A Perfect Storm Is Heading Toward Higher Education

Colleges are facing a perfect storm that could shutter hundreds of them and leave many more wondering how to survive. Yet much of higher education’s leadership is in denial that anything is amiss.

The College Board just concluded its annual Higher Ed Colloquium of college presidents, admissions deans, and financial aid directors. I was invited to address the group about whether there is an irreconcilable gap between college costs and the stressed middle class. There is. And my message was about as popular as a hurricane forecast.

The perfect storm will be the culmination of soaring tuitions, technological disruption, and parent dissatisfaction.

Out-of-control tuition increases have been the stuff of parents’ nightmares and media headlines for years. The Bureau of Labor Statistics pegs it at a 1200% increase since 1978, far higher than health care’s 634% rise, or the Consumer Price Index’s 279% increase over the same period.

Most middle class families are ineligible for the government’s scholarship programs – Pell grants almost never go to kids whose parents earn more than $60,000. And colleges’ own financial aid programs typically don’t kick in until the family puts up the first monies known as the “Expected Family Contribution,” an amount dictated by a Congressional formula that most observers recognize as unrealistically high. For example, the EFC for a family of four earning $100,000 and with $50,000 in assets and just one child about to go off to college is expected to contribute the first $20,000 of the school costs—every year.

Exactly how education will be changed by technology—or by whom—is a constant betting game among Silicon Valley’s venture capitalists. But with an industry estimated at around $1.3 trillion annually—9% of the GDP—lots of entrepreneurs are looking to disrupt education just as their predecessors saw opportunities in music, publishing, and communications. Moreover, there are just as many innovators without a profit motive looking to change education in order to improve it and make it more accessible.

The third force in this intensifying maelstrom is parent dissatisfaction with colleges themselves. That’s not my speculation or provocation. It’s the conclusion of research on middle class parents conducted by the education site Noodle.

In December, Noodle surveyed nearly 1,000 middle-class parents—two-thirds with college bound kids and the rest with children who are currently in college or recently graduated. Unfortunately, what these parents want for their kids is not what colleges are delivering.

First, parents want their children to acquire real-world marketable skills. In fact, according to the survey, they want it even slightly more than they want their children to get a first-rate academic experience. The only other factors in the same range of importance seem obvious: a safe environment and a good fit for the child.

Money concerns also affect families’ choices about college: two-thirds say they will only consider sending their child to a school that offers a substantial financial aid package. Parents don’t want their children graduating with debt, nor do they want to incur debt themselves paying for college. And fully 55% of middle-class parents say they are seriously considering sending their kids to community colleges for two years instead. And the survey was conducted just before the President proposed making community college free.

What parents do not care about was as striking as what they do care about. It turns out that diversity – racial, cultural, and economic – is simply not very important to parents. Nor are campus speech codes, which have provided an endless array of astonishing—First Amendment defenders would say appalling—media stories. About 62% of major colleges enforce limits on what students or professors can say on campus. For example, the University of North Dakota bans student speech that “feels offensive” or “demeaning.” And the University of Central Florida suspended an accounting professor because he joked that his notoriously difficult exams were like a “killing spree.”

One other issue that is “hot” on college campuses but of no interest to parents is the anti-Israel boycott. This issue has been so vigorously debated on college campuses around the country that the issue ranked third on the Chronicle of Higher Education’s 2014 “Influence List.” But just seven percent of parents cared.

The gap between parents’ goals and colleges’ performance was pronounced. Parents’ biggest disappointment was their kids’ failure to acquire “real-world marketable skills.” Close behind was the mediocre success students have getting into a good graduate or professional school. And, significantly, parents felt that both they and their children were graduating with far too much debt. I summarized my reading of the Noodle results to the audience simply: colleges are earning a grade of about “C” on most measures.

Not surprisingly, much of the rhetoric at the Colloquium focused on why governments—federal and state—should allocate more of their budgets to higher education. Not a word was said about colleges reducing tuition or providing more financial aid from their endowments.

So what should colleges do? First, they need to recognize the inevitability of change. Change is coming, and those schools that embrace it are far more likely to survive. Second, they should start listening to the constituency that is paying the bills. Providing real job skills and job placement assistance—along with a solid education—should take priority over identifying potential micro-aggressions. And third, colleges must make a real effort to make college affordable to middle-class families.

If colleges hope to survive the inevitable changes that will roil higher education in the next few years, they cannot continue to ignore the middle class. If they do, they seriously risk being swept away.