Jon Marcus, Higher Education Editor for The Hechinger Report: The Trust Factor in Higher Ed

Van Ton-Quinlivan: Welcome to WorkforceRx with Futuro Health, where future-focused leaders in education, workforce development and healthcare explore new innovations and approaches. I’m your host Van Ton-Quinlivan, CEO of Futuro Health.

Skepticism on the value of higher education in the U.S. is deepening amongst prospective students and their parents, causing alarm amongst economists and policymakers about the implications of this trend on both the future workforce and our economy. A continuing sharp decline in college enrollments is perhaps a key proof point, but there are many other symptoms and causes which we will be exploring today with Jon Marcus, a keen observer of the higher education scene.

Jon is a veteran journalist who has written for many of the nation’s top publications and is the higher education editor for The Hechinger Report, a national nonprofit newsroom devoted solely to covering education. Thanks so much for joining us here today, Jon.

Jon Marcus: Thank you very much for having me.

Van: Absolutely. On this topic, there are many alarming statistics to choose from, but let’s start with enrollment. In a story earlier this year, you cited that the percentage of high school students heading to college right after graduation has dropped from a high of 70% in 2016 to 63% in 2020. Could you paint a fuller picture for us of what’s happening on enrollments?

Jon: Yes. So, a lot of attention has been given to the decline in enrollment during the pandemic. We’re down by about a million and a half students since COVID started. But in fact, overall, the number of students in college has declined by four million since the early 2010s. That is unprecedented, and widely overlooked until COVID happened. Even now, I think we’re sort of focused on the more recent past and not paying attention to this longer-term trend. It’s not only that the national proportion of students going right from high school into college in the successive fall has fallen, but in some states, the proportion has fallen even more sharply. In Tennessee and Indiana, it’s down by 12% points for instance.

There’s a sort of common wisdom that this is a result of the pandemic. People were demoralized by being in class virtually in high school. They thought college would be much like that, and so they chose not to go. There’s a lot of attention being paid to the fact that the labor market improved and that might have sucked students right from high school into jobs. On top of which, by the way, there’s been a long-term demographic decline in the number of 18-year-olds generally, just because of fluctuations in the birth rate. All of those things may have contributed to the decline in enrollment, actually, except for the labor market, where in fact fewer high school graduates went into the workforce before COVID, not more. That kind of contradicts that theory.

But the demographic changes are not enough to explain this drop, nor is the pandemic by itself. There are much longer-term issues at play here. Most significantly, as you mentioned in your introduction, this growing public skepticism about the value of a college education. The cost of going to college has finally caught up with us and many people have chosen to vote with their feet and not go. They just don’t see the value of it. They don’t see that it’s worth the debt.

Interestingly, the last few months of conversation about forgiving student loan debt has had the inadvertent effect of reminding all of us every single day how much people borrow to go to college. The other really kind of mind-blowing reality here that I realized as I was working on these stories, is that parents of these graduating high school students are still repaying their college loan debt. They are reluctant to subject their kids to debt of that duration, too.

Van: Two generations of debt. That’s very, very worrisome. I can see why that would affect the decisions of students to pursue the cost of higher education. Let’s dive into that a bit more. On the value of higher education, the national polls do reinforce what you’re saying, showing that one in three adults say a degree is not worth the cost. How did we get here?

Jon: There are a number of reasons that I think have contributed to this decline and this sort of public skepticism of higher education. It’s impossible to overlook the political aspect here. There have been politicians and government leaders who have been beating the drum that college is a place where students get indoctrinated. There are speech issues that have arisen. All of those things, I think, actually do have an impact.

This is something that I learned after we wrote about the huge decline in college enrollment when we began to hear from parents who very angrily were talking about — as they expressed it — the woke Marxist faculty indoctrinating their children. How an engineering or an accounting professor indoctrinates a student into Marxism, I’m not entirely sure. But that’s a widespread impression, not surprisingly, considering the sort of beating that higher education has been taking over the last few years for political reasons.

More immediately and more empirically, I think there are a couple of things that colleges and universities have done that have hurt them. One is that they insist on listing a sticker price. That is the price that you see on the website for tuition, room and board, and other costs of attendance. Almost no one pays that price. People pay, on average, 54% of that price in their first year in college. Yet, many students — including students whose parents didn’t go to college or who go to poorly resourced public high schools and don’t have college counselors that can explain this to them — don’t understand that that is not the real price of college.

Yet, colleges have stubbornly clung to this idea of listing a sticker price and then discounting it by 54%. Incidentally, it’s a terrible business model for colleges. If you were a private business and discounted your price by 54% of your principal product, you’d be out of business. That is, in fact, why colleges are closing. Nonetheless, this is how they’ve chosen to do business: charge a high price, and then make people feel good by giving them a discount or financial aid.

The second thing that colleges have done in particular to sort of propel the skepticism is that they’ve been very, very bad at connecting a major to a job. As much as faculty and some administrators like to think that people go to college to become smart, to become citizens of the world, that their job is to impart knowledge, you can’t charge what colleges and universities charge without addressing the return on the investment. What will the students get for what they’re paying?

Colleges have been really, really bad at articulating this generally. That is, they don’t connect some major that has a name of a discipline that somebody made up in their doctoral thesis before they became a faculty member…they don’t understand how that major connects to a job. It probably does connect to a job. I’m not suggesting that it doesn’t. It’s just that colleges and universities have been very bad at messaging that fact to students and prospective students. Without being able to see that connection, I think parents and their kids — and older adults, who are also an important market for colleges and universities — are not seeing it. They’re not getting it. As a result, they’re not going.

Van: Well, Jon, you’ve alluded to the woke environment in higher education, the discounting practices in tuition and also this inability to connect the majors to a job. Overall, this all ties together to a trend whereby there’s an erosion of trust in our higher education system and our institutions. What is higher education doing to respond to these trends? Have you seen any effective efforts being made to turn this around?

Jon: Not enough, but some, yes. That’s because institutions respond best to their own self-interest. With a gigantic decline in enrollment, universities have been motivated — more perhaps than in the past –to make some changes here. When you talk about connecting majors to jobs, some institutions have been doing a better job. One that comes to mind is Kenyon, which has what looks like the route map in the back of an airline magazine that connects every major to the real-world job that a particular graduate assumes. You can look on this diagram and see ‘English Major’ and follow the trajectory to ‘Financial Investment Advisor’ if that’s the case, which is much clearer, I think, to a reader.

Some other universities have done a better job, like the University of Texas, at connecting postgraduate earnings to majors. How much will you make if you major in a particular subject at a particular institution? A lot of universities claim that they provide that information, but it’s fake news. It’s alternative facts. Those numbers often have no basis in reality. They’re mid-career earnings — not immediate postgraduate earnings — or they cherry pick the best looking numbers. But a few institutions have gotten serious about it, like UT, by using census data and other data that provides really accurate assessments of where students go and how much they make after graduating.

Another thing that universities are doing increasingly this year is going to be really interesting to watch. Anyone that took economics knows that market forces would demand an adjustment in price. When the supply of customers declines, the price is often adjusted downward. We have seen a number of institutions freezing tuition or even lowering tuition, and in some cases, substantially. They’ve tried this before and there’s an interesting outcome of this. When you lower your price, consumers sometimes don’t think you’re worth the money. When one institution unilaterally lowers its price and people look at the competitors that cost more, we, for some reason in America, instantly assume that that isn’t worth it. It’ll be really interesting to see what happens there.

The other danger of this is that if colleges do lower their price, there’s the danger that they’ll significantly affect their revenues, especially in an inflationary environment such as what we’re living in right now. That’s because if you think of the things that are increasing in price the most right now, it’s energy, labor, and food. Those are the three mainstays of a residential university, especially in the north. Those are all costing these institutions more which makes it harder for them to lower the price.

In many cases, they lower the price to the average of what students are now paying anyway. That is really good for rich kids who pay more, but not so good for poor kids who pay less now and will now have to pay the average amount. There’s a potential equity impact of this as well. Whether colleges are more concerned about equity right now or just enrollment is a broader question.

There are other things being done increasingly to address the enrollment issue. One really important one is what college and university people call retention, which is the proportion of students who stay as opposed to dropping out. Right now in this country, one quarter of all the freshmen who start college quit before they come back in the sophomore year. One in four students. That is extraordinary. It’s another example, frankly, of the failure of our higher education sector to its job. In many cases, of course, those students leave because of situations that are beyond the institution’s control: a family emergency or a financial shortage. But universities have done far too little to retain them. The retention numbers had crawled up slightly since the beginning of the 2010s, and then flattened out again during the pandemic.

The cold reality is it costs a lot more money to replace a dropout than it does to keep them from leaving in the first place. We visited a number of institutions that have done a lot of things to keep people from leaving. That also sheds a light — a not particularly flattering light — on the kinds of dumb things that colleges do that force people out.

We went to a university in Florida which began to address retention because it was part of their funding formula. In Florida, they have what’s called performance funding, which means that public universities are funded on the basis of, for example, the proportion of their students who graduate, the proportion who graduate on time, the proportion who stay.

Because of their very, very low retention rates, this university was threatened with the loss of millions of dollars in state funding. They got very serious about retention. As a result, they made very small changes that had a huge impact. One of the most interesting ones to me was when a student was in the Registrar’s Office and had a financial aid problem, rather than say, ‘go talk to the Financial Aid Office,’ the registrar’s office employee would refer the student to a person in Financial Aid by name. That tiny, tiny difference in humanizing a giant bureaucracy has made a big difference in the proportion of the students who have stayed.

A number of universities are finally addressing this. In addressing it — I mean not to sound like a cynic — but in addressing it, they’re exposing how dumb they’ve been, how poorly they’ve been doing business in the past by just allowing people to slip out of their hands by sending them to an office anonymously where someone else was going to say to them, ‘I don’t know. Go to this other office’ and they get the run around. Universities could afford to do that when there was an endless supply of students. Now, there’s not. Now they’re getting serious about, actually, effectively helping students stay.

Van: That ties well back to your prior point, especially the demographic changes and the shrinking K-12 population. If that population has shrunk, then the number of bodies coming in to these colleges isn’t as numerous as it was before. Now, each student counts a lot more. That one-quarter of the freshman class statistic is shocking!

Can I probe a little bit, Jon, on this issue of costs? You talked about market forces and price adjustment. We know the vast majority of costs on campus is really the cost of salaries, right? You have faculty with tenure, and you have cost of living adjustments. How do colleges actually affect those costs elements?

Jon: That’s true that labor is a significant proportion of the price of college. That’s something colleges and universities have often said in response to questions about why college costs so much. It is also true that there are a lot of administrators. There’s been a huge increase in the number of administrators. Using federal data, we found that the number of administrators in the last twenty-five years has doubled while enrollment has actually declined.

In some cases, there are good reasons for those administrators. They work in the development office, which raises money. They work in the sustainability office, which we didn’t have twenty-five years ago. They work in Title IX. They work in mental health — mental health counselors are considered administrators by the coding that the feds use when they count administrators. I want to be very careful to say that no one has ever been able to empirically connect the increase in the number of administrators that we all sense with a specific contribution to the higher cost of college.

Nonetheless, colleges and universities also do a lot of things for their employees. People that work at colleges and universities will differ about this, I’m sure. They offer very, very nice benefits. They offer free tuition in many cases at their own institution or even at other institutions on a reciprocal basis for faculty and other staff. That’s a really nice perk. It also, I think, sort of shields people that work at universities from understanding the pain that other people go through to put their own kids through college.

Colleges are three times more likely to offer post-retirement healthcare, something that almost no one in the private sector gets in this country. Very generous pensions, very generous healthcare, very generous matching retirement contributions. Although many colleges suspended or reduced those during the pandemic, they do a lot of things like that for their employees that I think reasonable people might come to agree are expensive and contribute to the cost.

But it is true that labor is a very expensive part of this. Many colleges have also — and this is no surprise to anyone that’s gone to college lately — hired adjuncts. Adjuncts are very, very hard-working people, often professionals, who teach their subject. They don’t get paid very much. They’re not on campus very often. How that contributes to the quality of the education students get for the escalating price is something that is the subject of a lot of debate.

I think, in many cases, professional adjuncts add a lot to students by being a connection to the career field that the student might choose to enter. But there are other people who feel that the fact that they’re not available for office hours, for example, is a downside. Colleges, while charging more, are providing part-time adjuncts but the quality of their availability is in question.

This is also propelled by the pandemic when everyone went remote and universities really, really badly needed graduate and teaching assistants. The number of universities that had for a long-time resisted unionizing efforts by their graduate assistants and teaching assistants very quickly caved-in and gave them contracts just so they’d stick around and help teach courses online. That added additional expense to pay a reasonable wage to those graduate assistants and teaching assistants that also keep a lot of classes going.

There’s a lot of things on the cost side that could happen and that are only sort of sluggishly happening or that might actually reduce quality, but not a huge amount that is potentially going to make a big difference. That’s a problem because there need to be.

Van: Well, let’s talk about one interesting development you’ve reported on which is how higher ed institutions are collaborating on dual admissions in an attempt to make it easier for students to transfer from, for example, a two-year institution to a four-year program. Tell us more about that.

Jon: This is a fascinating new development and one of the solutions you were asking about earlier. Dual admission is separate from dual enrollment. Dual enrollment means that high school kids are taking college courses before they graduate. That has been a boon to students who have been able to take care of a lot of their credits before they even get to college, speeding up their eventual graduation, which is all a good thing.

Dual admission is another thing entirely. Dual admission means that you’re admitted to both a two-year and four-year institution simultaneously. Transfer is a huge problem. It wastes billions of dollars in lost credits and tuition that students who then transfer have to take again because the second institution won’t accept those credits. At a time when more students are transferring and want to transfer, we’ve made transferring extremely hard. Transferring is largely controlled by faculty, who often — understandably by human nature — don’t think the way that some other institution teaches their course is as good as the way they teach it. They don’t want to confer credit for it.

Something in the neighborhood of 80% of community college students say that they intend to finish and go on to transfer to a four-year bachelor’s degree-granting institution. Only about 14% of them actually ever do. Dual admission means that you’re admitted to the community college or to the two-year institution simultaneously with admission to a four-year institution. It’s usually public, but sometimes also private four-year institutions. Especially in states like Pennsylvania, we find this happening a lot because private institutions are very hard-pressed for students. They’re also hard-pressed for diversity, which transfer students from community colleges, as you know, can provide.

Dual admission is a promising, relatively new approach. It has made a difference in some places where it’s been tried. One area where we have some data already is Virginia, where thousands of students who started at a particular community college went on to one or another of two public universities and stayed and are moving on their way to a bachelor’s degree. That’s far more than would have done it without this. They don’t have to reapply from community college to a four-year bachelor’s degree granting institution. They’re automatically enrolled.

They often have the right to use the library, other facilities, and even join extracurricular activities at a four-year university while they’re enrolled at the two-year institution. Often, the institutions are in geographic proximity. They’re next door. They’re across town. There’s a lot of really good reasons to do this. That also makes community college students feel a part of the four-year institution where they might progress or feel less like imposters when they transfer from a community college to a four-year university because transfer understandably is a traumatic process. This eases that route. We’ll see if it makes sense over time and makes a difference.

Van: Well, Jon, I’m taking notes because one of the areas we’re working on at Futuro Health is a shortage of behavioral health workers. It’s an aftermath of this pandemic. We have such a shortage of therapists who are trained at the master’s level, which is a very, very long distance to go. How do we create accelerated programs where people can power through their bachelor’s and master’s or associate’s and bachelor’s to head towards their master’s? I’m definitely taking notes on what you’re saying.

Jon: Good. I think that there are a lot of opportunities there, and there’s a lot of policy work going on in trying to increase output of people like mental health workers, nurses at all levels, and teachers. That’s great. It would be better if there was that same level of activity and interest in getting everyone through college and to the level of education that they need for the jobs they want.

Van: Let’s talk about the jobs that they want. Are there institutions or colleges you want to call out who have been particularly good at being able to keep up with the rapid shifts in the employment market? The shelf life of skills is getting shorter and shorter, so it’s become much more difficult for workers to keep up.

Jon: Yes. In addition to doing a better job — as in the Kenyon example that I gave earlier at making clear to a consumer where that degree will lead — there’s something new and amazingly underappreciated and unreported that I’ve been writing about recently. It’s called course sharing.

Course sharing is something that, so far, is a solution for: small, largely liberal arts colleges that don’t have a national brand, that are very highly tuition-dependent, and that are very worried about their enrollment; HBCUs (Historically Black Colleges and Universities); and religiously-affiliated institutions, all of which are also very small and may not have a lot of majors.

Students are looking at a liberal arts college and wondering why they should be an English major, history major, or philosophy major. As a product of a liberal arts college, I know — as most of us do that went through that education — that those majors actually do lead to very good jobs. They impart skills that people really do need for lifelong careers. But consumers don’t think that.

This new idea of course sharing picks up on something that we all did during the pandemic which was learn online. It allows a small institution to add courses and majors actually taught by another institution somewhere else while their students stay there. They stay at the home campus and are able to remotely take a major or program. They get the advantage of a small residential education and get a major in the field that they want.

We wrote about a small liberal arts college in Michigan that was able to add computer science, cybersecurity, data analytics, and all kinds of very hot majors that students really wanted. Also, supply chain management, which is a very big, very lucrative major in Michigan. This was a small liberal arts college. You wouldn’t have expected to find supply chain management as a major at a small liberal arts college.

But through course sharing, they were able to pick up courses from other institutions that do teach these courses, and recruit students to their campus that wanted the advantages of a small college — a very robust athletics program and all of the things that are great about going to a small college — plus the major students wanted. In the last two years, they picked up a hundred students who they say would not have come had they not been able to major in these programs.

Course sharing is going to be a game changer. I expect to see it spread beyond small colleges to all kinds of colleges and universities that see it as a way of joining the sharing economy and providing courses that way and streaming them.

Van: Jon, if you start with just course sharing — which sounds like a great practice — then could you begin to bundle in, for example, industry value certificates that are offered via different platforms or, frankly, even by the employers themselves? Could you mix and match that way eventually?

Jon: Yes. Most course sharing actually is dependent on middlemen who are private, for-profit companies that supply the registration process and all of the other very complicated needs because higher education, as we know, is massively overly complicated and very hard to navigate. So, they use these middlemen to do that. There are many of them that are cropping up to provide this. They are darlings of venture capital firms and hedge fund managers who see this as a huge potential market. Some of them are very focused on industry credentials so that you can embed an industry credential in your English major.

There was actually a survey that was conducted by Kaplan, the test prep and education company. They did a survey — not just of employers but of adults in general — that if you had a choice between an English major, or someone that had a cybersecurity credential, or third, an English major that also had a cybersecurity credential, you’d hire the third one. You’d hire the person that had both English and the credentials. Yes, to your point. A lot of these course sharing arrangements are embedding industry credentials that are short of associate or bachelor’s degrees, but still add value to a graduate who’s a prospective employee.

Van: Well, I hope our listeners are listening intently to these best practices. You mentioned a little bit earlier on about the Biden administration’s student loan debt relief plan and made some commentaries about it. I was wondering if Jon Marcus were President and he were doing a debt relief plan, how would you have targeted that debt forgiveness?

Jon: Thank God that’s not true! It is clear that we have failed many students in our higher education sector. We have particularly failed them in the private for-profit sector, where there are the single largest proportion of defaults. This is empirical. It’s not opinion. I’m not disparaging them. They simply have recruited many students who have never finished and ended up with debt. Or, in some cases, institutions that are private and for-profit have closed and stranded millions of students. We, the taxpayers, have also been paying off their college loans under this administration. But not only them.

There are nonprofit and public institutions that have done just as poor a job. We talked about how one in four students drop out between freshman and sophomore year. That’s a significant failure. Many students never graduate. This is another mind-boggling statistic that — when I share it with friends who aren’t in higher education, they cannot believe — that only 43% of people that started a four-year university graduate in four years. More than half do not graduate in four years.

It’s not only the people at the dinner parties that I don’t get invited to anymore because I talk about this stuff. It’s students themselves. There’s a UCLA survey of freshmen nationwide that finds that 90% of freshmen think they’re going to graduate in four years and only 43% of them do. Only about two-thirds of them graduate even in six years. That is a gigantic failure, and yet almost nowhere in this conversation about student loan forgiveness have we addressed the failure of the higher education sector to give students what they’re paying for, for all this money.

The third failure is that they’re graduating students that don’t make enough money with their educations to justify paying for the degree. One thing I would do is hold them accountable in some way. There have been proposals over the years by politicians on both sides of the aisle. One that’s been proposed would hold all higher education institutions accountable for their students who default on their loans. It’s never passed. Colleges and universities have a significant amount of very quietly-held lobbying power and clout. Maybe that’s why. I don’t know. I guess that.

If I was in charge of the student loan forgiveness program, I would have maybe lowered the eligibility lower than a couple that makes $250,000 a year, which is arguably enough to repay your college loans. In the great scheme of things — in spite of a lot of the criticism of this proposal — 91% of the people that are eligible for this loan forgiveness make significantly less than that. It’s a bad look to say that other taxpayers should pay off the loans of a couple making a quarter of a million dollars a year.

Van: Well, you give us lots to think about. I’m going to pose you this closing question: what’s your crystal ball tell you when you look ahead over the next 10 years? Where do you think higher education will be in the U.S.?

Jon: Van, I’m going to wish I had something really happy to tell you, but it’s not going to get better. Here’s why. In 2008, we had a recession and people stopped having children. Eighteen years from 2008 is the mid-2020s when this already horrible enrollment picture will go down even more because there’ll be fewer eighteen-year-olds than there are right now.  In the mid-2020s, we’re going to see another giant over-the-cliff of enrollment that’s going to put more colleges out of business, especially in areas like the Northeast and the Midwest that are already having trouble with enrollment.

There was some hope that the birth rate would recover, but in fact during the pandemic, the rate went down again by 300,000 births in the first year. We don’t know yet about the second year. That means that eighteen years from then, rather than going back up, enrollment is going to continue going down. 300,000 fewer eighteen-year-olds is a big hit for colleges and universities. On the enrollment front, we’re not going to see much getting better.

I’d like to think that now that it’s an existential crisis, we’ll see colleges and universities finally taking steps they should have many years ago to stop hiring, stop building, stop spending, start innovating, start using technology to work smarter and to do a lot of those kinds of things to improve retention, diversity, and all of those other things.

I fear that in the process of doing that, of keeping themselves afloat, they will jettison some of their mission statements, particularly of continuing to accept low income and other underrepresented groups and first-generation students. Those are students that require a lot of financial aid in many cases and significantly more support because they come from under-resourced urban public high schools or rural high schools. That’s expensive for a college.

If they do ignore that group, that is the only growing demographic that we have, particularly Hispanics. While a few forward-looking colleges in very northern areas without a lot of Hispanic college-going, like Oregon, are hiring Spanish-speaking admissions officers for the first time, which is very smart, not everyone is recognizing this reality.

By focusing on the short-term balance sheet, I fear that they will overlook the importance of continuing to enroll a diverse student body. The pending affirmative action case in the U.S. Supreme Court might also have an impact on that. I worry that things might get worse before they get better. I wish that’s not how we were ending this conversation, but I’m hoping that we’ll see more innovation.

Van: There you go, audience members. Jon Marcus has forewarned us of higher education’s existential crisis that is to come. Let’s wrap up for today. Thank you very much, Jon, for joining us and sharing your vast, vast knowledge base, wisdom, and insights into the world of higher education.

Jon: Van, it’s so nice to be with you.

Van: Likewise. I’m Van Ton-Quinlivan with Futuro Health. Thanks for checking out this episode of WorkforceRx. I hope you will join us again as we continue to explore how to create a future-focused workforce in America.