Many universities have announced plans to move courses online next year, but few have mentioned dropping the price of tuition. Colleges across the nation may be tempted to pretend that remote schooling is worth as much as an in-person experience, but students aren’t stupid. If colleges persist in this willful blindness, students will consider alternatives to the four-year degree.
The COVID-19 pandemic has revealed many of the vulnerabilities inherent in an already tenuous and fragile higher education system. Even before the pandemic struck, college students were experiencing a crisis of confidence in the value of a college degree. This crisis, driven by rising costs and ballooning student debt, reached an all-time high of $1.4 trillion in 2019. At that time, the fraction of college dropouts was nearly as high as the fraction with a bachelor’s degree (18 percent versus 21 percent). These concerns are what prompted the Democratic presidential candidates to advocate for “free college” and abolishing student debt.
The pandemic has only exacerbated these concerns.
A large part of the college experience is the socialization process. From entrepreneurs like Andrew Yang to academic economists, most recognize that college students form ties with their peers on campus and that these ties influence their labor market outcomes. Some find the benefits of socialization for students are especially present among more selective institutions, where networking with higher-performing students can lead to expanded business opportunities and personal growth. The social ties formed during college can affect job placement, managerial decision-making and even organizational outcomes when those students become executives.
Moving classes fully online eliminates all those benefits. Why should high school graduates pay top dollar for less value?
Let’s look at the data: Economists generally agree that the return to schooling (e.g., college attainment) is roughly 6 percent. However, the additional earnings advantage for a college degree (the "college premium") has declined over the past decade. And it’s fallen by 6 percentage points during the ongoing COVID-19 pandemic from 9.8 percent in February to 3.8 percent in April, although there’s been some recovery since May.
These declining returns to a college degree, coupled with the move to online learning at many universities, suggest students might want to hold off investing in an expensive degree and explore more affordable alternatives. Some have significantly reduced the cost of online courses. Arizona State University reduced the cost of its Earned Admission courses from $400 to $99.
There are more opportunities than ever to pursue higher learning. A four-year college is not the only way forward.
Options range from free or nearly free online learning courses and non-traditional credentials to in-person apprenticeships and community college degrees. EdTech companies, including DataCamp, edX and Coursera, are pushing the frontier with such a wide array of options for learners. In fact, new research shows that online learning, particularly in technical areas, can achieve equal student outcomes at a much lower cost. Moreover, there are smart ways to improve student engagement so that students do not lose motivation.
Moreover, apprenticeships are becoming increasingly attractive given the value of experiential learning, especially in manufacturing, production and repair occupations. For example, the Bureau of Labor Statistics reports that electrical and electronics engineering technicians earn a median annual salary of $65,000 without a college degree, which is more than $10,000 above the national level. Apprenticeships are an effective vehicle for increasing economic mobility, and economists estimate that they lead to an approximate 5 to 7 percent earnings gain.
The federal government has already taken steps to promote alternative pathways. For example, through the Pledge to America’s Workers, more than 430 companies have pledged over 16 million education and training opportunities for workers. Moreover, the Modernizing and Reforming the Assessment and Hiring of Federal Job Candidates executive order is beginning to expand the talent pipeline in the federal government, prioritizing skills over degrees. These policies, among others, are laying a foundation for a new model in higher education, which is a model that’s defined by skills and value-added rather than pedigree.
To be sure, today’s high school graduates have a much more complicated decision-making calculus to think through. But they also have more reason to doubt what many students once took for granted: That college was the natural next step.
While college graduates still earn more than their counterparts, the added benefit has faded and is likely to continue to fade as alternative low-cost options become available and as universities begin offering more limited in-person socialization opportunities.
If universities want to stay relevant and adapt to these structural changes, they will need to reconsider not only their pricing but also their broader model for hiring and promoting faculty. Steady increases in tuition are no longer a reality, and universities will have to diversify their revenue streams if they want to remain competitive. The combination of non-traditional learning solutions and a greater emphasis on skills over degrees is ultimately changing the landscape — perhaps for good.
Christos A. Makridis, Ph.D., is an assistant research professor at Arizona State University, a non-resident fellow at the Baylor University Institute for Studies of Religion and a senior adviser to Gallup. Follow him on Twitter @camakridis.