Redefining ‘Value’ in Higher Education

Gates Foundation issues report calling for a new definition of value, and for clear ways for students to identify it. The emphasis is on promoting economic mobility for all.

May 12, 2021
 
Cal State Long Beach

When the Bill & Melinda Gates Foundation created the Postsecondary Value Commission two years ago, the foundation's leaders were thinking about ways to measure economic outcomes for students earning certificates and degrees -- outcomes that could include postcollegiate earnings and the ability to repay debt, earnings premiums for degree earners or certificate earners, and economic mobility after college.

The 115-page report being released today is consistent with those goals. It calls for the release of more information to help students make better choices about where to go to college, eliminating "completion gaps" and "removing affordability as an impediment to postsecondary value." (Inside Higher Ed received financial support from the Bill & Melinda Gates Foundation for coverage of the foundation's report on the value of higher education. Inside Higher Ed maintains editorial independence and full control over the content.)

But much has changed in the past two years, and the report also reflects current socioeconomic realities, including the murder of George Floyd and the inequalities of COVID-19.

"Our country has witnessed the murders of countless Black men and women at the hands of police alongside COVID-19’s startling death tolls and economic and social upheaval, including the rise in anti-Asian hate crimes," the first paragraph of the report says. "The COVID-19 pandemic’s impact has been borne disproportionately by Black, Latinx, Indigenous, and Asian American and Pacific Islander (AAPI) populations, while women -- especially women of color -- have overwhelmingly shouldered the weight of the economic crisis and shifting childcare responsibilities -- bringing to the forefront the insidious ways that racism, classism, and sexism continue to play out in American society."

The report reflects those changes by putting racial and gender equality front and center in the "why" of issuing the findings.

"Without explicit attention to racial, socioeconomic, and gender equity, postsecondary education will continue to sustain and exacerbate inequalities, but a more equitable postsecondary education system can build a more just society," it says. "We urgently need to transform the nation’s postsecondary system to ensure value for the very populations most impacted by racial and gender violence and the coronavirus pandemic and the dire economic -- and life-or-death -- consequences they impart to marginalized communities."

Other Perspectives on the Report
This week's episode of The Key podcast features insights from Margaret Spellings, José Luis Cruz and Tamra Hiler on the Postsecondary Value Commission's report. Click here to listen.

Specifically, the report makes the case for its agenda by noting the gaps between white and (some) Asian groups and other minority groups on college completion rates, retention rates and income later in life.

The report addresses three main areas: "a definition of postsecondary value," "the clear value-add that postsecondary education can provide to students and society, in both economic and non-economic terms," and "an action agenda [that] outlines policies and practices that institutional leaders and federal and state policymakers should implement to address systemic barriers that prevent Black, Latinx, Indigenous, and AAPI students, students from low-income backgrounds, and women from reaping equitable returns from postsecondary education and achieving economic and social mobility."

Together the three parts are "designed to catalyze an equitable value movement, which will help reshape the higher education system in the United States by combating access and completion barriers, sparking economic mobility, dismantling racist practices and structural inequalities, and building a more vibrant and just society."

Mildred García, co-chair of the Postsecondary Value Commission and president and CEO of the American Association of State Colleges and Universities, said addressing such inequities in higher education is the best approach for combating and ending generational poverty.

"This is the new majority of America, and if we don’t educate the new majority -- the first generation, students of color and/or the low income -- the effect will be not only on the students and the families of these students for generations to come but also to the communities, states, nations and our democracy," she said. "We know that today and into the future the new careers and employment require postsecondary education."

Eloy Ortiz Oakley, chancellor of the California Community Colleges and a member of the commission, said the group's work was "about giving college and university leaders important information to make tough and necessary decisions." And he said the commission's report was focused on institutions that most students attend. He noted that community colleges educate "the top 100 percent of Americans," while hypercompetitive private colleges educate "the top 1 percent."

The institutions that are educating the most people "provide the greatest value," he said.

The Numbers and the Challenges

The report -- written by the Institute for Higher Education Policy and the Gates Foundation -- makes its case with a series of tables. For instance, this table on enrollment shows that Black and Latinx students are far more likely to enroll in public than private (nonprofit or for-profit) institutions. Those who enroll in a private, nonprofit college are more likely to graduate, but their numbers are relatively small. And their student loan default rates are higher in private than in public higher education.

"Disparate attainment outcomes are the result of high prices, inadequate support for completion, and racial and socioeconomic stratification across and within colleges," the report says. "While incomes continue to lag behind for Black, Latinx, and low-income families compared with their white and wealthier peers, the full price (adjusted for inflation) of postsecondary education has increased by more than 170 percent over the last 40 years. Today, students from low-income backgrounds must find a way to finance an amount equivalent to 157 percent of their family’s annual income to pay for one year at a four-year college. Meanwhile high-income families can send a student to college for a much more manageable 14 percent of their family’s annual income."

The report adds, "Black, Latinx, Indigenous, and underrepresented AAPI students and students from low-income backgrounds are also less likely to have access to the supports necessary to complete a credential, the well-resourced institutions that provide greater chances of completion, or the programs that provide strong economic returns -- returns often necessary to repay educational debt and build wealth. For instance, students of color and students from low-income backgrounds are concentrated in for-profit institutions and underfunded two-year colleges that offer lower chances of completion, as well as certificate and associate’s degree programs that can offer an immediate return on investment, but provide lower average lifetime earnings and less opportunity for economic mobility than do bachelor’s degree programs on average."

Economic mobility is a key theme. The report argues that going to college matters hugely for one's economic well-being, but race also matters significantly.

Commenting on the above data, the report says, "Furthermore, far too many Black, Latinx, Indigenous, and underrepresented AAPI students and students from low-income backgrounds leave college with debt, but no degree. This system-wide failure leaves these students unable to earn enough in the labor market to repay their loans or recoup their initial investment in postsecondary education, placing them at risk for the worst borrowing outcome: default. Indeed, more than half (55 percent) of Black borrowers who start college but do not complete enter default, inflicting serious financial consequences including damage to credit scores, wage garnishments, collection fees, and Social Security and tax refund withholdings."

The report also notes, however, that "Black households headed by a college degree holder still have substantially less wealth than White families headed by a high school dropout."

To further emphasize earnings, the report relies on University of Texas system data. The university system gives current and prospective students a wealth of information about how recent graduates like them have fared in the job market. The website links to records from the Texas Workforce Commission to track 68,000 alumni of the system's 15 universities into the workforce, providing earnings and loan debt levels one year and five years after graduation by institution and major. (A major problem is that the data are less valuable for the University of Texas at Austin because so many alumni work out of state.)

The Texas data are program-level data, not institution data. So people can see the impact of earning a degree in a certain field. But over all, readers of the report can see numerous things about Texas system graduates:

"Over time it becomes apparent that completion matters immensely for the economic outcomes of Black and Latinx students," the report says. "Relative to their non-completer peers, Black and Latinx UT System completers realize substantial premiums for their degree. Five years after graduation, the median Latinx completer earns $50,421, which is 81 percent more than their Latinx peers without a degree; median earnings are $51,068 (a 59 percent premium) for Black completers. In contrast, White students receive a lower (45 percent) premium for completion likely due to higher wages for White high school graduates. Ten years after graduation, UT System graduates from low-income backgrounds also experience larger earnings premiums from completing, compared with their higher-income peers (42 percent compared with 30 percent). As a result, the relative net gain in earnings can be substantially higher for completers from underrepresented groups."

The report adds that "in some fields, completion can mean the difference between small earnings gaps and massive earnings canyons. For instance, among health majors, Black completers consistently have higher median earnings than their White peers (from 1 year after completion to 15 years after completion), and Latinx completers close a $10,000 gap at year 1 to less than $3,000 by year 15. In contrast, among non-completers, Black students face a $4,000 deficit at year 1, which grows to a $14,000 deficit by year 15. Latinx non-completers face a gap of nearly $15,000 at year 1, which grows to approximately $23,800 by year 5."

The Gates report criticizes the extremely selective colleges (on admissions) and suggests that they not receive praise for admitting brilliant students who then go on to do good work.

"The most selective institutions typically have massive pools of privileged white and wealthy students seeking entry. These students often have had access to expensive test preparation and college counseling services, as well as advanced level coursework during high school. They also have access to extensive social networks that facilitate career opportunities during and after college. Therefore, it is unsurprising that institutional selectivity and average SAT scores have moderately strong correlations with institutional median earnings," the report says. "However, these indicators are also highly correlated with socioeconomic and racial inequity. Black and Latinx students are disproportionately funneled into high schools without advanced coursework programs like Advanced Placement or International Baccalaureate; or, if their school has these programs, they often are tracked away from them. Similarly, standardized test scores are correlated with socioeconomic status. Putting these factors together clarifies the ties between selectivity and institutional diversity."

The report says a more fair way to judge value is to look at who benefits and who gains -- and here the answer is both the students and society. In fact, the report is called "Equitable Value: Promoting Economic Mobility and Social Justice Through Postsecondary Education."

Based on all these factors, the commission says value is what students experience in higher education.

"Students experience postsecondary value when provided equitable access and support to complete quality, affordable credentials that offer economic mobility and prepare them to advance racial and economic justice in our society," the report says.

Next Steps

The commission -- armed with 600 pages of research reports -- also discusses what colleges should do to address and dismantle all these structural barriers.

"The first phase of the societal economic benefits analysis shows clearly that investments in postsecondary equity -- on the parts of institutions, states, and the federal government -- would pay off and narrow earnings and wealth gaps for Black, Latinx, Indigenous, and underrepresented AAPI communities as well as people from low-income backgrounds, and achieving more equitable representation within higher paying fields would make a difference for women. The second phase demonstrates that higher education cannot eliminate the societal inequities that contribute to these persistent gaps by only addressing attainment and affordability. Racism, labor market discrimination, and unequal access to wealth building strategies -- particularly through intergenerational wealth transfers -- shape the economic benefits that individuals and society can accrue from postsecondary education."

But while the report says colleges didn't cause the problems in American society, it doesn't let them off the hook.

"However, institutions should not shy away from reshaping policies and practices within their control to help dismantle structural inequalities. Colleges and universities can direct their efforts toward more equitable access, affordability, and completion for students of color and students from low-income backgrounds. They can make sure that students -- especially students from low-income backgrounds -- are not burdened with educational debt. And they can streamline pathways to careers for marginalized students, especially people of color and women, who face labor market discrimination. As the commission’s underlying research shows, combating the inequities that plague our current postsecondary system -- and society at large -- can lead to enormous local and societal benefits."

The report outlines the "action agenda" for higher education:

  • Equalize access to increase postsecondary value.
  • Remove affordability as an impediment to postsecondary value.
  • Eliminate completion gaps and strengthen postcollege outcomes to ensure postsecondary value.
  • Improve data to expose and address inequitable postsecondary value.
  • Promote social justice by providing equitable postsecondary value.

The question is whether higher education will embrace or fight the ideas in the report.

Commission members pointed to research they released today showing that billions of dollars would be gained by solving the problems identified in the report.

Pursuing the action agenda will not be easy. For example, commissioners said the University of Texas data should be part of a national database. But the private college lobbying group the National Association of Independent Colleges and Universities has opposed the collection of data, citing privacy concerns, among others.

Ted Mitchell, president of the American Council on Education and a member of the commission, called the Gates report "an eloquent statement on the value of higher education."

He acknowledged that, in the past, some private colleges have opposed measures that would create any national database on student performance. But, he said, "we've all come a long ways." He noted the hard work of colleges on cybersecurity and the work of College Scorecard should make it easier to support the changes. "Those things open the doors."

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