American Higher Ed Isn’t Doing the Job

One thing I know is the United States isn’t producing enough college graduates to compete in the global economy

About 30 percent of today’s young people will earn a bachelor’s or higher degree. That just barely exceeds the 27 percent of baby boomers who earned a B.A. And while our country slowed higher education to a crawl, the rest of the world vastly increased their investments. Several small countries have passed the United States in college graduation rates, and now big competitors like Japan, France, and the United Kingdom are closing in.

Don’t blame the young people. Sure the temptations of sex, drugs, and video games fell some promising high schoolers. But most graduates are ready, willing, and able to go on. Rising tuition keeps some out. Cost turns out to be far from the most important impediment, though. Financial aid and loans could solve the higher education problem if cost were the only problem.

Admissions and enrollment are deeper and more difficult problems. America’s colleges and universities turn away millions of applicants every spring. Universities that once had “restrictive” admission rates in the neighborhood of 30 percent now admit 10 percent of applicants. State universities that used to take all high school graduates who had a C or C+ average now reject one-third or more of their applicants.

Once inside the college gate, students bump up against enrollment restrictions. Very few colleges and universities have a reliable system of tying their course offerings to admissions. As a consequence, many freshman end up being denied enrollment in the entry-level courses they’ll need to start working on a major.

My oldest son had that experience. He went to San Francisco State University and told anyone who would listen he was “majoring in left-overs.” He persisted to graduation and is currently putting his creative writing degree to good use working as an accountant in New York City. But many of his cohort didn’t stick it out. After two years of acquiring five-figure debt and left-over courses, they left college for “a semester” to take a job and pay down their debt. Many never made it back. The registrar’s office calls it “stopping out.”

To solve its admissions and enrollment crisis, America needs to reinvigorate public investment in higher education. The private sector charts its own course and responds to market forces too slowly, if at all. Total enrollment at private four-year colleges has grown 0.9 percent per year since 1945 without waver or fluctuation. The privates aren’t keeping up with population growth, let alone responding to the nation’s need for more college graduates.

And why should they? They’re prospering mightily under the present system. Tight admissions hurt young people and the national economy, but the endowments of private universities bloom like never before.

Public investment worked like a charm for the baby boom. In the late 1960s states dramatically created new opportunities by building new campuses and raising enrollment quotas on old ones. The college graduation rate, already rising, accelerated despite unprecedented population growth. The engine of opportunity was running on all cylinders.

Suddenly, in the late 1970s, public four-year institutions stopped growing. Tax revolts, prison-building booms, and unfunded federal mandates for programs like Medicaid eliminated governors’ discretionary spending. Since then we have seen retrenchment and recovery but precious little growth. The engine of opportunity sputtered.

Nobody questions the fact that public investment in higher education pays off for taxpayers. Big studies in Texas and California show each dollar invested in higher education yields between $3 and $5 of returns in the form of future taxes or savings on welfare, prison, and social service spending.

The annual spring panic over college admissions and ever-rising tuition are symptoms of a broken higher education system. The deep source is under-investment. The private sector marches on impervious to outside influences like economic conditions or national priorities. The public sector is shackled by 30 years of anti-tax activism. A few bright spots exist at places like the University of Florida and Arizona State. For the American economy to compete in the 21st century, the rest of the nation will need to expand higher education opportunities.

Comments 6


February 27, 2009

Very interesting piece, although the Arizona legislature has just removed Arizona State University's "bright spot" status. The cuts to education in Arizona including at ASU are staggering. As a member of the ASU faculty, I know how devastating they are beginning to impact students, staff, and faculty on all four ASU campuses.


February 28, 2009

We have to push hard on the idea that access is our top priority and ASU has been one of the few universities in the nation taking access seriously. Pres. Obama set some lofty goals - 50 percent of the next cohort with BAs and leading the world again - in his speech to the joint session of Congress. Let's hope that federal spending can fill the gaps left by state retreats. We know ASU is "access ready."


March 5, 2009

All relevant points but is a mass investment in higher education going to make the U.S. better at competing in a global market (as the title of your piece suggest).

I agree that it would make better citizens but would it necessarily makes the U.S. better at competing in a global market when our higher education system is so diverse and open education?


March 16, 2009

Skeptics asked the same questions about expanding high school education in the 1930s and 1940s. Yet those investments were key to the productivity gains 1946-1970 (see Goldin & Katz, The Race Between Education & Technology, 2008). As office and service work expanded, the general literacy and numeracy skills mastered in high school positioned people to take advantage of new industries and jobs. These days technology has moved on. And the rest of the world has a surplus of high school level skills. The only competitive position to take is at the peak of the human capital pyramid. The US recently ceded the top spots to little countries. But this country is on a trajectory that will take it to the middle of the pyramid in the next 15 years unless the pace of new investment starts upward.


May 12, 2009

It shouldn't be taken as a given that more of our high school graduates have the skills and temperment for secondary education. Nor for that matter that having more college graduates would be preferable to having more certification programs. (A very robust debate can be had over the merits of a liberal arts degree).
Under the assumption that increasing the number of graduates is desirable and achievable, the current approach needs reexamination. Pell Grants and Stafford Loans have increased the competition for available seats driving up tuition. While the higher price tag induces expanded capacity, the 0.9% annual increase doesn't keep up with population growth. Many of the seats are occupied by foreign students. The government should consider more funding to expand state university systems and less for financial aid. From Econ 101 we know that an increase in supply lowers the price and increases quantity while an increase in demand increases price and quantity.


May 13, 2009

I do not take academic preparation in high school lightly. But data indicate that students are preparing better than they did in the 1980s. On average, today's high school seniors have taken .49 more years of academic English, .93 more years of lab science, .98 more years of foreign language, and 1.45 more years of academic math. They may not be as prepared as some teachers would like, but they are better prepared than their counterparts of 25 years ago were.

If I understand you correctly, we agree on the other points. Increasing supply of positions at four-year colleges and universities is the most important and efficient reform for right now. Demand growth has outstripped supply growth since the late 1970s, leaving logjams in the admissions and transfer points. Kids who would have gotten in 25 years ago are rejected; if they go to community college and apply to transfer, they get turned away again. Expanding opportunity is the only way out of this waste of human potential.

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