The first article, from The Chronicle of Higher Education, discusses the concept of “badges” that are awarded by various websites, training companies, individuals, etc. The concept is that the badge is relatively easy to earn (to keep the learner motivated and engaged) and indicates that they have achieved a certain skill level or learning competency.  At the Khan Academy, students receive a “Great Listener” badge for sitting through 30 minutes of video lectures and can earn an “Awesome Listener” badge after completing a full hour of video lectures.  In addition, visitors and users of that site can earn badges indicating “Master of Algebra” or “Challenge Patches.”  Similarly, MITx is a newly announced venture by Massachusetts Institute of Technology (MIT), slotted to be released in an experimental prototype version in the spring of 2012 and designed to recognize people who complete MIT’s online courses and successfully pass the tests and quizzes.  MIT has an arrangement with OpenStudy to offer badges to students who are helpful in course discussions.  The John D. and Catherine T. MacArthur Foundation has a $2 million grant to test the badge platform in education.  With the Foundation’s support, The Mozilla Foundation (best known for the Firefox browser) is “building an Open Badge Infrastructure to enable the interoperability and collection of badges” which will “support badges from any issuer across the Internet.” 

Both The Chronicle of Higher Education and Inside Higher Education wrote about the tenured Stanford professor who has left to form a startup, Know Labs.  Sebastian Thrun and a colleague taught an artificial intelligence MOOC (Massively Open Online Course) this summer to more than 160,000 students and he plans to commercialize that type of course through the Udacity portal owned by his startup, Know Labs. Thrun’s venture will not only offer courses developed and taught by him but also by others.  One of the first courses that Udacity will offer is “Building a Search Engine” which will be seven weeks in length and which will be taught by David Evans, Associate Professor of Computer Science at the University of Virginia.  Thrun is betting that the word (grades/recommendation) of a highly regarded professor will win over prospective employers or current employers of students taking courses.

Richard Vedder, an economist at Ohio University, wrote an article for the Chronicle’s Innovations blog entitled “Beware: Alternative Certification is Coming.”  Most of the article talks about Straighterline’s lower priced college course offerings and the announcement last week that Straighterline is offering students the opportunity to take the Educational Testing Service (ETS) iSkills test and the Council on Aid to Education’s (CAE) Collegiate Learning Assessment (CLA) test (the one made famous by New York University Professor of Sociology and Education, Richard Arum and University of Virginia Assistant Professor of Sociology, Josipa Roksa in their book, Academically Adrift: Limited Learning on College Campuses).  Vedder also discusses the Khan Academy and MIT certification offerings.  My favorite paragraph from his article relates to his discussion of the first week of beginning economics courses when professors explain the point that:  “If the price of something rises a lot, people look for substitutes.  Resources are scarce and they [people] maximize their utility by shifting away from high priced goods or services to the lower priced good or service.”

The comments sections in the online postings of these articles range the gamut from commending the idea to ridiculing it.  I happen to think that these alternatives to traditional higher education are to be expected as part of the continuing onslaught of alternatives for a service that many can either not afford or believe is overpriced.  As Christensen states in his books about innovation (specifically Disrupting Class: How Disruptive Innovation Will Change the Way the World Learns and The Innovative University: Changing the DNA of Higher Education from the Inside Out), it’s not always the disrupter that succeeds, but sometimes the incumbent who adopts the disruptive technology and deploys it successfully.

One of the issues that I see with badges is the issue of identity verification and assuring that the person who earned the badge is actually the person who did the work.  Just like the recent SAT test taking scandal on Long Island, if I have a talent at taking a certification course and there are no checks and balances in the system, I may be able to take the course/test for others using their identity.  That problem can be solved, but some solutions are more expensive than others and the expensive solutions may overweigh the cost of the badge or the alternative certification. 

As soon as employers start accepting the badges, the value equation for higher education will lower, putting additional stress on a system that is already stressed by its high prices.  If employers value the training of a superstar professor over a university, that will be another disruptive force to the sector.  The situation reminds me of the scenarios described by Nicholas Carr in his book, The Big Switch (which I wrote about in my blog in July 2008).  Carr’s premise is that the lower cost of technology switches the power from institutions with lots of capital to the individual entrepreneur who is able to “rent” powerful servers and technology from vast farms owned by Google, Microsoft, etc.  Having accreditation and a fancy campus with many faculty and staff may not overwhelm a solo professor/instructor able to convey valuable knowledge to students and to “certify” them by awarding a badge.

The fact that “badges” and other forms of alternative certifications are surfacing daily is another example of the evidence that traditional higher education is overpriced and under siege.  According to a recent Pew Research Center survey, the primary reason that students don’t attend or complete college is financial.  In fact, 57% of adults responding in the survey said that the higher education system does not provide good value for the investment and 75% said that it is not affordable.  The trend is for U.S. employers to seek workers with at least some post-secondary education.  If our colleges and universities are unable to provide employers with graduates with these credentials, it opens opportunities to corporations, organizations, or even individuals offering the alternative credentialing.  Colleges and universities should look to some of these alternatives as viable means to providing a lower cost education as well as a way to preserve or grow their existing enrollments.

Unlike Clayton Christensen who writes about innovative companies as a Professor of Business Administration at Harvard Business School (thus making his transition to writing about innovative universities less surprising), DeMillo’s background is in engineering and computer science.  His observations, however, stem from his background as a professor at a traditional “brick and mortar” school.  From his position inside the hallowed halls of academia, he notes that the institutions in the middle, those between the elite institutions (top 75) and institutions that admit everyone, are the ones that are in trouble with a value proposition squeeze coming from above (elite) as well as below (business model to serve anyone or everyone at a lower price point).  DeMillo stresses that modern universities are businesses (contrary to some of the myopic ideologues who insist that non-profit institutions don’t have a business model) and are competitive organizations run by smart people.  Similar to Christensen, DeMillo argues that the class-oriented society and culture of higher education creates a faculty-centered model that is difficult to break out of for institutions undergoing competition for enrolled students.  (For a review of Christensen’s book, Disrupting Class: How Disruptive Innovation Will Change the Way to World Learns, see my August 2008 blog article.  To see my review of Christensen’s book, The Innovative University: Changing the DNA of Higher Education from the Inside Out, see my August 2011 blog article.)

DeMillo states that in any market, the winners are those with competitive brands, price, or value.  Brand is difficult to build for all but the elite colleges and universities, price continues to increase for almost all institutions and in most cases is becoming uncompetitive, and value is a concept seldom understood by the faculty at most institutions.  Because most college presidents are promoted from the ranks of academics, they are ill-equipped to understand the importance of strategic planning and understanding competitive threats from business disruptors like creative proprietary institutions.

DeMillo states that his book is “ultimately an essay about value.”  Most of the world does not understand the traditional American business model for higher education that is faculty-centered and resource inefficient, not to mention costly.  If American universities want to “survive” (DeMillo’s choice of words) over the next generation, they must apply the following three lessons of our global economy to their operations:

1. Focus on value and deliver a degree that is priced reasonably and that is of reasonable quality.
2. Focus on costs by controlling them in ways that are unthinkable by faculty-centric institutions to include:
a. Deskilling (greater use of adjuncts)
b. Better use of physical plants
c. Better use of materials
3. Establish an individual institutional reputation versus continuing to chase the elite institutions at the top.

DeMillo takes the time to review and report on activities of proprietary or for-profit institutions that he credits for being student-centered because students provide their main source of income.  DeMillo states that enrollment growth is a good thing at a for-profit in that it increases revenues and profits and allows the institution to reinvest those profits in additional services and programs.  Traditional institutions determine their charges from a fixed cost model designed to measure the cost of hours of instruction in the classroom with little consideration for the appropriateness of the charge or the specific relevance of matching labor delivered to competitive market costs.  Online programs run by proprietary institutions price based on services consumed or delivered and unencumbered by a high fixed cost structure; because of this, they are able to provide a competitively priced product with a value recognized by the students they serve.

Institutions in the middle are subsidized by public funds, sponsored research, endowments, or church support.  Tuition fluctuations at these institutions create revenue gaps that have to be covered by increases in one or more of the relevant subsidies.  Those subsidies are shrinking.  DeMillo states that it is not clear how much disruption institutions in the middle can tolerate, but for many, resources are stretched and stressed beyond the breaking point.  DeMillo argues that all institutions in the middle have to pay attention to price sensitive customers.

DeMillo spends some time talking about non-profit and proprietary institutions that are process centered and provides examples about efficiencies that lower the production cost for those institutions.  Another topic that he spends a little time discussing is “hacking degrees.”  Hacking is a topic that continues to be discussed by many writers including Anya Kamenentz, author of DIY U: Edupunks, Edupreneurs, and the Coming Transformation of Higher Education.  It is a controversial topic for those focused on traditional education but more strategic for those focused on the capabilities of technology and the learning that the internet and employers provide many adults.  In my opinion, it is a topic that is not covered enough in this book given its potential for impact on the higher education sector.

Like any good researcher, DeMillo provides recommendations for institutions in the middle to “survive” and thrive in the 21st century.  Broadly speaking, institutions should define their value and become “architects” for new business models.  As it applies to the definition of value, institutions should forget about who is above them, focus on what differentiates them, establish their own brand, not romanticize their weaknesses, and be open.  From an architecture perspective, institutions should balance faculty-centrism and student-centrism, use technology, cut costs in half, focus on their own measures of success, and adopt the New Wisconsin idea which is to be truthful to the community that you serve.  His recommendations are sound and grounded.  Because of the entrenched culture at many of the institutions in the middle, I doubt that few will be able to follow DeMillo’s recommended path to improving their performance and financial stability.  Those that are able to follow the path, should see improvements in reputation, enrollments, and be able to distinguish themselves from their competition.

Bailey points out that the public sector has frequently employed the expertise of private industry in various attempts to solve the nation’s problems.  For example, in March 2010, President Obama reached out to private-sector businesses, agreeing to provide some $150 billion in support of those businesses developing an alternative to foreign oil.  He said to the CEOs in attendance, “’Your country needs you to mount a historic effort to end, once and for all, our dependence on foreign oil…And in this difficult endeavor, in this pursuit on which I believe our future depends, our country will support you.’” 

In another example, Bailey points out that the Review of US Human Spaceflight Plans Committee established by the White House Office of Space and Technology Policy recommended that NASA seek private sector assistance in developing commercial spacecraft.  “The review argued that this would free NASA to focus its attention and investment on developing more advanced capabilities, particularly in deep-space exploration.”  In each of these examples, a significant problem or dilemma has been acknowledged and government has rightly recognized that private sector innovation has the business agility and market understanding to propose and execute a meaningful solution.

In the realm of education, however, the pattern of public-private cooperation has not held true.  Bailey states that “Instead of involving the private sector, education policymakers have actually created policy and funding barriers that skew support to non-profits and prevent for-profits from participating in programs aimed at improving teaching or learning.”  He uses the American Recovery and Reinvestment Act’s Investing in Innovation competition as an example of education policymakers “shutting out” private sector for-profit institutions.  He explains that Congress wrote that legislation in a way that effectively excludes the for-profit education sector. 

In explaining why government is hesitant to engage the private sector in the higher education debate, Bailey recounts some of the most pronounced criticisms of online education.  He explains that many fear that government support for for-profit universities could lead to “market distortion.”  On the other hand, systematically excluding the private sector can lead to its own variety of market distortions and fundamentally, “these concerns do not outweigh the benefits of having a thriving marketplace of private-sector entrepreneurs tackling social problems, particularly in education.”  Interestingly, there also seems to be resistance to government engagement of private sector education institutions because of a belief by some that one should not make a profit on education.  It is difficult, in my opinion, to justify this notion – especially in light of the fact that government engagement of private industry in the areas of clean energy, healthcare, and space exploration has set the precedent that it is okay to turn a profit while addressing some of the nation’s greatest challenges.  Additionally, no president of a non-profit college or university operates continuously on negative margins.  Prudent managers of non-profits are obligated to cover operating costs or explain why not.  The non-profit system actually encourages continued increases of expenditures during good economic times since the tax code questions a non-profit that continually generates a substantial surplus.  In order to reduce surpluses, additional projects are funded.  In addition, the taxpayer subsidies of non-profit entities are already very large.  In addition to allowing families of students to receive education tax credits, alumni and parents are allowed to deduct charitable gifts, and the institution does not pay income taxes on its endowment earnings, the receipt of charitable gifts, and generally, little to minimal property taxes and no income taxes are paid. 

Private enterprise plays an integral part in the fulfillment of national policy initiatives.  As Bailey points out, “Private industry routinely takes technologies pioneered by the government and turns them into cheap, reliable and robust industries.”  Why should online higher education be any different?  The federal government developed the initial product – education (via compulsory, free public K-12 education, and eventually the establishment of government subsidized institutions of higher education) – and placed significant value in obtaining that product.  In an era of considerable funding cuts and a bleak financial outlook for most institutions, it seems that now is the optimal time to engage the private sector for its opinion and ideas in order to reach President Obama’s stated education goals. 

Schneider and de Alva note that consumers are largely oblivious to the cost of an item, focusing almost solely on the price instead.  As long as the price seems reasonable (or, at least comparable to other similar products), the consumer is not likely to consider what the actual cost of the product is.  As the authors point out, nowhere can this be seen more clearly than in higher education.  Since the downturn of the economy in 2008, a deluge of articles have been published exploring the price of a college education (see the “Impact of the Economy on Higher Education” section of this blog) but little has been written for the American public about the true cost of a degree (that data is typically buried in academic policy and research reports that typically do not receive broad media coverage).  Schneider and de Alva have undertaken the daunting task of publishing the total cost of a bachelor’s degree for the American taxpayer.  Their findings are notable, assuming that those in a position to influence public policy and a broader national discussion read their paper.

The authors divided their sample into the following categories: public, private not-for-profit, and private for-profit institutions.  Beyond that,  they used a variation of the well-known rankings reported in Barron’s Profiles in American Colleges which provides six categories for schools ranging from “noncompetitive” (open admissions schools) to “most competitive” (highly selective, elite institutions).  Interestingly, American taxpayers subsidize the least competitive schools far less than they do the most competitive.  The irony is that the largest and fastest growing sector of the college population includes low-income and non-traditional students who are attending the lesser competitive schools.  These schools tend to offer greater flexibility for part-time students, working adults, and other “nontraditional” student populations.  To provide perspective on the dramatic differences in taxpayer subsidies, consider that “among not-for-profit institutions, the amount of taxpayer subsidies hovers between $1,000 and $2,000 per student per year…”  Among the most selective institutions in the nation, “the taxpayer subsidy jumps substantially to more than $13,000 per student per year.”

The amount of return (ROI) is important when considering any investment and can mean the difference between whether one makes an investment or not.  In the case of higher education and the taxpayers’ “investment,” the return is far lower than necessary to justify the current subsidy trends of the more highly subsidized institutions.  “For public institutions, taxpayers are investing more than $60,000 for each bachelor’s degree granted in the three less competitive categories, close to $75,000 in the highly competitive institutions, and more than $100,000 for each bachelor’s degree granted in the most competitive flagship institutions.”  In the less competitive schools, high dropout rates and longer time taken for completion of the degree decrease the taxpayers’ total ROI.  The highest dropout rates, however, tend to be found in the lesser competitive institutions – the same institutions receiving the least taxpayer subsidies (or none at all in the case of private for-profit institutions). 

According to their research, bachelor’s degrees earned from the private for-profit institutions offer the highest ROI for taxpayers since so little taxpayer money is invested into those schools.  The authors also consider the income taxes paid by those without and those with bachelor’s degrees.  Data shows that individuals holding a bachelor’s degree have lifetime earnings substantially higher than individuals without a college degree and therefore pay more in taxes, providing a benefit to the taxpayer. 

For example, because for-profit institutions receive no state appropriations but pay income taxes, there is a “net ‘profit’ to the taxpayer” for bachelor’s degrees earned at schools within this category.  Table 2 in the report shows that there is a benefit of approximately $6,100 to the taxpayer and over the degree holder’s lifetime, taxpayers will realize a net benefit of approximately $60,900 thanks to higher taxes paid by the graduate holding a bachelor’s degree from a for-profit institution.  By contrast, at a public school (non-/less competitive category), the taxpayer will subsidize approximately $6,000 per bachelor’s degree per year and ultimately see a total cost of $67,600 per bachelor’s degree.  Over the lifetime of the graduate’s career, the taxpayer will not see a positive ROI for subsidies provided for the benefit of the degree-holder.  The ultimate net cost to the taxpayer for a bachelor’s degree earned from a public school in the “non-/less competitive” category is $7,500.

In concluding, the authors make several recommendations that are worth re-iterating here.  First, they encourage stakeholders to focus efforts on addressing issues of college completion and retention.  This makes sense considering that the bulk of taxpayer costs associated with degrees earned at the lesser competitive schools (where the majority of students are earning degrees) is a result of high dropout and slow completion rates.  Additionally, the authors recommend that policymakers reverse “the current policies that result in providing the lowest levels of taxpayer support to the institutions that enroll the highest percentage of low-income, nontraditional, and minority students…”  Providing additional monetary incentives to these students can help boost the college completion and retention rates, ultimately benefiting the taxpayer as degree holders earn more and pay more in income taxes over the course of a lifetime.  The authors point out that if the Obama Administration’s “completion agenda” is met, taxpayer ROI at the lesser competitive schools where dropout rates are highest will increase.  The authors also recommend that policymakers take notice of the Lumina Foundation for Education’s Guide for State Policymakers which calls for  states to make strides in expanding and strengthening “’lower-cost, non-traditional education options,’” including online education.  Finally, the authors note that little data has been collected regarding the true and complete cost of a bachelor’s degree.  By understanding the real and total cost of the educational product as well as the price, policymakers can gain a better understanding of the true financial picture of higher education. 

The Economist presents data that may back the case that it’s not just the economy.  In examining data accumulated in their annual ranking of the top 100 MBA programs, they note that in 2010, the average cost of an MBA for the 85 schools outside of the top 15 was $81,911 while the average starting salary for the graduates of those schools was $81,178.  Five years earlier, the two year cost for the same 85 schools was $60,247 while the starting salary average was $78,442.  The attached graph shows that the disparity was greater ten years ago when the average starting salary was over $80,000 and the average cost was slightly less than $50,000.  The comparison could hardly be more dramatic; increasing costs of tuition have cut the noticeable advantage of attending a residential MBA program outside of the top 15. 

Elite schools like Harvard still have an advantage according to The Economist’s survey data.  Additionally, the article mentions a recent event at Harvard hosted by a large consulting firm where a member of that firm’s senior management noted while speaking to the faculty that the most valuable player on the Harvard Business School team was the Director of Admissions, a not so subtle reference to the elite students recruited to the school and subsequently recruited by that consulting firm.

While the purpose of the article is to compare costs of high end MBA programs, the comparison can easily be made across the entire continuum of accredited business programs.  The Association of Advance Collegiate Schools of Business (AACSB), one of the accrediting bodies for U.S. business schools, estimates that there are 13,670 institutions world wide that offer a business degree.  Being able to distinguish your program and your graduates from the masses is more than likely the only way that you can command a premier price going forward.  In more recent commentaries on the general state of global higher education, books like The Global Auction: The Broken Promises of Education, Jobs, and Incomes and The Innovative University: Changing the DNA of Higher Education from the Inside Out also stress the need for differentiation, tuition reductions, or both in order for institutions to maintain their competitive edge.  My theory is that regardless of your business program’s relative ranking, competing on price and product differentiation is the only safe way to ensure long term success.

In general, the report finds that revenues are down and spending (overall and per student) reflects that decline.  Recession-related state budget cuts meant deep cuts to educational appropriations.  As a result, schools in every sector of the industry raised tuitions (in some cases significantly) in an attempt to make up that difference.  American Recovery and Reinvestment Act (ARRA) funds may alleviate some pressure in the future but because most institutions did not begin receiving those funds until the last part of 2009, the impact of that funding source is not fully captured in the report. 

Some of the most striking statistics are related to community colleges.  In 2009 alone, community colleges were educating more than 6.5 million students, accounting for approximately one-third of all the nation’s college students.  Though shouldering a large portion of the burden of educating the nation’s college students, community colleges also saw the largest funding declines during the decade.   

The authors point out that “nationwide public appropriations for higher education never completely rebounded from the 2001 recession, and the 2008 recession is proving to be more serious and longer lasting.”  This decline in appropriations has trickled down to have a direct impact on the student.  In an attempt to make up the lost appropriations, most colleges and universities increased tuition consistently over the decade.  Unfortunately for the student, however, most such increases failed to make up the entire difference in lost appropriations and did not equate to an increase in spending per student.  On average, increases in tuition revenues made up for only about half of lost appropriations except for at public community colleges where tuition increases accounted for less than half of the difference. 

The findings outlined in Trends in College Spending are particularly salient in the current economic environment.  As the report’s authors note, when compared to the 2001 recession, “…the 2008 recession is proving to be more serious and longer lasting.”  Even though the recession was identified as “over” in mid-2009, the economy has clearly not rebounded and unemployment remains significant (9.1% as of last month).  According to Mark Kantrowitz, publisher of FinAid.org, “the average increase in annual college enrollment during a recession is 567,400 (4.5% of total college enrollment), compared with 150,800 (1.2% of total college enrollment) between recessions.”  Between 2008 and 2009, as reported in the Trends in College Spending report, enrollments in US colleges and universities increased by more than 860,000 students, “nearly a 5 percent increase since 2008 and the single largest one-year increase since the mid-1970s.” 

One of the only positive trends found in the data is related to educational productivity.  In 2002, colleges and universities began providing data on undergraduate credit hours per degree.  The analysis done for the Delta Cost Project report show that colleges and universities are using credits earned more effectively, reducing total credits to be taken to earn a degree.  The authors note that more effective use of credit hours earned has “translat[ed] into a ‘savings’ of nearly a half a semester’s worth of credits.”  This is a very positive finding especially when one considers the increase in tuition rates across the board and decrease in spending per student. 

As the authors point out, the ramifications of the “Great Recession” of 2008 are still being felt and will continue to reverberate through the industry for at least the next several years.  President Obama, however, has stated that it is his hope and intention that America regains its standing as number one in the world for number of college graduates.  In considering the policy implications of the study’s findings, the authors note that even with the improvements in instructional efficiency, much more needs to be done if the nation is to achieve the President’s goals.  The report notes that reaching such an ambitious goal (the United States currently ranks 12th in the world), “will require improvements in educational performance at every level of the educational pipeline, from high school graduation to college completion, averaging 4 percent per year.  The gains in degree/certificate completion reported here are close to 1 percent per year, and by themselves are not enough to meet the attainment goals…” 

A 2006 report from the Commission of the European Communities titled “Delivering on the Modernisation Agenda for Universities: Education, Research, and Innovation,” noted that the “modernization of Europe’s universities, involving their interlinked roles of education, research and innovation” is a “core condition” for the success of the Lisbon Agenda.  In that same year, the Spring European Council agreed upon the establishment of the European Institute of Innovation & Technology (EIT) which would “contribute to improving Europe’s capacity for scientific education, research and innovation, while providing an innovative model to inspire and drive change in existing universities, in particular by encouraging multi-disciplinarity and developing the strong partnerships with business that will ensure its relevance.”  Additionally, the Commission called on member nations to create national systems that allowed for geographic mobility of degrees between various EU member states, greater autonomy with strengthened accountability for universities, incentives for partnerships between universities and the business community, and an increased “employability” of graduates. 

To this end, EU member nations set forth their own individual agendas geared to meet the goals of the Lisbon Agenda, although few developed comprehensive national strategies in a timely manner.  In 2005, for example, Ireland introduced its “National Reform Programme” which called on the government to double R&D investments, increase participation in higher education by currently underrepresented groups, and decrease the number of students who prematurely leave their educations.  Spain committed significant funding to “growth and employment priorities” including building up access to higher education as a means to fulfilling the goals associated with the Lisbon Agenda.  In France, the government used the Lisbon Agenda as justification for educational reforms that increased spending on science and research and development by 3 percent.  After joining the EU in 2004, Slovenia attempted to catch up with its colleagues in regards to the Lisbon Agenda.  By June 2005, the government of Slovenia published its “Development Strategy” which included some “interventions in the field of higher education and research.” 

Today, more than 11 years since the signing of the Lisbon Agenda, it is clear that these efforts were not enough.  Many heads of state of EU nations have admitted the failure of the Lisbon Agenda.  In the summer of 2009, Swedish Prime Minister Frederik Reinfeldt wrote in an article published in the Swedish daily paper, Dagens Nyheter, that “even if progress has been made it must be said that the Lisbon Agenda, with only a year remaining before it is to be evaluated, has been a failure.”  Many decry the nonbinding nature of the Lisbon Agenda as one of its greatest failures.  Despite its shortcomings, many EU heads of state have called for the program to be re-launched.  Spanish Prime Minister, Jose Luis Rodriguez Zapatero, has encouraged member states to analyze and understand the failures of the Lisbon Agenda when moving forward with another ten-year program with similar goals.

Recent news stories from around EU member nations, however, leave many questioning how much attention heads of state will give to Prime Minister Zapatero’s advice.  Nearly every EU nation is facing a financial crisis similar to that of the United States and like their counterparts in the US, publicly funded European universities are suffering.  In Latvia, for example, significant cuts to the nation’s education budgets have left many students uncertain about their academic futures.  Each of the nation’s 34 universities is facing deep budget cuts with one estimate noting a “threatened 50 percent cutback to the planned higher education budget…”  Universities in Italy, Ireland, Iceland, Estonia, Romania, Lithuania, the Czech Republic, Croatia, Serbia, and the Former Yugoslav Republic of Macedonia are also experiencing significant higher education budget cuts. Germany is a notable exception.  Most German universities are fully state-funded and require little to no tuition for attendance and the federal government continues to make significant investments in German higher education.

While the Germans continue to make significant investments in their higher education system, other EU member states are struggling with how to actualize the recommendations of the Lisbon Agenda.  As early as 2005, many were already realizing that the Lisbon Agenda was doomed.  European Commission President Jose Manuel Barroso of Portugal told a gathering in Brussels in early 2005 that “’The overall Lisbon goals were right, but the implementation was poor.  The lesson from the last five years is that we must refocus this agenda to deliver results.’”  Since its expiration in 2010, many have called for the revitalization of the agreement, either in its original form or in a somewhat altered form.  In the face of the “Great Recession” of 2009, very few European economies were left unscathed leading many to reiterate the importance of the ideals of the Lisbon Agenda.  As a result, the Europe 2020 Strategy has been put forth as the “new and improved” Lisbon Agenda.  With so many heads of state acknowledging the importance of education and innovation as a driver of economic development and experiencing the failures of the Lisbon Agenda, it will be interesting to see what alterations are made to the new Europe 2020 Strategy and how that program will impact the higher education systems and ultimately the economies of the EU member states.  The European higher education model is not significantly different than the U.S. higher education model.  Given the significant cuts to higher education support that we’ve seen in states like California and the resulting increases in tuition costs to students, a similar outcome of limiting access to higher education is likely at a time when neither states (U.S.) nor countries (Europe) can afford to decrease the number of their college graduates.

To see headlines regarding the financial state of international higher education, see the “International” section of the “Impact of the Economy on Higher Education” portion of my blog. 

Within only a couple months of taking office, President Obama announced his goal to increase the national college graduation rate which is woefully low (40.4 percent, according to statistics from the College Board) compared to those of other nations including Japan (53.7 percent), Russia (55.5 percent), and Canada (55.8 percent).  One of the main initiatives associated with President Obama’s plan to boost college graduation rates included a proposal to provide $12 billion in funding to US community colleges over a ten year period.  Per the President’s plan, however, these funds would be for use in improving programs, courses, and facilities; not, in other words, to assist students in paying for their degrees at these schools.  Obama also told community colleges that he would like to see them play a more active role in creating jobs while simultaneously graduating five million more students than current rates by the year 2020. 

Two years after tasking community colleges with such an ambitious goal, the unemployment rate lingers around nine percent nationwide, down slightly from when President Obama took office but still painfully high for many college graduates.  Whenever the economy tanks, college enrollments tend to rise as people return to school in hopes of earning a degree that will help them stand out in a highly competitive job market.  With state funding dwindling and colleges and universities forced to make hard economic decisions, many students are finding it difficult to even get into a classroom thanks to faculty layoffs, program cuts, and other actions taken by many schools in an attempt to balance their budgets.  Without question, so many cuts are leading to fewer scholarship opportunities across the board. Combining scholarship cuts with tuition and fee increases, the dollar amount of educational loans has grown dramatically even as other forms of consumer debt have remained static or even decreased.  According to an article in Texas’ Star-Telegram, “Total student debt was $550 billion at the end of the second quarter [of 2011]…up 25 percent from $440 billion in the third quarter of 2008…”  The Project on Student Debt reports that some two-thirds of students graduate from college with educational loans and the average amount of these loans is up substantially.

All of these factors are compelling many to question whether the cost of college is worth the value of a degree.  On the one hand, some claim that college degrees are overrated, not nearly as imperative as students are led to believe.  Richard K. Vedder, Ohio University professor of economics and founder of the Center for College Affordability and Productivity, notes that “eight of the ten job categories that will add the most employees during the next decade – including home-health aide, customer service representative, and store clerk – can be performed by someone without a college degree.”  Vedder recommends that rather than encouraging high schools across the country to prepare every student for college, they work to prepare every student for the workplace instead.

For me, the more compelling evidence is found on the side of the argument reinforcing the importance of higher education in America.  Aside from the fact that if we devalue college educations in this country, we are sure to continue to outsource our highest paying jobs to other nations, the value for the individual consumer is also consistent.  According to the Lumina Foundation’s September 2010 report titled, “A Stronger Nation through Higher Education,” “It appears that increasing attainment can actually drive economic growth – and therefore job creation.”  The US Department of Education’s National Center for Education Statistics notes that in 2009, students with only a high school diploma or equivalent could expect to make a median salary of around $33,000 while those with a bachelor’s degree could expect upwards of $51,000.  It is important, however, that colleges and universities examine their fixed cost models and evaluate alternative delivery methods capable of decreasing the costs from the current levels that are increasingly unaffordable.

As the debate continues, it is important to qualify my assertion that college is worth its cost by saying that it is equally as important that students make informed and educated decisions about which college or university they attend.  Comparing institutions can assist potential students in determining which schools offer the best values, most well-rounded programs, most successful advising services, etc.  In the long term, an individual with a college education is more likely to earn more over the course of his or her lifetime than someone with only a high school diploma or equivalent.  The nation as a whole benefits from having a highly educated citizenry.  If we discourage our young people from attending college, we will undo generations of hard work toward demonstrating that education is important while simultaneously falling behind our international competitors. 

The event was an opportunity to share ideas for promoting sustainability within higher education and within the communities in which college campuses are situated.  The audience included members of the Jefferson County Commission, representatives of the Jefferson County Planning Commission, the Mayor and other officials from Ranson, WV, the President of Shepherd University, Dr. Suzanne Shipley, and other higher ed representatives from APUS and West Virginia University (WVU), and various representatives of the building and development industry.

Rather than provide a few introductory remarks, I chose to provide the audience with a history of the acquisition, renovation, and construction of the buildings comprising APUS’ Charles Town, WV campus as well as some of the other green initiatives implemented by the Sustainability Committee since 2007 (click here to see my presentation).  I explained that our pathway to green construction occurred over time as we could see the demonstrated benefit to the community, our employees, and our energy consumption.

Our first outside speaker was Mr. Ed McMahon who is a Senior Resident Fellow at the Urban Land Institute (ULI) in Washington, DC. In that role, he oversees ULI’s worldwide research and educational efforts related to environmentally sound development policies and practices.  He is considered an expert on the topics of sustainable development, land conservation, urban design, and historic preservation.  In beginning his presentation, Mr. McMahon stated that Sustainability is “about our children.”  According to Mr. McMahon, in order to preserve the environmental well-being of our planet for the benefit of our children, a systematic behavior change is required.  He noted that “Even though the number of people per household has decreased from 3.57 to 2.62 over the last 50 years, the amount of land that each individual home consumes has increased by nearly 60 percent.”  The same trend is seen in commercial space as well.  Though the behavior change that is required to reverse this trend of consumption can be daunting, Mr. McMahon presented several positive examples of environmentally sound development.  One example was the Solara housing project in California which is equipped with solar panels on each unit, reducing energy consumption in the community by 95 percent.  Walkable neighborhoods with close public transportation have also had a significant impact on the success of projects.  Whereas city centers and towns migrated from mixed use to commercial use over the past 100 years, Mr. McMahon noted that successful developments are going back to the mixed use profile in style in the first part of the 20th century.  He also noted for the developers in the audience that top tenants are demanding green buildings and that “no one wants to be known as the last person to build a non-green building.”  Mr. McMahon’s presentation provided some thought-provoking ideas and provided some feasible options for this type of environmentally-friendlier and sustainable development.

Attendees at the Summit also had the benefit of hearing from Dr. Clement Solomon, Director of the Office of Sustainability at West Virginia University.  WVU has a comprehensive and successful sustainability program and Dr. Solomon has made tremendous strides toward incorporating sustainability into all aspects of the university, from operations to academics and from athletics to   community engagement.  Dr. Solomon discussed the various strategies that he and his team have employed to effectively engage the key stakeholders (students, faculty, staff, alumni, community leaders, etc.) involved in making any sustainability initiative successful.  During Dr. Solomon’s presentation, he highlighted the need for prioritizing efforts and encouraged the audience to identify and “pick” low-hanging fruit, the initiatives that are low-cost and relatively easy to execute.  Dr. Solomon provided some very interesting statistics about sustainability (and its execution within higher education) but the one that struck me as most relevant for higher education was that “64% of students say knowing a school’s commitment to the environment would influence their decision to attend that school.”  That is a compelling reason for more traditional, land-based institutions of higher education to pay close attention to the “triple bottom line” (“people, planet, profit”) as they move forward.

To wrap up the day, Mr. Noah Mehrkam, Founder and Partner of Arcland Property Company, presented the ways in which colleges and universities can begin the process of undertaking environmentally sound development projects.  The key points in Mr. Mehrkam’s presentation included the need to identify the key stakeholders in any sustainable development project.  For colleges and universities, “relevant stakeholders” include the obvious groups (students, faculty, staff, alumni) but also the less obvious groups including local community members, local governments, and even local businesses.  In fact, Mr. Mehrkam noted that in many communities, sustainability is driven by a highly engaged local business.  According to him, socially-conscious businesses can bring focus to “developing the urban core” of a community in order to provide for a more environmentally friendly community plan.  Mr. Mehrkam was instrumental to the development of APUS’ first green building, a 45,000-square-foot Academic Center that is currently in the LEED certification process (we have applied for LEED Gold). 

Overall, the Sustainability Summit was a great success.  The outside speakers were top-notch and spoke directly to many of the key functions of the various audience members.  During breaks and over lunch, audience members mingled and these relevant “stakeholders” were able to share ideas with one another, network, and confirm their common goal of creating a more sustainable community within Jefferson County.  I want to thank Beth Gray and the Sustainability Committee members at APUS who organized this first Summit. 

Debra W. Stewart, President of the Council of Graduate Schools, is quoted: “Several years ago, it became very clear to us that the master’s degree was moving very rapidly to become the entry degree in many professions.”  She further states that the degrees are not “generic” master’s degrees but are profession specific such as a Master’s degree in Supply Chain Management or a Master’s in Skeletal and Dental Bioarcheology.

Ms. Pappano interviews a number of individuals for their opinions as to whether or not bachelor’s degrees are being devalued or that employers are increasing qualifications.  The opinions seem to support a little of both.

The topic reminds me of an article published in the July/August 2011 issue of the Harvard Business Review.  Written by Thomas W. Malone, Robert Laubacher, and Tommy Johns, “The Big Idea: The Age of Hyper-specialization” takes the concept of credentialing one step further by stating that employers in the future will look increasingly for workers who have a very unique specialty.  Knowledge worker jobs will “atomize” into global networks of workers able to perform highly specialized tasks.  The authors provide an example of TopCoder, a software firm, that breaks up clients’ IT projects into small chunks that freelance developers compete for the best design, coding, systems integration, bug fixing, etc.  With a network of 300,000 developers world-wide, TopCoder is able to identify specialists and complete the projects for a fraction of the cost of a firm required to employ generalists and specialists.

Malone, Laubacher, and Johns further state that the ability of companies like TopCoder to increase the specialization of its workers will require that managers will have to increase their level of expertise in order to assign the work, manage the intermediaries, and verify that complex problems have been solved properly.  The authors propose that cultivating communities of specialized workers will likely be the key discipline of managers in the 21st century.

Predicting major changes in the employment base is no easy task and none of the authors of these articles attempt to quantify the impact of the trend that they are predicting.  Improving your qualifications, whether through the completion of a master’s degree or a specialized certificate, would be prudent if you can afford the time and the cost of obtaining those credentials.