- Higher ed spending is not sustainable, and everyone–students, the government, and society–bears that cost
- Higher education must get back to the fundamentals–leaders must consider which activities actually contribute directly to student success
- See related article: Can higher ed solve its 7 wicked problems?
This post originally appeared on the Clayton Christensen Institute’s blog and is reposted here with permission.
Note: Scott Pulsipher, president of Western Governors University, and I published this piece on Forbes two days before the Supreme Court overturned President Biden’s student loan forgiveness plan, as the majority said that it exceeded the authority Congress delegated to the executive branch. As I’ve made clear in past writings, this was both my expectation of what would happen and my personal belief of what should happen. But more broadly, regardless of the ruling, the central message in the piece that Scott and I wrote in Forbes—about the spending problem on the part of colleges and universities—is a critical one with which those in higher ed must wrestle. Our piece is below.
With the Supreme Court expected to announce its ruling on the legality of President Biden’s student loan forgiveness plan tomorrow, debates around who should pay for the country’s crippling level of student debt—amounting to more than $1.7 trillion—continue to flood the national discourse. What’s less discussed, however, is how we got here in the first place, and what would need to change to avoid imposing immense financial hardship on yet another generation.
Policy analysts can point to shifts in state funding, government subsidies, and myriad other reasons for the escalating price of college, but this issue is fundamentally one of costs—the overall expenditures associated with delivering the educational experience—not price. Higher ed has long been on an unsustainable cost trajectory, and everyone—students, the government, and society—bears that cost.
Looking at graphs of the rising costs of college is like watching a snowball gain size as it rolls downhill. In 1970, for example, public colleges and universities spent nearly $104 billion in today’s dollars. That number rose to $190 billion by 1990; $296 billion by 2010; and a whopping $420 billion by 2020.
Altogether, post-secondary institutions now spend more than $670 billion per year—yet interestingly, four-year public and other private nonprofit colleges devote just one-third of their total spending on course delivery and instruction. This raises the question: what is driving the rest of this spending? And what tradeoffs are needed now to bend the arc of the cost curve?
Higher education, it turns out, has been engineered beyond what should be its primary objective of arming students with the knowledge and skills needed to build better lives and careers. Instead, many institutions have taken on tasks that were designed originally to provide value, but eventually took on a life of their own. In effect, these institutions have lost their clarity of purpose in pursuit of a multiplicity of competing missions. The result? Complex, costly educational models.
Higher education must get back to the fundamentals. With the eyes of the nation upon them, leaders of colleges and universities must consider which activities actually contribute directly to student success and come to terms with two realities.
The “Hollywood” version of college is increasingly irrelevant for America’s diverse talent.
Despite dramatic demographic shifts, many institutions continue to cater to upper-middle-class 18–22-year-olds in pursuit of a romanticized college experience. The result of this is an ever-burgeoning list of obscure majors, departments, programs, and other offerings divorced from a connection to opportunity and the labor market, or what would help most students progress. The cost of maintaining these programs isn’t just in the programs themselves, but in managing a layer of administrative overhead, the growth of which has greatly outpaced the rise in faculty and students over the past several decades.
If that weren’t bad enough, far too many colleges continue to engage in a costly amenities arms race.
Although amenities such as housing, food services, student experiences, and athletic facilities were introduced originally to provide value, today many institutions are using these to attract higher-paying students. Unfortunately, the spending isn’t helping their students persist, graduate, or get a great job. Consider that nearly 40% of students don’t graduate from a four-year college within six years, for example.
Even crazier is that many of these amenities don’t benefit their students. Just 13% of first-year students live on campus, according to Higher Learning Advocates, for instance. The coming-of-age experience is also at odds with the needs of a growing share of today’s undergraduates whom some call “post-traditional”—over the age of 25, from low-income backgrounds, who work at least part-time, have children, and/or pay for school independently. This new majority doesn’t care if their school boasts a competitive athletic program or an obscure department in which they’ll never take a course. They instead want to acquire the skills that will help them advance in life, and they want to do so at a cost commensurate with the return.
Pursuing research comes with tradeoffs.
Research-intensive universities provide critical, hands-on learning experiences and create value for society when they advance our collective understanding in important domains. The trouble is, embedding research into an institution’s business model can result in misalignments that compromise student success and drive spending.
In an effort to move up-market and attract federal financing, far too many institutions have embarked on research activities that add little to the student experience—or to society’s knowledge.
What we instead often see is that faculty are incentivized to prioritize activities that elevate their reputation rather than focus on student learning. A single faculty member can only accomplish so much in a day, so professors compensate by reducing their office hours and passing the responsibility of grading papers onto teaching assistants to make time for publishing articles and attracting grant money.
Pursuing a dual mission also further increases organizational complexity, which in turn increases administrative overhead. Research-intensive institutions, for instance, must work with 18 different federal agencies and roughly 30 different areas of regulation. With the exception of a few established universities, students and society would be far better off repurposing those dollars toward student learning and success.
Why have we settled for a system that prioritizes breadth, student life, and research contributions above an institution’s ability to increase access, improve student success, and increase value for graduates? Wherever one stands on forgiving debt, we should all agree that the promise of higher education needs reinvigorating.
Rather than rely on the government or taxpayers to bail them out, our institutions must take responsibility and consider which tradeoffs they should make to control costs.
As they do so, however, this shouldn’t be an exercise in slashing costs, but in boosting student value. Institutions must lean into those parts of their model that help students and eliminate the parts that don’t. When students enroll and don’t graduate or don’t receive an education that leads to a great opportunity that advances their life, that also extracts a cost in a student’s time, perhaps their most precious resource. Students deserve better, as does a society that pays the way.
Related: 2 keys to budget success this season
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