Questioning the Value of the Bachelor’s Degree

The confluence of rising tuition, increasing student debt, and declining employment opportunities for recent graduates is raising questions about the value of a bachelor’s degree. These concerns have been around for years, but the good news is there are rays of hope in the form of tuition rates beginning to freeze or even contract. Better still, over the next five years, expect the use of online classes to snowball across the postsecondary universe. Institutions that fail to respond will, in all likelihood, start to fall to the wayside—unless the size of their endowments insulates them.

Since 1983, annual postsecondary costs have risen at five times the rate of inflation, meaning what had cost $5,000 in 1983 now costs $60,000. Consequently, over two-thirds of students have had to take out loans. Currently, the average student debt load is $26,000. Total student debt now tops $1 trillion dollars.

The United States spends more of its GDP on higher education than any other developed country, yet the US ranks 15th in the number of university graduates per capita. Worse, a federal survey discovered the literacy of college graduates declined between 1992 and 2003. Only a quarter were considered proficient in using the printed word to learn and solve problems. Almost a third of students had taken courses that required fewer than 40 pages of reading a term. 

During the fall of 2012, 40% of private universities saw their enrollment ebb, with over a third witnessing it dive by 5% or more.   By the end of last year’s admissions cycle, 15% of the colleges reported space was still available. In the public universities, state funding has dipped by over 10%, while tuition rates have risen into the double digits, reducing the number of high school graduates enrolling by 4% over the last two years. Even at community college, enrollment, which has risen 22% since 2007, dropped 1% last year.

To combat declining enrollment, the University of California recently announced a tuition freeze, with a UCI graduate petitioning to ban tuition increases on students already enrolled. The University of Arizona and ASU, after five years of increases surpassing 80%, froze tuitions. The Iowa Board of Regents, the Universities of Minnesota, Massachusetts, Texas, Austin, and New Hampshire all joined in freezing rates. On the private school side, the University of the South in Sewanee, Tennessee actually reduced tuition by 10% and Concordia University (MN) reduced tuition by a third. Duquesne University, a Catholic university in Pittsburgh, is discounting tuition by 50% for incoming freshmen to its school of education. Outside the most selective branded elite institutions, the days of unlimited tuition increases appear to be ending (though even the venerable Mount Holyoke, in MA, elected not to raise fees this year).

To address tuition costs, and impacted registration, colleges are augmenting their investments in online learning, especially through ‘massive open online courses’ (MOOCS) as a means to teach thousands calculus or physics. The ability to scale classes and courses can easily be done online. The University of California system through UC Online Education offers online courses for credit (for both UC and non-UC students). A coalition of western states set up the Western Governors University (WGU), which provides an enormous selection of courses and majors, tailored to the student’s schedule, with most students gaining a degree in two and a half years (with annual tuition under $6,000), rather than the six years which is the timeframe, on average, for only 57% to achieve a bachelors. MITx will be offering certifications in particular skills online. Khan Academy, an online free tutorial site, had over 41 million visits in the US alone in 2012, which speaks volumes to the efficacy of online educational delivery.

The existing higher education model is undergoing tectonic changes. The transition is already underway. If there is any place in the world that can shake the inertia of the ivory towers into willful action, it is in these United States. As Churchill remarked, “The Americans will always do the right thing…after they have exhausted all the alternatives.” We’re still exhausting the alternatives, but not for much longer.