A college degree has become the new high school diploma

Megan McCardle on how a college degree has become the new high school diploma:

… the BA is becoming what a high school diploma became before it: a signal to employers that you are not stupid, lazy, or poor enough to drop out before you’ve finished your education.

This method of signaling is inefficient, a huge waste of resources.

 … That’s valuable for the employers, but it’s increasingly expensive for the students, without necessarily preparing them to better do their work.  And it’s far from clear that it’s worth removing people from the workforce for four years in order to prepare them to do sales, or manage an office.

McCardle wrote in response to a recent New York Times “lengthy article exploring this phenomenon through the lens of a law firm which requires everyone, even the lowliest clerical worker, to have a college degree”.

This built-in inefficiency has its roots in a dysfunctional K-12 educational system and the government’s misguided intervention into higher education funding.  Too many high school graduates that are poorly prepared for college or career are being subsidized to enroll in colleges with watered down standards.

The old model is no longer working.

I recently chatted with a friend who had pushed her two sons to attend college even though they were not strong “college material”.  After they received their degrees from lower-tier schools, both went on to start their own businesses.  Both are doing well, but neither has really ever used or needed their college education in their line of work.  However, as my friend explained, both had very good college experiences.  For them, it was a time to mature, have fun, and learn about different types of people and places.

Growing up and learning new things can occur in many places other than on a college campus, usually at a much lower price.  But because we see how employers use college as a sifting tool for employment, we are forcing college on many people who don’t need it.  We do this at great expense, both in terms of money and opportunity cost.  The soaring rise in college costs, a faltering economy, and technological advancements are causing big changes in this system, although it’s still anybody’s guess what exactly the next model will be.

Related:

• ‘The smart high school grad no longer just picks a school, borrows money and wings it.’ (Cost of College)
• Too many college graduates are chasing too few college-level jobs (Cost of College)
• College graduates are no longer ‘special’ (Cost of College)

‘The smart high school grad no longer just picks a school, borrows money and wings it.’

Mark Cuban gives advice to high school students on the importance of preparing a “college value plan”.

Unless your parents are wealthy or you quality for a full ride or something close, the days of picking a school because that is the school you always wanted to go to are gone.

The class of 2014 and beyond now has to prepare a college value plan. What classes are you going to take online that enables you to get the most credits for the least cost. What classes are you going to take at a local, low-cost school so you can get additional credits at the lowest cost.

A major hurdle is that this requires “the smart student who cares about getting their money’s worth from college” to exercise “personal discipline”.

Then, with your freshman and sophomore classes out-of-the-way, you can start to figure out which school you would like to transfer to , or two years from now, which online classes you can take that challenge you and prepare you for the areas you want to focus on. If you have the personal discipline you may be able to avoid ever having to step on a campus and graduating with a good degree and miracle of miracles, no debt.

For the smart student who cares about getting their money’s worth from college, the days of one school for four years are over. The days of taking on big debt (to the tune of 1 TRILLION DOLLARS as I write this ) are gone. Going to a 4 year school is supposed to be the foundation from which you create a future, not the transaction that crushes everything you had hoped to do because you have more debt than you could possibly pay off in 10 years. It makes no sense.

Slackers without wealthy parents do not fare well in this scenario.

Cuban still believes in college.

College is where you find out about yourself. It’s where you learn how to learn. It’s where you get exposure to new ideas. For those of us who are into business you learn the languages of business, accounting, finance, marketing and sales in college.

The question is not whether or not you should go to school, the question for the class of 2014 is what is your college plan and what is the likelihood that your college or university you attend will still be in business by the time you want to graduate.

He compares the newspaper business to higher education, and he sees a shakeout with schools that do not adapt falling by the wayside.

The newspaper industry was once deemed indestructible. Then this thing called the internet came along and took away their classified business. The problem wasn’t really that their classifieds disappeared. It was more that they had accumulated a ton of debt and had over invested in physical plant and assets that could not adapt to the new digital world.

For newspapers, higher education, and many other industries, the old ways no longer work.

Related:  Nathan Harden’s take on the big changes ahead for higher education (Cost of College)

There is little evidence that increased education spending drives economic growth

JONAH GOLDBERG: Education is important and necessary for a host of reasons. But there’s little evidence it drives growth.

Questioning whether increased education spending is really the key to “winning the future”

British scholar Alison Wolf writes in “Does Education Matter?”: “The simple one-way relationship … — education spending in, economic growth out — simply does not exist. Moreover, the larger and more complex the education sector, the less obvious any links to productivity.”

Nasim Taleb, author of “Antifragile: Things That Gain From Disorder,” argues that education pays real benefits at a micro level because it allows families to lock in their economic status. An entrepreneurial father can ensure his kids will do OK by paying for them to become doctors and lawyers. But what is true at the micro level is not always true at the macro level.

Think about it this way: Growing economies spend a lot on education, but that doesn’t necessarily mean that spending makes them grow. During the so-called Gilded Age, the U.S. economy roared faster and longer than ever before or since, while the illiteracy rate went down. But the rising literacy didn’t cause the growth. Similarly, in the 20th century, in places like China, South Korea and India, the economic boom — and the policies that create it — always come first while the investments in education come later.

Jarrett Skorup looks at higher education spending.

There is no link between higher education subsidies and economic growth, and none between college degrees and job creation.

Since 1980, Michigan has spent a much higher proportion of personal income on state government support for higher education than nearby states like Illinois and Ohio. According to Ohio University economist Richard Vedder, by the year 2000, the Mitten State was spending the sixth most in the country (2.34 percent of its personal income), double what Illinois was spending and much more than Ohio. This did not lead to higher growth as Michigan’s economy performed among the worst in the country during that time period.

And states with a higher proportion of college graduates do not necessarily grow by adding more college degrees. A comparison of the number of state residents with a college degree with per capital income growth from 2000-2008 yields no correlation.

James M. Hohman of the  Mackinac Center for Public Policy sees “no correlation between a state increasing its college graduate base and growing its economy”.

If the hypothesis promoted by Glazer and the lobbyists engaged by Michigan’s tax-supported public universities was correct, the various points on this chart would be clustered around an upward sloping line, as states with higher growth in the number of grads also enjoyed relative improvements in income. However, no such trend line exists.

Another chart that built in a lag time also showed no correlation.

… The chart below compares state grad growth between 2000 and 2005 and income growth in the three succeeding years; once again no pattern can be detected.

So many factors enter into economic growth, making it believable that education spending would not be a driving factor.

Related:

• Federal ‘investments’ can’t guarantee growth (kansascity.com)
• Phil Power: Michigan politicians starve the engines of economic growth: universities (mlive.com)

College graduates are no longer ‘special’

… the signaling value of a bachelor’s degree declines as a larger proportion of the population achieves it.

50 years ago, college graduates were considered “special”, according to a report released last month by the Center for College Affordability and Productivity.

… People with such degrees were among a relatively small, even elite, proportion of the population believed to have, for example, very high levels of erudition, intelligence, and discipline. Even graduates of mid- to low- quality institutions were viewed as somewhat special. If in, say, 2025 close to half of adults have such degrees, by mathematical necessity, some graduates are at best just about average, not endowed with relatively high levels of the productive attributes desired by employers.

Today we are trending to a place where only graduates of certain elite colleges and those with advanced degrees will be considered “special”.

… Students are clamoring to attend the 25 or 50 top universities and liberal arts colleges in America. Applications are soaring for those schools, while applications for lesser colleges are stagnating as the number of 18-to-22 year-old Americans (particularly those expected to attend college) plateaus.37 In response, new signaling devices are arising
to broadcast true excellence: attendance at a high quality institution, such as Ivy League schools, Stanford, M.I.T., Duke, Northwestern, Chicago, Amherst, Williams, Swarthmore, etc., or getting even higher degrees, such as a master’s or even a doctorate.

With some negative effects on higher education

…  unintended consequences, such as the denigration of the value of a bachelor’s degree, a lowering of collegiate academic quality, a growing reputational inequality among colleges, etc….

So, is it worth spending $50-$200,000 to send your children to college?

Families feel pressured to send their children to college because average figures continue to show that college graduates earn more than those without a college degree.  But when the data is disaggregated, and the increasing debt burden along with opportunity costs are considered, it becomes clear that parents should be more thoughtful in making decisions about their children’s college plans.

• Comparing average college and high-school earnings is highly misleading as a guide for vocational success, given high college-dropout rates and the fact that overproduction of college graduates lowers recent graduate earnings relative to those graduating earlier;
• Not all colleges are equal: Typical graduates of elite private schools make more than graduates of flagship state universities, but those graduates do much better than those attending relatively non-selective institutions;
• Not all majors are equal: Engineering and economics graduates, for example, typically earn almost double what social work and education graduates receive by mid-career;

Since “nearly half of working Americans with college degrees are in jobs for which they’re overqualified“ it is worth reconsidering whether college is the best way to spend what may be $100,000+ and five years of your life.  It could be that “skipping college for a high-paying job might be the right move‘. 

Related:

• Too many college graduates are chasing too few college-level jobs (costofcollege.wordpress.com)

At least four states have jumped on the $10,000 college degree bandwagon

California, Texas, Florida, and Wisconsin have all taken steps to offer residents a $10,000 college degree option.  This is starting to look like a legitimate trend, with a stronger emphasis on cutting costs than on asking taxpayers to spend more.

“Up until now, the argument over college affordability has been dominated by calls to action on two fronts: lower interest rates on student loans and asking taxpayers to pay more so state legislatures can increase funding to higher education a greater amount,” said Thomas K. Lindsay, director of the Center for Higher Education at the Texas Public Policy Foundation, a think tank with ties to Perry and associated with the reforms the Texas governor and others are pushing. “What this does, this changes the debate to reducing the cost to students and parents, raising expectations about what the public expects from higher education.”

Political leaders from these states emphasize efficiency and the “right” kinds of degrees.

These governors have emphasized degrees in science, technology, engineering, and math, as well as more professional degrees, such as teaching and business, rather than humanities. A gubernatorial task force in Florida recently proposed charging students who major in humanities disciplines more to discourage them from entering those fields.

It seems like a mistake to be using taxpayer funds to pick winners and losers among college majors.  Do we need to produce more teachers now, for example?

Support for cheaper degrees has not escaped criticism.

But critics contend such a policy on funding overlooks the value of a liberal arts education and the benefits of training in the humanities. They point to many studies have proven that liberal arts programs produce well-rounded students who often have better communication skills, which aid them in the job market, regardless of whether they were trained for a specific trade.

Many university faculty members have also voiced concern that educational quality would inevitably suffer. If colleges are expected to slash tuition costs without receiving more state subsidies, the cuts will have to be made elsewhere, they note. What’s more, cheaper tuition will not necessarily result in better education, and perhaps the difference will not be noticed until it is too late, they argue.

One compelling argument for the $10,000 degree from Cornell Law School professor William Jacobson:

“… the traditional model is not affordable to many people anymore.”

Meanwhile, one school in the University of Texas system is offering a $5,000 bachelor’s degree.

Texas students with an associate degree in applied sciences now have the opportunity to continue their studies and earn a bachelor’s degree for $5,000 from the University of Texas of the Permian Basin.

President David Watts announced Tuesday that UTPB is offering an online Bachelor of Applied Arts and Sciences with a concentration in industrial technology, for $5,000.

UTPB is located in my old stomping grounds of Odessa, where roughnecks and toolpushers can now work on a college degree during their down-time at the oil drilling site.

The 60-hour completion degree is offered entirely online and will allow students to complete course work whether they’re working at a rig site or sitting in a coffee shop, Watts said.

UTPB is already offering $10,000 degrees in a number of other fields.

The creation of the $5,000 completion bachelor’s degree follows UTPB’s April announcement of the Texas Science Scholars program, which allows students to earn bachelor’s degrees in geology, chemistry, computer science, information systems and math for only $10,000. Both programs were created in response to Gov. Rick Perry’s call for affordable college degrees for Texas students, Watts said.

Related:  Step right up and get your $10,000 college degree in Texas! (Cost of College)

Too many college graduates are chasing too few college-level jobs

“Nearly half of working Americans with college degrees are in jobs for which they’re overqualified“, according to study released last month by the Center for College Affordability and Productivity.

At the core of this issue is the problem of too many college graduates chasing too few college-level jobs.

The proportion of the adult population with degrees has dramatically increased with the passage of time. Figure 3 shows that the proportion of adults with degrees in 2010, 30 percent, was five times what it was 60 years earlier. In 1950 or 1960, college graduates constituted a single digit proportion of the adult population—almost by definition, an elite group. As we will soon demonstrate, what has happened over time is that the proportion of the workforce with college degrees has grown far faster than the proportion needing those degrees in order to fulfill the needs of their jobs, forcing a growing number of college graduates to take jobs which historically have been filled by those with lower levels of educational attainment. The reality is that many jobs in the United States do not require a lot of education to perform, even though they may require on-the-job training, sometimes in considerable amount.

A recent problem

The phenomenon of the college-educated person holding a job requiring little formal education training appears on the basis of this type of evidence, at least for the occupations we examine, to have arisen mostly in the past four decades or so.

Underemployed but overinvested

The authors consider whether our country’s spending priorities have produced a waste of resources, leaving us with a society that is not only underemployed but overinvested in higher education.  They also consider whether this is the time for government to step back from its involvement in higher education and let the market take care of this situation.

All of this calls into question the wisdom of the “college for all” movement. Does it make sense to become the world’s leader again in the proportion of young adults with college degrees? Is the goal of individuals like President Obama or groups like the Lumina Foundation to increase college degree attainment desirable? Should we look for new and cheaper ways to assure employee competency? Should we invest less in four-year degree programs and more in cheaper training, including high-school vocational education that once was fashionable?62 Perhaps the federal government should reduce its involvement in the higher-education business, much like some states seem to be starting to do out of fiscal imperatives imposed by balanced-budget requirements that the federal government does not face. If fewer students could get Pell Grants or subsidized student loans, enrollments might very well fall, an outcome we perceive not to be a bad thing from a labor-market perspective.63

The full report:  Why are Recent College Graduates Underemployed? University Enrollments and Labor Market Realities By Richard Vedder, Christopher Denhart, and Jonathan Robe | January 2013

A lively discussion on this topic took place in the comments of The College Grad/Employment Mismatch (Inside Higher Ed), with one person making this important point about college now providing what used to be considered a high school level of education:

Many college students today are learning (or relearning) skills and knowledge that formerly were taught in high schools. Textbooks have been dumbed down for decades, while more students take remedial English and math courses. Standards are held down by grading on the curve (a mediocre majority sets the class norm) and by the importance of student evaluations of faculty for promotion and retention of instructors, more of whom are desperate adjunct faculty. Tough assignments do not elicit favorable evaluations. Many students work at least part-time, slowing the pace at which they can study. Therefore the function of college today for many students is to provide high school education appropriate to the jobs as in the past except that students formerly attained it by age 18, not 28.
Inside Higher Ed

Nathan Harden’s take on the big changes ahead for higher education

Nathan Harden, a leading voice for a new generation of young conservatives,  predicts The End of the University as We Know It

In fifty years, if not much sooner, half of the roughly 4,500 colleges and universities now operating in the United States will have ceased to exist. The technology driving this change is already at work, and nothing can stop it. The future looks like this: Access to college-level education will be free for everyone; the residential college campus will become largely obsolete; tens of thousands of professors will lose their jobs; the bachelor’s degree will become increasingly irrelevant; and ten years from now Harvard will enroll ten million students.

… The most important part of the college bubble story—the one we will soon be hearing much more about—concerns the impending financial collapse of numerous private colleges and universities and the likely shrinkage of many public ones. And when that bubble bursts, it will end a system of higher education that, for all of its history, has been steeped in a culture of exclusivity. Then we’ll see the birth of something entirely new as we accept one central and unavoidable fact: The college classroom is about to go virtual.

The shift of power to consumers should appeal to many worried parents and students in the college application process.

… Power is shifting away from selective university admissions officers into the hands of educational consumers, who will soon have their choice of attending virtually any university in the world online….

Blended learning holds the greatest promise for leading the way.

One of the biggest barriers to the mainstreaming of online education is the common assumption that students don’t learn as well with computer-based instruction as they do with in-person instruction. There’s nothing like the personal touch of being in a classroom with an actual professor, says the conventional wisdom, and that’s true to some extent. Clearly, online education can’t be superior in all respects to the in-person experience. Nor is there any point pretending that information is the same as knowledge, and that access to information is the same as the teaching function instrumental to turning the former into the latter. But researchers at Carnegie Mellon’s Open Learning Initiative, who’ve been experimenting with computer-based learning for years, have found that when machine-guided learning is combined with traditional classroom instruction, students can learn material in half the time. Researchers at Ithaka S+R studied two groups of students—one group that received all instruction in person, and another group that received a mixture of traditional and computer-based instruction. The two groups did equally well on tests, but those who received the computer instruction were able to learn the same amount of material in 25 percent less time.

Even though we may be sad because of what is being lost, is college as it now exists really worth preserving? 

… At its best, traditional classroom education offers the chance for intelligent and enthusiastic students to engage a professor and one another in debate and dialogue. But typical American college education rarely lives up to this ideal. Deep engagement with texts and passionate learning aren’t the prevailing characteristics of most college classrooms today anyway. More common are grade inflation, poor student discipline, and apathetic teachers rubber-stamping students just to keep them paying tuition for one more term.

Prestigious institutions will be winners while second-rate colleges and universities will be losers in the new paradigm.  Fewer professors will be needed.

Prestigious private institutions and flagship public universities will thrive in the open-source market, where students will be drawn to the schools with bigger names. This means, paradoxically, that prestigious universities, which will have the easiest time holding on to the old residential model, also have the most to gain under the new model. Elite universities that are among the first to offer robust academic programs online, with real credentials behind them, will be the winners in the coming higher-ed revolution….

The open-source educational marketplace will give everyone access to the best universities in the world. This will inevitably spell disaster for colleges and universities that are perceived as second rate. Likewise, the most popular professors will enjoy massive influence as they teach vast global courses with registrants numbering in the hundreds of thousands (even though “most popular” may well equate to most entertaining rather than to most rigorous). Meanwhile, professors who are less popular, even if they are better but more demanding instructors, will be squeezed out. Fair or not, a reduction in the number of faculty needed to teach the world’s students will result….

University of Wisconsin to offer lower-cost online bachelor’s degrees

University of Wisconsin to Offer a Bachelor’s to Students Who Take Online Competency Tests About What They Know

No class time will be required for most degrees as Wisconsin begins “decoupling the learning part of education from student assessment and degree-granting”.

Wisconsin officials tout the UW Flexible Option as the first to offer multiple, competency-based bachelor’s degrees from a public university system. Officials encourage students to complete their education independently through online courses, which have grown in popularity through efforts by companies such as Coursera, edX and Udacity.

No classroom time is required under the Wisconsin program except for clinical or practicum work for certain degrees.

Competency tests will determine if course credit will be given.

Under the Flexible Option, assessment tests and related online courses are being written by faculty who normally teach the related subject-area classes, Mr. Reilly said.

Officials plan to launch the full program this fall, with bachelor’s degrees in subjects including information technology and diagnostic imaging, plus master’s and bachelor’s degrees for registered nurses. Faculty are working on writing those tests now.

A way to lower college costs

The charges for the tests and related online courses haven’t been set. But university officials said the Flexible Option should be “significantly less expensive” than full-time resident tuition, which averages about $6,900 a year at Wisconsin’s four-year campuses.

There is concern that programs will be “watered down” versions of traditional degrees.  I think they’re making a mistake by not requiring proctored testing.

Based on the examples given in the article, this new degree option will mainly attract older students.

Beth Calvert, a 35-year-old registered nurse at a Milwaukee hospital, hopes to enroll in the program to earn her bachelor’s in nursing. Between working overnight shifts and caring for her 3-year-old daughter, Ms. Calvert said she has little time to move beyond her associate degree but knows that it increasingly is important to her employer, which she said offers a pay raise to nurses with higher degrees.

‘households vary dramatically in the impact that inflation has upon them’

Inflation disproportionately affects specific groups of people, with families paying college tuition among those who have been hit the hardest.

Inflation has been tame in recent months. However, the one thing we can be certain about is this: Increases in inflation will have a painful effect on lower income households, those on fixed incomes, those with higher ratios of transportation costs, college tuition and any household whose discretionary spending is more dream than reality.

(Notice that both college and apparel costs follow a pattern coinciding with seasonal volatility.)

As explained by Doug Short, with its recent quantitative easing “the Fed has been trying to increase inflation, operating at the macro level”.  Here are his comments on inflation in the higher education sector.

The BLS weights College Tuition and Fees at 1.695% of the total expenditures. But for households with college-bound children, the relentless growth of tuition and fees can cripple budgets. Often those costs get bundled into loans that saddle degree recipients with exorbitant debt burdens. Consider the following numbers from the CollegeBoard.com website:

• Public four-year colleges charge, on average, $8,240 per year in tuition and fees for in-state students.
• Public four-year colleges charge, on average, $20,770 per year in tuition and fees for out-of-state students.
• Private nonprofit four-year colleges charge, on average, $28,500 per year in tuition and fees.

Of course, Mr. Bernanke would point out that, with a healthy dose of Core Inflation (extended of course to wages), those debt-burdened college grads will pay down the loans with inflated dollars.

Other factors in play are slowing down the skyrocketing costs of college, so the worst of the “inflation nightmare” may be over for a while.

Related:

• A simple solution to the escalating tuition costs at Dartmouth College (costofcollege.wordpress.com)
• Tuition freeze sends message (omaha.com)

A simple solution to the escalating tuition costs at Dartmouth College

Joseph Asch of Dartblog offers some recommendations for solving the tuition inflation problem at Dartmouth College.

First, an illustration of the problem

One source of the problem is administrative bloat.

In 1999, the College had 2,408 non-faculty employees, including 75-80 at the Hanover Inn. Today Dartmouth has well over 3,200 employees (without the Inn’s staff). That’s a difference of approximately 900 employees — of whom, according to IP Folt, about 300 are in research. What are the remaining 600 new employees doing with their time? After all, Dartmouth was a fine school in 1999, the number of students has not changed materially since then, and the size of the faculty has increased by only about 60 members. I submit that they are not doing much of anything; they are just a manifestation of bad management, given that the number of College bureaucrats has increased in virtually every department. Here’s an excerpt from a column I wrote on the subject for The D in 2009:

In 1997, the President’s Office numbered 6.5 full-time employees; 10 years later there were 10. During that time period, the Dean of the Faculty Office went from 14 to 28 full-time employees. The Dean of the College Office went from 16 to 26; the Provost’s Office went from 6.5 to 11.5; and the combined headcount of the First-Year Office, the Office of Student Life and the Office of Residential Life went from 26.5 to 47.

Unrealistic wages contribute to the problem.

Beyond the bloat, as we have noted ad infinitum, the College’s compensation structure (wages, benefits, holidays) is totally out of line with that of the local labor market. In many cases, employees are paid twice what workers earn in similar occupations in the private sector in the Upper Valley.

The solution

The solution to the higher ed bubble in Hanover? That’s easy, as any management consultant could tell you. You trim 500 positions from the College’s bloated ranks, and cut compensation so that the College pays a generous 20% more than other Upper Valley employers — but not double. Not only would you save money, but the College would run better.

With the savings from these cuts, you could either reduce tuition to zero, or, better yet, trim it in half and use the remaining savings to fund the kind of academic programs and student pedagogical support that would make a Dartmouth education the envy of the world.

This scenario might sound too simple to work at Dartmouth or at the many schools where administrative bloat is pushing up costs.  Considering the crisis in escalating college costs, it certainly seems to be worth a try.

Related:

• Administrative bloat at universities drives tuition hikes (Deseret News)
• ‘Diversicrats’ – diversity administrators’ role in college administrative bloat (Cost of College)