Everyone’s been talking about this NYT article that suggests not everyone should go to college:
College degrees are simply not necessary for many jobs. Of the 30 jobs projected to grow at the fastest rate over the next decade in the United States, only seven typically require a bachelor’s degree, according to the Bureau of Labor Statistics.
Among the top 10 growing job categories, two require college degrees: accounting (a bachelor’s) and postsecondary teachers (a doctorate). But this growth is expected to be dwarfed by the need for registered nurses, home health aides, customer service representatives and store clerks. None of those jobs require a bachelor’s degree.
Intriguing point, but the fact is that we’re only talking about this as a good idea because college is so expensive. Cheap credit (i.e. low interest rate loans subsidized by the government) has enabled universities to jack up tuition far beyond inflation.
Take a look at this chart (via Rolfe Winkler). In 2 years, outstanding student loan balances have shot up over $100 billion. Is a college degree really worth a mountain of debt?
The argument for going to college usually comes down to the fact that college degree holders earn far more money than those who didn’t get a BS. But it’s not at all clear that what we’re paying is coming back to us – the estimated monetary value of a degree is all over the place. And it’s tough to know how correlated smarts and a degree actually are.
As I’ve argued before, the higher education market looks a lot like a bubble, fueled by more and cheaper debt.
But why aren’t universities trying to bring down costs? The incentives are all wrong. Here’s Kevin Carey, writing in Democracy:
Non-profit colleges aren’t profit-maximizing; they are reputation-maximizing. And reputations are expensive to buy.
The economist Howard Bowen wrote the classic treatise on how reputation-seeking influences university behavior. He called it the “revenue-to-cost” phenomenon. Essentially, colleges don’t figure out how much money they need to spend and then go get it. Instead, they get as much money as they can and then spend it. Since reputations are relational–the goal is to be better than the other guy–there is no practical limit on how much colleges can spend in pursuit of self-glorification. As former Harvard President Derek Bok wrote, “Universities share one characteristic with compulsive gamblers and exiled royalty: There is never enough money to satisfy their desires.” Inevitably, much of that money comes from students.
He adds that the big problem is the total lack of information students have when selecting a school:
…reputations are largely based on wealth, admissions selectivity, price, and a generalized sense of fame that is highly influenced by who’s been around the longest and who produces the most research. Not coincidentally, these are the factors that drive the influential U.S. News & World Report rankings that always rate old, wealthy, renowned institutions like Harvard and Princeton as America’s best colleges.
Carey calls for much more open information about universities’ success at educating students – class reviews, job placement statistics, etc. – that will make it far easier for students to select on value and price, not the reputation of the researchers. (Unfortunately the higher education lobby is fighting hard against making these data available.)
Making universities more accountable for their skill at educating would bring a lot more sanity to the market. That, coupled with the government scaling back the amount of subsidized debt it gives out, would drive tuition prices down.
And that seems like a far better route to keeping young people out of debt than encouraging them not to go to school at all.
UPDATE: Just after finishing this, I saw Carey had a long post up about the NYT article here. He’s more informed and more eloquent than I. Read it.