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Is It Time To Rethink The Worth Of Faculty?

The pandemic hit almost every industry hard, but few were as badly hit as higher education.

For many American universities, times were already difficult, largely due to falling enrollments and weaker financial support from state governments. The pandemic accelerated these trends, forcing colleges – especially smaller private colleges and a tonne of mid-level state schools – to ease their budgets and lay off workers to make up for lost revenue.

As we emerge from this pandemic, it is worth asking what will become of higher education in America. And if the situation is as dire as it seems, should students – and parents – seriously reconsider the value of college?

For some answers, I turned to Kevin Carey, who covers higher education for the New York Times, to speak about the state of American colleges. We discuss the student debt crisis, why the pandemic is affecting institutions in very different ways, what types of schools are at risk of extinction, and whether he believes the future of higher education in America will be much like its past.

A slightly edited transcript of our conversation follows.

Sean Illing

Is There A Real Crisis In American Higher Education?

Kevin Carey

Parts of it are facing a crisis. It is an enormously diverse system with many institutions that serve different people and purposes. If you're a wealthy university with wealthy students enrolled in, times are still pretty good. If you are a small private college with a small foundation that makes a living from teaching year after year, these are really difficult times. If you are one of those midsize public universities, especially in states that have withdrawn funding, things are bad.

The number of new student enrollments has declined by about one and a half million students from the peak in the late Aughts, which was a high water mark. We have seen that income growth is fairly stagnant for everyone but the wealthy, and there aren't that many students, and families don't have enough money to pay for tuition. Social attitudes towards debt have fundamentally changed and people are (rightly) concerned about it.

From a purely business perspective, many universities have a hard time adding the numbers – and that will keep getting worse.

Sean Illing

What about larger, more reputable public universities in states that value higher education?

Kevin Carey

They have problems, but public universities in states that support higher education do better. In the past, supporting higher education in this country has been a fairly bipartisan or impartial matter. This has changed, however, as the electorate has been divided according to educational and class boundaries.

You can see this after the great recession. That was a huge blow to the national budget. Every state has cut funding for its higher education system. First, because they didn't have that much money, and second, because states always cut university budgets disproportionately during recessions because universities can raise prices while K-12 schools and prisons cannot. The difference is that some states – like New York and California – put money back into the system when their budgets recover. Other states, like Louisiana or Pennsylvania, which have done poorly in the past at funding higher education, haven't saved money, and these are places that are really having problems.

Sean Illing

Was the pandemic a bigger success than the Great Recession?

Kevin Carey

We don't really know yet. The effects of the Great Recession developed over the course of about five years, mainly because public revenues have not declined for a long time. Traditionally, enrollment in a college has been rather cyclical. People are laid off and then re-issued ID to improve their value in the job market and also because they have time.

The pandemic recession was different because it was so quick and so severe, but also strange and unique and so quick. People went back to school when they weren't ready to go back, so most of it was online. It was a disaster. But things are definitely looking bad for many universities at the moment, as enrollment is declining.

Sean Illing

There are many private universities that are in a very difficult position. How many do you think are critically endangered?

Kevin Carey

That's a good question. It's difficult to find an exact number, but it's not a tiny number. Only through publicly available financial information can you see that many schools are in danger of going out of business in the next five years. Even in the years leading up to the pandemic, there was a steady drop in small private colleges that were just going bankrupt.

Many of these schools actually got through the last year better than I expected. Total employment in higher education has fallen by around 15 percent. I think many institutions have used the crisis as an opportunity to fire people who they probably wanted to fire anyway. I hate using the term "fat loss" to describe people losing their jobs, but that is exactly what schools did to cut their labor costs.

They were also very aggressive when it came to getting people back on campus last fall, even if it was against the best public health interests. But they live and die by enrollment, so they were very determined to bring people back through the doors. In my opinion, it is currently difficult to say whether this will have a permanent effect on enrollment.

Sean Illing

Does reducing “labor costs” basically mean laying off teachers and coreing liberal arts or liberal arts programs?

Kevin Carey

We don't have such numbers. The colleges didn't spend that much money on these things at first because there weren't that many students enrolling in the humanities. Most of the enrollment is in economics, social sciences, education, and health. There aren't as many historical focuses as there used to be. You can't hire a history teacher for anything in the market right now as it is absolutely full of people who have the qualifications to be college professors. The academic job market was in a real crisis before the pandemic. Everything that happened in the last year made it worse. I think the hiring will likely accelerate the trend towards more contingent faculties, especially if this major shift to online education continues.

Sean Illing

I wonder if the current model can last much longer, especially given the student debt crisis. With people constantly being forced to purchase mountains of debt in order to keep the promise of upward mobility, feel like we are going to reach a tipping point where the cost of a deal does not match market value and it simply is no longer doable for not wealthy people to go to college? And if that happens, what will happen to higher education?

Kevin Carey

I think the turning point is more on the institutional side. When people are no longer willing to pay money to certain types of colleges, those colleges will fail and fail. But it's not that they're not going to go anywhere. It's just that they just don't go to these places.

The thing is, we have an enormously complicated and highly structured market that has huge spaces that you just cannot enter without a degree, sometimes even legally. You cannot be a teacher without a degree. Every professional approval process is tied to the university system. Our entire health system works like this. If you want to be a nurse, you have to go to college. If you want to be part of the professional managerial class, if you want a well-paid working life, a stable working life, you probably have to go to college. And when you have a college degree, you are definitely further away from an acute employment crisis in this economy.

So I don't think higher education will go away, but institutions will fail and the market will have to correct.

Sean Illing

How much of the turmoil in higher education is due to full adoption of the business mode? So many universities haven't invested in teaching, making college a post-puberty consumer experience. Is that a big part of the story for you?

Kevin Carey

Well, there is only one real model of success in higher education: the academic city-state. It is the global research university. Everyone wants to be the University of Michigan or something like that. Of course there is the Ivy League, but the Ivy League is such a strange and esoteric place. What you really want to be is a big, prosperous, prosperous institution that has all kinds of smart people and beautiful buildings and sports teams and lawns and Saturday football games and social prestige and everyone makes enough money to have a nice little house, where you can cycle to work. That is the model of a successful university.

But this is a zero-sum game and everyone is trying to get there at the same time. There are only so many upper-middle-class students who have to pay full tuition to support your lazy river and science center. So there can only be so many University of Michigans. I think a new report was released yesterday saying that private colleges are now giving an average of 54 percent off the published tuition price. And that number is increasing every year. So they have just exhausted their pricing power.

If universities play this game and lose, they are in a difficult position. What we need, socially and politically, is most of the institutions that are not trying to be University of Michigan. There shouldn't be 2,000 research universities in this country. What we need are probably 300 great research universities and 1,700 universities that are mostly for teaching. However, when status is research and teaching, do it because you have to, and therefore do it as cheaply as possible, basically indifferent to quality. This is not good for anyone. Including the institution. But here we are right now.

Sean Illing

What does High Ed look like in a decade? Does it even resemble its current form?

Kevin Carey

Many institutions that exist today will be gone. On the private side there will continue to be signs of wear and tear and bankruptcies, probably on the public side there will be mergers. Because almost all institutes in the lower half of the distribution of resources and prestige are facing enormous challenges with regard to their cost structure and the associated problems of a decline in enrollment and a decline in pricing power.

I suspect that the long-term trend of more online students will continue as it has for many years. Even before the pandemic, 35 percent of students were taking at least one online class, and about 15 percent were fully online. It will all go on like this. I think you have a relatively small number of institutions that will be successful on this scale, but most of the colleges that exist now will still exist. Universities are historically very resilient.

Sean Illing

When should students and parents seriously rethink the value of higher education as a whole?

Kevin Carey

I think they should think deeply about the value of all their decisions in higher education as there is tremendous variance in value. Not all universities are created equal. They don't charge the same amount of money, offer the same experience, and your graduation chances vary greatly depending on the institution you're enrolling at.

I think the last thing I would say is that college has become very high stakes both in terms of price and value. Hence, nobody should wait to think about the value of higher education. The time now is to take a close look at all of the decisions and not believe all of the promises the colleges make. Because they do it in their own interest, not yours.

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