Sustaining the right things

An analysis by Bain and Company of the financial sustainability of American universities found that more than one-third of universities consistently spend more than they can afford. Endowments are not likely to see the same growth as they did before the recession, and smaller, private colleges without endowed cash safety nets are closing their doors.

This occasions a reflection on the grim trajectory of higher education, and what we can do to sustain its most valuable features. We have determined that higher education has two kinds of goals—educational and monetary.

Universities’ overarching educational goal is to bring together sharp and open-minded students, engaged faculty mentors and institutional resources for the pursuit of knowledge. From this perspective, the goal of universities is the production of knowledge and the education of critically minded citizens who live inquiring and socially beneficial lives.

When looking at universities’ monetary goal, the good of higher education lies in its ability to efficiently train students for lucrative careers. Universities both aim to generate marketable knowledge and produce employees with the kind of knowledge needed to sustain the nation’s gross domestic product.

People have different views about the relative significance of each kind of value. For instance, North Carolina Gov. Pat McCrory’s comments this February about liberal arts colleges teaching courses, such as gender studies, that prevent students from getting jobs emphasized universities’ monetary goal. Articles in The Chronicle of Higher Education about the upsurge of low quality, profit-driven online colleges tend to emphasize universities’ educational goal.

From either perspective, higher education is doing poorly. A financial perfect storm has made paying for education at regional, private colleges untenable—these colleges’ employment outcomes are too poor in a down economy to qualify paying their expensive tuition. Enrollment has plummeted, forcing these colleges into a double bind—they cannot reduce tuition to attract more students without significantly reducing educational quality, which will only drive away students.

We think this phenomenon could have grave consequences. Small, regional colleges closing their doors will drive more students to local, state-funded colleges and universities, which themselves suffer from the effects of federal and state budget crises. These state colleges could expand enrollment, driving down quality. Or they could refuse to expand, sending more students to low-cost alternatives like online-only and for-profit colleges. Either way, the highest quality education will increasingly become the preserve of the wealthy, with fewer Americans benefiting from the social mobility and critical education these institutions provide. This is both an educational and monetary failure.

For the time being, Duke’s prestige will insulate it from these changes. Until there is a sea change in American education, where the best high school students feel justified attending lower-cost colleges and the most prestigious employers feel comfortable hiring from them, Duke will be able to offer a good value proposition.