It’s no secret that the status quo in higher education is facing a lot of pressure from things like skyrocketing tuition, ballooning student loan debt, people questioning the need for higher education, difficulties graduates are getting established in careers, etc.
One organization focused on helping universities navigate the transition to a new future and boost higher educational attainment rates in the US is the Lumina Foundation. Lumina is a $1 billion foundation in Indianapolis – no, they don’t give out scholarships! – focused on “increasing the proportion of Americans with high-quality degrees, certificates and other credentials to 60 percent by 2025.”
I recently sat down with Danette Howard, VP of Policy and Mobilization for Lumina, and talked a bit about their work and the future of higher ed. Danette was formerly Secretary of Higher Education for the state of Maryland. If the audio player embed doesn’t play for you, click over to Soundcloud to listen.
As a preview, here’s an excerpt of her response to those, especially in tech industry, challenging the idea, particularly heard in the tech industry, that people don’t need to go to college:
We hear all the time about these incredible outliers. Bill Gates and Mark Zuckerberg are not your traditional college dropouts, and I really wish that people would stop holding them up as the example. Because for every one of them, there are millions of others who also didn’t complete college and whose lives are not nearly as successful as they would be if they had some type of post-secondary credential, in my opinion. And, it’s a fact that post-secondary education is still the best predictor of lifting oneself out of poverty. So if you want to have a better life for yourself, and you are starting at the lowest income levels, your surest best of doing that is getting a college degree or credential. That’s an undisputed fact.
Update 9/9: I want to add as a disclosure that I’m a finalist in a competition that’s being sponsored by Lumina. Though as far as I know Danette has nothing to do with that. I first made contact with her as part of researching an article on college tuition.
On the same topic, City Journal also has an article out called “Slimming the College-Tuition Beast.” Here’s an excerpt:
Some states are proposing to get rid of pay-as-you-go tuition altogether. Citing the “increasing unaffordability of college education,” Oregon’s legislature unanimously approved a plan last summer–“Pay It Forward, Pay It Back”–that would make tuition free for resident students attending the state’s public universities and community colleges. In exchange, the students would sign “binding contracts” requiring them to pay a percentage of their future income, over a set number of years, to the state. Oregon’s Higher Education Coordinating Commission (HECC) will determine how much students will pay and for how long, and come up with a funding source for the first 15 to 20 years of the program. After HECC works out the details, it will send its recommendations to the 2015 legislative session. The plan will launch initially in a few pilot schools.
Given the good deal that Pay It Forward offers students, it’s no surprise that the program emerged from a classroom–one belonging to Portland State University professor Barbara Dudley. A cofounder of Oregon’s left-wing Working Families Party, Dudley wanted to offer a senior capstone class on a subject that was, in her words, “relevant to the community.” So she chose the economics and politics of student debt, asking her students to propose a solution to the growing tuition burden. After reviewing research from Seattle’s Economic Opportunity Institute, the students came up with Pay It Forward. Kevin Rackham, one of Dudley’s former students, tells me that he lobbied for the idea “because of my experience with debt, because I know how much this debt is going to impede my ability to do things like buy a car and house and start a family.” After developing Pay It Forward further with the Oregon Students Association and the Working Families Party, Dudley’s students approached a group of state legislators, who introduced a bill based on their suggestions.
And stagnant or declining wages. Obviously this is more of a problem for the working class–or what’s left of the working class–but the wage issue is affecting almost everyone in the hourly/salaried workforce. Real wages are currently falling even for bachelor’s degree holders.
I was slightly disappointed by the discussion. Most of the strategies have been tried before. Having recently finished the book Caught in the Middle by Longworth, I saw a lot of similarities. I would have liked to hear more of a discussion on how to get those 2 year degrees to be more available.
Also, graduating students is not enough to get universities to put more skin in the game. I think that will have the adverse effect of just passing students for the sake of giving them a degree. And Aaron I think you were trying to give that example where its the ability of a student to get a job that impacts their standards of paying it back, which would give an incentive of the universities to put more skin in the game.
Despite the negative comments I think any discussion about higher education reform is highly encouraging and I give my best wishes to Lumina in finding solutions.
The idea of spreading higher education costs out over the long-term is worthy of discussion. Look at Medicare. The cost of providing health insurance past the age of 65 is spread out over four decades for most individuals. This takes a service that has a high cost and spreads the payments out over a long time frame so that the cost of that service is hardly crippling an individual’s income in any given year. If you look at the average lifespan, the benefits of that service play out over a period of at least 15 years. Since higher education increases incomes for most individuals throughout their lifetime, the benefits are paid out anytime over the age of 25 (which is over 50 years for an individual with an average life span). Even when an individual is in retirement, the amount of money someone with a higher income has been able to set aside in their 401k and Social Security greatly benefits their quality of life until death.
The current system of front loading payments for the benefits of higher education is unnecessary crippling an economic system that depends on consumer spending in the form of purchasing cars and homes. The merits and sustainability of that system is a discussion for another day, but that is the current picture.
The thing that’s being reinvented here is the wheel. American universities cut costs by replacing permanent faculty with adjuncts. At CUNY, where real per student costs have fallen in the last 25 years, making more than 100% of the tuition rise the fault of state budget cuts, math professors bring their own chalk because the classrooms often don’t have any. The administrators will probably create a new administrative position just to oversee the latest cuts, with high pay and benefits.
Look, free or nearly free universities exist in lots of first-world countries. Here’s how higher education is funded here: people pay taxes, and the state funds a variety of services, including higher education. Instead of administrators finding ways to blow budgets out of proportion, costs per students here are, by OECD standards, reasonable. As they are everywhere universities are universities rather than not sports clubs with university annexes.
My organization (CAEL) is working in a number of cities where Lumina is supporting degree attainment efforts. Our focus has been on:
(1) encouraging the higher education institutions offer degrees that are targeted at real and emerging opportunities in the economy so people can be confident that their education will indeed result in employment opportunities, and
(2) working with colleges and universities to recognize (and grant credit for) college level learning that doesn’t happen to take place in the classroom – in the workplace, through volunteering, in the military, etc. so they can earn degrees more quickly and at a lower cost.
Alon, you might find the book “Falling Behind?: Boom, Bust, and the Global Race for Scientific Talent” by Michael Teitelbaum of interest. He goes into a lot of detail about the perversity of the way the federal government basically pays for grad students and postdocs through research specific grants and how this distorts the market. I don’t have enough personal knowledge to evaluate his claims, but I found it illuminating.
I’m a little late to discussion, but a few thoughts:
(1) I always hate when people use Bill Gates and Mark Zuckerberg as successful people without college degrees, too. Both of them had the brains and grades to get into Harvard and then identify brand new business opportunities. They are hardly the same as your average college dropouts or those that never went to college. Even with rising debt levels, there’s simply no comparison between the income levels for the average college grad vs. non-college grad.
(2) The Oregon proposal is interesting and there definitely needs to be a way to address rising college costs. That being said, the finance/economist side of me is wondering if the Portland State proposal was created by students with major with lower earnings prospects (i.e. liberal arts, fine arts). In the short-term, paying a percentage of earnings is a good deal for those students. However, if you’re running a college (particularly a public college that’s under constant budget constraints), this setup provides a *massive* incentive to eliminate all lower earning degrees completely and just focus all of your resources on higher paying areas like engineering and business. If your revenue (AKA tuition) is solely based on future student earnings, why admit a student that is going to earn starting artist wages for the foreseeable future when you can add more engineering and accounting students that will earn great salaries from the get go? Now, that might be the reality check that some students need if they’re going into professions with low job prospects. However (and I say this as a finance major with a law degree that works for a technology consulting firm, which is about as business and engineering-oriented of a combo as you can get), the world still needs a lot of educators and social workers where the pay is inherently low yet college degrees are critical. Watch out for the unintended consequences of setups where colleges directly benefit on tuition payments when their graduates are making higher salaries.