The Big Squeeze - The Coming Crisis in American Higher Education

Most Americans already know that a crisis is happening in American higher education. Tuition costs are surging, putting a college education out of reach for many Americans. College grads are defaulting on college loans. They cannot find jobs in the fields they trained for. Those trends make the news every day. Yet they are only the most visible signs of deeper troubles that threaten to destabilize American higher education in the coming years. Let's take a closer look. Coming Crisis: Colleges Will Price themselves Further and Further Out of Reach According to the U.S. Census, the median income of U.S. households in 1970 was $8,390. By 1989, it has risen to $28,910. And by 2005, it was $46,326. Those figures indicate that Americans today are earning about 5.5 the salaries that they earned 40 years ago. How much have college costs grown? According to the Congressional Budget Office, the average yearly tuition at a four-year public American university in 1970 was $480. The average tuition at a four-year private college or university was a lot higher, at $1,980. Today, according to data from The College Board, tuition and fees at four-year state universities currently average $7,020 per year for students who live in- state, and $11,528 for students who live out of state. And private four-year colleges charge an average or $26,273 per year in tuition and fees. So tuition costs are rising at a rate that far outpaces the growth in income of the typical American household. While income has grown by a factor of 5.5 in the last 40 years, the cost of attending a state college has increased by a factor of 15 for in-state students and by a factor of about 24 for out-of-state students. And the cost of attending a private college has increased by a factor of more than 13. And colleges are planning tuition increases for the coming years. It's the big squeeze. For many American families, the dream of sending a child to college is slipping even further out of reach. Crisis: American Colleges Will Close Endowments at American colleges and universities have dropped dramatically during the current economic downturn. At the University of Delaware, the endowment shrank by 24.8%. Gettysburg College lost 25.3%, and the list goes on and on. Top-tier, well-funded institutions will weather the crisis. But a growing number of smaller American private colleges and universities are already finding it difficult to attract enough tuition-paying undergraduates to keep their doors open. With increasing frequency, these schools are making their troubles known. There's another reason that colleges are in trouble. With the lack of jobs awaiting graduates, it is difficult to convince many American families that it is really worth paying $30,000, $40,000 or more a year to earn a college degree. Crisis: American Students Will Be Unable to Train for Available Jobs The days of the English major, the philosophy major, and the general studies major may be numbered, as more students seek training for jobs that they can actually find after graduation. They are training as medical technicians, computer programmers and air conditioning technicians. Yet just as students are looking for practical training, the sources of that training are harder to find, for a few reasons. First, community colleges are no longer offering as much practical training as they once did. To attract more students, many have modified their course offerings to become more like private institutions. While President Obama has pledged to invest heavily in community colleges and upgrade their training programs, the changes are long overdue. Second, for-profit colleges and universities are in trouble. A number of them are being investigated right now by Congress because of shady recruiting practices and abuse of government programs for funding higher education. It seems likely that a number of for-profit schools will shut their doors. The result? American students will find it harder to find schools that offer the practical training they need to secure jobs. And we all know what can happen when a country's workers are under-trained, compared to workers in other countries. The result will likely be further damage to the American economy and business. What Will Save American Higher Education? The trends outlined above are grim. Yet the situation is far from hopeless. A number of positive trends are at work that point to the possibility that American higher education is not going away, but simply changing. * America still has the strongest educational infrastructure in the world. We simply have more colleges and universities than any other country. Many of these institutions are already reinventing themselves by offering distance learning options, three-year degree programs and other incentives for modern learners. * Americans' desire for education remains strong. With so many of our citizens hungering for learning, there is ample incentive for colleges to develop new learning options for them. * The timeline of education has changed. More Americans are returning to college at all stages of life. The result is that a larger pool of Americans who are interested in higher education. * Distance learning is moving into the forefront of American higher education. As Bill Gates predicted on August 9 in his talk at the Techonomy conference in Lake Tahoe, it is already possible to deliver a college education over the Internet for as little as $2,000. In the end, we predict that American ingenuity will not only survive these crises, but turn America into a new kind of community of learners.