Introduction to the Crisis in Higher Education

The decision of where to attend college, or whether to attend at all, has become an increasingly complex calculation for young Americans. This calculation often revolves around a single, pivotal question: Is the degree worth its price? Public confidence in higher education has plummeted in recent years due to high tuition prices, skyrocketing student loans, and a dismal job market, compounded by ideological concerns from conservatives. As a result, colleges are now scrambling to prove their value to potential students.

The Concept of Return on Investment (ROI) in Education

Borrowed from the business world, the term "return on investment" has become a staple in college advertisements across the U.S. New rankings have emerged that grade campuses based on the financial benefits they deliver to students. Some states, like Colorado, have started publishing yearly reports on the monetary payoff of attending college, while Texas factors this information into calculations for how much taxpayer money is allocated to community colleges.

Most Bachelor’s Degrees Are Still Worth It

Research indicates that, on average and in the long run, a bachelor’s degree still pays off. However, there’s growing recognition that not all degrees lead to a good salary, and some that seem like a good bet are becoming riskier as graduates face one of the toughest job markets in years. A recent analysis by the Strada Education Foundation found that 70% of recent public university graduates can expect a positive return within 10 years, meaning their earnings over a decade will exceed those of a typical high school graduate by an amount greater than the cost of their degree. This figure varies significantly by state, ranging from 53% in North Dakota to 82% in Washington, D.C., with states where college is more affordable generally faring better.

Lowering College Tuition and Improving Graduate Earnings

American higher education is grappling with both sides of the ROI equation: tuition costs and graduate earnings. This has become even more critical as colleges compete for a decreasing number of college-age students due to falling birth rates. In response, many campuses have kept tuition rates flat in recent years to address affordability concerns, and some private colleges have lowered their sticker prices to better reflect the actual cost to students after financial aid is factored in. However, ensuring that graduates land good jobs is more complicated. A group of college presidents met at Gallup’s Washington headquarters to study public polling on higher education and found that one of the chief reasons for flagging confidence is the perception that colleges aren’t giving graduates the skills employers need.

A Disconnect with the Job Market

Bridging the gap to the job market has been a persistent struggle for U.S. colleges. A study by the Burning Glass Institute found that 52% of recent college graduates were in jobs that didn’t require a degree, even in higher-demand fields like education and nursing. The federal government has been trying to address this issue for decades, including a rule established in 2011 aimed at cutting federal money to college programs that leave graduates with low earnings. More recently, a Republican reconciliation bill requires most colleges to meet earnings standards to be eligible for federal funding, aiming to ensure that college graduates end up earning more than those without a degree.

Transparency as a Solution

Others see transparency as a key solution to the ROI crisis. For decades, students had little way to know whether graduates of specific degree programs were landing good jobs after college. The College Scorecard, established in 2015, shares broad earnings outcomes for college programs, and bipartisan legislation in Congress has sought to provide the public with even more detailed data. Lawmakers in North Carolina ordered a study on the financial return for degrees across the state’s public universities, finding that 93% produced a positive return. This data is available to the public, showing which undergraduate and graduate degrees tend to have high returns at specific universities.

Conclusion

The crisis in higher education, centered around the return on investment for college degrees, is multifaceted and challenging. While most bachelor’s degrees still offer a positive return, the variability by state and degree program is significant. Colleges are working to prove their value by addressing tuition costs, improving graduate earnings, and bridging the gap to the job market. Transparency, through initiatives like the College Scorecard and state-level studies, is seen as a crucial step in helping students and their families make informed decisions about where to invest in higher education.

FAQs

• Q: Is a college degree still worth the investment?
  A: Generally, yes, but it depends on the degree and the state. Most bachelor’s degrees offer a positive return on investment, but there is significant variability.
• Q: How are colleges addressing the issue of return on investment?
  A: Colleges are working to lower tuition costs, improve graduate earnings, and provide more transparency about job outcomes for their graduates.
• Q: What role does transparency play in solving the ROI crisis?
  A: Transparency, through initiatives that provide detailed data on graduate earnings and job outcomes, helps students and their families make informed decisions about investing in higher education.
• Q: Are all degree programs equally valuable in terms of ROI?
  A: No, the return on investment varies significantly by degree program. Some fields, like applied math and business, tend to have higher returns than others, like psychology and foreign languages.
• Q: How is the federal government involved in addressing the ROI issue in higher education?
  A: The federal government has implemented rules and legislation aimed at ensuring that college programs lead to good job outcomes and has supported initiatives like the College Scorecard to provide more transparency about graduate earnings.