College has turned into a large entitlement program, with students going deep into debt to get degrees that aren’t worth as much as they used to be, according to a panel of conservative education experts.
Describing rising tuition costs as the current “defining middle-class issue,” Andrew Kelly of the American Enterprise Institute said students are paying more for college tuition while seeing less financial return on their degrees.
“You’re paying more for a degree that’s not worth what it used to be,” Kelly said at the Bradley Symposium in Washington on Wednesday.
A significant reason for the diminishing returns on degrees, Kelly said, is the amount of loans and subsequent student debt being handed out to students by the federal government.
“This has now turned into a larger entitlement program,” Kelly said of federal loans.
Kelly said too many universities are receiving federal loans, especially universities that aren’t producing a significant amount of graduates.
“A lot of federal money flows to bad colleges,” he said, pointing out that 37 percent of federal loans go to colleges with a 40 percent or lower graduation rate.
While the increase in student loans is saddling many graduates and dropouts alike with significant debt — less than half of them are currently on their loan payments — it is allowing universities to raise tuition, according to Kelly. To combat this, he suggested a system of consumer data that could compile graduation rates, degree returns and student loan debt.
President Obama has proposed a similar concept. Starting with the 2015-16 school year, the Department of Education plans to publish college rankings. The rankings intend to chart student tuition and loan debt, financial assistance, and degree completion for public colleges.
According to the Department of Education, the rankings hope to “hold students and colleges receiving student aid responsible for making progress toward a degree,” and incentivize states to fund public colleges based on performance.
Another problem is that college tuition is increasing far more rapidly than family incomes, Kelly said.
That is a conundrum since a college degree has never been more crucial to economic mobility, yet it’s never been more expensive, he said.
Wednesday’s panel discussion wasn’t all doom and gloom. Some colleges have frozen tuition, such as Purdue University.
Purdue President Mitch Daniels, the former Republican governor of Indiana and White House Office of Management and Budget director, took the helm at Purdue in January 2013. That May, he and Purdue’s board of trustees froze the university’s tuition. Since then, the freeze has been extended through the 2015-16 academic year.
In discussing the decision to freeze Purdue’s tuition, Daniels said creating a flat tuition rate “turned out not too hard to do.” According to him, it simply required Purdue to adjust the university’s budget to that of student and family incomes and needs, instead of vice versa.
Purdue’s tuition freeze in 2013 came after 36 years of annual tuition hikes.
Rising tuition costs, Daniels said, are driving students away from their first and second college choices. “The reason is almost always cost,” Daniels said.
Since freezing tuition, Daniels said, Purdue student debt has fallen by 18 percent.
As college costs rise, more students are being drawn to the more affordable option of online higher education.
George Mason economics professor Alexander Tabarrok, co-creator of the online Marginal Revolution University, said the promise of online classes lies in its ability to reach thousands while maintaining low costs.
“You can teach 100,000 online at the same cost you could teach 10 people [in person],” Tabarrok said.
Tabarrok touted online education’s — and his own program’s — ability to allow students to move at their own pace. In online education, Tabarrok said, an educator never has to repeat himself to make sure all students are keeping up with the material. Instead, an online student can control the pace of a lesson or lecture.
“It’s a much more individualized approach,” Tabarrok said, giving it the moniker of “TiVo for education.”
Yet, for traditional colleges such as Purdue, the rise of online higher education presents both competition and a challenge.
Daniels said he constantly tells his staff and board of trustees that Purdue must “pass the pajamas test,” distinguishing itself from the more affordable, home-based online competition.
While saying online higher education is “clearly going to be the right decision for many students,” Daniels said a traditional, residential college offers amenities online learning can’t, namely in-person correspondence with instructors, research capabilities for students and organizational and leadership opportunities.
Peter Lawler, a government professor at Berry College, said he fears new forms of learning, including online education, are driving higher education away from a liberal arts emphasis. Chiefly, he said online higher education could nix meaningful class discussion and seminar-style courses.
Tabarrok agreed that those are shortcomings.
Daniels said online education is “menacing this millennium-old model” of higher education. He acknowledged universities must adapt and adjust to a changing world, but Daniels, no stranger to bureaucracy, noted the complex institutions can be slow to implement change.
