Higher Education in America (part 2)

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Derek Bok describes three key features of America’s higher education system. First, it is very diverse, including about 200 research universities, over 700 comprehensive universities, almost 1,000 private nonprofit colleges, over 1,000 community colleges, and over 1,300 for-profit institutions.

Second, it involves government only to a limited degree: “Because our higher education system has a large private sector along with a federal system in which much funding and oversight of universities is provided by the states, it is harder to create a coherent and effective national policy for higher education than is the case in most other countries.” Although total spending on higher education is 2.4% of national income, about twice as much as the average European country, a greater share of the costs fall on households since public support is more limited. (Although I don’t recall Bok making the connection, this sounds a lot like the US health care system–most expensive in the world but falling a little behind in results.)

The third key feature is competitiveness. Educational institutions are in serious competition for revenue and students, especially students with academic ability and financial means. Bok identifies this as “the aspect of our system that seems to produce the most mixed results.” On the one hand, it is “the source of much of the energy and innovation that characterize our universities at their best.” On the other hand, Bok is concerned that institutions compete in ways that waste resources or undermine quality. The things that are educationally most important aren’t the most visible to the public, especially to young students. People may be more impressed by attractive buildings or winning football teams than by the quality of instruction. That quality is challenging to measure, and national rankings are based on more readily available indicators like average SAT scores. “The result is that much of what is most important to the work of colleges and universities may be neglected, undervalued, or laid aside in the pursuit of more visible goals.” Bok is especially critical of universities that let their undergraduate teaching mission be overshadowed by efforts to “climb to a higher rung on the ladder of prestige” by becoming more like the major research universities.

A metropolitan university that excels in teaching students is likely to add more value than it would by becoming another medium-quality research institution. Even so, because the contributions from first-rate teaching are hard to evaluate and seldom win public acclaim or achieve much prestige, they tend to be overshadowed by more tangible, measurable, gains, such as higher SAT scores, new programs, and successful fund drives.

One way that students might like universities to compete would be reducing prices, like successful computer manufacturers. But that’s hard for suppliers of highly skilled services:

Most entities like colleges and universities that make extensive use of highly skilled labor raise their prices faster than the cost of living. The reason is that it is difficult to substitute machines for employees and achieve the productivity increases common to manufacturing, agriculture, and other sectors of the economy….Competition in most industries tends to lower prices. In higher education, however, what appeals to talented students, foundation officers, philanthropists, and other valued audiences is often not lower prices but higher quality, or what is commonly thought to be higher quality [emphasis added].

Another reason for higher tuition is the declining share of public university revenue coming from state governments. That share went from 32% in 1980 to 18% in 2009. In about the last 30 years, the consumer price index has risen 106%, but college tuition and fees have risen 439%, even more than the 251% increase in health-care costs. Bok objects to the “blanket charge that colleges cost too much,” because tuitions vary so much among institutions and financial aid is so widely available. Nevertheless, he notes that money is the most common reason undergraduates give for dropping out, and he is concerned that cost is a major obstacle to increasing college attendance and graduation rates. “Most of the additional enrollments needed to raise attainment levels will have to come from low- and moderate-income families, since children from more affluent homes already graduate in high enough numbers to leave little room for further growth.” But these families have been hurt not only by the increasing costs of college, but by the stagnation in wages for most workers, the increasing concentration of wealth and income at the top, the shift in financial aid from predominantly grants to predominantly loans, and the increasing emphasis on merit rather than need in the awarding of scholarships. (Although rewarding merit is a good thing in many contexts, the result can be that universities compete to make the best offer to students who would have gone to college anyway, whether they got financial aid or not.)

Bok is skeptical about addressing the problem with increases in federal financial aid. He doesn’t think it’s likely in a period of public austerity, and he fears that it will just enable state governments to make further cuts in their support. He suggests a different approach to federal aid:

The federal government should try to make more effective use of its resources by offering additional aid in the form of matching grants to the states instead of simply increasing Pell Grants. In order to qualify for additional aid, states should have to match the added funds with need-based grants (rather than merit awards or athletic scholarships) and agree to keep public tuitions from rising faster than increases in need-based aid.

Bok also recommends two things for universities and colleges to concentrate on:

…On the one hand, lowering dropout rates by offering simpler, more highly structured programs and by providing more effective remedial education and better counseling and job placement services; and, on the other hand, reducing costs by eliminating nonessential activities (such as intercollegiate athletics), making greater use of online courses and part-time instructors, and instituting more effective ways of keeping students from taking more courses than they need in order to graduate.

Although Bok tries to be cautiously optimistic, he doesn’t underestimate the difficulty of achieving reform on the scale needed to raise the educational achievement of students of limited means. He acknowledges that many of the recommended ways of cutting costs will encounter stiff resistance (cutting back sports), endanger quality (part-time instructors) or have as yet unknown results (more online courses).

Bok suggests five possible directions higher education may go, the first two of which are unpleasant to contemplate:

The first is that students will eventually balk at paying higher tuitions and taking on increasing debt and either gravitate to lower-cost colleges or abandon plans for college altogether….

A second possible outcome is that federal officials will try to restrain the rising cost of college by withholding their financial aid from universities that do not moderate their tuition increases….The most probable result will be a decline in educational effectiveness.

Three more favorable directions involve possible changes to the economy, a new approach to government financing, or technological change:

The third alternative is for the economy to resume the pattern that existed from 1950 to the mid-1970s when the gross domestic product (GDP) grew at a healthy rate and the gains were quite evenly distributed throughout the working population….[But Bok acknowledges a catch-22: Evenly distributed income gains will be hard to achieve without a more educated workforce.]

The fourth possibility is that, one way or another, government and college officials will arrive at an arrangement whereby federal and state governments agree to finance at least a slow growth in the undergraduate population through increased institutional support and student aid in return for reasonable restraint in the growth of tuitions….

The fifth and final possibility is that online education and related technological advances will produce enough cost savings to remove the need for unsustainable tuition increases while greatly reducing the expense of educating the larger cohorts of students required to raise current levels of educational attainment.

Continued

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