and speculating.  The bubble machine was in full force starting with the boom and bust cycles of S&L Crisis, Latin American Currency, Technology Stocks, Long Term Capital Management and the Housing Crisis (sub-prime).  All the while, corporations were accumulating information about us and our financial lives (data mining).  In the predator state, informational asymmetry for a large swathe of the population is equivalent to huge profits (% of GDP).  Globalization of higher education meant another more expensive revenue stream and as long as the economy grew, no one much asked questions even after massive frauds at Enron, Madoff or Countrywide.   Debt for diploma was entrenched, but now the interest rates were higher and more profitable (see Sallie Mae executive salaries)  and tuition rates had exceeded the normal inflation rates by a 3 to 1 ratio.  Companies had grown and merged so much and saved so little that corporate influence was necessary to keep the ponzi going.  Higher education was handed over to business as the mid term elections in 2002 aimed to gut local and state governments support from the federal.  This was an indirect attack on public funding systems and was met with little response.  So, we had an exponentially expensive product that people were funding through debt.  We had private industry in place to benefit (now owned by uncle Sam) from the profits, but what no one knew was that our private industry was heavily leveraged and indebted from the securitization of sub-prime mortgages, over-leveraging bets and diminished capital requirements. 
    By 2010, the economy was being propped up and bailed out based on our Federal Reserve printing money. 

    The problem with the undereducated American in this phase and time in society is that we forget that there needs to be a permanent underclass of people to perpetuate the dependencies thrust upon our largest institutions just to make it through the next quarter without a major collapse.  For higher education, unless we address the cost, benefit, utility and application to employment, it will increasingly be a breeding ground for the privileged and ‘educated’ ignorant of the permanent underclass who can say they had a college education, but can see little evidence of its benefits.

  • burger1376

    I often wonder if the “not everyone has to go to college or get an education” advocates ever worked in a factory. Before college, I worked in a car parts factory in western PA.  In the short time I was there, the factory was investing in automation technology and robots to do most of the work.  Who were they hiring?  Not high school dropouts.  They were hiring the people who could run such equipment, thus tech school associate degree holders (die setters, CNC operators, and such).  Many of these people didn’t get the BA degree that many people think of when they think of higher education.  But, they NEEDED a degree and an education.  This is a simple fact of life, and those who advocate otherwise are not seeing the future.  Yes, there will be greater competition in the skilled-workforce, but that would lead to even more skilled workers and possibly more innovation as those who can’t find work go into business for themselves. 
     
    I should also add that, yes, US companies hire foreigners to do some of their work.  But, foreign companies in other nations hire highly skilled Americans to work in their host country as well.  I work in China for a Japanese advertising company that focuses on emerging markets.  If I didn’t leave the car parts factory and get my education, learn Chinese, and get work experience in multiple fields, I would probably have been laid off in the last recession. 
     
    Reducing the cost of education and/or making it more affordable for everyone is a difficult matter.  However, we could start by reducing foreign aid, both military and economic, to other nations.  Why are we giving away so much when we need to rebuild our own nation?  I don’t understand that at all.  Universities also need to change their thinking, and reduce costs by reducing investments in world-class gyms, high-class dorms, and other exorbitant costs.  And yes, the unfair financing of primary and secondary education needs to change.  (As someone who comes from the appalachian region, this hits right at home).  Another thing is that there are so many scholarship programs out there based on need, but too often they go to those who don’t need them.  Many minority scholarships go to middle income students instead of the poor.  That, to me, is a civil rights issue right there.   Also, the national eye is on these “disadvantaged” youth of the middle class based mainly in cities.  The neglect of poor whites in rural areas is a stain on US freedom and fairness ideology. 

  • Timray

    take government out of the equation and tuition will drop. faculty lounges…work out gyms…you name it the university has it or is seeking millions to build it. the amount of government pay out on totally worthless studies is beyond belief…

  • potential1

    I like the structure (3 points) from the original blog however I would add an exension to number two: US Higher Education is not largely prepared to meet the needs of nontraditional students.  This disconnect is most often seen in public institutions and manifests both on the institutional/structural level as well as in the classroom. 

    So even if I am able to muster the resources to go to college and qualify for admission, this issue of higher education offerings may contribute to my academic demise even though I can/should succeed.

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