What will be the future of higher ed?

Published 7:15 pm Friday, May 22, 2020

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COVID-19 has disrupted almost all aspects of life, including higher education.  Colleges moved classes online during the spring semester and some observers believe that this will permanently change higher education.  I think this will create new focus on how college creates value.

Online education has existed for years.  Arguably though, the willingness of the nation’s most prestigious universities to shift online affirms the quality of online instruction.  I would caution about reading too much into any response to this unprecedented pandemic.

Higher education’s predicament becomes much greater if the 2020-21 year ends up online.  I will not try to forecast the progression of COVID-19 here, but the California State University system recently announced online classes for fall.  An online year would produce an immediate financial crisis and a longer term viability challenge.

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Universities take on considerable debt for classrooms, dorms, dining halls, and recreation centers.  Tuition may pay for classroom buildings, but room and board payments service the bonds for dorms and dining halls.  Similarly, many football schools have financed stadium improvements using revenue from long term television contracts.  Universities will almost certainly create a need for a government bailout.

The longer term issue would begin when campuses reopen.  Will students return in the new normal?  Focusing on college’s value proposition for students helps here.

Most traditional academics believe that online education is low quality, but this may simply reflect our biases.  I see student learning styles as more relevant; some students’ can learn readily online.  A parallel I think is the large state university versus a smaller college.  Some students can succeed with the anonymity of the giant lecture hall; others need a personal connection with professors and classmates.

Why employers value college degrees is also relevant and there are three competing sources here.  First and most prominent is human capital.  In this view, classes teach skills and knowledge used in jobs.  A second explanation is signaling, in which a college degree provides valuable information about a student’s talents even though course content is not used in jobs.  Finally we have legal restrictions; laws, primarily licensure, require a person hired for certain jobs to have a specified degree. Online education can most readily supply legally required degrees.  When job seekers and employers view the degree as merely checking a legal box, both will want to meet the requirement with minimal cost.

The signaling function might be the most difficult to replicate online.  Education works as a signal when only students possessing certain traits (e.g., the ability to learn challenging material quickly) earn a degree or high grades.  Credible signaling requires a level of familiarity only face-to-face interactions have traditionally afforded.

The usefulness of online education for human capital depends on the skill or knowledge.  Consider learning to play a musical instrument (something I know only from reading about).  Such instruction is usually one-on-one or in very small groups; watching a how-to video by one of the world’s leading musicians does not work well.  Music teachers have offered lessons on Zoom during the pandemic; perhaps virtual instruction will prove effective.

Higher education involves valuable experiences outside of the classroom.  While this might sound like an apology for parties and football games, for many people, college is a valued part of growing up.  People make lifelong friends and often meet their spouses.  College is about more than just book learning.

A four year party might seem unnecessary, but life is about more than mere survival.  Fine food and elegant dining is not just about efficiently ingesting calories.  Clothes for many people are fashion statements.  This is normal in a prosperous society; the quality of the journey becomes paramount, not merely getting from A to B.

The economic slump, I think, threatens higher education’s long term viability more than COVID-19.  The pandemic may trigger a depression leaving the United States and the world substantially poorer than at the start of 2020.  If so, we will be able to afford fewer luxuries, including traditional college.

Daniel Sutter is the Charles G. Koch Professor of Economics with the Manuel H. Johnson Center for Political Economy at Troy University and host of Econversations on TrojanVision.  The opinions expressed in this column are the author’s and do not necessarily reflect the views of Troy University.

About Dan Sutter

I am the Charles G. Koch Professor of Economics with the Manuel H. Johnson Center for Political Economy at Troy University.

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