Who will be the last to pay a quarter of a million dollars for a college education?

college-costReposted from Medallion Learning blog

At the nation’s most expensive college, a four-year education now costs upwards of a quarter of a million dollars (Northeastern, we’re looking at you). Debates about the value of this education continue to rage. Most recently, the 2014 PayScale College ROI Report [1] allows readers to rank nearly 900 undergraduate institutions based on metrics including 20 year net ROI and annual ROI.

Let’s set aside for a moment the necessary simplifications embedded in the report’s methodology. Harvey Mudd College tops the 20 year net ROI ranking at just shy of one million dollars. At nearly 12%, the Georgia Institute of Technology leads the way on annual ROI. At the other end of the spectrum, Shaw University trails the 20 year net ROI pack at NEGATIVE $156,000 and the annual ROI list at -11.9%. That’s if you graduate—only a quarter of its students do.

Overall, the average 20 year net ROI for the ~900 schools comes in at about $230,000 with an ROI a shade less than 5% a year. Sadly, only half of all students embarking on this expensive path even graduate. Imagine that you’re one of these fortunate students. Just what is it that you’re getting?

The Lumina Foundation, working with Gallup, tackled that question as part of its 2013 study, “What America Needs to Know About Higher Education Redesign” [2]. The message from colleges and universities to its students rings positive—96% of chief academic officers at these institutions assert extreme or somewhat confidence “in their institution’s ability to prepare students for success in the workforce.”

Great news! Or is it? What do those doing the hiring think? That storm cloud rolling in brings the opinion of business leaders—only 11% strongly agree that “today’s college graduates have the skills and competencies that their business needs.”

Clearly, a disconnect exists between what colleges and universities offer and what employers need. What’s a poor student to do? Six figures is a lot to pay for a degree that doesn’t deliver … but don’t try getting a white collar job without one.

While it’s fair to be skeptical of Lumina’s finding that only 9% of business leaders claim “where the candidate received their degree is very important in hiring decisions” (sorry, Harvard; bad news MIT; you’re out of luck, Stanford), one cannot avoid the fact that a full 84% share that “the amount of knowledge a candidate has is very important in hiring decisions.”

Where are students turning to bridge the gap? More and more, online. Online courses and certifications offer students the chance to efficiently and effectively replace some or all of their brick and mortar “hours in the seat” with competency-based learning that appeals to employers. More than half of all employers (54% per Lumina) now report the likelihood of hiring “a candidate who has a degree from an online higher education provider OVER a candidate with the same degree from a traditional higher education institution.”

No doubt, the higher education experience offers more than just access to the workplace: a protected step away from the family home, illuminating interaction with peers and mentors, acquisition of knowledge for knowledge’s sake, well-rounding as a human being. For far too many, however, the price of that education exceeds the ability to pay. The all too common failure of that education as career preparation just adds injury to injury.

For reasons of content and cost, higher education finds itself poised on the cusp of major change. Not all that many tomorrow’s from now, someone out there is about to become the last one to pay a quarter of a million dollars for yesterday’s higher education.

[1] http://www.payscale.com/college-roi/

[2] http://www.luminafoundation.org/newsroom/news_releases/2014-02-25.html

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