The Economics of Tuition, Workforce Development, and Academic Programs

Council Insights: Council of Finance Committee Chairs

By Stephen T. Golding May 2, 2023 May 4th, 2023 Blog Post

Opinions expressed in AGB blogs are those of the authors and not necessarily those of the institutions that employ them or of AGB.

The AGB Council of Finance Committee Chairs identified the economics of tuition, workforce development, and academic programs as a topic for discussion at a recent council meeting. Their interest in this topic stemmed from the growing volume of student, parent, and industry voices questioning the value proposition of today’s higher education business model—that is, the efficacy of current academic curricular programming in support of a student’s post-graduation employability when compared to the level of tuition they are required to pay. When researching this topic for the council, an important corollary appears to be whether current tuition levels are becoming a barrier to future generations of prospective students and the “perceived” opportunity a college degree offers. For those attending the council meeting earlier this month, these questions were not new, and based on the council members’ conversations, were most likely influenced by the lens through which one was looking when trying to find the answers.

Economics of Tuition

Reviewing the literature regarding the changing attitudes toward higher education tuition charges over the last 40-plus years offers several observations that may help explain how we arrive at today’s attitudes. In her October 2022 Chronicle of Higher Education article, “The Return of College as a Common Good,” Karin Fischer noted that a 1980 U.S. Department of Education poll of parents found that more than 55 percent believed parents and students should have the “main responsibility” for covering the cost of education. The poll she explains affirmed the thinking at the time that college students, or their parents, should foot the bill, given they would reap the rewards of middle-class job security and lifetime earnings that dwarf those of high school graduates—that is, they were making a private investment with the expressed goal of raising their individual prospects.

In selecting this topic, council members and others were asking what has changed between 1980 and 2023? One explanation almost universally cited is the rapid growth in the tuition institutions charged. In 1980, student tuition accounted for only 20 percent of public higher education revenues, while today it is more than 40 percent in most states and in some it is more than 50 percent. Another is the change in state budget priorities (K-12, healthcare, corrections, tax cuts, et cetera) and funding levels in concert with evolving public policy that higher education was more of an “individual benefit” and no longer viewed as a “public good.” Gary Rhoades, PhD, a professor in the Center for the Study of Higher Education at the University of Arizona, underscores the import of this decades-long policy shift when he writes about this period: “We have been systemically disinvesting in higher education,” over the last [40 years] “precisely at the time when people who want higher education—lower-income kids, students of color, and immigrant kids—have increased.” He goes on to suggest this policy reversal has led to the prevailing attitude over time that (a) college is no longer affordable or attainable, and (b) the opportunity for economic and social mobility is no longer a realistic hope for rising generations of students.

While the actions of state governments and Rhoades’ analysis are insightful, council members focused on the growing concern that access to a quality education at an affordable price may no longer be exclusively relegated to lower-income families, students of color, and the children of immigrants, but has become a more prevalent concern for many middle-class families as well. Given this reality and the sizeable investment families are making to protect their children’s future given an acknowledgement that for many, a college degree is the price of entry into today’s workforce, they feel empowered to seek assurances that the education they are paying for will provide the required skills and training to ensure their children’s future employability.

Workforce Development and Academic Programs

The original notion that a college degree should prepare students to be “work ready” was articulated as far back as 1749 by Benjamin Franklin. Franklin recognized that the integration of theory and practice were integral to social and economic development, and this was one of his original founding principles when he established the University of Pennsylvania in 1740. His influence can be seen more than 100 years later with the passage of the Morrill Land-Grant Acts establishing this country’s Land-Grant System in the 1860s. Congressman Justin Morrill, when proposing the legislation, reasoned it would provide an “opportunity in every state for a liberal and larger education to larger numbers, not merely to those destined to sedentary professions, but to those needing higher instruction for the world’s business, for the industrial pursuits and professions of life” and provide educational opportunities that would allow a young nation to grow and prosper. In the intervening years, since the passage of the Morrill Acts, a disconnect emerged between these two objectives leading to the creation of separate institutional pathways.

Today, for numerous reasons, colleges and universities are rethinking this separation, as Peter Stokes, the managing director of Huron Consulting Group, explains in his 2015 book Higher Education and Employability: New Models for Integrating Study and Work. Stokes writes “the task of fostering students’ work readiness, developing their entrepreneurial capabilities, and guiding them down a pathway to a successful career is the de facto mission of all our colleges and universities.” To underscore his thesis, he cites several examples—including Georgia Tech’s Capstone Design Expo, which employs actual industry problems to create applied learning experiences for their students; New York University’s global campuses, which create a diverse set of learning experiences in foreign settings; and Northeastern University’s Accelerated Link to Industry through Northeastern’s Global Network providing pathways to future employment opportunities. The common elements in each of these examples cited are they mend the “artificial” divide between vocational and academic learning, they create employability ecosystems that includes everything from co-ops to academic courses, to career coaching, to job matching, to peer networks, to internships, and more. They require new types of partnerships with industry through which employers and university leaders need to step into each other’s worlds actively and purposely to strengthen the alignment between what educational institutions deliver and what employers expect and need.

While Stokes further acknowledges the liberal arts and sciences are not unaffected by the changes he is promoting, council members in their discussions pointed out that liberal arts colleges needed to better articulate and brand how they prepare students for the workforce and market their mission and purpose to support both students and employers. Liberal arts institutions needed to provide students with the ability to sell themselves to employers by helping them understand and articulate the proficiencies learned in pursuit of their degree, while simultaneously clearly delineating learning outcomes achieved in their coursework so they can be translated to prospective employers. Council members’ discussions underscored Stokes’ conclusions that this integration of vocational and academic learning should in no way be interpreted as anti-liberal arts, or anti-education-for-education’s-sake, but rather a recognition that the combination of academic study and work preparation should be seen as a both/and (rather than an either/or) proposition with the community of stakeholders coming to the realization that such an approach is integral to their institution’s value proposition in today’s higher education marketplace.

Takeaways

  1. Given current tuition levels, do you believe (a) that colleges and universities are entering into a contract with students and their families regarding expected outcomes; and (b) if one acknowledges a growing economic inequality gap in this country, do you believe states should revisit the debate between whether access to higher education is an individual benefit or a public good?
  2. In your view, can combining theory and practice in the academic curriculum help move higher education beyond some of the culture war’s public discourse currently driving the body politic?
  3. From your perspective, what are the types of partnerships higher education institutions should consider entering with industry to support the needs of their students? Are there precautions you believe should be put in place to protect the academic core?
  4. How would you like to see liberal arts colleges better articulate and brand how they market their mission and purpose to students and employers?

Stephen T. Golding is a senior consultant for AGB Consulting.

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