By Glenn Harlan Reynolds
This is an excerpt from "The New School: How the Information Age Will Save American Education from Itself," published this week by Encounter Books. The author, a law professor at the University of Tennessee, is also a columnist and a nationally prominent blogger at Instapundit.
College students and prospective students will have an effect simply by becoming better informed and less willing to pay top dollar for an inferior product. Indeed they are already doing so. Ultimately, you can't run a college if you can't fill the seats with paying students, and that will be harder and harder to do for schools that don't produce visible value, particularly as college enrollments are already declining, with 2012 enrollment a half-million below 2011's. Those schools that get ahead of the curve here will prosper, while those that lag behind will not.
There will likely be at least one major effort to secure federal bailout money for the higher education sector, but the prospects for that relief seem poor. The nation is already in sad financial shape, and higher education already received a substantial slug of "stimulus" money in 2009 that was mostly used to conduct business as usual for a bit longer. Should another bailout occur, its impact is likely to be similarly short-lived. At any rate, ironically enough, the social programs that many academics have long supported now represent much more powerful political interest groups, meaning that in the competition for scarce resources, higher education is likely to find itself outnumbered and outgunned by other claims on the public fisc.
But that's okay. The higher education bubble isn't bursting because of a shortage of money. It is bursting because of a shortage of value. The solution is to improve the product, not to increase the subsidy.
A Few Scenarios
So what will happen? There are several possibilities:
1. Shrinkage. It's possible that higher education will simply contract until it's down to a level that can support itself. How much contraction will that involve? It's hard to say. In the legal academy, we're graduating about twice as many people as there are legal jobs for them. But nobody expects half the law schools in America to go out of business. College outcomes are more imprecise, and people go to college for a lot of reasons. But if the main reason people go to college is economic--and, at any rate, that's the main way college is sold, as an "investment"--then there are a lot of people graduating from college now for whom the investment is a poor one. If those people leave higher education, a lot of colleges and universities will shrink or go out of business.
2. Reconfiguration. Of course, it may be that people won't quit college but rather will just pursue it differently. After all, if you want to improve return on investment, there are two ways to go about it: You can increase the return while keeping the investment the same, or you can reduce the investment while keeping the return the same. So if all you're looking to do is recoup the basic, ticket-punching college-degree-as-diploma return for a college education, then the thing to do is to get that education as cheaply as possible. People who have this in mind might go online or to a community college and then to the cheapest state institution they can get into. (This may be better in other ways too. Note that the strivers in the Armstrong/Hamilton study did better in regional state universities.) If widely adopted, this won't cut college enrollment that much as a whole, but it will pull a lot of students out of schools that cost too much for the value of their degrees. Those schools will have to change, or die. Even if you need a college degree to get a $37,000 receptionist job, a $37,000 job with no student-loan debt is vastly preferable to a $37,000 job with $100,000 in student-loan debt.
3. Substitution. People might pursue certificates in valuable skills--computer security, welding, whatever--instead of bachelor's degrees. If a lot of people do this, the overall college population will shrink, and many institutions will suffer. On the other hand, there's another kind of substitution we might see: if what people are looking for from college isn't a degree but a social experience, perhaps they will find better ways to get a peer-bonding experience without dropping six figures and running into debt. Burning Man or Bonnaroo are a lot cheaper than college, and then there's the prospect of taking a Wanderjahr or doing foreign charity work. Compared with $125,000 in debt for a degree in women's and religious studies, that doesn't sound too bad. There are business opportunities here for the entrepreneurially minded.
4. Exit. While it's harder than it used to be to get ahead in America, even with a college degree, it's probably easier (and more comfortable) than ever to just barely get by. For some, the appeal of cheap living--with Internet porn, video games, weekend parties, and occasional hookups--will make subsistence-level jobs seem adequate, making a college degree superfluous. These people may not be getting ahead, but they won't be buried in debt, either. Nor will they stay up at night worried about the "toothache pain" of student-loan payments. That might make a resurgence of slacker culture look more appealing.
5. New models. It's possible that people will find entirely new ways to meet the needs that are currently being met by higher education, ways currently unforeseeable, or at least unforeseen. The chances of this happening are actually pretty good. There are a lot of smart people thinking about the problem, and what they come up with may be as hard to predict today as Facebook or Twitter were in 1993.
What all of the above scenarios have in common, though, is that traditional higher education won't be as flush in coming years as it has been over the past few decades. That, alas, seems like a safe prediction, whatever transpires. Something that can't go on forever, won't.