Cost of a Degree
Thanksgiving vacation provided me with some time to catch up on reading. I’ve significantly reduced magazine subscriptions due to their digital availability, but one I continue to receive in print is The Economist. In its November 2, 2019, issue, the magazine wrote about business schools in the U.S. and the market forces forcing them to change.
I am no fan of the Department of Education’s College Scorecard, primarily because it is incomplete and may be misleading for some metrics. Much of the data is derived from students using Federal Student Aid (FSA) only and some of it is from those who are first-time, full-time students using FSA loans. At APUS, most of our students are part-time, working adults not using FSA to fund their education. I first wrote about the Scorecard in 2016 and reported about others like me who criticized its incomplete data.
Despite the flaws of the Scorecard, I understand why Georgetown University’s Center on Education and the Workforce recently attempted to create a return on investment (ROI) for all colleges using this data. First, it’s the only published source that uses IRS data to match earnings with students who have attended those specific institutions and who received FSA. With access to earnings, institutional costs and debt incurred, the researchers can calculate a rudimentary ROI.
Anthony Carnevale, Ban Cheah, and Martin Van Der Werf of Georgetown University’s Center on Education and the Workforce issued a report ranking the ROI of all 4,500 colleges and universities listed in the College Scorecard.
Included among the researchers’ notable findings:
- Community college and many certificate programs have the highest ROI in the short term (10 years).
- Colleges that primarily award bachelor’s degrees have the highest ROI in the long term (40 years).
- Public colleges have higher ROI than private colleges in the short term.
- Degrees from private nonprofit colleges generally have a higher ROI in the long term than public universities.
It’s no secret that state funding per student for public higher education has dropped significantly since the 2008 recession. In response to lower tax revenues during the recession, states cut their funding to higher education (a non-mandated spending item in most state budgets) and public colleges and universities responded by increasing tuition, recruiting more out of state students, eliminating faculty and staff positions, and shuttering academic programs. Many states’ tax revenues have rebounded since then, and yet their funding for higher ed has not. According to the Center on Budget and Policy Priorities, only four states out of 49 analyzed have increased their funding per student above the 2008 funding levels.
Given that state treasuries have purportedly returned to pre-2008 levels, one might assume that states would no longer be cutting higher education funding. However, that’s not the case. At least three states recently indicated the potential for change, and not necessarily positive change. The most notable was Alaska, where Governor Mike Dunleavy cut the state’s higher education funding by more than $130 million on June 28. The cut represented 41% of the state’s annual higher education budget. After the legislature failed to override his line item veto cut, the board of regents declared financial exigency. After weeks of discussion, the Regents and Governor agreed to reduce funding by a cumulative $70 million over three years. However, this occurred after the system president proposed merging the state universities under one entity, triggering a faculty vote of no confidence and a letter from the universities’ accrediting body. The Regents and the system president rescinded that recommendation, for now.
New York isn’t the first state to offer tuition-free college, but it is the first to offer free tuition for a four-year degree. The Excelsior Scholarship program was proposed by Governor Cuomo in January and approved by the legislature last week.