Wednesday, November 03, 2010

The Perfect Storm: a Coming Revolution?

A couple of weeks ago, I spoke at the Alexander Hamilton Institute (AHI) in Clinton, New York, near the campus of Hamilton College. AHI should be part of Hamilton, but the leftist orientation of faculty and administration makes that impossible, since AHI is a group of right-of-center scholars who bring in speakers with a different perspective than the typical campus visitor. Hamilton, like many schools, seems to think diversity is beautiful when it comes to skin color but deplorable when it comes to ideas, but that is a topic I should leave to new “Innovations” blogger (and friend) Peter Wood, who I welcome to our little group. He is already stirring up a bit of a fuss, starting to rival me in the number of agitated readers. Good.

What did I say at Hamilton? Basically, a “perfect storm” is enveloping higher education, which will lead to revolutionary changes. Consider the following:

1. The cost of higher education to students is rising faster than family incomes, not a sustainable condition indefinitely. Tuition fees can rise faster than overall prices forever (like London theater tickets), but they cannot rise faster than people’s incomes for eternity.

2. The pool of 18 to 24 year old students that forms the core constituency of colleges and universities will stagnate in size over the next decade.

3. Despite rampant grade inflation, well over 40 percent of entering full-time students fail to earn a diploma within six years, with the record for community colleges even worse. This may be related to evidence showing remarkably low levels of student academic effort as measured by their use of time.

4. Growing numbers of college students are ending up in relatively low paid jobs traditionally held by persons with modest levels of educational attainment, or, worse, are becoming unemployed.

5. The college-high school earnings differential has not materially grown for the largest population cohort –women–over the past couple of decades -despite sharply rising costs of attendance.

6. The number of college graduates or dropouts with dangerously high ratios of student debt to current income is growing substantially, a repeat on a smaller scale of the situation leading up to the housing bubble.

7. In spite of all of the above, the President, other key politicians, foundation executives and higher education officials are exhorting us to expand student college participation in order to raise the ratio of college graduates to the adult population.

8. Historically unprecedented federal budget deficits, a rising debt to GDP ratio, and a large growth in the elderly population (and the financial liabilities associated with their entitlements) are putting pressure on government to reduce spending in all but the absolutely vital areas.

In the market economy, when something becomes more expensive and its benefits become less clear-cut, people quite rationally and efficiently reduce their demand for it and thus resources are allocated away from the activity. In the politicized world of higher education, people like our President are trying to do the opposite –increase resource usage at a time when trends suggest we need to do otherwise. And universities, who could counteract the “perfect storm” by reforms that reduce costs and increase efficiency, have little incentive to do so, thwarting an efficient solution to the problem.

How will this all end up? I am not sure, but I predict American higher education in another generation will look rather different than it does today, and the institutional inefficiencies will probably have to be broken down, and the utopian aspirations of politicians and the Education Establishment will have to be modified. Time will tell if I am right.

1 comment:

Glen S. McGhee said...

This is a good list, but Item 7 fails to clearly identify the consequences of continuing expansion: accelerating credential inflation.

Many are laboring under the false delusion that shifting the median of educational attainment upwards will result in increased economic rewards. This is, on its face, wrong because the underlying distribution of wealth and reward is left untouched by such a shift.

Such expansionary policy only stimulates competition for advanced degrees at the same time that higher-end occupational slots are shrinking, exacerbating the lottery effect of higher education.

What this will do -- including credential inflation along with the factors cited -- is widen social divisions and create more tension between the haves and the have-nots.

Add to this list accreditors and the accrediting guild -- the moat that protects the Ivory Tower from outside reform pressures -- which are caught up in an impossible situation (i.e., having to protect the interests of their member institutions, and the interests of the public at the same time). Despite the recent attempts by the US Dept of Education to rehabilitate accreditors as federal agents for compliance and enforcement, such medieval institutions have been, and continue to be, wonderfully resistant to outside pressures to change. They will not be able to satisfactorily perform their new responsibilities because they have yet to perform the job given to them by Congress in 1992!