I just spent two days with a room full of higher education leadership, and as one might imagine, there were several topics of discussion. We are educators, after all, accustomed to parsing issues minutely. There was one topic, however, that stopped conversation short, and that was the issue of higher educate finance. There were two strands to the conversation, and they kept entangling, which gave us plenty of fun in disentangling them. One strand might be labeled ROI -- that is to say, does education have a sufficient return on investment to merit the investment in time and treasure? The other strand, might be labeled "who pays?" -- this was the broader question of higher education finance, a question of particular concern to those of us who serve in public institutions.
The first question, on ROI, begs a follow on question -- "a return on investment for whom?" Education at any level is highly politicized, and as anyone who has sat through meetings that involve legislators and educators knows, the major differences are definitional. The notion of "return," for example is fraught with difficulty, some educators wanting the notion of "return" to include the social benefits of higher education -- the sorts of things like "citizenship" evidenced by the greater likelihood that holders of degrees will vote or volunteer -- like "self-sufficiency" evidenced by the lessor likelihood that holders of degrees will attach public welfare programs like food stamps. All to the good, of course, but the social benefits of higher education are difficult to quantify, and even when one can find common ground on a quantification, they remain fraught. It is hardly persuasive for those on the right, who believe themselves to be in the right, that higher education reduces public expenditure on welfare programs, in part because welfare programs, to their way of thinking, should not be offered at all.
I do, of course, believe such discussions are important, and if one buys into the traditional arguments of educators, it helps justify public expenditure on public higher education. It is, in other words, a public benefit, but it is also a private benefit. Here again there are various ways of parsing the notion of private benefit, some similar to the notion of social benefit. There is reasonably good evidence to suggest that degrees contribute to the pursuit of happiness -- that people with degrees are happier in their marriages and their careers. It is even more difficult to quantify a person's individual happiness, and most attempts to do so are always somewhat suspect and vaguely irrelevant as a public concern. The other way of parsing the "private benefit" brings us around to a more tangible form of ROI -- earnings expectations. Here again, there is substantive evidence that an investment in higher education in general provides a substantive return on investment in immediate employment prospects, salary on entry, and life-time earnings. There is a sort of win-win in the equation of higher education and higher wages, the complementary equation of higher wages and higher tax returns, both a private benefit and a social benefit.
It is perhaps not surprising that much of the conversation between educators and legislators have been around the equation of higher education and high wages, but it also begs the question of who should make the investment. If the principle ROI of higher education resides in a private benefit to the individual, shouldn't then the individual, not the public, make the principle investment? The question is largely rhetorical, and to most legislator's minds the answer obvious. They are nudged along by competing pressures on the state budgets for police and prisons, for roads and public transportation, for medicare and medicaid, and a host of other public goods. Unlike public higher education, which has always had the revenue stream of tuition to offset some of the expense, most of the public goods do not have revenue streams associated with them, and when they do, it is rarely wise to ask for "increased revenues." The periodic outcry when police are suspected of quotas on traffic stops, for example, points to some of the difficulty for raising "police revenues." Public transportation might be an exception, where there is a clear fee for service, but increased fares disproportionately affect the working poor. There are, in other words, all sorts of reasons to shift the priority balance away from higher education toward other more immediate public goods, particularly when individual investments in higher education return to the individual the substantiated expectation of higher wages.
It is perhaps not surprising as well that most state legislators have reduced the public expenditure and asked students to bear a greater and greater portion of the cost of the higher education. While around 80% of the cost of higher education is largely centered in the faculty and staff, contrary to popular belief, increased tuition costs have not gone into escalating faculty costs. At my own institution, for example, there have been salary increases of 1% per annum over the last five or so years. Those increases are below the increases of the consumer price index, and have been coupled with some rather significant increases in the cost of and their contribution to benefits, particularly health care benefits, which have been eroding over the same period. In short, faculty, like most middle-Americans, have seen their real wages declining. Most of the tuition increases at most public institutions have gone to off-set declines in state legislative support. I say "most" of course because I am sure there are exceptions which would give someone somewhere the pretext of saying "there! there! you see!" I can say this ALL of the institutions with which I have been associated, either as an employee or as a colleague, have struggled to keep tuition costs down, and have raised them only as a matter of institutional survival, a matter of keeping essential faculty and staff employed, a matter of keeping valued instructional programs going, a matter of keeping the lights and heat operating.
While public tax-based support diminishes and tuition increases, there is an escalating increase in expectations. First that higher education will absorb ever greater numbers of students, and second that they will actually deliver on the promise of higher wages. On the first, completing the private ROI of life-time wages, there is a body of literature that suggests that attaining ONLY a high-school diploma relegates one to a life-time of economic struggle. The evidence for that is compelling and beyond controversy. The sorts of jobs where one could learn the skills necessary on-the-job are rapidly disappearing. Whether one wants to blame off-shoring, the incursion of technology or both, there is considerable evidence that SOME post-secondary education is necessary to attain a middle-class income and life-style. Just how much post-secondary education and what kind is still a matter of debate, but it is clear enough that SOME is necessary, and so higher education is increasingly seen as both a necessity and an entitlement for all.
Consequently, while public tax-based support diminishes and tuition increases, public institutions, particularly public community colleges, are expected to educate more and more students, many of them ill-prepared for collegiate work. They are ill-prepared academically and attitudinally -- there has been plenty of press around that -- but often they are ill-prepared fiscally. The traditional picture of "college" -- that students graduate from high school, go off to college and study for four years, then enter into adulthood and careers -- pertains to a small and shrinking minority of students. Most are working part time at least, many are working full time or more at working poor wages, with the all familial and fiscal pressures that implies, and they are studying "in between" all the other obligations. One young woman, Maria Sanchez, slept and slept soundly through the entirety of my 8 o'clock class (how awful!). When I woke her at the end, she apologized and tried to make her escape, but indignantly I asked for an explanation. She had worked her customary mid-shift (6 p.m. to 2 p.m.) and had gone home to find her child ill, which meant a lengthy wait at the emergency room (no insurance). She had gone straight from there to my class, where she couldn't manage to stay awake. Yet she was there. I was still indignant, but not at her. College in the traditional sense is increasingly an elite indulgence. Maria needs better English skills to succeed in College, but she doesn't need a better, more committed attitude. She has that. What Maria needs to be successful in College is money, pure and simple, and she certainly cannot take a risk and ask her parents for that money.
On the second, when you consider students like Maria, it is rather important that higher education make good on its promise of an ROI on investment for the student. It is good, of course, that there have been some steps of late to curtail the predatory marketing practices of the for-profit sector of higher education with the Gainful Employment Act, which puts some pressure on all to provide evidence that attaining such and such a certification or degree will make the advertised difference in one's life prospects. In fairness, for-profit institutions are, well, for profit. Their business models are predicated on student demand, and they have been successful in adapting to that demand in ways that public higher education has not been successful, particularly the adult working students. Their business models are also predicated on low overhead, so generally speaking, their programming tends to be low overhead, high demand programming. One does not find too many for-profits entering fields where over-head tends to be high, as it is in most so-called STEM disciplines (Science, Technology, Engineering, and Math). The exceptions might be digital technologies, where over-head is moderate, and allied health programming, where student demand exceeds the capacity of most public institutions, and the perceived pay-off is so high that students will pay the premium in tuition. Beyond those exceptions, one will find instead a concentration on fields where over-head is low, as it is in business, public administration, and criminal justice -- fields where the for-profits can, well, make a profit.
Whether students can make a better living with low-prestige, high-cost education in those fields is another matter, but the cost is certainly high both for students and tax-payers. The business models of the for-profits are also predicated on the existence of various federal and other subsidies for students. If you make inquiry at a for-profit institution as a potential student, your first conversation is with an admissions counselor, but the admissions counselor is much less concerned (and often not at all concerned) with your academic ability, much more concerned with your eligibility for federal financial aid and guaranteed student loans. Just as some health care institutions will provide care to the limits of insurance, many of the for-profits will provide education to the limits of the available financial aid and student loans, and beyond that the student is on their own. Most drift away or drop out under financial pressure. While there is no doubt fat in public higher education budgets that could be trimmed away -- things like high-cost athletic programs, which includes football at all but a small handful of institutions -- and we find more with each round of budget cuts. While the "privatization" of higher education is popular in some quarters, and the decreases in direct tax-subsidies from the states is incrementally "privatizing" higher education, it is mis-leading to think that the for-profits can provide education more efficiently. On a program for program basis, the costs in the public and private sphere are roughly equivalent. The difference is this: they will offer only programs where there is a likelihood of profit, regardless of social need, and those profits will come from high tuition rates that are buttressed by federal subsidies, and loans. Take away the subsidies, take away the loans, and the for-profits disappear tomorrow.
Of course, so would many of us in the public sector. Frankly, we are not so different. If higher education were priced at its actual cost of delivery, very few (perhaps the so-called 1%) could afford it. In truth, even with existing subsidies, few can afford it. The declining state support, off set by increasing tuition costs, will have a long-term impact on the student population graduating today as they enter the job market. In a recent editorial in USA TODAY, Diana Furchtgott-Roth suggested that "huge tuition increases have also left those new workers with substantial debt. The graduating class of 2011 left school with student loans of almost $23,000, the highest on record." If default on exaggerated mortgage debt had a devastating impact on the middle-class in 2008, I suspect default on exaggerated student loan debt will have an equal, but more insidious impact on the middle-class in the future, particularly as education is increasingly commodified, and the commodity is increasingly devalued. The same editorial reports that "even those with bachelor's degrees don't have it easy. The unemployment rate in 2011 for new graduates with a bachelor degree was 9%, nearly double the 4.9% rate the same group experienced in 2006." Of course, that 9% does not include the number of baccalaureate holders who are significantly under-employed -- the communications major, for example, working as an administrative assistant, not as the sportscaster she might have imagined -- and so have only marginal ability to make a decent living, much less pay off student loans.
When one begins to match the increasing cost and diminishing expectations of higher education, it does raise the question, "is it worth it?" While a big pay-off for higher education is more and more difficult to guarantee, one thing is clear -- not pursuing higher education pretty much guarantees a life of diminished expectations on scales both human and economic. The plane, so to speak, is significantly over-booked, but one thing is certain -- over booked or not, without a ticket you cannot get on the plane. So there will be people clamoring to buy tickets, and people with tickets clamoring to get on the plane, but I have little faith that either political party will significantly increase the number of seats available. While graduation ceremonies are appropriately congratulatory, the ultimate success of our students resides in what might be called "out-put demand," a factor largely beyond the control of higher education proper. While we might take some steps to match "in-put demand," those clamoring for tickets, with "out-put demand," the employer needs that determine the number of seats on the plane, for the moment that is an elusive goal because the analytics that might allow us to predict the job market two, four, six years hence are less accurate than weather forecasts. For those with modest memories, consider what the world looked like in 2007 and what it looks like today as the class of 2007 graduates.
In the meantime, here's hoping the student loan bubble doesn't pop, and that there are no riots at the gates as the numbers of modestly educated, but largely disenfranchised young people clamor for their place in the clouds.
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