The Need for Real Change in Higher Education Reform

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By Matthew Denhart     American higher education has long been considered a driving force behind the realization of the American Dream. Through a college education, so it goes, a person of any family or income background can acquire the knowledge and skills necessary to enjoy an enlightened middle-class lifestyle.

Yet, the evidence suggests that as costs continue to grow unabated, college access is increasingly leaving the poor on the sidelines. One can imagine that Thomas Jefferson would be appalled to know that at his own university, the University of Virginia, less than 9 percent of undergraduates in 2008 received Pell grants (a typical indicator of the number of low-income students). That’s a smaller proportion than at Yale, Dartmouth or Brown – long-considered bastions of elite privilege.

Higher education reform directed at encouraging more low-income students to attend college is a noble effort, and one the Obama administration has pursued. Quite unfortunately, however, these reforms have been misguided and are merely temporary solutions that do nothing to address the most pressing roadblock to college for the poor: skyrocketing tuition.

A major contributor to increasing college costs is the large amount of third-party subsidies that make students themselves less cost-sensitive. Yet, the president’s reforms (which focus on tinkering with financial aid programs) actually contribute to larger third-party payments to higher education. Rather than pump more money into federal financial aid programs, a better short-term solution would be to create personal higher education “investment accounts.”

Such accounts would shift from funding institutions to funding the students themselves. This would give students a much better understanding of how much financial aid they can expect prior to applying to a school and would promote much-needed competition between institutions of higher learning. Additionally, these accounts could be made progressive, with aid going only to those with the most need. Furthermore, incentives could be built in to encourage outstanding student achievement and timely degree completion – something sorely needed, considering that over 40 percent of American college students fail to graduate within six years, if at all.

However, radical reform is what is really needed, and that reform must be driven by innovation. New technologies (namely the Internet) have transformed the way businesses and societies operate, but colleges have remained resistant to adopting them. Also, traditional understandings of a college education need to be reconsidered. The “four-year” degree model is terribly outdated and constrains students to a one-size fits all approach.

The for-profit higher education sector has become a leader in both these areas, using primarily online delivery to offer educational options that fit the unique needs of individual students, many of whom are from lower-income groups. Somewhat ironically, Congress and the Department of Education have recently gone on a tear attempting to derail this industry that serves the very demographics they claim to be trying to assist.

Several other reforms would be prudent. For example, trimming growing administrative bloat and focusing resources on undergraduate education is essential. Data show that between 1997 and 2007, the growth of university administration has outpaced enrollment increases by a factor of two. At the same time, college campuses have assumed increasingly recreational type functions. One would be hard-pressed to find a campus today that lacks a climbing wall, a lavish student union center or well-funded intercollegiate athletics teams. This all has distracted from the traditional instructional mission of higher education and has driven up costs.

Finally, it is important to note that President Obama’s quixotic goal of doubling the proportion of Americans with college degrees by the year 2020 is neither sensible nor realistic. This assumes that college is a good investment for the vast majority of Americans. Much evidence exists now to suggest that this is not the case. The U.S. Bureau of Labor Statistics notes that among the top 30 occupations with the largest projected job growth by 2018, only eight require a college degree. Currently, over 5 percent of laundry and dry-cleaning attendants and more than 14 percent of hotel clerks have at least a bachelor’s degree. These people are either seriously underemployed, or our colleges are running rampant in promoting credential inflation. Many Americans lack the necessary skills or motivation to be successful in college, and the type of training provided by colleges is not suited for all occupations in the first place.

While encouraging low-income students to attend college is a laudable goal, the policies of the current administration do little to help. Inefficiencies run rampant in our current model of higher education. Reforms to actually help the poor must focus on fundamentally altering the cost structure of higher education, rather than simply channeling more money to our campuses. Only then will financial obstacles diminish, to the benefit of all students, rich and poor alike.

Matthew Denhart is the administrative director of the Center for College Affordability and Productivity, an independent higher education research center based  in Washington, D.C.