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03

THE VALUE EQUATION

Table of ContentsExecutive Summary 4

Introduction 6

Degrees of Value 8

Measuring Graduates’ Success 15

The New Career Services 20

Conclusion and Methodology 26

The Value Equation: Measuring and Communicating the Return on Investment of a College Degree is based on a survey conducted by Huron Consulting Group, Inc., was written by Jeffrey J. Selingo, contributing editor at The Chronicle of Higher Education, Inc. and is sponsored by Lynda.com. The Chronicle is fully responsible for the report’s editorial content. Copyright © 2015.

A typical bachelor’s-degree recipient earns 80 percent more than

a high school graduate during a 40-year career.

Executive SummaryAs the global economy increasingly demands a knowledge-based workforce, the value of a college degree is growing exponentially. The so-called wage premium of a college degree now is higher than ever before: A typical bachelor’s-degree recipient earns 80 percent more than a high school graduate during a 40-year career, more than $500,000 over a lifetime.

That wage premium has resulted in an enrollment surge in the past decade for American colleges and universities. The number of students on campuses has grown by more than one-third since the early 2000s, and institutions have responded with a bevy of new academic programs to serve this market hungry for new skills. The number of college majors tracked by the U.S. Department of Education has increased by some 20 percent just since 2000.

Student demand also has allowed colleges to continue increasing their tuition prices. When the recession of 2008 hit, average tuition in the U.S. consumed some 40 percent of median earnings in the United States, up from less than a quarter of income eight years earlier.

But as student debt surpassed more than $1 trillion in 2011, students and their parents started to question what they were getting in return for the high cost of a college degree. While the value of higher education remains undisputed, prospective students and their parents—armed with new tools that track the career and earnings outcomes of graduates—are beginning to cast doubt on the return on investment of certain majors and particular colleges.

05

THE VALUE EQUATION

VALUE OF DEGREE. Overall, some 40 percent of college leaders believe their institutions provide an excellent value for the money parents and students spend. Officials at public colleges are more likely than those at private institutions to say that they provide the best value for the dollar.

STUDENT OUTCOMES. About a quarter of institutions surveyed make job preparation for their graduates a “very high” priority. Private four-year colleges were more likely to report job readiness as a high priority, largely because students and parents at those institutions demand a return on their hefty tuition investments.

SKILLS FOR SUCCESS. While parents and employers often want students to graduate from college with specific skills, those who run colleges believe their job is to provide a well-rounded education that gives graduates an appreciation for the value of lifelong learning.

OUTCOMES DATA. By and large, college officials were opposed to publishing career and salary outcomes of their graduates either on their own or under government mandate. Overall, only a third of respondents said it was reasonable for the federal government to require outcomes data.

CAREER SERVICES. Close to half of the surveyed respondents reported a budget increase in career planning and placement services over the past five years. A notable 14 percent of institutions increased the budget for career services by more than 25 percent.

In response, colleges are focusing more on the outcomes of their education and are putting in place programs to better prepare their undergraduates for the job market. In an extensive survey of college leaders, conducted by The Chronicle of Higher Education in the fall of 2014, six in 10 of them reported an increase in discussions about job preparation for their graduates in just the past three years.

The survey, completed by some 800 vice presidents, deans, and directors at two-year and four-year colleges, focused on their attitudes about the value of their degrees, strategies to measure the outcomes of their graduates, and what skills higher education should provide to students. Among the highlights from the survey:

STUDENT DEBT. Survey respondents had varied answers to what should constitute “minimal debt” for graduates. Some measured debt by the amount of time it should take to pay it off. About a third of respondents used a dollar amount, and among them, a majority said that a graduate’s debt should be under $25,000. (The average graduate of the Class of 2014 left with about $33,000 in debt, according to Edvisors, a web site about planning and paying for college.)

Institutions increasingly are adding career-related

programs for undergraduates to better prepare students

for the job market and measure their success

long after graduation.

Introduction

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THE VALUE EQUATION

On a cold February night in 2013, President Obama, addressing a joint session of Congress for his State of the Union, said that “skyrocketing costs price too many young people out of a higher education, or saddle them with unsustainable debt.” The line drew applause from both sides of the political aisle.

More than any other recent president, Barack Obama had used the annual address to announce new higher-education proposals, many of which brought cheers from colleges and universities who wanted more federal dollars for student aid.

But on this night, the president was not to announce any new federal investment in higher education. Instead, he told the chamber that the next day his administration would release a new “ ‘College Scorecard’ that parents and students can use to compare schools based on a simple criteria: where you can get the most bang for your educational buck.”

Now there would be a government tool that turned college into a product to compare in the same way consumers size up cars or televisions in Consumer Reports. Already, several states were publishing public databases, collected through unemployment insurance records, that allowed residents to compare colleges and majors based on the first-year incomes of graduates.

With these new tools, college officials worried that the success of a college degree would be measured solely on the career outcomes and earning of graduates. Such measures, they said, didn’t track the value of college over a person’s lifetime nor did they determine the less-tangible benefits of a degree: better health and increased civic engagement, and the broad knowledge that higher education instills in students. While higher-education organizations had published reports outlining the economic benefits of a college degree for years, the emphasis now was on comparing specific colleges and majors rather than citing national averages.

It’s against that backdrop that college officials have attempted to redefine their approaches to measuring student outcomes after graduation. For colleges and universities, simple post-graduate surveys no longer are enough for many prospective parents and students. Institutions increasingly are adding career-related programs for undergraduates, some as early as freshman orientation, to better prepare their students for the job market and measure their success long after graduation.

This brief describes the strategies institutions are taking to improve and measure student outcomes. It is based on a survey of vice presidents, deans, and executive directors at two-year and four-year colleges; the survey explored their attitudes about the value of higher education, student debt, the skills needed for today’s job market, and the role colleges should play in preparing their graduates for the workplace.

Introduction The fallout from the global financial crisis was somewhat slow to reach higher education. By the time the housing market crashed in the fall of 2008, colleges had already welcomed their freshman class for the academic year. The following year, many colleges were forced to either raise their discount rates or lower their expectations for enrollment. For the most part, however, college and university leaders were able to manage the crisis, assuming that the economy would turn around, as it had after past downturns.

Degrees of Value Every year, the College Board publishes Education Pays, a report that documents the ways “in which both individuals and society as a whole benefit from increased levels of education.” Despite its focus on the dual role that higher education often plays in the lives of individuals, the College Board report largely is dominated by the economic returns from higher education.

Nearly 80 percent of survey respondents described the value

their institutions provide to students

for the cost they pay as a “very good” or

“excellent” value.

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THE VALUE EQUATION

In 2013, the College Board used the report to criticize those who question the value of higher education through anecdotal evidence of graduates working as baristas at Starbucks with tens of thousands of dollars of student debt. “On average and for most students,” the College Board wrote, “college is an excellent financial investment.”

Not surprisingly, college officials in The Chronicle survey tend to agree. When asked to describe the value their institutions provide to students for the cost they pay for their education, nearly 80 percent called it a “very good” or “excellent” value. Among the different sectors of higher education, private-college officials were least likely to call their institutions an “excellent” value, but only 6 percent of them called it a “poor” or “fair” value (see Figure 1). By comparison, in past surveys by the Pew Research Center and Time magazine, around 40 percent of Americans have described the value of college for the money spent as poor or fair.

• Poor • Fair • Good • Very Good • Excellent

FIGURE 1VALUE OF THEIR INSTITUTION’S DEGREE COMPARED TO THE AMOUNT STUDENTS SPEND

2-Year

Public 4-year

Private 4-Year

Overall

40%38%15%5%

31%47%16%4%

37%41%17%4%

40%42%18%

2%

2%

1%

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THE VALUE EQUATION

College officials also thought they were doing a good job in preparing their students for careers, although they weren’t as exuberant on this measure. Three-fifths of respondents said their institutions were doing “very well” or “extremely well,” with private four-year colleges far more likely to report success in getting students ready for employment than two-year colleges, which are often seen as workforce development engines (see Figure 2).

FIGURE 2HOW WELL INSTITUTIONS ARE PREPARING GRADUATES FOR THEIR CAREER

• Not At All Well • Not So Well • Well • Very Well • Extremely Well

10%46%31%13%

14%43%32%10%

16%57%21%5%

14%47%28%9%

2-Year

Public 4-year

Private 4-Year

Overall

2%

1%

1%

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THE VALUE EQUATION

Indeed, the role colleges should play in preparing the workforce is often a subject of intense debate these days. Higher-education officials tend to believe that institutions should provide foundational skills, the so-called ability to “learn how to learn,” and employers should follow by arming their workers with the specific skills needed to do a job. Overwhelmingly, survey respondents said that the most important outcomes for their graduates were not having a job requiring a college degree or graduating with little or no debt, but rather having an appreciation for the value of lifelong learning, being intellectually well-rounded, and having a plan to achieve a professional goal. (see Figure 3).

FIGURE 3THE MOST IMPORTANT OUTCOMES FOR COLLEGE GRADUATES

• Overall • 2-Year • Public 4-Year • Private 4-Year

Having an appreciation for the value of lifelong learning

Being intellectually well-rounded

Having a defined professional goal and a plan to achieve that goal

Having a job whose required skill set relates to their college major

Having a job whose salary will enable the graduate to pay off college debt within five years

Having a job requiring a college degree

Being actively involved in civic or volunteer activity

Having minimal or no higher education debt

49%65%

62%

63%

34%57%

56%

61%

55%57%

56%

58%

51%30%

31%

28%

31%27%

26%

21%

19%18%

18%

15%

8%17%

16%

19%

28%13%

13%

11%

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THE VALUE EQUATION

When asked the most important skills today’s college graduates need, survey respondents largely picked the foundational soft skills: communications, problem solving, and collaborating with others (see Figure 4). Only two-year colleges were likely to see their role as providing technical skills for a job.

FIGURE 4MOST IMPORTANT SKILLS NEEDED BY GRADUATES TO SUCCEED IN JOB MARKET


Written and oral communication skills

Making decisions/solving problems

Collaborating with others

Working with diverse groups of people

Adaptability/managing multiple priorities

Analytical/research skills

Technical skills associated with the job

Planning/organizational skills

Leading teams

75%84%

83%

83%

48%46%

49%

49%

53%39%

40%

35%

27%37%

35%

40%

33%27%

29%

29%

10%31%

27%

30%

32%14%

17%

15%

13%12%

12%

13%

2%3%

3%

4%

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THE VALUE EQUATION

Internships

Relevance of coursework

College major

Employment during college

Extracurricular activities

University rank and prestige

College GPA

Volunteer experience

While those with a college degree do much better in getting a job than those with just a high-school diploma, the unemployment rate for recent college graduates remains higher than their counterparts from earlier generations. As a result, parents want to know how their sons and daughters will get the experiences in college needed to snag that first job after graduation. According to the survey, the No. 1 college experience that leads to a job is an internship. Courses and majors also matter, respondents said, but not so much a student’s grade-point average or a university’s prestige (see Figure 5).

FIGURE 5EXPERIENCES IN COLLEGE THAT LEAD TO SUCCESS IN THE JOB MARKET


68%78%

77%

79%

80%62%

65%

62%

50%42%

41%

32%

33%31%

30%

28%

7%25%

23%

29%

13%20%

20%

22%

17%17%

18%

19%

22%16%

18%

19%

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THE VALUE EQUATION

College academic programs typically shadow the needs of the job market. Six in 10 respondents said that they either added or eliminated majors in the past five years based on employment forecasts for their graduates. Nearly half of those institutions axed majors in professional programs and the humanities (see Figure 6).

FIGURE 6MOST COMMONLY ELIMINATED ACADEMIC PROGRAMS BASED ON EMPLOYMENT FORECASTS

53%

47%

29%

18% 18%

Professional Degree Humanities Social Sciences Formal Sciences Natural Sciences


Measuring Graduates’ Success In an era of virtual

education, the real benefits of traditional, residential education often extend beyond the time it takes to amass 120 credits for an undergraduate degree.

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THE VALUE EQUATION

Until recently, colleges have not felt much need to help launch the careers of new graduates. Many followed the same playbook year after year— a career office, employer fairs, visits from corporate recruiters, and then, six months or so after commencement, a survey of graduates.

But with the economy stuck in neutral and college prices continuing to rise, prospective students and their parents are looking more closely at how a college will ease the transition into the working world. Colleges can’t just welcome students for orientation, wish them well at commencement, and say their work is done. In an era of virtual education, the real benefits of traditional, residential education often extend beyond the time it takes to amass 120 credits for an undergraduate degree.

More than 60 percent of respondents in The Chronicle survey described an increase in campus discussions about job preparation for students, compared to just three years ago. Private four-year colleges and community colleges reported the largest uptick in interest (see Figure 7).

FIGURE 7INCREASE IN THE NUMBER OF DISCUSSIONS ABOUT JOB PREPARATION OF GRADUATES IN THE PAST THREE YEARS

• Much less • Less • Neutral • More • Much more

2-Year

Public 4-year

Private 4-Year

Overall

1%

1%

1%

1%

1%

3%

13%53%33%

20%41%34%4%

17%49%32%

20%45%31%

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THE VALUE EQUATION

But how colleges can demonstrate these outcomes to the public remains a heavily debated topic among higher-education officials. Seven months after he announced the College Scorecard in his State of the Union address, President Obama hit the road on a two-day campus bus tour through New York and Pennsylvania where he called for a new ratings system that rewarded colleges for enrolling more students and getting them to graduation.

While the ratings system still remains under development, government officials have made it clear that they want employment outcomes a part of the bottom line for measuring college success. Higher-education officials disagree. In the survey, only 34 percent of college officials believe they should be required to publish career and salary outcomes data. And only slightly more, 42 percent, say it’s reasonable for the public to expect colleges to publish the data even if it is not a government requirement. Among the different sectors of higher education, private colleges most objected to publishing the data (see Figure 8).

FIGURE 8ATTITUDES ON PUBLISHING CAREER OUTCOMES DATA


43%

35%34%

28%

49%

42%42%

37%

Percent who believe it should be required to

publish outcomes data

Required to publish

Percent who believe it is reasonable to expect schools to

publish outcomes data

Expect to publish

18

THE VALUE EQUATION

What’s more, many colleges also are accustomed to checking in only once with graduates about their employment status: Some 38 percent of institutions survey graduates once, six months after graduation, about equal to the share who check in yearly (see Figure 9).

FIGURE 9HOW OFTEN COLLEGES SURVEY GRADUATES ABOUT EMPLOYMENT STATUS

Around every 10 years



Every year

Just once 6 months after graduation

Never2% 6%

11%

7%

36%

38%

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THE VALUE EQUATION

In open-ended responses in the survey, opponents cited several reasons for their resistance to publishing career outcomes: Colleges are not solely responsible for employment; inconsistent reporting and unfair comparisons between institutions; and they are not persuaded that salaries and employment define success. Wrote one survey respondent: “Individuals must build their networks, must embrace adaptability, and make many, many decisions professionally and personally that are beyond the influence of four to six years in college.”

Job outcomes, of course, are tied largely to graduates’ financial flexibility, whether they come from families able to support their job search in those critical first years after graduation or whether they have undergraduate debt that requires them to forgo certain opportunities. Respondents to the survey described the “minimal debt” students should have at graduation in different ways. Some used debt relative to the time needed to pay it off, while others described it relative to the cost of attending college. But many used a dollar amount, with most respondents describing an acceptable amount of student debt somewhere between $5,000 and $25,000 (see Figure 10). For comparison, the average graduate of the Class of 2014 left with about $33,000 in debt.

FIGURE 10LEVELS OF “ACCEPTABLE” DEBT

6%

1%

11%

30%31%

16%

4%

1%

$0 $1-$1,000 $1,001-$5,000 $5,001-$10,000 $10,001-$25,000 $25,001-$50,000 $50,001-$100,000 Above $100,000


The New Career ServicesIn the 1970s and 1980s, many colleges eliminated the name “placement” from their career planning offices, some out of fear that it might indicate to parents that colleges were in the business of matching students to specific jobs.

In the last five years, nearly half of colleges

have increased the budget of their career

offices with 14 percent of them boosting the

budgets by more than a quarter.

21

THE VALUE EQUATION

But beyond that name change, many career offices remained unchanged over the decades. They continued to be places in a corner of campus where students arrived in the second semester of their senior year to search through job openings, update their résumés, or practice their interviewing skills in time for a job fair.

Since the recession of 2008, however, when both the state of the economy and the value of a college degree became more important to parents and students in the college search, career offices and the services they offer are gaining more prominence on campuses.

In the past five years, nearly half of colleges have increased the budget of their career offices, according to the survey, with 14 percent of them boosting the budgets by more than a quarter (see Figure 11).

FIGURE 11CHANGES IN BUDGETS FOR CAREER SERVICES

8%

11%10%

22%

35%

12%

2%

Reduced >50 Reduced 25-50 Reduced <25 No change Increased <25 Increased 25-50 Increased >50 percent percent percent percent percent percent

22

THE VALUE EQUATION

Career counseling

Institutionally arranged internship or coop program

“Basic of business” course

Supported development of post-graduation professional plan

Assigned alumni mentoring programs

Today, more than 60 percent of colleges offer optional career counseling, internships arranged through the institution, and help for students in developing a post-graduation professional plan. Twenty percent of institutions require career counseling and another 14 percent mandate “basics of business” courses. About half of colleges offer an alumni mentoring program and another 30 percent of respondents said they wish they did (see Figure 12).

FIGURE 12TYPES OF UNDERGRADUATE CAREER PROGRAMS

• We offer this and it is required

• We offer this and it is optional

• We do not offer this, but should

• We do not offer this and should not

1%

1%

4%75%21%

6%13%64%17%

13%27%46%14%

27%65%7%

30%57% 12%

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THE VALUE EQUATION

The value of a college degree, of course, often pays off over time. As a result, many colleges increasingly are offering more of their on-campus career services to alumni. Of particular interest are academic courses offered to current students that alumni can take for professional development. In recent years, however, college graduates wanting to retool their skills have turned away from traditional colleges and universities and instead have embraced a new crop of online and in-person providers, such as Lynda.com, Coursera, edX, and General Assembly. Most college leaders remain unfamiliar with these new competitors (see Figure 13), according to the survey, and over a third of college officials said that their institutions shouldn’t provide discounted or free audits of courses to alumni (see Figure 14).

FIGURE 13COLLEGE LEADERS’ FAMILIARITY WITH NEW EDUCATION PROVIDERS

Khan Academy

Coursera

iTunes U

edX

Udacity

Lynda.com

Skillshare

Codecademy

General Assemby

Treehouse

67%

34%

58%

20%

9%

84%

48%

58%

11%

3%

24

THE VALUE EQUATION

FIGURE 14TYPES OF ALUMNI CAREER PROGRAMS

• We offer this and it is required

• We offer this and it is optional

• We do not offer this, but should

• We do not offer this and should not

Financial counseling regarding higher education debt repayment

Access to campus career placement services

Assistance with professional development (career coaching)

Short courses to enhance specific technical skills that are in demand in the workforce

Discounted or free auditing of regular university or college courses

2%

1%

2%

26%51%21%

10%78%9%

36%51% 10%

22%37% 39%

18%72%9%

3%

3%

25

THE VALUE EQUATION

It’s clear from the survey that college officials sometimes are struggling with the new demands placed on career services by students, parents, and employers. Nearly half of respondents said that the timeline for employer recruiting begins earlier in the academic year than it did five years ago (see Figure 15). “Recruiters want to secure top talent early,” one respondent wrote in the survey. College officials in the survey also said that budget constraints, poor student participation, and a lack of faculty and administrative buy-in also have hindered their ability to enhance career services and improve outcomes. “We know that students need the help and support, but they may not,” one respondent wrote in the survey. “They underestimate how competitive the process is and how early it starts.”

FIGURE 15THE HIRING TIMELINE FOR STUDENTS TODAY COMPARED TO FIVE YEARS AGO

43%53%

4%

The process begins at about the same time

The process begins earlier now

The process begins later now

Conclusion

Methodology

Ever since the recession of 2008, colleges have been under pressure from students, parents, and lawmakers to better prove their value in the face of increasing tuition prices. College leaders, however, have been pushing back against such efforts under the belief that a college degree serves multiple purposes and, as a whole, its value can’t be measured easily. They largely oppose efforts to measure the career earnings and job outcomes of their graduates, and particularly dislike government efforts to mandate such measures.

The results of The Chronicle survey demonstrate that college officials still believe in the value of a college degree despite its high price. Even as employers complain about college graduates who come to them unprepared for the job market, college leaders say their job is not to train students for a specific job, but to provide them the foundational education that’s needed to succeed in a fast-changing economy.

Even so, the survey shows that colleges have been investing more money to expand the offerings of their career services, but are struggling under the pressure of tight budgets and sometimes-apathetic students to provide the full range of programs that they desire. It’s in programs related to career services, however, that campus leaders could continue to focus their efforts and investments if they want to improve the employment outcomes of their graduates in the coming years and, ultimately, the value of their degree.

The results of The Value Equation: Measuring & Communicating the Return on Investment of a College Degree are based on responses from vice presidents, deans, and executive directors at private, not-for-profit four-year, public four-year, and public two-year institutions. Huron Consulting Group conducted the online survey for The Chronicle. Of those invited, 801 college officials completed the survey. The data collection took place in November and December 2014.

The Value Equation: Measuring and Communicating the Return on Investment of a College Degree is based on a survey conducted by Huron Consulting Group, Inc., was written by Jeffrey J. Selingo, contributing editor at The Chronicle of Higher Education, Inc. and is sponsored by Lynda.com. The Chronicle is fully responsible for the report’s editorial content. Copyright © 2015.

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