What services do we take for granted that have been around for well over 100 years, had steady growth until the early 2000’s, are funded by taxpayers AND user fees, and are being threatened by new Internet-inspired competitors? The United States Postal Service and accredited colleges.
Both enterprises have served this nation well by providing critical services the private sector was unwilling to provide. The postal service connected a far-flung nation, while U.S. colleges and universities educated millions, conducted groundbreaking research and helped the United States achieve global supremacy. For both the postal service and accredited colleges, population growth has made previously unserved markets viable and technology has dramatically reduced the cost and altered the method of service delivery. With email, texting, FedEx, UPS and Amazon taking on the postal service and internet driven “alternative credentials” from new providers and colleges’ non-degree arms threatening the degree structure of colleges and universities, taxpayers are stuck with increasingly anachronistic systems.
Since 2007, the USPS has run an annual deficit every year and, first class mail – its most profitable service – has dropped by nearly 50%. Likewise, on the whole, American colleges and universities are offering bigger and bigger tuition discounts (sometimes called merit scholarships) to more and more students even as enrollments in degree programs fall—and the return on investment of a college degree from too many programs and institutions is negative. Fewer customers paying less for the same services is a business model death spiral. And, like the postal service, taxpayers are being asked to bail out the system by forgiving student debt.
The American public has certainly caught on: Their confidence in higher education continues to erode on both the left and the right. With such broad-based unhappiness, it would seem there is room for political compromise. But Democrats and Republicans can find little in higher education to agree on. Student loan forgiveness was a non-starter in Congress, and the two parties haven’t reauthorized the Higher Education Act since 2008, in large part because reauthorization would require recognition from both parties that the economics of the higher education market have changed dramatically—and therefore the way that subsidies flow should change too.
Significant change to higher education is akin to closing military bases or overhauling entitlement programs. Everyone knows the system isn’t sustainable, yet real reform would require acknowledging inconvenient truths and making difficult decisions. Here’s what real reform could look like:
Become provider agnostic. Accredited colleges have long benefited from non-profit status, public dollars and being exclusive recipients of federal financial aid. But mobile and broadband has made it possible for anyone – a college or otherwise – to deliver education and training programs at a much lower cost for learners no matter where they live. Congress should allow Pell Grants and other forms of federal financial aid to flow to a broader set of providers, including new entrants. Better yet, all higher education funding should shift to vouchers that can be indexed by income, like we already do with Pell Grants and anti-poverty programs like SNAP. Opponents argue that the inclusion of new providers will usher in more fraud. However, with taxpayers being asked to forgive over $1 trillion in student debt, any fraud is likely to be a tiny fraction of that.
Do away with traditional time standards for degrees. There’s nothing magical about 60 credit hours (for an associate’s degree) or 120 hours (for a bachelor’s degree) other than it’s always been that way. With online education increasingly the norm, an associate’s degree could take 1.5 years and a bachelor’s degree three — or any length of time. At a time when employers are increasingly questioning the degree as a proxy for career preparation, there has never been more consensus about the need to focus on measuring skills and competency instead of just clocking seat time.
Make all academic credits count for transfer. Student mobility is the norm these days, with more than 1.2 million learners changing schools in 2022 alone, but colleges are stubbornly uninterested in awarding credit for someone else’s — usually lower-priced — course. That’s why college students lose on average more than 40% of their credits when they change schools. Governments frequently intervene in markets to force product interoperability, and transfer credits represent interoperability in higher education. Requiring all institutions receiving taxpayer subsidies to accept all earned academic credits from colleges and non-colleges alike will help students complete their college programs more quickly and for less money.
Make no mistake: education and training beyond high school is the price of admission in today’s fast-changing economy. Yet, a 2 or 4-year degree from an accredited college is no longer the only, and for many, maybe not the best, post-secondary pathway. Our federal policies should reflect this reality—but for the most part, they don’t.
Changing any incumbent and heavily subsidized industry is difficult work. But a higher education system that has produced nearly $1.8 trillion in debt (while generating little to no serious debate about the conditions that created this debt) is a broken system.
The only way to make change is to first articulate the problem, and higher education’s problem is that it pretends that population and technology haven’t changed since World War II. By admitting it now, we can begin to undertake the much needed reorganization of the system.
