Dear Higher Ed, It’s Time Out for Excuses

I hate excuses. And that is one reason for my disappointment in the higher education system right now. There are so many excuses for why it is a hot mess. And the excuses come in the form of finger pointing, the blame game, and defensiveness over the status quo. We just witnessed a year in which students were forced to endure online instruction with schools failing to compromise on tuition costs. This led to a flurry of class action lawsuits from families who legitimately questioned the value of a remote learning structure which was the opposite of what they paid for.

The higher education system in America is antiquated. The same model has been around since the 1600’s. And fundamentally, colleges and universities still operate much as they did back then — with some notable exceptions, such as costs skyrocketing beyond comprehension today. But sadly, there is no indication that massive change or reform is imminent, despite the wake-up call of the pandemic. Additionally, with more employers like IBM shifting their recruitment practices to hire non-degree holders and STARs (skilled through alternative routes), we are seeing some pivoting in response to a declining U.S. labor force participation rate.

So here is the million-dollar question that has been asked repeatedly without a straight answer. What exactly is the value of higher education today? This is not a rhetorical question. Really, what is the value? I’ve been waiting for an answer to that question for quite some time. And right now, millions of students are also looking for an answer (as evidenced in a recent ECMC Group study), with more and more of them deciding they don’t see the value. And herein lies the problem.

Value of a College Degree

The first major excuse is that colleges and universities don’t have to define the value of a postsecondary education. Perhaps they think it is already understood, or widely accepted, that a traditional higher education is still valuable. However, schools have lost sight of a basic business principle: you must express value to your customers in terms of features and benefits. Schools have done a poor job of getting to the heart of “what’s in it for me?” from the customer’s perspective. They are too busy trying to sell features.

Let’s see, you may have heard statements like these before. “We’ve been around for 200+ years,” or “we have more tenured professors than the college down the street,” or “we’ve been a top X university for the past Y years…and oh by the way, we also have a state-of-the-art rock climbing wall!” Features, features, and more features.

Colleges and universities have done an artful job of selling features, thinking they were promoting benefits. But the old-school ideology of what higher education means, and what it ultimately amounts to in terms of return on investment, must be revisited. Half of the features being tossed around do not hold the same meaning for students as they once may have. For example, who says that having X number of tenured professors is even important to all students? If a large percentage of students will not have access to tenured professors in the first place (only their assistants), or if students have zero interest in fields of research where that even comes into play, who cares? Will that help them land a job with a good starting salary? Do the tenured professors offer refresher training post-graduation based on the latest trends in the field? Doubtful. You know why? Because that would be a benefit. The way schools promote themselves and their alleged educational outcomes have not kept pace with current needs. Ultimately, the value must be framed for prospective students, and their parents who often foot the bill, in a way that matters to them. And this means it must translate into something that holds value over time.

That brings us to the difference in lifetime earnings between a high school graduate versus a college graduate with a bachelor’s degree. Yes, the lifetime earnings gap is around $400K in favor of the college grad, by the time she or he reaches age 64. This amounts to a difference of roughly $8700 per year between age 18 and age 64. (And we’re talking averages as opposed to the outliers.) But is this the right comparison anymore? What about lifetime earnings for individuals who forego college and start successful businesses? Or those who engage in skills-based training, bootcamps, or on-the-job training that allows them to level up in their career? And what about the gig economy where so many young adults have side hustles and multiple streams of income, including college grads? You didn’t think the gig economy was reserved for non-degree holders, did you? I personally know a handful of college grads who need multiple jobs to help make ends meet, or to help pay their student loan debt.

Why is College So Expensive?

Speaking of debt, this leads us to the second excuse. Price. Why is it so expensive to go to college, and why isn’t more being done to rein in costs? Since 2015, the cost of college has increased roughly $1300 per year and consistently outpaced the rising costs of other goods and services. As Scott Galloway so effectively points out in his book, Post Corona: From Crisis to Opportunity, the amount he paid for his undergraduate (UCLA) and graduate (UC Berkeley) degrees was a combined total of $10K back in the 80’s and 90’s. “Fast forward to present day, that won’t cover two classes at NYU Stern ($14,000).” And he should know. He is a professor at NYU. He goes on to state that the conservative gross margin on his course is 90+ points. Pause for reaction.

But colleges and universities only justify their price point as opposed to seeking ways to restructure it, or revisiting the value attached to it. And as much as policy makers threaten to limit federal funding to help address rising costs, they never seem to pull the trigger. To deal with high costs, many students and parents end up borrowing federal student loans. And in some cases they also need private student loans to fill the gap. This assumes there is an obvious understanding of one’s financial need after receiving the financial aid award letter which can often be confusing, if not outright misleading.

While some improvements have been made to increase transparency on the financial outcomes of a college degree, such as the Department of Education’s new College Scorecard, it’s still clear as mud. For example, according to the College Scorecard tool a liberal arts major at Georgetown University can expect to pay $30,169 per year and receive median annual earnings (two years after graduation) of $62K. But if you plug in a major like Peace Studies and Conflict Resolution, there is no data available. I have no idea why that would be the case when Georgetown graduated the same number of students between each discipline. A student would be forced to look at the more general statement that indicates ALL Georgetown graduates earn between $27,476 and $88,639 per year. How helpful is that? Not very.

Is College Worth It?

You might think I am not an advocate of higher education. Not so. I have two degrees. Ok, three if you count my associate degree. (Does anyone do that after they get their bachelor’s and master’s?) I believe there is value in structured learning, philosophical debate, expansion of worldviews through social interaction, and breakthrough-seeking research. These are great takeaways from a campus experience. But we cannot lose sight of the fundamental need to prepare young people for a viable career; one that also helps them become strong contributors to the economy. When I went to school it was still largely affordable with a better ROI. And the competition was limited. Today, costs have ballooned and the number of avenues to learn skills and trades is immense. Instead of addressing the outlandish price tag for a degree, colleges and universities adhere to the status quo. And politicians are focused on forgiving student loan debt, a temporary measure at best until the next cohort racks up even more debt.

Let’s put it this way. If colleges and universities were run like major corporations with shareholders, the vast majority would not be standing today. Their costs would have been severed, efficiencies would have been sought, growth hacking strategies would have been implemented, and they would have found ways to dominate or acquire trailblazers like Skillshare, Udemy, Masterclass, and others. Perhaps it’s time for the teachers to become students again. Take a much-needed time out, higher ed. Walk outside, observe the new landscape, engage in conversations with students, parents, employers and your local communities. Find out what the true needs are today. Then fulfill them. Maybe then we can finally stop asking if college is worth it.