Universities in the United States are in trouble
Tertiary education in the USA – education beyond high school – constitutes about 1% of the GDP. The vast majority of this money is spent in large universities: those that offer undergraduate education, graduate education, professional training, substantial research programs and sports programs that increase prestige as well as income.
Let’s analyze the health of this sector of our economy in structural terms, leaving issues of content and ideology for another time.
The long-accepted value proposition of a university education – that a bachelor’s degree guarantees a decent job and entry into the middle class – is now widely disbelieved. It is disbelieved because it is no longer true. Tales abound of college graduates unemployed or working as baristas, while other tales tell of college dropouts becoming billionaires. In addition, attendance at universities has been artificially inflated because of the cultural belief that a non-college graduate is somehow a second class citizen.
The universities no longer understand their mission. Is the goal of a university to train its students for careers? To prepare them to be good citizens? To educate them for a good life? Tertiary education was started in the (future) United States to train clergy and, soon thereafter, lawyers. In the 1860s the Land Grant Colleges Act added education in agriculture and the mechanical arts to the universities’ role. This led to the need for research to support these expanded educational needs. The large universities try to do it all, with varying degrees of success.
Multiple missions create multiple problems. For example, there is an ongoing conflict between research and teaching. Many researchers are lousy teachers, although there are notable exceptions. University professors who get research grants are rewarded with ‘released time’, that is with being excused from some of their teaching responsibilities. (The same reward structure accompanies assignment of administrative duties.) Is it any wonder that teaching suffers?
The financial model is unsustainable. Prices have increased substantially faster than inflation and are now out of reach of ordinary consumers. There is no market discipline on tuition. Student loans go largely to pay increased tuition, much of which in turn goes to administration rather to instruction or to research. Many potential students would find it impossible to attend a university without government subsidies, institutional subsides and loans unlikely to be repaid.
The market for tertiary education is undergoing radical change. Some colleges are having problems filling entering classes. Admission applications are down even at the largest and most prestigious schools, as are backlogs of qualified applicants who have not been admitted. There are schools that have cancelled courses and entire areas of concentration (majors). Students are increasingly cutting class. Many students are taking five to six years to earn their degrees, rather that the nominal four years. Some high school football programs are closing!
The sector’s supply of raw material (high school graduates) has been diminishing in quality for years. It shows no signs of improvement.
Restructuring the tertiary education sector will be exceedingly difficult. There are about 20-40 major players and about 3000 smaller ones, but they are constrained both by custom and by laws from consolidating.
New, disruptive technology is already being deployed. It is called distance learning or MOOC (massive open online courses). It is currently limited in its capabilities, but its costs are a fraction of the costs of conventional college. And it provides something that conventional education cannot: attendance at will. This is the classic Clayton Christensen definition of a disruptive technology.
What will happen next
Distance learning will move many students out of the classroom, decreasing the markets for existing institutions. This will force major changes and retrenchments.
The large and well endowed universities already resemble large and rich private companies. Both have operations departments, central administrative staffs and overall central management responsible for setting strategy and allocating resources. These universities will act more and more like business conglomerates. They will acquire other entities, try to expand into new markets and embrace new technologies. (Purdue’s acquisition of Kaplan and MIT’s distance learning initiatives are examples.) They will spin off or close activities that they perceive as not fitting their mission. Their success will depend on talented and charismatic leaders, and on having the deep pockets to survive the inevitable ups and downs of their businesses.
Some of the less well endowed universities will survive for a while on their accumulated capital but will eventually morph into one of the more specialized institutions described below. Others will merge into one of the big educational conglomerates. Some will simply go out of business.
Most of the cutting edge research beloved by universities will be done by non-teaching institutions, such as the Santa Fe Institute, Lawrence Laboratories and The Cleveland Clinic.
Professional schools will become more important. Rush University in Chicago and Rockefeller University in New York are solely devoted to professional medical training, with no undergraduate degree programs. More institutions of this type will come into being either as startups or as evolutionary remains of shrinking of mid-sized universities.
Most undergraduate education will take place at small liberal arts colleges and two-year community colleges.
Training in the skilled trades will take place mostly in the private sector, in dedicated trade schools such as coding academies, specific-purpose training schools for exam preparation and apprenticeships both formal and informal. Community colleges will provide formal training programs in specialized areas, such as the nursing program at Triton College in Illinois.
What will get in the way
These changes will be resisted (as are all significant changes) by those who think they will be hurt by the changes and by those who have benefited from the existing structures – called ‘rent seekers’ by economists. This overt resistance to change is no surprise.
More insidious are some biases built into our culture. One is the bias against for-profit educational institutions, manifest, for instance, by differing rules surrounding student loans. Yet it is clear that for-profit entities are much quicker to respond to market demands and often produce better products than the not-for-profit sector.
We have a panoply of artificial boundaries that needlessly inhibit growth and change. One bias is that the people who do white collar work are in some way superior to those with blue collar jobs. This bias is being somewhat eroded in the computer industry by the often functional equivalence of software and hardware. Closely related are the boundaries between professionals and clerks, and between managers and production workers. Woe betide him or her who tries to cross. Yet these boundaries must be eliminated or at least blurred if we are to realize the promise of our new technologies.
Finally, the biggest inhibitor of all: lousy primary and secondary education. There is a lot of it out there, and until we figure out how to fix it, everything else is just a band-aid. Or rather a tourniquet – something to help us survive until we fix the real problem.
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