towards the future of higher education economics

Towards the future of Towards the future of higher education higher education

financingfinancing

NERCOMPNERCOMP--

December 2016December 2016

Plan of the sessionPlan of the session

1.1.How we pay for higher How we pay for higher educationeducation

2.2.Current driversCurrent drivers3.3.FuturesFutures

Introductory hedgesIntroductory hedges• My perspective: future of educationMy perspective: future of education• Caveat1: some of the data is Caveat1: some of the data is

controversial or provisionalcontroversial or provisional• Caveat2: serious complexityCaveat2: serious complexity• Caveat3: narrow scope of United Caveat3: narrow scope of United

StatesStates

(Rejected titles for this (Rejected titles for this talk)talk)

"When 'middle class' is as historical a "When 'middle class' is as historical a term as ‘the Warsaw Pact’”term as ‘the Warsaw Pact’”

"Neofeudalism, and why you are making "Neofeudalism, and why you are making it happen”it happen”

"Downton Abbey, and you're not the "Downton Abbey, and you're not the lords, but some of your students are and lords, but some of your students are and will be”will be”

1.1.How we pay for How we pay for higher educationhigher education

Higher Higher education: education: costs soaringcosts soaring

• NB: health care NB: health care costs contribute to costs contribute to college costscollege costs

1.1.How we pay for higher How we pay for higher educationeducation

• Public/private/for-profit Public/private/for-profit segmentation (weakening) segmentation (weakening)

• State support (budget)State support (budget)• Federal support (loans)Federal support (loans)• Other aidOther aid• Tuition (THE BIGGIE)Tuition (THE BIGGIE)

EndowmentsEndowments

““Amherst College endowment, Amherst College endowment, valued at $2.19 billion as of June valued at $2.19 billion as of June 30, 2015”30, 2015”https://www.amherst.edu/offices/office_of_the_chief_financial_officer/investments

EndowmentsEndowments

““The value of the Investment Pool The value of the Investment Pool as of June 30, 2016 is $2.3 billion; as of June 30, 2016 is $2.3 billion; this amounts to over $1 million this amounts to over $1 million per student at the current per student at the current enrollment.”enrollment.”http://investment.williams.edu/files/2016_Investment_Report.pdf

Tuition -> financializationTuition -> financialization

““The value of the Investment Pool The value of the Investment Pool as of June 30, 2016 is $2.3 billion; as of June 30, 2016 is $2.3 billion; this amounts to over $1 million this amounts to over $1 million per student at the current per student at the current enrollment.”enrollment.”

About state supportAbout state support

What we pay for in higher What we pay for in higher educationeducation• Personnel costs leadPersonnel costs lead• Some research costsSome research costs• ““Administrative” costs Administrative” costs • Increasing student supportIncreasing student support• Some campus infrastructure Some campus infrastructure

Why we pay this wayWhy we pay this way

• Baumol’s disease (productivity Baumol’s disease (productivity not increasing)not increasing)

• Ethos of careEthos of care• Amenities arms raceAmenities arms race

Campus actionsCampus actionsAdjunctification risingAdjunctification rising

Campus actionsCampus actions

Inequality Inequality within within professoriatprofessoriate sharply e sharply increasesincreases

Campus actionsCampus actions

2. Current drivers2. Current drivers

InequalityInequality

http://www.newyorker.com/news/john-cassidy/pikettys-inequality-story-in-six-charts

The top The top takes takes offoff

Long-term trend: Long-term trend: hollowing out hollowing out the middle classthe middle class

Inflection of racismInflection of racism

Changes in job typesChanges in job types

Causes: no consensusCauses: no consensus

GlobalizationGlobalization De-industrialization, rise of serviceDe-industrialization, rise of service (related) De-unionization(related) De-unionization ““Supermanagers” (Piketty)Supermanagers” (Piketty) Winner-take-all economy (Frank + Winner-take-all economy (Frank +

Cook)Cook) Financialization (Arrighi)Financialization (Arrighi) Market-focused, or neoliberal ideologyMarket-focused, or neoliberal ideology

Causes: widespread Causes: widespread automation?automation?

Can education keep up?Can education keep up?

Goldin and Katz, Goldin and Katz, The Race Between The Race Between Technology and EducationTechnology and Education (2010): (2010):

““[I]f the supply of skills does not [I]f the supply of skills does not increase at the same pace as the increase at the same pace as the needs of technology, then groups needs of technology, then groups whose training is not sufficiently whose training is not sufficiently advanced will earn less and be advanced will earn less and be relegated to devalued lines of relegated to devalued lines of work, and inequality with respect work, and inequality with respect to labor will increase.” (305)to labor will increase.” (305)

MappinMapping class g class onto onto

campus campus typetype

DemographicsDemographics Youth population shrinkage, Youth population shrinkage,

esp. NE + midwest esp. NE + midwest Increasing nonwhite Increasing nonwhite

populationpopulation Ballooning senior Ballooning senior

population…population…

2828

2929

Demographic possibilitiesDemographic possibilities Increased state and federal Increased state and federal

funding to Medicaid, funding to Medicaid, Medicare, pensions, etc.Medicare, pensions, etc.

Smaller labor pool w/wage Smaller labor pool w/wage stagnation = falling tax stagnation = falling tax revenuerevenue

Political possibilitiesPolitical possibilities Pressure Pressure

on high on high endowmenendowments ts

Hostility to Hostility to academia?academia?

Political possibilitiesPolitical possibilities

Student Student unrest, unrest, uprisingsuprisings

State/State/federal federal reactionreaction

3. Futures3. Futures

Piketty, take 1: get used to itPiketty, take 1: get used to it

Great Compression was an anomalyGreat Compression was an anomaly

““Once constituted, capital reproduces itself Once constituted, capital reproduces itself faster than output increases. The past devours faster than output increases. The past devours the future.” (571) the future.” (571)

r>gr>g

Extrapolate into medium termExtrapolate into medium term

Faculty 80% adjunct Faculty 80% adjunct (“neofeudal” campus)(“neofeudal” campus)

Focus on rich students Focus on rich students Student debt > Student debt >

mortgagesmortgages

Extrapolate into medium termExtrapolate into medium term

F2F for the 1%F2F for the 1% Distance learning for Distance learning for

middle classmiddle class MOOCs for everyone MOOCs for everyone

elseelse

Extrapolate into medium termExtrapolate into medium term

Elite schools offer liberal arts Elite schools offer liberal arts educationeducation

Lack of visible tech = mark of Lack of visible tech = mark of statusstatus

BA= mark of service qualityBA= mark of service quality Leading majors: finance, Leading majors: finance,

human resources, poli sci, CS, human resources, poli sci, CS, engineengine

Follow 1% displays Follow 1% displays closelyclosely

Contributed to sharing Contributed to sharing economy by age 10economy by age 10

““Middle class” is as Middle class” is as historical as the Warsaw historical as the Warsaw PactPact

Extrapolate into medium termExtrapolate into medium term

Some mitigation by public Some mitigation by public servicesservices

Potential unrest stirred Potential unrest stirred and/or sapped by mediaand/or sapped by media

Populism and oligarchyPopulism and oligarchy

Take 2: Piketty Take 2: Piketty et alet al turn out to be turn out to be wrongwrong• Class mobility becomes more dynamicClass mobility becomes more dynamic• Globalization’s pressure on wages Globalization’s pressure on wages

slows downslows down• We decide family dynamics are more We decide family dynamics are more

importantimportant• Upper 1% commit to massive Upper 1% commit to massive

philanthropy increasephilanthropy increase

What is to be done?What is to be done?National actionNational action• Increased government support for Increased government support for public institutionspublic institutions

•“ “ “ “ “ “ “ “ “ “ LACs (i.e., COPLAC)LACs (i.e., COPLAC)•Change K-12 fundingChange K-12 funding• return to busingreturn to busing

What is to be done?What is to be done?On campusOn campus• Partner with K-12Partner with K-12• Increase aid based on economicsIncrease aid based on economics• Organize on adjunctsOrganize on adjuncts• Nurture public intellectualsNurture public intellectuals• Research and teach the problemResearch and teach the problem

3. Peak higher 3. Peak higher educationeducation

Academia Academia experiences experiences a serious a serious correctioncorrection

3. Peak higher 3. Peak higher educationeducation

Brian Mitchell, former president of Bucknell University Brian Mitchell, former president of Bucknell University

and Washington & Jefferson College and Washington & Jefferson College

https://academeblog.org/2016/07/27/higher-education-https://academeblog.org/2016/07/27/higher-education-must-look-inward-to- improve-financial-viability/ must-look-inward-to- improve-financial-viability/

Enrollment decline?Enrollment decline?

Spending less per familySpending less per family

Enrollment decline?Enrollment decline?

http://research.studentclearinghouse.org/

Grad programs checkedGrad programs checked

How does this impact How does this impact campuses?campuses?

Fewer, less crowded campusesFewer, less crowded campuses Very international student Very international student

bodybody Low-cost programs ($10K BA)Low-cost programs ($10K BA)

How does this impact How does this impact campuses?campuses?

Increased remedial Increased remedial programsprograms

College generally seen College generally seen as job trainingas job training

A handful of readingsA handful of readingsArchibald and Feldman, Archibald and Feldman, Why Does College Cost So MuchWhy Does College Cost So Much? ? (Oxford)(Oxford)

Cappelli, Cappelli, Will College Pay OffWill College Pay Off? (Public Affairs)? (Public Affairs)

Christensen et al, Christensen et al, Disrupting ClassDisrupting Class (McGraw-Hill) (McGraw-Hill)

DeMillo, DeMillo, Abelard To AppleAbelard To Apple (MIT) (MIT)

____, ____, Revolution in Higher EducationRevolution in Higher Education (MIT) (MIT)

Massy, Massy, Reengineering the UniversityReengineering the University (Johns Hopkins) (Johns Hopkins)

McGee, McGee, BreakpointBreakpoint (JHUP) (JHUP)

A handful of readingsA handful of readingsNACUBO.NACUBO.

Newfield, Newfield, Unmaking the Public University Unmaking the Public University (JHUP)(JHUP)

____, ____, The Great MistakeThe Great Mistake (JHUP) (JHUP)

Piketty, Piketty, Capital in the 21st CenturyCapital in the 21st Century (Harvard) (Harvard)

Stevens and Kirst, eds., Stevens and Kirst, eds., Remaking College: The Remaking College: The Changing Ecology of Higher Education Changing Ecology of Higher Education (Stanford)(Stanford)

Wildawsky et al, eds., Wildawsky et al, eds., Reinventing Higher EducationReinventing Higher Education (Harvard Education)(Harvard Education)

http://bryanalexander.org

bryan.alexander@gmail.com

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