Valuing Higher Education in the "New" Economy
As students and families are questioning the value of a college degree and unsure about the accumulating debt in the process, it is critical to make the case for the value of education on our campuses and even to reallocate the savings offered by efficiencies to improve that value.
I recall sitting around the table many years ago when our senior management team at Wesleyan University was discussing breaking through the $30,000 per year barrier. We held our breath, raised our price, and not much happened. Not many years later, we discussed breaking through the $40,000 per year barrier. We proceeded and, while criticism about the price of higher education was on the rise, we did not encounter much resistance. More recently, colleges and universities went through the same exercise as we broke through the $50,000 per year barrier. Based on the reactions of politicians, reporters, and students and their parents, sticker prices over $50,000 combined with the economic crisis that began in 2008 clearly have had a much more profound impact than previous price increases.
Earlier in this blog, I noted the new challenges facing higher education with the economic downturn of the first decade of the century. Even the wealthiest institutions have had to confront budget shortfalls. I will review these pressures below, but what is critical is how to respond to them strategically. Cutting costs must be done strategically, but so must the allocation or re-allocation of resources. When making decisions to cut or re-allocate, I want to emphasize the strategic importance of preparing our students to be both career ready and prepared for life.
I made the case that the “value proposition” in the minds of prospective students and their families has changed. Students and families are questioning the value of a college degree and unsure about the accumulating debt in the process. In the past, families would save and sacrifice to have students earn a degree at the “best” college. Today, many students and their families are instead looking for the “best bargain.”
A college degree has become a commodity and many families are failing to make distinctions regarding the “quality” of the college experience. For example, here is some advice from Suze Orman, a personal finance expert who hosts a show on CNBC:
So your kids’ dream school shouldn’t necessarily be the best one they can get into at whatever cost. It should be the school that won’t leave the entire family up to their eyeballs in debt. If that means saying no to your child’s top choice and opting for a school that comes through with more grants and scholarships, so be it. If that means focusing your search on less expensive, in-state public universities, so be it. And even if it means living at home while attending a local college, so be it.
While one should not deny the logic of ensuring that a student does not go too deeply into debt, institutions should take careful note that the quality of the educational experience and the level of preparedness for entering the world after college are nowhere to be found in her argument. Clearly price should be a part of the “value proposition.” Yet established institutions have had difficulties when trying to reduce significantly the cost of higher education, let alone slow the rate of increase. It is also important that colleges and universities act strategically to improve what they do and then to market that “product” to students in the hope that their decisions will be based on a combination of price and quality.
There have been varied responses to the recent economic crisis from traditional higher education – for example, public institutions have made up for lost state funding with tuition increases; many schools have made cuts, but generally around the edges and not by eliminating programs; and, in order to keep the classrooms and dormitories full, schools have competed heavily for students with steep tuition discounts disguised as “merit awards.” The majority of the responses are far from “game changers.”
Becoming more efficient is clearly a priority for most if not all institutions of higher education. Where efficiencies can be identified, savings can be allocated to reducing the cost of an education (or at least slowing the rate of increase). This is an important direction and one that may help compete with some of the more “disruptive” new educational formats offered in low-residency or on-line formats. However, campus-based education will never be able to compete with these alternatives on price alone. Therefore, it is critical to make the case for the value of education on our campuses and even to reallocate the savings offered by efficiencies to improve that value.
Returning to the theme of this blog, I believe that allocating resources to ensure that students are career ready (as in pre-professional and professional training) and prepared for life (as a result of a liberal arts curriculum) is a critical strategic direction for many institutions. While I would not like to see continually spiraling costs and student debt, I want students to understand the value they are receiving from institutions that can blend these two approaches.
In the three introductory entries to “higher ed mash up,” I have introduced the concept of this blog, highlighted the need for change in higher education, and observed how the “new” economy has added pressure to change. Having established the premise for this blog, future entries will be of two types. First, I will write individual entries on specific “markers” that help identify and strengthen institutional efforts to blend the liberal arts and professional training – for example, interdisciplinary first-year seminars, service-learning courses, electronic portfolios, community service, capstone courses. Second, I will intersperse a different type of entry in reaction to breaking news in higher education. For example, recently groups of institutions have banded together to produce MOOCs, massive open on-line courses (e.g., Coursera, EdX, and Udacity). There are many angles from which to examine this trend. My question will be: what is the impact of the evolution of MOOCs at the confluence of the liberal arts and professional education?
William H. Weitzer is currently a Senior Fellow at the Spencer Foundation. After completing his Ph.D. in Environmental Psychology, he has served for thirty years in administrative positions at the University of Massachusetts-Amherst, Wesleyan University, and Fairfield University.
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