American universities lack clients

The University of Austin, a new academic institution created by a group of donors and intellectuals unhappy with the increasingly left leaning of English-speaking academia, was unveiled this month. Many professors at existing universities, including several who are not particularly leftist, were not impressed.

This is hardly surprising, and not just for political reasons. Incumbent operators generally do not welcome new entrants to a market. And the main challenge facing US colleges and universities is economic: an increasingly robust job market now competes with them for declining numbers of young people.

College enrollments have fallen 3.2% this year after dropping 3.4% last year. Part of this concerns the pandemic, with some potential students being discouraged by the risks of college life and others unwilling to abide by the health rules that many schools impose on their students. But registrations have been declining, albeit more gradually, since 2012.

To a large extent, this is a direct consequence of the American population pyramid. There are more people between the ages of 25 and 29 than there are between 20 and 24. Cohort 15-19 is even smaller, as are cohort 10-14, cohort 5-9, etc. So any turnaround in the supply of college-aged people in the United States will be in their twenties, and even that seems unlikely, as the fertility rate in the United States has fallen rapidly in recent years.

In other words: colleges are running out of customers. They are therefore preparing for a difficult future, even without new politically motivated competition.

The real blow to higher education, however, is a vastly improved labor market for workers with minimal experience. As much of the US economy is shattered by inflationary pressures and labor shortages, with many older workers choosing to retire rather than roll the dice with COVID-19, the employment ratio -population for teenagers has reached a level not seen since 2006 Soaring wages in the restaurant industry will continue to encourage young people to choose to earn money rather than go into debt.

And in a very large number of cases, it will be the right choice. The proof that a university degree is worth the time and expense is very strong. At the same time, around 40% of people who start studying for a bachelor’s degree do not graduate within six years. Some of these students end up graduating. But many end up going into debt because of incomplete courses, having obtained very little to improve their employment prospects.

Under these circumstances, there is little tension between a belief in both the enduring value of higher education and the notion that lower enrollment rates will be beneficial. The marginal student has a very low chance of graduating, and the marginal educational institution just isn’t doing a very good job of serving their clients.

In many ways, this asymmetry is the fundamental driver of America’s higher education problem: students only benefit if they graduate, while schools benefit as long as they continue to collect tuition fees. schooling.

Most people, unfortunately, believe they can defy the odds and get their degree. And the schools themselves are strongly encouraged to encourage this belief. In 2015, Barack Obama’s administration attempted to address this problem by adding a paid employment rule to the federal student loan program.

The basic idea was simple: Schools with too many students who wouldn’t earn enough income to pay off their debts would be cut off from federally subsidized loans. Around the same time, there was a lot of interest in the idea of ​​massive open online courses, or MOOCs, which were supposed to disrupt standard educational institutions.

MOOCs haven’t really worked, at least not yet. And Obama, bowing to the political power of the higher education lobby, limited the rule to for-profit schools. They were the worst players in terms of percentage, but public and nonprofit institutions are by no means immune to these problems. Under Donald Trump’s administration, the federal government cited this bias as the reason for repealing the rule completely.

However, the combination of demographic pressure and a strong labor market can deliver what neither disruptive innovation nor top-down regulation could. Employers today are increasingly abandoning college degree requirements as they seek an affordable workforce.

Meanwhile, regardless of the shortcomings of the MOOC vision, it is still true that it has never been cheaper or more convenient for the person who is truly curious to learn something – be it the origins of the Indo languages. -European, monetary policy or how to fix a dishwasher. Yes, the internet works better for motivated students than for marginalized students, but the end result is a squeeze of higher education in both directions. Those less interested in learning for itself have better options in the job market, while those more interested can take advantage of all the glories of technology.

The dilemma of higher education could be alleviated somewhat if the federal government issued more student visas to foreigners. Their numbers have rebounded from their pandemic lows, but remain below 2019 levels (which were themselves depressed due to the Trump administration’s mistrust of immigrants and higher education). Despite its problems, American higher education is a thriving export industry with a strong global brand. Foreign-born students help the American economy, lower the cost of educating American students, and spread American soft power.

The fact remains that declining national enrollment will force colleges of all political stripes to compete more to deliver real value to students. During the first decade of this century, college administrators could count on many customers, regardless of the quality of the product. Those days are over – and the country will be better off.

Mathew Yglesias is a columnist for Bloomberg Opinion.

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