In President Obama’s State of the Union address, he noted the importance of college attainment in closing the skills gap in our country. He’s right and his timing couldn’t be better because it has become fashionable in some quarters to suggest that higher education is no longer worth the cost.
Pay Pal founder Peter Thiel got a lot of publicity last year saying there is a “higher education bubble” and offering to pay 20 bright young people $100,000 to skip college. Newspapers and magazines are full of stories about the poor job prospects for recent college graduates, and most everyone seems to know about a college grad living in their parent’s basement or driving a cab. College costs much more than it used to, and more students are taking on debt to pay for it. So, it’s become reasonable to ask the once-heretical question: Is college worth it?
With a question of such importance – not just to millions of students and their families, but also to the nation – it is important to look at the facts and not make decisions based on anecdote. The facts overwhelmingly point to the conclusion that many more people need higher education – both to secure their own futures and for the economic future of our nation.
Two recent analyses from the Georgetown University Center on Education and the Workforce describe what is happening. The first is that roughly 60 percent of American jobs will require some level of education beyond high school by 2018. Unfortunately, only about 40 percent of American adults have a two- or four year college degree, and around 5 percent more have a certificate or other credential of high value in the workplace. That’s a big gap.
But what about all those unemployed college graduates? The other analysis by the Georgetown Center found that 22 to 26 year olds with a bachelor’s degree have an unemployment rate of 8.9 percent. That’s high by any measure, but the unemployment rate for young adults with only a high school diploma is 22.9 percent, and it’s a staggering 31.5 percent for high school dropouts. And it is almost certain that those college graduates will be the first one hired as the economy recovers.
It’s not hard to figure out what is behind these numbers. Occupations that require higher levels of skills, like healthcare, are growing. Low skill jobs aren’t exactly disappearing, but they are shrinking, leaving more workers competing for them. The skill and knowledge requirements of most occupations are increasing, and people with only a high school diploma or less are not able to fill many of the jobs that the knowledge economy is creating. It’s like two games of musical chairs, where chairs are taken away from one game – the one for low-skill workers – and added to the game for workers with the skills and knowledge in demand in the workplace.
Given this hard reality, it’s no wonder that people are concerned about the cost of higher education and whether or not they can afford it. It’s not just that students are graduating with a lot of debt that they may struggle to repay. Many economists now believe that this shift to loans to pay for college is causing ripple effects through the economy. For example, if students graduate with a lot of debt, they will likely have to put off buying a house, and that hinders the recovery of the construction industry. So a lot of people are affected by the high cost of college, not just students and their families.
While the public must do more to support higher education, colleges and universities have work to do, too. Everyone must find ways to use scarce public funds to produce more highly qualified college graduates, and there are ways to do just that.
For example, several states now use performance funding to increase college completion, shorten time to degree or credential, and reduce the cost of delivery. Tennessee is distributing 70 percent of its higher education appropriations based on results and quality rather than enrollment. And student performance incentives, such as the strategic use of tuition and financial aid to encourage students to stay in school and complete their programs as quickly as possible, are also proliferating.
Introducing business efficiencies like joint purchasing of products and services can also help produce savings that are used to graduate more students at a lower cost. In Ohio, more than $900 million has been saved by public colleges and universities over the last few years. We need more efforts like these to increase the productivity of higher education so more Americans can afford to go to college.
America is grappling with the challenge of how to grow jobs, skills, and opportunity. The issue can’t be wished away by fanciful talk about higher education bubbles and whether college is still worth it. America needs more college graduates – it’s the only route to economic prosperity for both individuals and the nation.