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Fix Higher Ed’s Broken Model

The Covid-19 pandemic and recession will leave lasting marks on many major U.S. institutions, and higher education is no exception. Last spring, as most of the economy shut down, America’s colleges and universities also closed their campuses and shifted to online, video-teaching, or some combination of the two.

The experience likely will trigger a searching debate over the relative merits of online versus classroom instruction in higher education. But it already has shown that many U.S. colleges have been resilient enough to deliver a high-quality learning experience amid an unprecedented public health emergency.

If that’s the upside, here’s the downside: Once the pandemic is behind us, there will be fewer schools to welcome students, and fewer families that can afford to send them to college.

Many of America’s colleges and universities have lived on the economic margins for a long time, able to postpone tough budget choices so long as students could get federal loans to finance the rising price of a college education. A 2016 report by Ernst & Young found, there are 800 colleges vulnerable to “critical strategic challenges” because they depend on tuition for more than 85% of their revenue. Already more than 90 colleges have closed in the last three years, according to EducationDive, and that number will likely increase dramatically because of the impact of Covid-19.

The pandemic, in short, may bring to a boil a long-simmering crisis in higher education financing caused by profligate spending and mismanagement. Tuition and fees have skyrocketed since the 1970s, increasing by 2020 percent at private nonprofit four-year schools and 285 percent at four-year public colleges and universities. Though some higher education institutions have frozen or roll-backed tuition because of the pandemic and its impact on family income and savings, many others have marched ahead with their tuition hikes.

As America recovers from the Covid-19 crisis, policymakers and educators should give high priority to fixing higher education’s broken finance model. Building a more resilient education system, where schools are less dependent on tuition to survive and better skilled in providing different modalities of learning, is the key to moving forward.

More specifically, PPI proposes the following reforms:

1. Expand opportunities for qualified applicants at leading universities by creating more high-quality online and virtual courses and degrees. Many of America’s top schools already have significant experience in offering online education (where everything is online, lectures, assignments, readings) and virtual education (remote learning typically by videoconferencing). By combining in person, online, and virtual learning, schools could expand college enrollments by 10 to 25 percent, helping to expand access to America’s best public and private schools. For example, students could take their introductory courses online or virtually, and then shift to in-person classes for their majors. Schools also could offer an online/virtual version of their bachelor’s degree in certain specialties.

2. Cut the cost of higher education. Even before the pandemic, the cost of higher education was reaching a tipping point, with total debt held by students and parents now at half a trillion dollars — more than total credit card debt in America.

Yet despite the warning signs, few schools have made progress toward controlling tuition, much less reducing it. Most university presidents have called for more government aid to students rather than subjecting their institutions to touch-minded fiscal scrutiny and finding ways to cut costs and hold down expenses.

While those who call for the federal government to provide more aid to students are well-intentioned, experience shows that opening the spigots allows colleges and universities to inflate prices even more, thereby eating up most of the additional assistance. A better approach is to use some of the almost $75 billion in direct federal spending on higher education to leverage cuts in college tuition and fees. Schools can bring down the costs of tuition, and federal and state governments should require them to do so as part of any bargain to increase aid. There are a number of ways they can do this:

  • Reduce Administrative Bloat. As my colleague Ben Ginsberg has noted, over the past 40 years, the growth rate in the number of administrative staff at colleges and universities has been five times that of faculty. Jobs faculty used to do, including admissions, have now become the province of a cadre of overpaid “management” staff who spend days and weeks devising new rules and procedures that stifle creativity and initiative and bloat university budgets. Schools should commit to cutting administrative expenses, including staff, travel, as well as association fees, and salaries of every school leadership position (presidents, provosts, deans, vice deans, associate deans, etc.) by five percent for the next three years.
  • More Teaching. Teaching loads at research universities have declined almost 50 percent in the past 30 years, according to the American Council of Trustees and Alumni. While university research is often of great societal value, teaching should be given equal if not greater consideration. After all, tuition is the main source of revenue for most colleges and universities. Over the next five years, colleges should require tenured and full-time faculty to teach one additional course per year at the median pay rate for adjuncts –$2700. According to the American Association of University Professors, there are over 52,000 tenured or non-tenured
    full-time faculty in the U.S. If each agreed to teach one additional course during the next academic year at 20 students per class, the number of course slots would increase by one million.
  • Three-Year Degrees. Three-year degree programs are common in much of Europe, and students who graduate with bachelor’s degrees from prestigious institutions such as Oxford, Cambridge, or the London School of Economics typically do so in just three years. Transitioning to a three-year degree system would force U.S. universities to streamline their curricula and cut unnecessary degree requirements that pad educational expenses for students without enhancing the value
    of their degree. Making a 3-year bachelor’s degree the norm in the United States as well could cut the cost of tuition, fees, room & board by up to 25 percent. There are a variety of ways schools could shift to three-year degrees. Schools could award course credit (not just course waivers), for Advanced Placement (for students with a score of three or higher), International Baccalaureate, and other college-level coursework completed by students in high school. Schools could also give students credits for work experience and internships even if those jobs paid wages. And universities could create accelerated bachelors/masters programs so that students could earn both degrees within five years rather than in six or seven years as is currently the case.

The coronavirus pandemic has tested our country’s capacity to adapt and improvise in the face of a nationwide quarantine of indefinite duration. So far, many of America’s colleges and universities have stepped up to the challenge by shuttering their on-campus operations and swiftly moving students to virtual education. But others, operating on the slimmest of economic margins, are unlikely to survive the pandemic recession.

To make our higher education system more resilient against future shocks of this kind, lawmakers and educators must now focus on two critical tasks. The first is refining and improving remote learning and striking the right balance between online and classroom instruction. The second is developing a new financing model for higher education, one that makes colleges more cost-effective and affordable, instead of relying on ever-growing public subsidies to chase ever-rising tuition costs.

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