Free College or Trump University? Both Miss the Point
By Tamara Hiler & Lanae Erickson Hatalsky
So far this election season, it seems like most of the conversation about college has been focused on this:
While these headlines have generated buzz around the rising sticker price of college and the financial jeopardy in which many for-profit schools leave their students, both miss the most fundamental question we should be asking about our higher education system: are most colleges actually making their students better off?
There is little doubt that having a college degree continues to be one of the best tickets to increased economic mobility in the United States. Americans with a bachelor’s degree have median weekly earnings that are more than $400 greater than their non-college educated peers and are expected to earn on average more than $1 million more in wages over the course of a lifetime. And nearly 65% of all jobs will require education and training beyond a high school diploma by the year 2020 — compared to a mere 28% in 1973. And demand for college-educated workers is increasing even within the same profession. Nearly two-thirds of all job postings for secretaries now require a college degree — yet only 19% of current secretaries have one.
Yet, our recent analysis of the Department of Education’s College Scorecard data reveals that a staggering number of our country’s 4-year private, non-profit institutions are failing to make good on their promise to improve the lives of students who walk through their doors. And the problem is particularly acute for the low- and moderate-income students who rely on college as their ticket to a middle-class life.
At most of our 4-year private, non-profit colleges, large numbers of students fail to graduate, many do not earn sufficient incomes years after enrollment, and far too many are unable to repay their student loans. In fact, 74% of these institutions graduate less than two-thirds of their students every year — a completion rate so low that the federal government would label them “dropout factories” if they were held to the same standards as our K-12 schools. (By contrast, this designation only applies to about 5% of high schools, which are required by federal law to create and execute plans to improve their graduation rates.)
These abysmal dropout numbers mean that many students are taking out the 100 billion dollars in federal loans we subsidize each year and are getting no degree to show for it — potentially leaving them worse off than if they had never attended school in the first place.
Shockingly, the schools that have the worst outcomes for students actually cost the most. Our analysis found that schools in the bottom quarter in terms of outcomes have a net price (the amount actually paid out of pocket) for low- and moderate-income students that is on average $3,000 more per year than schools with the highest completion, earning, and loan repayment rates.
And though higher education is supposed to be the great equalizer for students, far too often the schools that could actually increase mobility for students are the ones that are doing the least. For example, at the average 4-year private, non-profit, about 38% of the students receive Pell grants (a proxy for how many students come from families earning less than $50,000 per year). Yet most of the schools with the best outcomes have Pell populations in the teens or below. This means our country’s low- and moderate-income students are concentrated at schools that won’t deliver on the promise of equipping them with the degree and the skills they need to be successful in our 21st-century economy.
Making college free would do nothing to motivate these institutions to improve their outcomes — instead it would simply pour more money into a broken marketplace without demanding any changes in return (and actually benefit wealthier students who are more likely to pay the sticker price instead of those who really need the help). Focusing only on poor outcomes at for-profit institutions doesn’t address the deeper problem either, as it ignores the fate of nearly 90% of students each year who attend our country’s non-profit and public institutions.
That’s why we must shift our conversation to focus on how we can make sure every college that is subsidized by taxpayer dollars bears some responsibility for fulfilling its promises to students. Because cost is only half of the equation in higher education— and it means little without an examination of the value a school provides.