by John Andrew Willis
Dallas Mavericks owner and outspoken entrepreneur Mark Cuban posted about a potential meltdown in higher education in his Blog Maverick last May. It has recently resurfaced on various social media outlets. Since the major economic downturn in 2008, there’s been a lot of talk about both the current value and future landscape of American colleges. The gentlemen behind Epic 2020, for example, have gone as far as to suggest that higher education will be unrecognizably different by 2020.
The Higher Education Bubble
Cuban argues that the higher education industry’s bubble will burst similarly to the recent housing market disaster. He explains that consumers bought very nice houses on generous mortgages with the hope that their house would only grow in value, allowing them to sell later at a profit. Of course, values declined, and many homeowners had to sell at a loss.
In drawing a comparison to college education, Cuban predicts:
“At some point potential students will realize that they can’t flip their student loans for a job in 4 years. In fact they will realize that college may be the option for fun and entertainment, but not for education. Prices for traditional higher education will skyrocket so high over the next several years that potential students will start to make their way to non accredited institutions.”
Mark Cuban is right about one thing – going to college is a blast; many students meet lifelong friends, develop an intense affection towards their alma maters, and leave with stories they will tell their grandchildren.
Will Colleges Begin to Close their Doors?
What remains to be seen is whether or not we will see a decline in traditional brick-and-mortar residential colleges due to increasing cost of attendance. Eventually, I think we will. I believe some regional, public universities with small endowments will see their enrollment drop to the point that some will shut down. You’d hope they will be parts of a larger regional public system such that another college in the system can absorb many of the institution’s students and programs, similarly to what often happens in the private sector. Maybe this will happen at private colleges too, but my suspicion is that it will be schools with less individual identity – the places students go to “get in,” “get through,” and “get out” as quickly as possible.
Increasing Financial Assistance
I believe colleges will have to adapt to the changing needs of the 21st century student and job market, but I also believe they already are. Tuition is increasing at most colleges in the United States, but so are the prices of goods and services of everything we consume. Just as few students look at a college’s sticker price and think, “Wow, what a good deal,” few drivers leave a gas station thinking, “$3.50 per gallon – I think that’s a fair price for a refined black liquid from the ground.”
Fortunately, TCU and many other schools have consistently increased institutional funding for merit scholarships and need-based financial aid at the same time as tuition prices increase. According to a recent Wall Street Journal article, private U.S. colleges as a whole offered an all-time high 45% discount rate last year. This means that – when taking into consideration students paying the full sticker price, students receiving full scholarships, and everyone in between – only 55% of the full tuition price was actually collected by the universities. So, while the price tag is increasing nationally, so are the discounts to high-achieving students and those with demonstrated financial need.
Universities vs. the Dallas Mavericks
I find Cuban’s comments to be very fitting of his industry. He is a fast-paced mover-and-shaker in many aspects: a technology business guru, an entrepreneur, and the owner of the Dallas Mavericks. It’s hard to say which of these changes most rapidly, but it is impossible to argue that any change slowly. If his businesses don’t adapt immediately, their competitive advantage is threatened.
If the Mavs lose a game, it can change the outlook of the whole season. If Google released a smart phone with a software superior to iOS, it could change the iPhone’s dominance in the marketplace overnight. However, if TCU replaced a retiring professor of Latin with a new faculty position in Engineering, not so earth-shattering…
Much like the government, education changes slowly. There are pros and cons to this. A university is never going to be able to offer the precise menu of course curriculum to satisfy the market’s picky appetite for worker qualifications. Even if they could, would that be in the best interest of students? I don’t think so. For starters, a bachelor’s degree takes three years for the most ambitious students, four for most, and five for some. Many industries change so quickly that, by the time you’d learned something in a classroom, the real world procedures are already refined. Great colleges teach you the fundamentals of your area(s) of study, help you intern at reputable companies who will show you exactly what they expect, and facilitate an environment of maturation that will make you an exceptional individual in any field, anywhere in the world.
On a Mission
At TCU, our mission is much broader than job training; we aim “to educate individuals to think and act as ethical leaders and responsible citizens in the global community.” We want a student to accomplish something greater than land a job after they receive their degree. We expect them to improve the human experience.
In the words of TCU Professor of Political Science, Ralph Carter:
“There used to be a quote on www.addran.tcu.edu that I loved, which said, ‘Those who know how will always work for those who know why.’ And that’s what we do – we deal with the why. And as a result of that, students who really master social sciences and humanities types of training, whether it’s in the core curriculum, and then they go off to the business school or nursing or whatever college they want to at TCU, one of the things that we give them is this ability to question and to analyze and to critique and to communicate…One of the other things, though, that is structural about TCU that works is, because we have a limited enrollment, we can have smaller classes. Because we can have smaller classes, we can make our students write more papers and write more essay exams and we have the time to grade those things. And so the result of that is they get drilled on these skills that are crucial to future success in life…”
Class in Your Living Room?
I question the notion that a student can acquire the skills and experiences necessary to be a successful professional and fruitful citizen from classes on a laptop in their pajamas in their parents’ living room. If you thought Matthew McConaughey was pathetic in Failure to Launch, imagine millions of Millennials who never physically go to college.
Cuban and others who claim that traditional colleges will go bankrupt as students instead choose the value of non-accredited schools I think fail to understand the totality of the college experience – the whole student education. As Amanda Nickerson noted in a previous post, it was Socrates who claimed, “Education is the kindling of a flame, not the filling of a vessel.” Colleges don’t simply feed students information for them to later regurgitate. There’s a lot more to it than that.
Students can’t participate in athletics, explore the plazas of a European city with a well-traveled professor, or break down the meaning of life with a diverse array of residence hall neighbors on the internet. They can’t manage the budget and culture of a student organization or meet a new friend, significant others, or fiancé through “distance learning.” Above all else, I’m convinced the power of the human connection is too great to allow a mass exodus of young people from brick-and-mortar colleges to their electronic counterparts.
Dollars and Sense
All this crunchy, gooey, touchy-feely stuff sounds good, but what about affording it? Colleges are getting more expensive and their parents aren’t getting any more wealthy as of late. This is true, but, as previously mentioned, colleges are discounting their tuition more than ever before. Mark Cuban mentions traditional universities’ burden of legacy costs, “from tenured professors to construction projects to research they will be saddled with legacy costs and debt in much the same way the newspaper industry was. Which will all lead to a de-levering and a de-stabilization of the University system as we know it.”
For some colleges, I think he’s right. Some institutions’ administrators will be completely at odds with professors not willing to adapt, subsequently making them unable to meet the enrollment goals which allow the college to operate. However, for most colleges, I think gradual adaptation will be the reaction to the public’s newfound obsession with online education. While colleges do have substantial ongoing financial obligations like compensating a large number of highly-skilled employees and building and maintaining dozens and dozens of complex facilities, many colleges also have enormous endowments unlike corporations. TCU is blessed to have an endowment of roughly $1.12 billion, greatly aiding in long-term financial stability.
I think some academic departments will downsize, maybe even merge with another discipline and offer something a bit broader. Online courses could be very helpful for students trying to find placement in a subject, or for those desiring or needing some remedial work in a subject before studying it at the college level. It would be a great benefit to the community for colleges to offer these free of charge. Let’s also not forget that the research on college campuses drives much of the innovation advancing our global society. Even when it’s not outwardly apparent, colleges are always adapting.
Colleges can’t buy into the hype of sound bites and abandon their beliefs. Today’s skills alone aren’t what will lead to prosperity and success tomorrow. It requires time-tested values – excellent communication skills, the desire to challenge the status-quo, and a thirst for lifelong learning – to realize the potential for the human experience in the future. I just happen to think these attributes are more likely accomplished on a residential college campus than on YouTube.
Is a substantial investment in a young person for four years not worth it for the rest of their life and their influence on the next generation?