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The Higher Education Bubble: Rhetoric vs. Reality


Elyse Ashburn


This spring was a bruising one for higher education. Added to the all too real budget cuts were the slings and arrows of public opinion. A billionaire hedge fund manager paid kids $100,000 to drop out of college. The governor of Texas, now a leading presidential candidate, challenged the very role of research universities. College graduates tending bar, driving cabs, or simply sitting at home were the face of the season. And everywhere there was talk of the next bubble: higher education.
But as Peter Thiel prepared to lure two-dozen students away from their elite universities, the Associated Press ran a curious story: “Youth without degrees at end of job line.”

The piece, based on a national survey of young adults, found that college-educated workers were faring much better in just about every aspect of the job market. Of course, that was no surprise at all.
Data from the U.S. Bureau of Labor Statistics have been telling a similar story throughout the recession and continuing malaise. Everybody is hurting, college graduates included. But their unemployment rate is less than half that of workers with only a high-school diploma. In a country feeling varying degrees of pain, those with a degree clearly have an extra layer of protection.
It’s worth remembering, too, that Americans are still voting with their feet, enrolling in college in record numbers. The Thiels of the world, however, have some evidence on their side, too. And arguing that, say, a coat is overvalued is not the same thing as saying it doesn’t provide any protection from the cold.
“A typical reaction is, ‘How dare you say higher education is worthless,’” says Greg Lukianoff, a guest on a recent segment on Fox Business’ Stossel show that questioned whether college was a sound investment. “I’ve only seen people say it’s overvalued for what you’re getting.”
Assessing that, however, is tricky too. Colleges and universities, like coats, come in many cuts, sizes, colors, and trims—all at an array of price points. Any serious discussion has to account for higher education’s breadth. And the “bubble” coverage seems to skew toward the most expensive and selective institutions in the country, with a lesser focus on low-income students at relatively expensive for-profit colleges. The vast majority is often ignored.
Yet memes are catchy because they’re simple. They tap into our deepest fears: Will I be a success? Am I making the right choices? What will happen to my children? And both fears and distrust are running high these days.
“There are just all sorts of questions about why everything costs so much,” says David Hawkins, director of public policy and research at the National Association for College Admission Counseling. “Higher education is nothing but a mirror of what we’re experiencing in the economy as a whole.”
And before people go looking for hard truths, they go looking for scalps. Take a recent issue of The New Yorker. On the cover, three well-dressed gents chortle in a lifeboat, sipping bubbly and smoking cigars. Behind them, the Titanic, the red line of the stock market, and our dreams sink into the depths.
The three men aren’t labeled, but it is easy enough to imagine them being a banker, a politician, and a university president. The idea that college leaders are overpaid plutocrats building bureaucracies and generally feathering their nests precedes our latest economic woes. Sen. Charles Grassley, then the senior Republican on the Senate Finance Committee, began eyeing flush university endowments as the stock market neared its peak in 2007. What exactly were the wealthiest institutions doing with all that tax-free money?
Colleges and universities worked hard to explain the intricacies of managing an endowment for the long haul—and they assuaged Grassley’s concerns, in part, by rolling out generous new financial-aid packages for students. Then the market crashed and fat endowments became a less pressing issue. But Grassley’s notions never quite abated.
The idea of profligate institutions carries with it simplistic notions of what drives costs: If only the president weren’t paid so much, tuition would go down. It resonates because public perceptions have been misshapen by a national media now focused on cultivating clicks and consumers, more than citizens. Our attention spans are squeezed. And in a sound bite culture, we find ourselves looking at that New Yorker cover and simply rooting for the lifeboat to tip.
The question for higher education, of course: Is it really in that boat for good?
History Repeats
The good and the bad news: higher education’s been here before.
In the mid-1980s, President Reagan’s education secretary wrote a scathing editorial for The New York Times, deriding “Our Greedy Colleges.”
“Many of our colleges are at it again,” wrote William J. Bennett. “As they have done annually for the past six years, they have begun to unveil tuition increases that far outstrip the inflation rate.” He went on to question not only the colleges’ efficiency, but the quality of education students get for all that money.

Newsweek beat him to the punch by about a decade, with a 1976 cover story asking, “Who Needs College?” The piece, which ran to 4,996 words, was full of gloom and doom: college prices were soaring, straining “all but the fattest family budgets,” the curriculum was in disarray, students were graduating without the requisite skills for the job market, and recession had winnowed the number of jobs for the college educated.
“For the first time since the Great Depression, numerous graduates today are standing in unemployment lines beside less-educated Americans or taking jobs for which they are conspicuously overqualified. One recent study suggests that as much as 27 percent of the nation’s work force may now be made up of people who are ‘overeducated’ for the jobs they hold.”
It could have been lifted verbatim from today’s Newsweek, 35 years later. Of course, the struggling youth of the 1970s, along with their slightly older compatriots, went on to remake the world of work and usher in the greatest prosperity the planet had ever seen. Along the way, they birthed the ideas of a meritocracy and a flat world. And the college-educated among them fared much, much better than their less-educated peers. That’s largely held true, even as the globalized world has shown its dark side.

It’s a comforting reminder that in times of pain, it’s often impossibly hard to take the long view. But, nonetheless, there is a long view.
True too, though, past performance is no guarantee of future returns. No doubt college, in general, still pays dividends, says Jane Wellman, executive director of the Delta Project on Postsecondary Education Costs, Productivity, and Accountability. “But there’s less more than there used to be,” she says. “People in higher education are so ready to think this is just a perception problem.”
An analysis done by her group found that as overall spending increased between 2002 and 2008, the share going to education and related expenses slipped. And although students still weren’t picking up the majority of the tab, they were being asked to shoulder a greater share. The one exception was private research universities—highlighting, Wellman says, a growing gap between “haves” and “have nots.” And one can only imagine that gap has grown as states have slashed funding for higher education.
Mixed Messages
It’s hard, however, to be open about strains in the system when conversations so quickly turn to name calling, when people are describing your industry as a “rip off” and “a scam.”

This spring, for example, The Chronicle of Higher Education ran an analysis of changes in the percentage of Pell Grant students at the country’s 50 wealthiest colleges. A number of colleges had made significant gains in enrolling those low-income students, but on the whole, they hadn’t made much progress.
Some institutions took issue with the numbers the Chronicle used, but the reporters were careful to lay out the limitations of the data. Within the span of a 24-hour news cycle, however, most of that care was undone. Colleges reacted understandably to the barrage. And suddenly, an important issue was being drowned in hyperbole. A typical headline: “The Nation’s 15 Richest and Stingiest Colleges.”
Whatever you might say about the colleges on that list, stingy they are not. In fact, a major point of the story was that colleges weren’t making large gains, despite rolling out the most generous aid packages in the country. Factors other than cost—including students’ perceptions and academic preparation—were at play.
More than just missing the point, though, the coverage was illuminating. It was a reminder that when people talk about affordability, what they often really mean is fairness.
That’s certainly evident in Thiel’s arguments. In the Tech Crunch article that sent the bubble talk into hyperdrive, Thiel aired his doubts about college prices and the crushing debts that students can’t effectively leverage in the marketplace. Colleges sell false hopes, he tells the writer, “and it’s how schools rationalize a quarter of a million dollars in debt.”
But his decision to use Harvard as the exemplar seems like a ruse, or at least a misunderstanding. Although its students can choose to borrow, Harvard doesn’t include loans in its aid packages. Two-thirds of its 2011 graduates had no debt at all. And the average debt of those who had any was less than $12,000.
No, Thiel’s issue with Harvard, or his alma mater Stanford, seems less about price and more about elitism. “He thinks it’s fundamentally wrong for a society to pin people’s best hope for a better life on something that is by definition exclusionary,” Tech Crunch writes. “‘If Harvard were really the best education, if it makes that much of a difference, why not franchise it so more people can attend?’”

How much would attending a Harvard franchise cost? Our best attempt at it—state flagship universities, those “public Ivies”—find themselves looking more like private colleges every day. Funding has withered in virtually every state, and more flagships are following the lead of the University of Michigan and the University of Virginia, which have severed many of their ties with the state legislature.
Harvard, of course, isn’t Hardees. And the confounding thing about any bubble argument is how easily the credentialing, experiential, and educational functions of colleges are convoluted.
A number of Thiel’s drop outs already had several years of college under their belts. He wasn’t taking their education from them so much as replacing one credential with another: the Thiel stamp of approval. His most successful fellow to date not only has spent years studying on college campuses—he has three bachelor’s degrees to his name. Andrew Hsu enrolled at the University of Washington at the tender age of 12 and was several years into his PhD program at Stanford, before he dropped out to start Airy Labs Inc., a company that will make educational games for children.
A Wall Street Journal reporter recently asked Hsu if he would be where he was today even if he hadn’t attended college. His answer: “It’s hard to say.”
But even if the answer were an unequivocal, “yes,” it seems a silly point to make. It’s quite a different thing for a disciplined child prodigy to go his own way than it is for the average kid to bypass college.
Peter Thiel wasn’t available to talk for this article, but he must know that.
“Us” Versus “Them”
It’s all too easy to boil people and arguments down to caricatures. Take Lukianoff, the president of the Foundation for Individual Rights in Education. Is he a Libertarian and perpetual thorn in higher education’s side, who sees a PC boogeyman around every corner? Or a product of elite higher education and former ACLU intern, who waxes almost naively enthusiastic about the virtues of the intellectual life on campus?

Both, neither, somewhere in between. “I go on whatever shows ask,” Lukianoff says. “Fox and MSNBC the most often.”
Lukianoff, a first-amendment lawyer, certainly takes issue with aspects of higher education. Many of their attempts to foster civility on campuses, he says, result in ham-handed policies. He sees vast—and expensive—bureaucracies that have built up around controlling students.
But if he thinks colleges go too far, he’s also sensitive to the pressures they feel. Threat assessment teams grew out of the Virginia Tech shootings and new guidance from the Department of Education. If civility training wasn’t already a new priority after a freshman at Rutgers University committed suicide after being harassed about his sexuality, it became so once the White House weighed in on school and campus bullying. And the Office for Civil Rights just outlined much more stringent standards for hearing accusations of sexual assault.
Nobody wants tragedy or harassment on their campus. No institution wants to be fined by the education department or sued, either. “The rise of the administrative class is, in part, because the federal and state governments and case law have required colleges to get more involved in students’ lives,” Mr. Lukianoff says.
If anything, he sees himself as upholding colleges’ ideals. “I actually love higher education. I love the promise of it. I love the reading. I love the marketplace of ideas.”
And, he says, “I wouldn’t trade my experiences at Stanford for anything.” But he also thinks he’s lucky—to have gotten scholarships, to have found a field of law he loves, and to have found a job.
Individual Paths
Lukianoff uses the word luck, and that’s true enough. But when pressed, he says the people closest to him think it had something to do with his will and discipline, too. And that, as much anything, strikes to the heart of the issue.

Perhaps, at the end of the day, what higher education really has is a rhetoric bubble. It’s striking how many stories eliminate individual volition from the equation. Go to college, and you’ll be drowning in debt. College debt will prevent you from getting married, having kids, buying a house. You’ll never be able to live in New York City!

The old assumptions the stories set up, only to blithely knock down, have the same tone: If you go to college, you’ll make lots of money. Still not sure what to do with your life, go to graduate school. Want to rule the world? Go to Yale!
Colleges and universities are right to market themselves as transformative institutions—but that was always a potential, never a promise. So much of the conversation seems to ignore that education is a powerful tool—but it’s not, in and of itself, an answer.

In late 2009, I followed up with a group of 18 men and women who had taken a buyout from Ford Motor Co. and enrolled at Lorain County Community College, just outside Cleveland. Three years later, a number were still enrolled, some had dropped out, and a handful had graduated.
One of the men, a father of five, had decided that a desk job just wasn’t for him and had left the college’s construction engineering program. Michael Dempsey had researched high-end trade schools, on and off, and decided to go to Boston to study historic carpentry at the North Bennett Street School.
He spoke of his work as art: “It’s rewarding work. It’s something a little more important than putting up vinyl siding on a house.”

Dempsey hoped to start his own business. It was a risk: there are few markets for his line of work, and it takes time to build a reputation and clientele. Last I talked to him, his financial future was far from secure. But had higher education failed him?

“Our goal is not just to prepare students for their first job but for a life of fulfillment,” says Joseph Aoun, president of Northeastern University. “We help them bring together their passions and their skills.”

Such a process can be circuitous and uncertain. But Aoun, who was born in Beirut and has studied or worked in a number of higher-education systems, sees the diversity and openness of the American model as nothing but a plus. “It’s like living in a society with one product,” he says. “One product is simpler, but more is not messy, it’s richer.”
Finding “Fit”
Maybe the process of choosing from all those paths is why Americans feel so strongly about higher education. It’s not only an investment or even an educational decision. Going to college is about tastes, what we value, the image we want to project—it’s a choice that we find deeply personal. Our colleges and universities reflect who we are in a way that those in other countries don’t quite seem to.
Malcolm Gladwell, who happens to be Canadian, marveled at that particular American social phenomenon in a New Yorker piece titled “Getting In.”

“There wasn’t a sense that anything great was at stake in the choice of which college we attended,” he wrote of his experience back home. “The issue was whether we attended college, and—most important—how seriously we took the experience once we got there. I thought everyone felt this way. You can imagine my confusion, then, when I first met someone who had gone to Harvard.”
Perhaps our unusually personal relationship with higher education explains why Americans can say—and have long said—that colleges are collectively failing, while simultaneously swearing by their alma maters. In a recent survey by the Pew Research Center and The Chronicle of Higher Education, only 40 percent of Americans said colleges and universities were providing a good or excellent value for their cost. But 84 percent of those who actually went to college said they got their monies worth.
Debi Hudson, college counselor and chair of the guidance department at Saint Teresa’s Academy in Kansas City, Missouri, sees a similar dichotomy play out. In large group meetings, she says, parents will wonder aloud whether college is worth the expense. When it comes to one-on-one discussions, however, parents still see college-going as the obvious choice for their children.
“The parents understand the value,” Ms. Hudson says. “I think they’re questioning, ‘This one’s too much. You’re not going to go there. You’re not going to your first or second choice.’”

That leaves some students, she says, disappointed. But if families are paying a bit more attention to “financial fit,” it may not be such a bad thing—for students or for colleges. John Sexton, the president of New York University, has been public about his concerns that families are over-reaching.

In 2009, the university made a push to better counsel applicants about the costs of an NYU education—and instructed counselors to call certain admitted students to discuss the university’s concerns about their ability to pay. It was a bold move that had implications for the college’s bottom line. The unusual initiative was written about twice by The Chronicle of Higher Education: when it started and when it folded a year later. The university had made 1,800 calls, it told the newspaper, and not a single student had reconsidered.
The president of Southern New Hampshire University, Paul LeBlanc, found himself in a similar situation this year. On his blog, he wrote about an uncomfortable exchange he had with a mother who was struggling to even come up with the money for the required deposit.

Mr. LeBlanc wrote, compassionately but frankly, that it appeared the woman’s daughter, “Susan,” simply couldn’t afford to come to attend his university. He would be doing her no favors, he said, by waiving the deposit fee to then stick her with crushing levels of debt. Mr. LeBlanc urged her to consider starting at a community college and then transferring in.
“My family was of very modest means and when I was in high school I had my heart set on Northeastern University and was accepted, but my family could not afford it,” he wrote. “Disappointed, I attended a much more affordable state college. My wife has a similar story. Susan’s situation is not unique, but she can be successful.”
It’s a delicate dance to get that message across. But it’s a reminder that, fair or not, colleges have to meet students where they are today—not where college leaders wish they could be. It’s a reminder, too, that showing value isn’t just about messaging; it’s about helping individuals figure out what path is right for them.
At the end of the recent Stossel show, the panel took questions from the audience. A young girl stood up:
“Should I, or should I not go to college?”
“Wow, that’s a tough one,” Mr. Stossel responded.
So, perhaps everyone can agree after all that answers about college are never easy.
Elyse Ashburn is a former higher education reporter and editor. She now works as a communications specialist based in Washington, DC.