The Compelling Need to Improve the Higher Education Value Equation

In the middle 90's, "value" was the hot new word and every business was trying to improve its value equation -- which we operationally define as "outcomes divided by cost."

Now, almost two decades later, it appears that higher education is hearing the message that value is important and matters to its customers (i.e., students). But, unfortunately, higher education in general does not appear to be getting that message.

We render that opinion with a sense of disappointment because there has been much discussion about the need to improve the value of higher education over the past few years as we have discussed in Huffington Post blogs posted in 2012 and 2013.

A raft of recent articles and studies documents the fact that the overall progress made in improving the value of higher education remains paltry. The "value" focus of these new reports is economic.

Others such as Richard Cohen of the Washington Post, Frank Bruni of the New York Times and -- as might be expected -- Gene D. Block, Chancellor of the University of California at Los Angeles argue that higher education should be about more than economics. We agree with them and acknowledge that the value received from higher education can and should take a number of forms including: intellectual, developmental, psychic, experiential, associational, attitudinal, emotional and financial.

But, in these tough times for the American economy combined with the increasing costs of higher education and the decreased funding support from state and local governments which means that many students must bear a larger burden in paying for their own education, the bottom line metrics such as graduation, gainful employment, and meaningful salaries/wages must be taken in account. In fact, in our opinion, these measures should always have been part of an accountability framework for institutions of higher education.

That said, how is higher education stacking up?

The most sweeping indictment that we have seen comes from Andreas Schleicher, an educational expert at the Organization for Economic Cooperation and Development, who states, "Institutions of higher education in the United States extract a lot of money without delivering value..."

Schleicher's general assessment is undoubtedly an overstatement as the degree of value provided in higher education varies substantially from institution to institution. In its 2014 September/October issue, Washington Monthly published its comprehensive annual value rankings of colleges and universities -- something it has been doing since 2005.

At the top of the Monthly's "best bang for the buck" college ratings for 2014 are City University of New York campuses (Brooklyn, Queens and Baruch); California State University in Fullerton; and, Amherst College (MA). All twenty of the Monthly's "worst" colleges based upon four factors (net price, average student debt, default rate and graduation rate) were private for profits or not for profits. The top three of the bottom group are: New England Institute of Art (MA); Columbia College - Hollywood (CA); and, Fountainhead College of Technology (TN).

While the Monthly's ratings and rankings present a broad range of performance in terms of value, sociologists Richard Arum and Josipa Roksa portray a more uniform trend in their new book, Aspiring Adults Adrift.

Arum and Roksa studied a diverse group of approximately 1,000 students two years after their undergraduate graduation and found that one-quarter were still living at home and almost three-quarters were still receiving some money from the parents. A Federal Reserve Bank study found that 5% of recent college graduates are unemployed and almost 50% are underemployed today.

These overall results are bothersome. But, more troubling by far is the performance in and of the for profit sector at all levels. For example:

  • In the class that Florida Coastal School of Law admitted in 2013, "... more than one-half the students were unlikely to ever pass the bar", as estimated by Paul Campos in an article for The Atlantic, September 2014.
  • A group of researchers discovered, based upon nearly 10,000 fictitious resumes sent out in response to on-line job ads, that "applicants with a bachelor's degree in business were about 22 percent less likely to get a 'callback' than applicants with degrees from non-selective public institutions."
  • Among 100,000 students who earned medical assistant certificates in 2008 or 2009, in 2011, "More than 50 percent attended a program where graduates earned less than someone working full time at the federal minimum wage -15,080." - Kevin Carey writes in the New York Times

These are damning statistics. Then, there are the costs of for profit institutions on average versus public institutions of higher education. Professor Rieg Cellini of George Washington University told Eduardo Porter of the New York Times, "...for profits cost students much more: $51,600 in tuition, foregone earnings and loan interest, almost $20,000 more than community colleges."

The question of cost is not just a concern for the for profit sector, however. The U.S. Department of Education reports that fewer than half of college undergraduates will actually finish with a degree in four years and almost 45% won't finish after six years.

The advocacy group Complete College America calculates that the average cost of one extra year at a four year public university is $63,718 in tuition, fees, books, living expenses and lost wages. Most state financial aid programs typically cover only four years. That is why Stan Jones, President of Complete College America, observes, "The parents' resources and the students' resources have run out. So, that fifth year is where you borrow."

Roil it all together and the need to improve the value equation across higher education is inescapable. And, some elected officials have the cost and value of education in their line of sight.

For instance, Senators Ron Wyden (D-OR) and Marco Rubio (R-FL) have drafted legislation titled The Student Right to Know Before You Go which would provide prospective students with data on how much they will earn based upon different courses of study in college. In 2013, the Obama Administration announced it would begin rating colleges in 2015 based upon measures of access, affordability and student outcomes.

Since that announcement, colleges have pushed back. And, in June, 2014, Bob Goodblatte (R-VA) and Michael Capuano (D-MA) introduced a resolution in the U.S. House of Representatives opposing the proposed rating system.

In an interview with Inside Higher Education at that time, Senator Lamar Alexander (R-TN), the senior Republican on the Education Committee, said he would oppose the ratings system but didn't feel he would have to do so because he thought the ratings system "will flop on its own face." Senator Alexander went on to declare, "We haven't seen it yet and we probably won't ever see it because it's impossible to do it the way they're planning with 6,000 autonomous institutions of higher education across the country."

One can quarrel about ratings and rankings, but there can be no quarrel with the need to reform higher education to enhance the value it delivers. These "autonomous" institutions benefit substantially from funds derived from state, local and federal coffers.

As Kevin Carey points out,

Every year, the federal government gives students $150 billion in grants and unsubsidized loans to attend any accredited college. This assumption is that the free market will take care of the rest. But college is what economists call an 'experiential good' - something you can't entirely understand until after you purchase and experience it, at which point it may be too late.

If changes are not made, these students become the scapegoats of a financing approach with little to no accountability attached for the provider of services which they receive.

Many students - especially those who are first time college attendees and from middle to lower income backgrounds - go to college as an article of faith. Without adequate information, education or protections, too many of those students become involved in an unintentional act of charity - giving their money away to an institution of higher education and getting nothing tangible in return. This diminishes their hope for the future.

This must be made unacceptable. It is much more than a question of value. It is a question of values. It is a question of who and what matters to us as a society and our institutions of higher education.

(This blog and other educational blogs posted recently are written in recognition of Connected Educators Month 2014.)

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