☕️ Good Saturday morning and welcome to the weekend. Thanks for reading Next. If someone forwarded this to you, get your own copy by signing up for free here.
Back in January, one of our guests on the Future U. podcast was Bill Troutt, who was chairman of the National Commission on the Cost of Higher Education in the late 1990s. The commission was an attempt by Congress to figure out how to curtail the rising price tag of a college degree.
One of the reasons that the commission is so forgettable, Troutt told us, is that its congressional sponsors really wanted the panel to “simply say it’s time for price controls.” It didn’t say that, and so the commission went down in history with a report collecting dust on a shelf somewhere in a Washington office building.
That 1990s-era congressional commission was one of many federal attempts over the years aimed at controlling the spiraling price of college. It’s reminiscent of the national debate over soaring health care costs. I was reminded during a visit last week to the Carter Presidential Library in Atlanta (highly recommend) that he had endorsed the idea of comprehensive national health insurance during his 1976 campaign. Health care and higher ed: we have complained about their costs for decades but can’t seem to do anything about either one.
The Biden administration is the latest to try on the college cost front with two policies that have dominated the higher ed news cycle over the last week. The first is something that really won’t do anything to bend the cost curve, but it’s good politics: student-loan forgiveness. The other attempt seems to be going after the wrong villain.
Rally in support of the Biden’s student debt relief plan in front of the the U.S. Supreme Court.
Let’s start with the administration’s effort to forgive some $400 million in student debt for tens of millions of borrowers—an idea that faced a skeptical conservative majority in the Supreme Court last Tuesday.
After listening to the oral arguments, it’s hard to imagine that the court won’t rule in June that any widespread loan forgiveness must have the backing of Congress (which it won’t get anytime soon). What then will be interesting is if the administration extends the pause on loan payments that has been in place since the beginning of the pandemic. The Education Department has said that payments will resume by the end of August, or 60 days after the litigation is resolved. Let’s see if the administration tries to do an end-run around the Supreme Court’s decision by continuing to extend the pause as long as they can (before there’s more lawsuits).
The other administration policy that hasn’t received as much attention in the mainstream press is new guidance from the Education Department to colleges that work with third-party providers on a range of services from enrollment to academic advising. In the last two decades, colleges and universities have outsourced so many of their services in an effort to save money (or drive new revenue).
But some of these services cost a lot of money to provide—money many institutions don’t have to invest—especially if they’re looking for new revenue streams. To solve that problem, a few savvy outside providers developed a great model: revenue-sharing agreements where they get a portion of the tuition dollars from new students in exchange for providing the needed infrastructure up front. In 2011, the Obama administration said these agreements didn’t violate a 1992 law that bans incentive compensation—basically colleges giving staff members (or in this case, outside vendors) more money when they enroll more students.
In its newest guidance, which the Education Department released in mid-February, it greatly expanded the definition of what it means to be a third party to, as Doug Lederman in Inside Higher Ed put it, “companies and other organizations that help colleges recruit, educate or retain students, and on the institutions themselves.”
The Education Department had wanted colleges to start to publicly reporting these relationships on May 1—a deadline they have since extended to September amid pushback. The big reveal the department really wants from this effort is what colleges are doing with so-called online program managers—or OPMs—which colleges contract with to recruit students and manage their online programs. (🎧 to this Future U. “Higher Ed 101” episode where ed tech analyst Phil Hill explains OPMs.)
On November 8, 1965, President Lyndon Johnson signed the Higher Education Act to help with access and costs, yet nearly 60 years later we’re still debating the cost of higher ed.
OPMs have helped many colleges and universities get online over the last decade and expand their offerings of graduate degrees, in particular.
But OPMs have also come under fire by government officials and progressive think tanks for their aggressive marketing of students to get more money from ever higher tuition prices (like a $115,000 two-year master’s degree in social work from the University of Southern California).
What’s often lost in this debate, however, is that the more a degree costs, the more difficult it is to recruit and retain students. It’s not in the OPM’s interest to have the most expensive degree. They want a reasonably priced one that makes it easier to recruit on volume. But many colleges and universities have long seen their part-time and professional graduate programs as cash cows. When colleges went online in the last decade they were no longer constrained to a specific geographic area, so they could charge more, to more people.
That was especially true among brand-name colleges that heavily restrict enrollment of in-person undergraduates to boost their prestige, but then open the floodgates to graduate students who end up subsidizing so much of the rest of the university. I saw this first-hand when I enrolled in an online graduate program at a top 25 university a few years ago where faculty members bragged in class that it was their ranking that enabled them to even offer this program at the price point they were charging us.
What college really costs a consumer is a black box that only colleges and the consultants they hire to help them with pricing can see inside. Forgiving loans for students who were burdened with debt for rising prices last decade or cracking down on third-party providers to colleges won’t change the fundamental problem in higher ed: price transparency.
We’ll probably never know why two students at the same college, with the same major, and without financial need get charged different amounts. Ron Lieber, a personal finance columnist at The New York Times, has been on a campaign for colleges to publish more data on how they award merit-based aid. As I point out in Who Gets In and Why, some colleges are “buyers” and others “sellers” in the admissions process. If college consumers are armed with more information about the black-box of financial aid, they’ll hopefully make better decisions (or at least they’ll know what they’re paying earlier in the admissions process).
Ever since President Lyndon Johnson signed the Higher Education Act in 1965 to have the federal government play a bigger role in paying for higher ed, we have debated the rising prices of colleges and the reason for them. And it’s certainly not going to end here in 2023, with a Supreme Court decision in June or Department of Education guidance to rein in outside service providers.
After all, there is no constituency that really wants to lower costs: parents and students want more services, the government demands more regulations, and trustees want better results. All of it costs 💰💰💰.
🗓 Mark Your Calendar
The “Next Office Hour” in March will be on Tuesday, March 21 at 2 p.m. ET/11 a.m. PT.
On this webcast we’ll explore how to make the bachelor’s degree into a much more valuable credential for students and will release the findings from a new paper on what enables the bachelor’s degree to have currency in the job market.
Join us for an interactive conversation to learn from:
Matt Sigelman, president, Burning Glass Institute
Lydia Riley, director of academic affairs, University of Texas System
Matthew T. Hora, co-director, Center for Research on College-Workforce Transitions, University of Wisconsin-Madison
Lydia Logan, vice president, global education and workforce development, corporate social responsibility, IBM
We often talk about higher ed in the traditional sense—the 19 million students enrolled in undergraduate and graduate programs.
But as Michael Horn and I point out in the latest episode of Future U. there are more than 53 million people in the U.S. who are in low skilled, low wage jobs—nearly half of whom did not complete high school or pursue any kind of post-secondary education after graduating.
What’s happening:Marcy Lab School and Merit America are among a growing number of programs that provide alternative on-ramps to more education for those who don’t pursue traditional two- or four-year degrees.
How it works: Merit America’s typical learner might be a DoorDash driver by day who takes care of their kids at night, earns $25,000, and doesn’t have time to go back to school, Rebecca Taber Staehelin, co-founder and co-CEO of Merit America, told us.
They enroll in Merit America and over the course of 3-4 months they spend 20 hours a week in online learning—a combination of an industry recognized credential and getting coaching on professional skills and making a career transition.
The program also includes peer support and individualized job search support.
Students don’t pay to enroll in Merit America. Thanks to support from philanthropies, students pay $95 a month for five years only after they finish the program and get a job that pays above a certain income level.
—Meanwhile, the Marcy Lab School serves recent high-school graduates who are looking for a “place-based” but not necessarily a “residential experience” that combines both the practical arts and the liberal arts, Reuben Ogbonna, co-founder and executive director of the Marcy Lab School, told us.
The Marcy Lab program, which is fully funded by outside sponsors, is full-time for 12 months with an academic major in computer science and software engineering combined with a leadership development program.
On the other side, Marcy Lab School sources career opportunities for its fellows who on average earn $106,000 a year, within 3-6 months of graduating.
Why it matters: Students who left college and are in Merit America aren’t “drop-outs” Staehelin reminded us. They just tried college and it didn’t work for them.
The difference at Merit America is that it is focused on in-demand careers. “You see a clear throughline from what you’re learning to the job you’re going to get,” Staehelin said.
The big picture: As Ogbonna and Staehelin told us, they’re serving students who we often say aren’t “college ready.” We put the onus on students rather than colleges to be ready.
Ogbonna used to work in public schools in Brooklyn and he said his students would often return after going to college and “they’d say ‘I don’t have a single professor who knows my name. I haven’t found a peer group that makes me feel like I’m a part of something here.’ There’s a lack of rigor and relevance. They’ll say, ‘I’m a year or two in my major coursework, my general ed studies, I still don’t have a direction.’”
That gave Ogbonna the idea for Marcy Lab School to give students “a sense of community, a rigorous curriculum that felt relevant to their career aspirations, and then enough support for them to meet a really, really high bar.”
Bottom line: As I’ve said many times, college is about “belonging” and “purpose.”
Why am I here? Can I find my people here? If colleges can answer those two questions for students, they are more likely to stay in school, be engaged in their learning, and graduate.
🎣 Athletes and Hooks.We talk about socioeconomic status and legacies as “hooks” for getting into a selective college, but not often do we talk about athletics as one of the biggest hooks. That’s what I talked about with my friend and former colleague Brad Wolverton for his new podcast, Sports Scholarship Stories. It is where former athletes give future ones scoop on athletic aid. So if you have a kid who is good at sports and you’re thinking “sports scholarship,” this is the podcast for you. (Sports Scholarship Stories)
🧮 1.5 Million More Apps and Counting. There’s been a 21% increase in overall applications to colleges since before the pandemic. That’s according to the latest Common App trends report. For those who are counting, that’s 1,559,670 more apps this year than in 2019-20, when the high-school graduating class was about the same size. And most of those apps are going to selective (read: brand-name) colleges. (LinkedIn)
👩🎨 What Happened to the Humanities? “Since 2013, the study of English and history has dropped by a third; the number of stem degrees, meanwhile, is soaring,” Nathan Heller writes in the February 27 edition of The New Yorker. He notes that Arizona State University “is today regarded as a beacon for the democratic promises of public higher education.” The university “has a better faculty-to-student ratio on site than U.C. Berkeley and spends more on faculty research than Princeton. For students interested in English literature, it can seem a lucky place to land. The university’s tenure-track English faculty is seventy-one strong—including eleven Shakespeare scholars, most of them of color.” (The New Yorker)
🛫 Going to SXSWedu next week? Come see me for a panel I’m moderating on the future of the college admissions process. Monday, March 6, at 4 p.m. CT in Room 8ABC of the Austin Convention Center.
