If you didn’t make it to the Evisions Annual Conference in April, I’m here to tell you—you missed out. There were so many amazing presenters and incredible, informative sessions over the course of the day. One of the presentations that definitely stood out was the lunchtime keynote by Jill Tiefenthaler, president of Colorado College.
Tiefenthaler is not just a college president, but also a former provost, a renowned economist and an expert, all around, on the economics of higher education. As we settled down to lunch, she kept us rapt, presenting and debunking ten oft-cited myths about the cost, value and quality of higher education.
For those who weren’t there—or for those who were and are dying to use some of Tiefenthaler’s points in your own discussions about the cost of higher ed—we thought we’d help you out. Below is a quick summary of Tiefenthaler’s talk and you can find her slides from the presentation here.
Myth #1: You no longer need a college degree to be successful.
While success is certainly possible without a college degree, it’s still much much more likely with one. On average, college grads make roughly twice what high school graduates make, and while the unemployment rate in 2012 was 4.5 percent for those with a bachelor’s degree, it was 8.3 percent for those with only a high school diploma.
Myth #2: More than half of recent college graduates are unemployed.
The job market for recent college grads is undeniably rough, but not nearly so dire as this myth suggests. The unemployment rate for recent college graduates, from April 2011 to March 2012, was at 9.4 percent, and underemployment for the same group was at 19.1 percent. For recent high school grads, they were at 31.1 percent and 54 percent, respectively.
Myth #3: College costs too much. It isn’t worth the investment.
This myth is particularly troubling—and widespread. A recent poll indicated that most Americans don’t view college as a worthwhile investment. But college graduates still make significantly more money than non-grads. That wage premium, especially later in a graduate’s career, can quickly make up the cost of tuition.
Myth #4: Increasing tuition has created a student loan debt crisis. Students are drowning in mounds of debt that they can’t repay.
Yes, student loan debt is up. In ten years, it’s doubled. But that’s thanks less to tuition increases—which have only gone up about 10 percent per student—than it is to the number of students attending. The story on loan repayment is similarly nuanced. For one thing, the student loan default rate today is less than half of what it was in the mid-90s. For another, the default rates for both for-profit and public two-year institutions vastly outpace those for public and private four-year institutions, where the majority of students go. Finally, the likelihood of defaulting goes up substantially for students who start college, taking on the debt, but don’t finish, thereby forfeiting that sought-after wage premium.
Myth #5: For-profit colleges are more efficient than traditional privates and publics and will bring much needed competition to higher education.
In order to measure the efficiency of an institution, you have to look at output—the number of students who graduate—compared to input—the tuition and fees collected. So, how do for-profits measure up? Are their graduation rates better? Nope. Ok, well, are they cheaper to attend? Nope. The one upside to competing with for-profits is that it has forced non-profits to better accommodate non-traditional students.
Myth #6: The whole industry is inefficient. Tuition keeps going up because higher education can’t control costs.
To tackle this one, let’s start with public institutions, which educate seventy-five percent of American undergraduates. Tuition at publics depends directly on the state subsidies for public schools, which, five years ago, plummeted. Even if institutions managed to decrease their costs per student, their tuition still had to go up to cover the shortfall. On top of that, non-profit institutions, whether public or private, succeed not by maximizing profit, but by maximizing quality—hard to do if you’re cutting teachers, classes, and amenities.
Myth #7: Even if the public tuition is increasing faster in recent years, they are still more affordable than private colleges.
Despite higher sticker prices at private institutions, in terms of actual cost to the student, they’ve become extremely competitive. Not only do the majority of private colleges offer significant financial aid for middle-class families, but their students are also more likely to graduate in four years.
Myth #8: Online education is the disruptive innovation that changes everything. It will lower costs, increase accessibility and make traditional colleges irrelevant.
Technology may have enhanced the quality of the higher ed environment. But in 100 years, it’s had no measurable impact on productivity, while reliably, dramatically increasing costs. Online education is a great tool, but so far, the data doesn’t support the idea that it’s the end of higher ed as we’ve known it.
Myth #9: Liberal arts colleges are irrelevant in this STEM world.
The assumption here is that STEM degrees more often lead directly to jobs, but the skills that liberal arts graduates learn are often at a premium in this job market. Strong communication skills, comfort with ambiguity, experience problem-solving, a knack for collaboration across disciplinary and cultural boundaries—all of these things are common elements of liberal arts programs and marketable skills for job-seekers.
Myth #10: The best and brightest students attend our nation’s elite institutions.
For this myth to be true, two other things must be true also:
1) The best and brightest apply to those institutions.
2) The best and brightest are admitted to those institutions.
Neither is true. Two economists recently did a study that showed the majority of low-income students who have the grades and test scores to get into top colleges, don’t even apply. Instead, they attend local community colleges and regional public institutions, from which they are 35 percent less likely to graduate than from a more selective institution. And even when they do apply, they’re less likely to get in because so few institutions can afford to be entirely need-blind.
These points were just a fraction of the insights Tiefenthaler shared, but they really got us thinking about how to make the conversation around higher education based less on myth and more on reality.
What kinds of myths have you run into about the economics of higher ed? We’d love to hear about them—join the discussion in the comments section below!