Here’s how to ‘shake up’ higher ed

If President Obama really wants to “shake up” higher education, he should start by scaling back student loans, writes economist Richard Vedder on Washington Monthly‘s College Guide. That means dropping loans to affluent parents and the federal tuition tax credit, limiting student borrowing and, ultimately, getting the federal government out of the student-loan business.

Colleges that benefit from student loans and grants should share some costs of high default rates, Vedder argues. That would discourage colleges from enrolling students with little chance of success. (Politically, this is a big loser.)

Next, consumers need better information, he writes.

Lots of students enter college based on bad advice, often from guidance counselors and school marketing efforts. Politicians make things worse with a “college for all” mantra, implying life will be a failure without a college degree to provide the ticket to the moderately affluent middle class.

To counteract the propaganda, a bill proposed by U.S. Senators Ron Wyden, an Oregon Democrat, and Marco Rubio, the Florida Republican, would mandate the disclosure of information regarding post-graduation earnings of students by college and major. Polls show that college students’ single biggest goal is achieving financial success.

Colleges are expensive screening devices, writes Vedder. There should be other ways to demonstrate potential workplace competence.”Why doesn’t someone (College Board? Educational Testing Service? Google Inc.?) develop a national college equivalency examination that tests for the critical learning skills, literacy and basic knowledge that all college graduates are expected to have?”

A credible exam would reduce the worry about low-quality online courses and make it easier for students to assemble courses from multiple providers.

Finally, Vedder calls for eliminating barriers to entry to higher education.

The single largest obstacle is the dysfunctional accrediting system, which is rife with conflicts of interest and gives consumers little information. . . . Arguably, we should eliminate accreditation as such, with the government simply defunding programs that fail to meet minimum standards (such as institutions with student-loan-default rates greater than graduation rates).

Lowering the demand for college slots and increasing the supply of higher ed providers would bring costs down.

Too many college graduates?

A growing number of college graduates are underemployed, concludes a new study from the Center for College Affordability and Productivity.

About 48 percent of employed U.S. college graduates are in jobs that the Bureau of Labor Statistics (BLS) suggests requires less than a four-year college education. Eleven percent of employed college graduates are in occupations requiring more than a high-school diploma but less than a bachelor’s, and 37 percent are in occupations requiring no more than a high-school diploma;

In 1970, fewer than one percent of taxi drivers and two percent of firefighters had college degrees; now more than 15 percent do in both jobs. Increasingly, new college graduates are working as clerks, cashiers, retail sales reps and waiters and waitresses, the report found. About five million are in jobs the BLS says require less than a high-school education.

Comparing average earnings for high school and college graduates is misleading, the report warns. “Overproduction of college graduates lowers recent graduate earnings relative to those graduating earlier.”

Not all colleges are equal: Typical graduates of elite private schools make more than graduates of flagship state universities, but those graduates do much better than those attending relatively non-selective institutions;

Not all majors are equal: Engineering and economics graduates, for example, typically earn almost double what social work and education graduates receive by mid-career;

The number of college graduates is projected to increase by 19 million in 20 years;  the number of jobs requiring a bachelor’s degree is projected to increase by 7 million, according to the BLS.

If President Obama’s college completion goal is met, even more young people will be competing for a limited number of professional jobs, warns Richard Vedder, co-author of the study and director of CCAP. Soon, would-be janitors will need “a master’s degree in Janitorial Studies.”

The “college for all” movement is misguided, CCAP argues, calling for “new and cheaper ways to assure employee competency”  and investing “less in four year degree programs and more in cheaper training, including high school vocational education.”

College graduates continue to earn significantly more than non-graduates, Anthony Carnevale, director of the Georgetown Center on Education and the Workforce, tells Inside Higher Ed.

“You can’t have a 48 percent surplus of college graduates and an 84 percent college wage premium over high school,” Carnevale wrote via e-mail. “This advantage wouldn’t have been growing along with the number of college graduates since 1983. The market is very responsive to labor supply…. If there was an over production the employers would’ve figured it out some time over the past 30 years.”

Nearly half of sales reps in the wholesale and manufacturing industries have four-year degrees in what the BLS considers a high school-level job. “What Vedder doesn’t point out is that sales representatives with B.A.s make $73,000 a year compared with sales representatives with high school degrees who only make $38,000 a year,” says Carnevale.

 

‘College for all’ spurs backlash

How many college-educated janitors do we need? It’s not clear that a college education is “an economic imperative,” as President Obama puts it, argues economist Walter Williams.

A good part of our higher education problem, explaining its spiraling cost, is that a large percentage of college students are incapable of doing real college work. They shouldn’t be wasting their own resources and those of their families and taxpayers.

We now have janitors, waiters and taxi drivers with college degrees, writes Williams, citing Richard Vedder, director of the Center for College Affordability and Productivity. Meanwhile, colleges are lowering standards to create “comfortable environments for the educationally incompetent.”

The backlash against “college for all” is growing, writes Paul Fain on Inside Higher Ed. Yet President Obama and other higher education advocates never wanted all students to enroll in liberal arts colleges to earn bachelor’s degrees, Fain points out.  Obama’s goal is at least one year of postsecondary education, which for many will mean job training that lasts a few months or a few years.

“College for all is a false premise. It’s not an argument anyone is making,” says Jamie Merisotis, president and CEO of the Lumina Foundation.

The completion push is really about “postsecondary education and training for all,” says Anthony Carnevale, director of Georgetown’s Center on Education and the Workforce. But “that doesn’t fit on anybody’s bumper sticker.”

Vocational and technical education often gets short shrift during debates on college completion, says Mark Milliron, president of Western Governors University Texas, and a former official with the Bill and Melinda Gates Foundation.

Instead of focusing on a “family of credentials that provide that earning and learning potential,” like certificate programs that cater to working adults, Milliron says the discussion gravitates toward bachelor’s degrees. And that conflation is a problem, because “it plays into anti-elitism.”

While earning a college degree has paid off in the past, Vedder warns it may not do so in the future, as less-capable students try college. “The law of diminishing returns is starting to rear its ugly head,” Vedder says.

Should students borrow more?

Some community college students “should borrow more and work less” to increase their completion odds, says Sandy Baum, co-author of a College Board report, in a University Business article by me.

Working one’s way through college is the norm for community college students: 85 percent work part- or full-time.

. . . “People who work 10 to 15 hours do OK,” Baum says, but as work hours increase, grades slide.

“The worst thing students can do is go part-time or work full-time. Both drastically reduce their chance of completion,” says Debbie Cochrane, a program director for The Institute for College Access and Success (TICAS).

Community college drop-outs were half as likely as graduates to report receiving financial aid or scholarships in a 2009 Public Agenda study. Six in 10 community college students surveyed were working more than 20 hours a week; a quarter worked more than 35 hours a week.

Only 3.3 percent of part-time community college students complete a bachelor’s degree, according to a federal study.

Here’s the sidebar on helping students access financial aid.

Of course, working less and borrowing more can be a risky business, especially for students who don’t complete a marketable degree. “It’s probably true that if community college people borrowed more, they’d probably see a modest increase in graduation rates,” says Richard Vedder, an Ohio State economist who runs the Center for College Affordability and Productivity. But “community college students are in much more precarious financial positions” than four-year students, Vedder warns. “The consequences of failure are substantial.”

Chickens, eggs and college returns

Is there a college premium?

Four-year college graduates earn nearly $1 million more over a 40-year working life than non-graduates, concludes The College Payoff, a new report by the Georgetown Center on Education and the Workforce.  Even at an average cost of $102,000 for four years, college is the best investment you’ll ever make, advises Brookings’ Hamilton Project.

The case for the college premium confuses chickens and eggs, responds Richard Vedder, a Ohio University economist, on the College Affordability site.

Those who go to college are, on average, brighter, more knowledgeable, more disciplined, and more conscientious than those who go to work after higher school. . . . Even if those in the college going population had NOT gone to college, they would have earned more than those others who did not go on—simply because they are better workers.

The college premium varies significantly by field of study, the Georgetown report finds. For example, 28 percent of workers with an associate degree earn more than the median wage for four-year college graduates. There’s a high premium for a degree in engineering, not much for social work or early childhood education.

The Georgetown report only looks at graduates: Forty to 50 percent of college enrollees don’t complete a degree, Vedder adds.

There is a substantial risk element to making a college investment, particularly those with attributes (low high-school grades, poor test scores, etc.) that suggest the probability of dropping out is high. Adjusting for this risk factor lowers the expected income gains from college dramatically.

In addition, as more Americans enter the labor market with college degrees, the payoffs are likely to change, writes Vedder, who predicts diminishing returns for a college degree.

A growing proportion of new college graduates are taking jobs that don’t require a degree. While they may earn more than co-workers with high school diplomas, their college premium will be reduced.

Finally, a degree’s value depends on the college’s reputation, Vedder points out. The Harvard premium is high. Chicago State? Not so much.

“We need the IRS to provide us average earnings data by college to help evaluate the differential rate of return on investments in the various colleges,” Vedder writes.

College is a good investment for good students, but not for everyone, Vedder adds in an EdCommons discussion.

Looking at those graduating from high school, I would guess somewhere between 25 and 40 percent should go to four-year schools, because they have the relatively high grades, tests scores, innate intelligence, ambition and motivation — good predictors of college and often vocational success.

The other 60 to 75 percent should pursue less-risky options, Vedder advises. That includes community college or a career college offering specialized occupational training.

Vedder: Look at Pell recipients’ graduation rates

We spend tens of billions of dollars on Pell Grants for low-income students, but don’t know what percentage earn a degree, writes Ohio University Economics Professor Richard Vedder of the Center for College Affordability and Productivity, in an open letter to Rep. John Kline chair of the House Education and Workforce Committee and Rep. Virginia Foxx, chair of the higher education subcommittee.

Here is my idea: Require the U.S. Department of Education to collect and publish, by institution and for the nation as a whole, data on the academic success of Pell Grant recipients. What is the four-year graduation rate? Six-year graduation rate? Freshman to sophomore retention rate?

The graduation-rate statistics “are almost certainly embarrassingly, appallingly low,” Vedder writes, citing other research which shows a strong correlation between many Pell recipients and low graduation rates. But, whatever the numbers, we ought to know.

Pell recipients tend to have high risk factors, such as low-income status and “mediocre secondary-education performance (in part the consequence of low-quality primary and secondary public schools),” Vedder writes.

Nonetheless, if we spend over $40-billion annually on Pell Grants, wouldn’t it be interesting to know how much of that is associated with academic success, and how much with academic failure? How many college graduates are there that owe their degrees to Pell Grants? Is that number high or low in relation to the cost of the program?

Hearings also could investigate setting time limits on grant eligibility or rewarding students who complete a degree quickly.

Should a student with a very low probability for success, based on low high-school grades, test scores, etc., be given probationary Pell Grants, continued receipt of which is contingent on good academic progress? In short, should there not be some performance standards, as there are for most private forms of higher-education student assistance?

The number of Pell Grant recipients has exploded. Vedder suspects some grants are going to middle-income families who probably would find a way to send their child to school without the grant.

It is amazing that the Education Department doesn’t track success rates for Pell recipients. I asked Education Secretary Arne Duncan about it in a meeting in March. He said he suspected the graduation rate was low, but didn’t know.