Higher Education's House of Cards
After reading Mark Cuban's "Is Your College Going out of Business?," I've been thinking: What is it about the coming collapse of America's higher education system that someone like Cuban gets, but those who are in it--and the students who are caught in its toils--don't?
Bain and Co. did a study last year of 1,700 private and public colleges, and found that one-third were on an "unsustainable financial path," including Princeton, Cornell, and even dear old Hahvad. Another 28 percent are in danger of slipping onto the same path.
Meanwhile, 53 percent of recent college grads are either unemployed or severely underemployed, while, of those working, 47 percent (according to a new study by the Center for College Affordability and Productivity) hold jobs that don't require a B.A. or a B.S., like taxi driver and Starbucks barista. And for the 19 million young people expected to graduate from college by 2020, there'll be fewer than 7 million jobs.
Yet tuitions continue to shoot through the roof (by an inflation-adjusted rate of 72 percent at public institutions since 2000) and colleges and universities continue to spend on administration and infrastructure as if nothing's happening (Princeton just finished a new $30 million dining facility).
Why is everyone so happily oblivious? Then I had the answer: the federal government. Washington has steadily turned our institutions of "higher learning" (I use that term very loosely) into adjuncts of the welfare state--and a generation of college students into its debt peons.
The numbers tell the story.
Federal aid to colleges and universities tripled between 2000 and 2008 -- making it one of the biggest and fastest growing discretionary spending sprees in the history of the budget.
In 2011 alone the Education Department handed out $157 billion in student loans -- while Obama has grown the go-to-college-free Pell grant program from $14 billion in 2008 to about $40 billion in 2012.
No wonder college and university administrators can ignore fiscal reality. Their customers' costs are largely underwritten by taxpayers- and they are themselves tax exempt.
For the customer and their families, of course, that freedom from reality comes with a massive burden of debt: debt they can't escape through normal bankruptcy and which cripples their earning power in their first years out of college -- assuming they can even get a job.
At some point they're going to catch on, and realize that the degrees they've been indenturing themselves to get are barely worth the parchment they're printed on -- and then someone will demand the architects of this house of cards pay for the lives, and the system of education, they've ruined.
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Mar '11
Re: Higher Education's House of Cards
So the real headline is 75% of recent college grads are finding a college degree did nothing to help them get a job.
Aug '11
Re: Higher Education's House of Cards
The purpose of higher education is not job-training. Since Vietnam, when lots of people entered college to avoid the draft, we've seen an increase in the need for college degrees as signals to employers that a student is good for hiring. Mind you, the original signal was that a person finishing college was doing a ton of work to graduate. Back in the 60s and 70s, coursework was quite challenging. Today? Well, it depends, but normally the freshman year is much more the "13th grade" than anything else. That's why BAs aren't enough unless it's in engineering or computers. Good degrees are now moving into MBAs, M. Eds, and JDs; yet, even these are losing value in a bad economy.
People who go strictly by the numbers miss a lot of value that parents and students put in college. First, being a college graduate is a sign of achievement. It signifies membership in the middle and upper-middle class. Second, it means you associate with other people in college. Students often find spouses at college, and admissions offices often serve as filters for potentially bad students. Finally, some students just like to learn. Image that.
Mar '11
Re: Higher Education's House of Cards
Student Loans are not indenturing, because the government guarantees the debt, does not collect the debt, and because the coming inflation will wipe the debt out anyway. So taking on student loan debt remains a super investment.
Aug '11
Re: Higher Education's House of Cards
As for tuition costs, the reason they rise is because people will pay them. A big part of this is the "bubble" of federal assistance in student loans, but that's not the only reason. Tuition signals quality. A small liberal arts school that could, ostensibly, provide a great education for $9000 a year will not get the same quality applications if they advertise that price. A cheap school, a potential student might think, is a cheap education. The $50,000 school, on the other hand--that's how much Ivies cost--appears to have the same "value" as the Ivies. Schools that want to compete for Ivy students set Ivy prices, and that's the average tuition quoted in the post.
But that's NOT the tuition most students pay. Non-Ivy competitors often provide free educations (Wow! I'm getting a $50,000 education for free!) by way of merit or athletic scholarships. The real cost of a student is much less than the tuition, but that's because a smaller number of students are paying for the ones that the universities really want. Many of those students are actually foreign nationals that can afford the tuition anyway.
Mar '11
Re: Higher Education's House of Cards
Education CAN be had from top-tier institutions. And many students are acquiring it.
Just because many kids go to college to party does not mean that the service is unavailable to those who want to better themselves. In other words, there is real value to be had by going to a great school, if you want it.
Aug '11
Re: Higher Education's House of Cards
The point is not to trust tuition numbers. There's a tremendous competition to get into the top 10% of universities, so they can charge what they like and discount for those students they really want. After that, you have good schools with better prices and terrible schools with any price being too high for what they offer.
Aug '11
Re: Higher Education's House of Cards
iWc: Education CAN be had from top-tier institutions. And many students are acquiring it.
Just because many kids go to college to party does not mean that the service is unavailable to those who want to better themselves. In other words, there is real value to be had by going to a great school, if you want it. ยท 1 minute ago
And the reports about students going to college and partying are often sensationalized. Don't get me wrong; they do. But they usually come in bleary-eyed but prepared the next day. That is, at the top schools.
But still, even most at decent mid-tier schools.
The real problem schools are flagships like the University of Texas that has 1500 person classes with faculty encouraged not to teach too much or the University of Florida that is basically a STD farm.
Oct '12
Re: Higher Education's House of Cards
Relevant:
Man Has Alarming Level Of Pride In Institution That Left Him In Debt, Unprepared For Job Market
Dec '12
Re: Higher Education's House of Cards
The issue is not the highly selective universities like the Ivy Leagues. Students who get accepted and graduate at those schools get their money's worth just in having Harvard or Princeton on their resume. The issue is that degrees at lesser known liberal arts colleges and state institutions are becoming a very bad value, both in lack of rigorous education and learning and in the over abundance of their college graduates in the labor market.
Somewhere along the line society decide that college is no longer meant for a select fraction of the population, but as requirement for employment. The BA or the BS has become the High School Diploma. The sad thing is that it doesn't have to be this way.
Aug '10
Re: Higher Education's House of Cards
Mr. Cuban is living proof that one can do well in business and become a billionaire without being able to spell.
Seriously, though, he was smart to choose Indiana U's business school because it was the cheapest of the top schools. Similarly, I chose a good public business school and was able to graduate (in the mid-'90s) debt-free. Best investment I ever made.
Edited on January 31, 2013 at 7:05pmAug '10
Re: Higher Education's House of Cards
Exactly. James Taranto rightly calls the bachelor's degree "a job-hunting license". When a person is hired for a job for which his college education provided little or no preparation, then all the degree really represents is that person's "stick-to-it-iveness" and ability to see things through to their completion. A high school graduate who, for example, completed AP-level courses, was an Eagle Scout, and scored highly on IQ tests would, in a sensible world, be more attractive to many employers than the average college B.A. drone.
It seems our society is heading for a reckoning and a realization of the absurdity of it all.
Sep '10
Re: Higher Education's House of Cards
I noticed the same thing. It's embarrassing. While I'm broadly sympathetic to Mr Cuban's points, his piece is so poorly written it undermines his case. It's particularly silly in a world of spell check.
Jul '10
Re: Higher Education's House of Cards
When I graduated last year, I left knowing full well the past 4 years had been useless. The only reason I didn't quit at 18 and move to North Dakota like I planned was because I wanted to go ino the military instead. I'm amazed as many people stay in that do. But I imagine if parents didn't largely foot the bill, there would be a massive exodus.
Aug '12
Re: Higher Education's House of Cards
There are so many structural flaws with our current university system that it seems almost silly to mention, but how many students go to college and study something inane that won't even remotely help them become marketable?
I recently had a conversation with a coworker (a secretary) who is the parent of a recent college grad with a degree in performing arts. Shockingly, she is unemployed.
Furthermore, what parent (usually helping foot the bill on some level) allows this absurdity? If I wanted a degree in performing arts, my parents would have said, "Fine, but get a dual major in something you can do to keep you off welfare and out of our basement while you wait for your big break."
I found a degree that WAS a job training program, and parlayed this into a career. There are many degree fields that offer skills specific to employment opportunities, such as engineering, accounting, etc.
Don't even get me started on high school.
Mar '11
Re: Higher Education's House of Cards
Owl of Minerva: The purpose of higher education is not job-training.... signals to employers that a student is good for hiring.
People who go strictly by the numbers miss a lot of value that parents and students put in college.... Finally, some students just like to learn.
One I 100% agree that a degree is about certifcation in the job market, not education. A high school student needs to be taught, hopfully even in highschool and before that, they should never let their schooling get in the way of their education.
The question is not wether you learn anything in college, the question is if you spent the same amount of time say watching videos and reading books does college give more learning value?
Going by my three business degrees only about 5% of the info I learned I could not of learned under a self study program. Most of that 5% value was in only a handfull of the 60+ classes I took. Overall I would say I would say about 20% of the material had value because college classes and grades helped keep me accoutable to study and read more than I would of on my own.
Aug '12
Re: Higher Education's House of Cards
According to Heritage Foundation federal funding for higher education spending was down 21% from 2002-2012 in real dollar amounts. The idea that the federal government is highly subsidizing higher education is not true. That does NOT mean that the encouragement of student debt is a good thing and does not help drive college costs.
May '11
Re: Higher Education's House of Cards
"Federal aid to colleges and universities tripled between 2000 and 2008 -- making it one of the biggest and fastest growing discretionary spending sprees in the history of the budget."
And whose administration was in the WH and who controlled Congress during those years? Talk about "No Child Left Behind".
Sep '10
Re: Higher Education's House of Cards
Pilli:"Federal aid to colleges and universities tripled between 2000 and 2008 -- making it one of the biggest and fastest growing discretionary spending sprees in the history of the budget."
And whose administration was in the WH and who controlled Congress during those years? Talk about "No Child Left Behind"
My thoughts exactly. The fault does not lie stars but ourselves.
Oct '12
Re: Higher Education's House of Cards
Best college bang for your buck: Grove City College.
Jun '12
Re: Higher Education's House of Cards
A lot of very wealthy successful people were not college graduates, but ambitious people and an ability to see a need or create a demand for a product or service. Schools are not places of innovation.
Most people still hold out hope that things will get better and fear that the worse things get in the economy, the more their kids need higher education. It is a competition, and people are grooved to think that it is still the most viable way for their kids to make it in life. It worked for them, and they want a better life for their kids.