As the Bubble Bursts, Opportunities for Reform

As the Bubble Bursts, Opportunities for Reform

According to the U.S. Census Bureau, the last two years have seen a substantive decrease (930,000) in the number of college enrollments nationally. Aside from the rebounding economy -- when jobs are scarce, some high-school grads and adult students see college as a more attractive option -- at least two factors account for this decline: the decrease in the number of entering-college-age students in the overall population, and the rising cost of college tuition (and, with it, student-loan debt). As enrollments fall, so does the viability of a large number of colleges and universities, which live or die largely on enrollment numbers from year to year. Amid all this bad news -- or rather, in response to it -- higher-education reformers may find their leverage enhanced.

The challenges posed to the very survival of a growing number of schools was predictable. Over the past quarter-century, average college tuition has increased 440 percent -- faster than general inflation and even health-care costs over the same period. As a consequence, student-loan debt stands at an all-time high of $1.1 trillion. For the first time in history, student debt is greater than total national credit-card debt. Little of this surprises higher-education reformers, who have been arguing for some time that these dramatic increases are unsustainable.

Prospective college students get it. A report by Sallie Mae finds that the college-affordability crisis has begun to change the buying behavior of the college-bound. Based on a survey of 1,600 college-going students and their parents, the study finds that the average amount students and their families are paying for college has fallen for two consecutive years. "American families reported taking more cost-saving measures and more families report making their college decisions based on the cost they can afford to pay."

With fewer applicants -- and these not willing to spend as much on college as in the past -- universities have reason to fear. But making matters worse is the fact that a large number of schools were already in financial trouble before these downturns occurred. A study of college finances titled "The Financially Sustainable University" finds that, on average, university debt is increasing at an average annual rate of 12 percent, which is more than twice the rate of instruction-related expenses. At a time when the state of the economy has driven down both government funding and endowment growth, the result, says the study, is that today approximately one-third of all higher-education institutions have an unsustainable business model.

The report goes on to argue that too many colleges and universities today continue to operate on basis of the "Law of More," that is, on the assumption that more building, more spending, more diversification, and more expansion constitute the formula for continued prosperity. However, this approach has yielded precisely the opposite result, says the study. Too many institutions of higher learning today are overly complex, mired in debt, and unwilling or unable to adopt expeditiously the change demanded for survival. Through overbuilding, overspending, and over-expanding, these colleges and universities have left themselves unmanageably complex and sluggish.

In this crisis, perhaps, lies an opportunity for reformers with financial backing. Those with the means to swoop down and rescue a bankrupt university would have the leverage to erect a new regime in its place, one which avoids the errors that have contributed to our current situation in which too many college students pay too much but learn too little. They could reestablish a required core curriculum in the liberal arts and sciences at the same time that they replaced life tenure with multi-year contracts. The faculty, with reduced publication requirements, could teach more, thus allowing for lower student-faculty ratios. Those courses that continued to be offered as lectures could be offered online. These measures would simultaneously increase student-learning outcomes and reduce the cost of education for students and their families. 

To verify their students' superior progress in critical thinking, analytical reasoning, and writing skills, as well as discipline-specific proficiencies, these schools could require all their students to take the Collegiate Learning Assessment (CLA), as well as GRE subject exams. These measurements of output could be broadcast in an effort to encourage prospective students and their parents to look past the U.S. News rankings when choosing a college. The CLA was the testing instrument used in the nationwide study of collegiate learning Academically Adrift, which found that 36 percent of college students nationwide show little to no increase in fundamental academic skills (critical thinking, complex reasoning, and writing skills) after four years invested in college.

Finally, these reformed universities could offer three-year degrees, something that has been practiced in Great Britain for hundreds of years with no noticeable ill effects. This too would lower costs and likely spur student interest at a time when student-loan debt stands as a major obstacle to college completion.

This brief sketch of a road not yet taken is doubtless littered with daunting roadblocks, chief among which perhaps are the regional accrediting bodies as well as the standards that must be adhered to in order to qualify for federally-subsidized student loans. However, both of these obstacles may come to lose some of their leverage as more and more universities begin to declare bankruptcy, leaving fewer and fewer options for college-ready students.

In sum, an increasingly desperate public would be happy to learn that alternatives to traditional education exist that are not only lower in cost but superior in quality. Were even a mere dozen such schools to be established, they would form a powerful rebuke to the higher-education status quo, spurring still more reform nationwide.

Will those with the means to finance such a reform step to the plate? Only time will tell. But one thing appears certain: The traditional business model governing a large number of American colleges and universities has reached the point of utter exhaustion.

Thomas K. Lindsay directs the Center for Higher Education at the Texas Public Policy Foundation and is editor of SeeThruEdu.com. He was deputy chairman of the National Endowment for the Humanities under George W. Bush. He recently published Investigating American Democracy with Gary D. Glenn (Oxford University Press).

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