Prescription 1: College shaming is coming
“At these prices, school is the biggest investment of time and money anyone will ever make. Isn’t it time we started to treat them exactly like investments? Just as Morningstar rates mutual funds, there is a need for a similar online rating system for schools that goes well beyond what BusinessWeek does for business schools. From schools with circular saws to those with girls named Muffy, there’s a need to weed out shady or overpriced institutions” (Econovation, Page 121).
Under the GOP, our prescription is shifting from ranking colleges to ranking vocational schools for effectiveness:
“The legislation is going to expand student access to—and the ability to participate in—industry-led ‘earn and learn’ programs,” Rep. Foxx explained. And to ensure that students can target, in advance, the college programs that will benefit them most, Prosper directs the secretary of education to create a “data dashboard” for comparison shopping.
her department formally introduced its plan to jettison so-called gainful employment rules. These 2014 regulations require that, to receive federal student-aid dollars, for-profit colleges — along with certain programs at nonprofit and public institutions — must maintain a reasonable debt-to-income ratio among graduates. If a program’s attendees typically rack up massive student debts and then cannot find decent jobs, the program is deemed a failure. Programs that fail in two out of three years become ineligible to receive the taxpayer-backed loans and grants with which so many students finance their schooling.
“The president, who was on the first day of a two-day bus trip across New York and Pennsylvania, said rising prices at colleges were partly driven by the distribution of $150 billion in federal assistance to students. He said colleges that allowed tuition to soar should be penalized by getting less federal aid for their students, while colleges that held down costs should get more of the money. He announced plans to create a federal rating system that would allow parents and students to easily compare colleges. And he said he would urge Congress to pass legislation to link the student aid to the rating system.”
“Barack Obama wants degrees to be better value for money.”
“Eventually, the ratings would be used to reward high-quality colleges with more federal aid. Creating any system of incentives is tricky. For inspiration — and caution — the administration should look to another sector where it has tried mightily to curb rising costs: health care. The markets for health care and college share many peculiarities, all of which tend to make consumers inattentive to price and uninformed about quality. Economists have contributed key insights to our understanding of how consumers and producers make decisions in the health care market, and many of these insights also apply to the college market.”
“Some of the industry’s biggest players have made headlines in recent years for their poor performance, exorbitant pricing, and exploitation of vulnerable, low-income students. And the feds are now poised to ramp up oversight amid larger efforts to reform the country’s besieged higher-education system. As part of his recently released 2016 budget plan, President Obama wants to eliminate a notorious loophole that allows for-profit colleges to capitalize on financial-aid benefits afforded to U.S. veterans, a move that could severely weaken some of the industry’s biggest schools.”
Prescription 2: Align school admissions with demand by major
“The number of jobs available is not aligned with school admissions for those professions. Schools churn out lawyers, actors, and journalists just because they can pay, even if it means their parents will live off canned tuna and the kindness of strangers in retirement. If schools don’t do this on their own, there is an opportunity to create a demand-pay index that tracks and projects demand and salaries in each profession. It should also track successful placements and graduate earnings over time. A tuition-salary ratio for each school and major would be a good start. Eventually, this will force education prices and durations down for professions that pay $20,000 when school costs $80,000” (129).
according to an analysis released today (Jan. 19) by global job search engine Indeed.com, companies’ across-the-board hiring difficulties also indicate the existence of a clear mismatch between employers and job seekers. Indeed’s report attributes this mismatch to several factors, including lack of qualified applicants; overabundance of some positions and undersupply of others; and uneven employer demand for certain talents, especially technology-related ones.
Economists like Gordon are fond of criticizing China for its top-down misallocations of physical capital, but few think deeply about the misallocation of human capital — and potential for realignment — within our own economy.
In recent history, unemployment/under-employment has been an economic anchor. The challenge has several facets: matching workers with jobs, aligning workforce capacity with employer demand and creating pathways for training that enable the workforce to adapt and recalibrate over time.
…that is beginning to change. Skills bootcamps in high-growth areas like web development and digital marketing are already helping thousands of learners develop skills — and land high-paying jobs. Universities are abandoning vestigial constraints on time, like the credit hour, and are developing programs more tightly coupled with employer demands.