This talk has had a long gestation period – 24 years to be precise. In the fall of 1980, I was hired by a small, nonselective college to teach a number of courses – Business Law, Principles of Economics, and an upper-level course in Political Economy. An experience in the latter class one fall day was, as Senator Kerry would say, “seared” into my memory. I had asked the students to read a few pages from Hayek’s The Mirage of Social Justice, expecting that they would do the reading and come to class prepared for some discussion.
Sadly, I found out that the students a) had not bothered to read the assignment, or b) didn’t understand grasp anything from it and c) were not the least bit bothered by their inability to answer any of the questions I posed. After much embarrassing silence, one young fellow put up his hand, and I eagerly called on him. He said, “Couldn’t you, like, just tell us the main point?”
Chalk up the phrase “Couldn’t you, like, just tell us the main point” along with other collegiate classics, such as “Will that be on the test?” and “Couldn’t I do an extra-credit project to raise my grade?”
Early in that, my rookie teaching year, I came to understand that college education in 1980 at the school where I was teaching, was not at all like the experience I had had just a decade earlier as a student in a liberal arts college. As an undergrad, I had known students who were lazy, but the students I now faced every day were different -- not merely lazy, but often hostile to intellectual pursuits. Many students exhibited what is now called “Attitude.”
“So why are you in college if you have no desire to learn anything?” I wondered.
I noticed something else about the students. By and large, they had reading and writing skills that wouldn’t have passed 4th grade back in 1960, when I was in 4th grade. They couldn’t or wouldn’t read; their writing was atrocious; and I knew that a large percentage had to take “developmental” math, meaning that they had also failed to get the basics of the third R.
“So how did you ever graduate from grade school, much less high school?” I wondered.
Those questions kept rambling around in my mind, and as they did, I started to come across articles by others in higher education expressing the same doubts I was having. Has college now become just an extension of high school or middle school? What is becoming of academic standards? Isn’t it foolish to send academically weak and indifferent students to college who would be much better off if they were learning how to fix cars or process loan applications?
Before long, I concluded that higher education had been badly oversold. By that, I mean that large numbers of students were enrolling in college and running up considerable bills and debts, for something that was simply a bad choice for them. To use an analogy, it was as if lots of poor people had been persuaded that driving a luxury SUV was imperative to their success in life and they were sacrificing a lot in order to afford, say, a Cadillac Escalade. Spending a lot for something that won’t produce commensurate benefits – that’s overselling.
But luxury SUVs (and other goods and services) can’t be oversold, for two reasons. First, purchasers have to bear the full cost of buying one. There is nothing like financial reality to make people think carefully about costs and benefits. And second, people can get good information about the performance of cars, appliances, electronic gear, and so forth. The producers can make all the seductive claims they want, but most people will see through them or check them out.
How Higher Education is Oversold
Two things are different between the market for SUVs and the market for higher education.
First of all, cars are not subsidized and higher education is.
State governments subsidize higher education by keeping tuition and other charges below cost. In North Carolina, for instance, state residents who are accepted at the “flagship” campus at Chapel Hill pay about $4400 per year in tuition and fees. At Elon University, a private school just a ways west on I-40, tuition and fees run over $17,000. At Duke, you could buy a pretty good SUV for what it costs to attend – more than $30,000. True, students at private colleges and universities often receive a discount from the “sticker price,” better known as financial aid, but nevertheless, the high degree of subsidization by the state is undeniable. Vermont, oddly enough, comes closest to charging full cost. A year at UVT costs more than $10,000 in tuition and fees, but even that amount, I’m certain, leaves quite a bit for the taxpayers to cover. The roughly three-fourths of students who attend state colleges and universities get a big price break.
Then, there is the federal government, which has been subsidizing higher education ever since the enactment of the GI Bill in 1944. This year’s budget includes more than $70 billion in federal money for a panoply of grants, loans, and other assistance designed to make college more affordable.
A basic tenet of economics is that there will be more demand for a good at a lower price than at a higher price. By keeping the cost of higher education artificially low for the great majority of students, we undoubtedly lure many away from the job market or vocational training.
Secondly, there is the information problem. What will a college degree – I’m not using the word “education” here on purpose – do for a young person? If Cadillac advertises that owning an Escalade will make you cool and popular with gorgeous girls, just about everyone can figure out that it’s merely hype. If Cadillac advertises that the Escalade has a 345 horsepower engine, that’s a claim that can be easily verified in independent sources. And if they said they get 40 miles per gallon, nobody would believe it, so they don’t.
But with college, the situation is altogether different. The selling comes largely from parents, who probably assume that if they have college degrees, their kids must at least earn a BA, if not a masters or doctorate, from high school teachers and counselors, who also have college degrees and regard it as a black mark against them if they “fail” to help a kid get into college, from and from colleges themselves, which want full dorms and classrooms.
The message that kids receive, often starting as early as grade school, is that going to college is imperative to success and happiness. In their book Other Ways to Win, Penn State professors Kenneth Gray and Edwin Herr call this the “one way to win” mentality. They write that great numbers of academically average (or worse) students “head off to a 4- or 2-year transfer college despite being academically and/or emotionally ill prepared for the experience. The tragedy is that many are not successful and as a result drop out. Even among those who graduate, as many as one half may never find college level work.” Teachers and counselors sell students on college with the idea that if they don’t get a degree, they will have to settle for a life of drudgery in low-paying employment. Gray and Herr report that even among high school students in the lowest quarter, 57% said that they had been told that they ought to enroll in college.
And naturally, colleges and universities, eager for paying customers, take advantage of the widespread belief that having a college degree opens all sorts of wonderful doors. Gray and Herr write, “Marketing efforts to fill empty college dorm rooms and classes have become sophisticated and extensive. The most prevalent advertising tactic used in these campaigns is to play on the hopes and fears behind the one way to win mentality. The net result is that, in the efforts to fill seats, higher education spends millions of dollars each semester to promote the go-to-college message.”
Thus, students – and parents who aren’t already sold on the idea – receive a steady stream of believable information from apparently trustworthy sources that it is almost unthinkable to continue in life without a college degree. It’s little wonder that about 70 percent of high school graduates now enroll in some college or university.
The Conventional Wisdom about College
Most Americans think it is a very good thing that we have so many young people going to college. Many even believe that we need to increase our “investment” in higher education to make sure that it is “more accessible” – in other words, almost universal. For example, writing in the August 5, 2004 New York Times, economics professor Jeff Madrick said, “To economists, higher education is like motherhood and apple pie. It will cure just about anything, from globalization and outsourcing to technological change and income inequality….The data on the benefits of higher education in the US are overwhelming and convincing. The spread of education is the best way to address the nation’s economic problems.”
This is a good point at which to adduce several propositions concerning the conventional wisdom about higher education.
1. Since we are moving into a “new economy” based on knowledge rather than on industrial production, it is imperative that our young people be better educated than in the past. Most jobs will require a college degree.
2. The more formal education people have, the more productive they can and will be.
3. Investing more in higher education is necessary to keep the US economically competitive.
4. People who don’t have college degrees will be restricted to dead-end jobs since good jobs for people without college degrees are rapidly disappearing.
5. Earning a college degree significantly augments a person’s “human capital” and thereby leads to higher earnings.
Alas, each of those propositions is mistaken.
First, we are not morphing into a radically different set of economic conditions. For all the talk about a “new economy,” little has changed and little will change with respect to the amount of formal education that people need. Of course, there are some jobs where a great deal of deep study is necessary, such as medicine and engineering, but such jobs are unusual. The broad outlines of the economy are not changing. Things are built; things are transported, things are sold; things are repaired. Services are rendered. Although many workers now use much more sophisticated tools and technology than in the past, that doesn’t make the work so much more difficult that only an individual with a college degree can possibly learn it.
In a paper he published last year in the American Review of Sociology, Professor Michael Handel addressed that point, writing, “In real-life situations, tasks are performed in context and people have greater internally generated motivation to develop proficiency, which they achieve by acquiring a stock of domain-specific knowledge and developing their own heuristics for solving problems…The skills workers can develop and for which they are rewarded are partly a function of the jobs employers offer, rather than the intrinsic capacities of individuals acting as a kind of hard restraint.”
In other words, people learn and adapt to changing job requirements. Years of additional formal classwork are hardly necessary for people to master new workplace challenges.
But what about the often-heard statement that most jobs in the future will require a college degree?
When people hear that, they’re apt to assume that the statement means, “Most jobs are going to be so difficult and demanding that only individuals who have earned college degrees could possibly have the knowledge and skill required to do them competently.” But when employers set the college degree as a requirement for applicants, they almost never do so because the work is terribly demanding that no high school graduate could cope with it. Instead, they do so as a crude screening device. With such a large pool of college graduates available these days, why bother interviewing high school graduates who are probably going to be less reliable and more difficult to train?
For example, there are now some banks that require applicants for teller positions to have college degrees. Is that because the teller’s job is now so hard that it just can’t be learned by someone whose formal education stopped after high school? No. The job has changed scarcely at all over time, and if anything, technology probably makes it somewhat easier than it used to be. The requirement of a college degree – which could be in anything – is not a knowledge threshold, but instead just a screening mechanism. Employers are not saying that high schoolers couldn’t do the work. They’re saying that since they can fill their employment needs with college graduates, there is no reason to bother letting people with lesser credentials apply.
Professor David Labaree of Michigan State has a term for this – credential inflation. In a delightfully named book, How to Succeed in School Without Really Learning, he writes, “The practical effect of (subsidizing higher education) is the production of a glut of graduates. The difficulty posed by this outcome is not that the population becomes over-educated…but that it becomes overcredentialed, as people pursue diplomas less for the knowledge they are thereby acquiring than for the access that the diplomas themselves will provide. The result is a spiral of credential inflation, for as ech level of education in turn gradually floods with a crowd of ambitious consumers, individuals have to keep seeking ever higher credentials in order to move a step ahead of the pack. In such a system nobody wins.”
So when you hear it said that “most jobs will require a college degree,” think “credential inflation” rather than “more difficult work.”
Second, it is not the case that more years of formal education necessarily makes an individual more productive.
The reason why this appears to be so is the frequently quoted statistics on the wide and growing gap between the average earnings of people with college degrees and people without them. In that New York Times piece I mentioned earlier, Jeff Madrick reports that according to census data from 2000, average earnings for men with college degrees was $52,500, but only$31,600 for men without them. That makes it sound like a no-brainer: Just get more people through college and they’ll earn more. Hence, Madrick’s assertion that more college education is the solution for income inequality.
But it is a logical mistake to compare average earnings of college graduates, a group that includes many fabulously wealthy professionals and business people, with the average earnings of non-graduates, which includes many people who are barely literate and operate at the fringe of the labor market. The right question to ask is whether the people at the margin, particularly kids who might have gotten into a lower-tier college but decided instead to go into the labor market, would be much better off with the college degree.
Let’s think about that. Suppose we have a young man who is at best a mediocre student, and not really much inclined toward intellectual pursuits. He might enroll in, say, Norfolk State, majoring in Business or Communications or something of the sort, then go off into the job market only to find that with that “glut of graduates,” the best job he can find is that of a loan processor with a finance company – or even worse. In her book Bright College Years, Anne Matthews writes that a third of the Domino’s Pizza delivery drivers in the Washington metro area have college degrees. On the other hand, he might take a training course in auto mechanics and within a year or so be in a solid, good-paying job. (A recent article in Forbes discloses that experienced mechanics can earn $75,000 per year, numbers that would make many college professor envious.)
The point should be obvious – more years of formal education are not good for everyone. Trying to put even more students through college will confer more credentials, but won’t do anything to increase their productivity.
Regarding the third proposition, the competitiveness of the economy has nothing to do with the percentage of workers who have college credentials. What I have said so far should already have one leaning toward the belief that we are well past the point of diminishing returns on higher education. Putting more of our weaker students through college won’t give us more brilliant engineers and scientists. It will merely create more credential inflation.
An interesting further piece of further evidence in that regard comes from a paper by economics professor Richard Vedder of Ohio University in the fall 2004 issue of the Journal of Labor Research. Vedder finds that there is a negative correlation between state spending on higher education and state economic growth. States that spend the most have poorer economic track records. Vedder believes that this is due to the fact that the resources drawn into expansion of higher education systems are more productively used elsewhere. If Vedder is right, and I think he is, “investing” more in higher education will hurt US productivity, not help it.
On the fourth proposition, it is not the case that good employment for people without college credentials is disappearing. According to Department of Labor figures, there is a shortage of qualified auto mechanics. A recent Wall Street Journal article discloses that there is also a shortage of skilled machinists – so much so that companies are even paying bonuses to lure away the workers they need. To the extent that we have a problem of jobs disappearing for people without college degrees at all, it is caused by credential inflation, not the increasing difficulty of work. If we continue pushing college education on the grounds that jobs are disappearing for high school grads, soon we’ll be hearing that we have to push students on to doctorates because jobs are disappearing for people with only BA degrees.
Fifth, while it’s true that a college education is highly beneficial for some students, those with the desire and capacity to move well beyond their high school studies, for many students these days, college is just, as Milton Friedman put it in Free to Choose, a “pleasant interlude between high school and going to work.”
In Beer and Circus, Professor Murray Sperber quotes a typical undergraduate at the University of Missouri: “Most students here, except for the journalism majors, feel they don’t need to try hard in classes and they can get by and get their degree. You find that out when you walk into your first class here….Most Mizzou students are satisfied with easy schoolwork because other things are much more important to them, mostly partying and following the Tigers.”
Sperber also blows the whistle on what he calls the faculty-student non-aggression pact – the implicit deal between professors and students which says that students will get light work and high grades in return for not expecting much teaching from the professors, who prefer to put their efforts into their own research projects. The result is a very thin gruel of academic work for many students, who graduate with little to show for their four or five or six years other than a piece of paper.
One salient weakness is in writing. It used to be taken for granted that college graduates, whatever their major, at least were proficient in the use of the English language. Sadly, that is no longer the case. In its September 2004 report entitled “Writing: A Ticket to Work…Or a Ticket Out,” the National Commission on Writing concluded that business leaders are dismayed at the poor writing ability of today’s graduates. Here is a typical comment, “The skills of new college graduates are deplorable – across the board; spelling, grammar, sentence structure…I can’t believe people come out of college now not knowing what a sentence is.”
The crucial problem is that, in their eagerness to have a growing student body, most institutions have chosen to admit more and more students who are ill-prepared for and little interested in serious academic work. Professor Paul Trout, in an article that was published in the National Association of Scholars journal Academic Questions, calls them “disengaged students.”
As Trout explains, “They do not read the assigned books, they avoid participating in class discussions, they expect high grades for mediocre work, they ask for fewer assignments, they resent attendance requirements, they complain about course workloads, they do not like tough or demanding professors, they do not adequately prepare for class and tests, they are impatient with deliberative analysis, they regard intellectual pursuits as boring, they resent the intrusion of course requirements on their time, they are apathetic or defeatist in the face of challenge, and they are largely indifferent to anything resembling an intellectual life.”
To keep such students content, most schools have decided to adjust downward. Academic standards have been lowered – but while grading has been inflated. The curriculum has been filled with watered down courses and courses that are more entertainment than work. (UNC-Charlotte has just approved a course on the TV program “American Idol.”) The masses of disengaged students can easily navigate a minimal work/minimal learning path to a degree, which then proves to be worth just about nothing.
We oversell higher education, but so what?
First, this entails a waste of money and resources. We have a much larger higher education system, employing far more people than need be. Waste in higher education may seem to be the most benign sort of waste, but it’s still waste.
Second, we have unleashed credential inflation. That’s part of the waste problem, but also has the perverse effect of shutting many people out of jobs they could easily learn, simply because their families didn’t or couldn’t get them through college. There’s a strong odor of unfairness in that, I believe.
Third, by luring needlessly large numbers of students into college, we give our notoriously leftist faculty a shot at influencing more students than would otherwise be the case. Perhaps I’m overestimating their effectiveness, but I fear that while the typical student these days learns little of value in the course of getting his degree, he picks up a lot of leftist notions about the environment, “social justice,” “diversity” and so on.
And fourth, the overselling of higher education tends to depress academic standards, thereby weakening the benefit of college studies for those students who are serious about developing their minds. Top students can still get a rigorous education, but it takes them longer to do so. That’s perhaps worse than the waste of money – wasting the time of kids with sharp minds in a dumbed-down academic environment.
But What Can Be Done?
The overselling of higher education is not an immutable law of nature. Of the two parts of the problem I’ve identified, government policy can and should do nothing about the informational aspect. The best and only appropriate antidote to the “one way to win” mentality that drives so many students to apply to colleges and enroll is counter-evidence from the experience of students who have gotten college degrees and wound up in menial jobs anyway. That realization will, I believe, slowly spread and take some of the bloom off the rose. We can also count on technical training institutes to more aggressively market their services and persuade more young people that going to college is not their only option.
What government should do, however, is to stop subsidizing higher education. States have been raising their tuitions in baby steps. They should keep doing so, working up to child steps and then adult steps. The federal government should phase out its student financial aid programs. Knowing that higher education would not be subsidized in the future, families would save more. It’s easier than ever for people to save for higher education what with Roth IRAs and State 529 plans.
Furthermore, lower-income families can look to private scholarships, which are more abundant than ever, and would undoubtedly increase if government aid were reduced.
Another intriguing development in higher education finance is the “human capital contract.” With human capital contracts, investors provide the funding needed for students to go to college and in return, the student agrees to pay a certain percentage of his income to the investors after he enters the labor market. One firm, named My Rich Uncle, has been in the business of putting investors and students together since 2000 and went public last summer. What’s especially appealing about this to an economist is that it provides a market feedback loop on the benefits of different courses of study and institutions. Students intending to study engineering, for example, are more apt to get the funding they need than are students who want to major in Women’s Studies.
The overselling of higher education is just like so many other government efforts stemming from good intentions – it has backfired and produced unintended and undesirable consequences.
In the movie The Wizard of Oz, the scarecrow implores the Wizard to give him a brain. The Wizard replies, “I can’t give you a brain, but I can give you a degree!” That pretty well sums up what has become of our higher education system.