Snap, Crackle and Pop: Thoughts On the College Enrollment Bubble

This week Richard Vedder, an Ohio State economist who runs the Center for College Affordability and Productivity, and his student, Christopher Denhart, ran a provocative piece in the Wall Street Journal on “How the College Bubble Will Pop.” They argued “the benefits of a degree are declining while costs rise.”

Looking at earning potential, Professor Vedder and Mr. Denhart suggest that a “key measure of the benefits of a degree is the college graduate’s earning potential and . . . their advantage over high-school graduates is deteriorating.” As a direct result of this perceived loss of value, total college enrollment has fallen by 1.5% since 2012. The result? The college bubble will pop.

Reaction was swift. Jordan Weissmann countered in The Atlantic. In his response, Mr. Weissmann looked at the same data from the National Student Clearinghouse and determined that enrollment actually grew at traditional 4-year colleges. By examining the data by category of institution, Mr. Vedder found that students are not giving up on traditional colleges but on “for-profit schools, whose business models and horrible loan records make them patently untraditional.”

The argument is an important one principally because it signifies a more important debate about the value of a college degree. In truth, to borrow from the commercial jingle made famous when Rice Krispies were poured into a bowl filled with milk, it may be more important first to listen for the snap and crackle before identifying the pop.

In the statistics battle, Mr. Weissmann is right. Declines are skewed to for-profit providers and 4-year non-profits have maintained a kind of steady state. We will need more analysis to determine the impact of 2-year transfer and foreign students to American higher education.

Deeper analysis will determine whether these institutions have added them into the enrollment mix, balanced by tuition discounting and better efforts to address demographic shifts in applicant pools, to explain the modest increases.

Further, the value the data overwhelmingly support the argument that a college degree provides substantially higher lifetime earning power. The gap discussed by Mr. Vedder may be caused as much by recessionary wage depression, declining median family income, and higher unemployment that places new graduates in a buyer’s market.

The statistics battle this week is less important for the hypothesis offered than for the deeper sense that fundamental changes must occur soon in American higher education. Those listening for the “snap” will suggest that how colleges finance education no longer works. Discount rates at four-year private approach 50 percent and a surprising number of colleges failed to meet their first-year enrollment targets this year.

Additionally, Moody’s issued a sector-wide downgrade in bond ratings. Further, the loss of traditional undergraduate 4-year markets to for-profits and community colleges indicates that something is broken that must be fixed.

And then there is the “crackle” that may be the most dominant sound in the milk-filled cereal bowl. American higher education is losing the perception battle in the media and with consumers. There’s a lot of background noise and little of it supports American higher education. Blaming social media may be accurate but it doesn’t matter in the end. Perception takes on a life of its own. You can win the intellectual battle within academia and lose the war with American families.

Training broadly educated citizens is a noble undertaking but an insufficient recessionary argument. College and universities must adapt what they teach to how students have learned as they enter the classroom, blend technology with traditional pedagogy, and differentiate their programs, teaching methods, and clinical experiences to survive in a highly competitive market.

Even more basic, however, colleges and universities must pay attention to outputs. Higher education has always been reasonably good at measuring inputs and developing process but it has almost uniformly ignored outputs. Students are broadly educated because professors teach them how to read insightfully, write, communicate, use technology, apply quantitative methods, and work in collaborative settings. These traits define a liberal arts education. They also meet workforce needs.

In making the case, American higher education must look at outputs as the first, best line of defense. Colleges and universities must develop stronger career centers, alumni linkages, and practical career pathways linked to internships and externships, whatever the major. They must set into place a social contact with students who become graduates by providing a lifelong “cradle through career” network.

In the end, the best higher education policy is seldom set by snap shot anecdotal evidence. What does matter is what’s behind the “pop.” If the enrollment bubble pops, it won’t be because Americans no longer perceive the value of a college degree. It may be because higher education refused to imagine a new future in a post-industrial economy, failing to innovate, create and imagine fast enough.

Higher education leadership — including trustees, administrators and faculty — must not risk continue to live in a world that they wish existed. The end of the recession cannot signal a return to older ways of financing, educating, and assessing how we educate globally. In the brave new world ahead, what matters most is value not measured by sticker price but by outputs that support the enterprise.

3 thoughts on “Snap, Crackle and Pop: Thoughts On the College Enrollment Bubble

  1. Insightful and engaging posting on many levels and from many angles — both in form and content.

    Some after-thoughts prompted by the post:

    — The fact that private higher education institutions are discounting their tuitions by as high as 50% speaks first of all to the fact that tuitions have been inflated in the first place. A major admissions strategy of the privates has been to over-price tuition and then provide discounts — which many if not most public institutions cannot match. Thus, these discounts, if understood in this context, may eventually lead in the direction of a more accurate assessment of the true costs of higher education.

    — Improving outputs naturally requires assessment of programs for many ends, values, and uses; however, traditionally faculty have foolishly resisted assessment, thereby permitting administrations to hijack a movement which faculty should have initiated and controlled in the first place.

    Thank you for an excellent blog posting.

  2. As a general rule, you can dismiss any higher-ed commentary in which the author:

    1. Uses the highly misleading, lazy, and cliched “bubble” analogy.

    2. Speaks of “higher education” generally without meaningfully distinguishing between what’s going on at Podunk State U where tuition is $4K and Ivies where it’s ten times that amount; it’s all just “higher education.”

    3. Uses climbing walls as their example of unspeakable opulence.

    Vedder and other bought intellectuals regularly deploy all three of these discursive strategies, which seem to play well with the Wall Street Journal crowd. It is to Professor Mitchell’s credit that he goes some small way to avoiding them; the biggest problem with this post is that its conclusion is simply wrong. None of the current trends will harm the elite institutions in the least. Rather, as public disinvestment in public education continues, the value signaled by their sticker prices will matter more than ever. Trust me, no one–not the kids, not their parents, not state legislators–will give a d*mn about the output-assessment results at Podunk State U. The fate of accessible quality higher education for the 99 percent is a purely political matter and it’s not going to be decided by beefing up the career center, “moving the needle” on outcomes assessment, or even getting rid of the climbing wall.

    • It is indeed difficult to know what economic factors do or do not affect elite institutions. Having served on the Yale Priorities and Planning Committee in the 70s under Kingman Brewster and Hannah Holborn Gray, I know for a fact that Yale did indeed experience a crisis as a result of its use of a “university equation” for the management of its endowment: an arcane formula devised by distinguised economists (including one Nobel prize winner) which even permitted the spending of principal in certain years, in addition to interest. Yale began serious cutting of its budget to compensate for serious endowment erosion which Harvard, for example, did not experience because its endowment management never spent principal, among other things.

      But, of course, one might rightly point out that Yale recovered — as did the Ivies in the wake of the more recent mortgage lending “bubble.” However, please note that no less an institution as Hopkins is restructuring itself in what is a controversial plan which may dramatically affect its research mission and quality (cf.

      So there are effects on the elite privates — and the jury is out as to how the “political” forces will be reshaping public education. One thing is certain: the quality of the cars in the student parking lots at the publics has risen during the past twenty years (e.g. BMWs, etc.), even as the tuitions at the elite privates have placed the sticker price of an undergraduate (or graduate) education closer to the quarter million dollar mark. So it remains true that many students and their families “vote with their feet” and resist tuition inflation — but, as the commenter points out, this will, of course, underscore the “added value” of an Ivy education from the fact of its sheer lavish expense.

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