Deal or No Deal

What do you do when long-held beliefs no longer turn out to be true?

This is a question many higher education institutions have been forced to ask in recent times as the economic picture remains fuzzy. For years the conventional wisdom (backed by Census data) has been that higher education was a recession-proof industry for the simple fact that those who receive a college or graduate degree are likely to earn more than those who don’t.  It was this promise of a return on their investment that kept students coming back to school.  As one industry analyst puts it, “Education pays. And more education, pays more.”

But we live in unconventional times.

While this basic fact that “education pays” holds true, these uncertain times have thrown a wrench in the machinery that has kept some colleges and universities packed with co-eds for years. The new reality is that while students do leave college and graduate school equipped with the skills to help them earn more, the jobs required for them to realize this ROI are no longer there.

Slate published an article this week that looks at the plight of some twentysomethings as they look to traverse this uncertain terrain. Not uncommoon today are students like Gordon. As the article explains:

Gordon, who is 29, has an undergraduate degree in computer engineering from Boston University, three years in IT, and an MBA and a master’s in information systems. How much more sturdy and practical can you get? But after a year and a half, he lost the job he got after graduation. He has $60,000 in student loans even though he had full scholarships for both undergrad and grad school (living expenses). That comes out to $500 a month for the next 10 years. “I would describe my current state of fear as a dull persistent thing that colors all of my life decisions,” he writes.

So what are institutions to do? How can they justify having students pay tuition when the outcome looks so uncertain?

Many institutions have come to rely on the “higher earnings” value proposition for quite some time, but they may have to start thinking of other reasons why students should invest in education. And, as thisletterfrom an angry parent shows, the challenge for private institutions may be even greater than cheaper public institutions.

The Slate article adds that Economists like David Autor of MIT (and I suspect most colleges) counter today’s doom-and-gloomers by reminding them,”When things recover, it’s going to be the highly skilled who are still in greatest demand (as has been true for the last three decades).”

Unfortunately, the short-term outlook makes this kind of pitch a tough sell for many. With budget cuts looming and students struggling to justify costs, it may be asking too much of institutions to just weather the storm. However, those that have used the “higher earning from higher learning” rationale for attracting students may need to shift course or at least modify their approach.

So, given today’s circumstances, when students ask you, “Why higher education? Why now?” are you prepared to answer?