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College Not Only ‘Worth it’, but a Key to Higher GDP and Lower Inequality

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The Georgetown University Center on Education and the Workforce has released another report projecting an increasing need for college graduates in the US workforce. Like last year’s report, the new report, “The Undereducated American”, argues that there is an existing under-supply of college educated workers, evidenced by the very high college wage premium, and projects an increasing need for workers with a college education in the future, which will exacerbate this wage imbalance, as well as stunt economic growth.

The report predicts that the demand for college educated workers (including those with ‘some college’ as well as those with AA, BA and graduate degrees) will increase by about 2 percent per year between now and 2025, while the US is currently on track to increase the supply of college educated workers by only 1 percent per year. They recommend that the US produce 2.6 percent more college educated workers per year, another 20 million students total between now and 2025, to not only meet the increased demand, but to increase supply enough to bring the college wage premium down significantly (but still in line with other developed nations) and reduce overall income inequality in the US.

Most importantly, this report provides ample evidence that there is not an oversupply of college educated workers in the US economy, despite it being fashionable to assert that college might ‘no longer be worth it’ given the combination of economic distress and the rising cost of college. In fact, the college wage premium (the difference between what the average college educated worker is paid compared to a non-college educated worker) remains sky high in the US at 74 percent, contributing to growing income inequality in the US. The data show that not only do college educated workers dominate the highest paid positions in the US, but they make significantly more money than non college educated workers even within the same types of jobs.

Read the report to discover more about why they settle on the recommendation of producing 20 million more college educated workers (and a projected college wage premium closer to 46 percent), and to see detailed data on wage and employment trends by occupation and education.

Oregon Institutions Gain Flexibility Alongside State Funding Cuts.

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Last week, Oregon Legislators signed a state budget that, among other things, cut funding for public higher education by 17 percent. It is unknown whether this cut will necessitate tuition increases above those already approved earlier this month by the Oregon State Board of Higher Education, including an 8.8 percent increase at Oregon State University and a 7.3 percent increase at the University of Oregon for resident students.

In the meantime, the Oregon Legislature is expected to pass a bill intended to help Oregon public higher education achieve greater long-term stability by ending state agency status for the institutions, enabling new flexibilities in managing and spending resources. In addition to freeing institutions from state processes guiding building projects and repairs, contracting, and employment, the bill ensures that institutions keep all interest earned on tuition revenue, and adds three members to the State Board of Education. In exchange, the institutions must meet agreed upon performance targets regarding enrollment, graduation, and other measures.

Are Public U Presidents Paying a Price for Seeking Change?

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Recent news has some wondering whether unsuccessful attempts by some public flagship institutions to obtain greater autonomy from the state, and in some cases from a larger university system, have led to negative consequences for the university presidents pushing for the reforms.

Having been strongly criticized by University of Wisconsin system officials and Chancellors for her leadership in working with Wisconsin governor Scott Walker to work out a deal that would allow the Madison campus to split off from the system and enjoy a considerable increase in management and financial autonomy, Chancellor Biddy Martin has announced that she is leaving UW Madison for Amherst College after only three years. In an interview with the Chronicle of Higher Education, Martin claims that the failed attempt to separate the Madison campus from the system is not the reason she is leaving, although she does admit that the strain of budget cuts and politics of leading a large public university may have played some role in her departure.

It appears more clear that University of Oregon President Richard Lariviere, who also led a charge to separate his institution from the greater system, was punished for that effort as the State Board of Education made a point to renew his contract for only one year (when three is standard), and added conditions that he participate more in the efforts of the system as a whole.

Meanwhile, two other presidents of large public research institutions, the University of Arizona and the University of Massachusetts, are facing questions about their leadership over the past several tumultuous years.

Projected 2011-13 State Revenue Takes a Dive

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Yesterday, the Washington State Economic Revenue and Forecast Council released a troubling update for 2011-13 state general fund revenue. Overall, the over $730 million dollars held in reserve in the recently signed budget is now projected to be only $163 million.

If this trend continues, mid-year and supplemental session cuts may be likely. Please see our OPB brief for a summary of this revenue report.

Improved Job Prospects For Recent College Graduates

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As the New York Times reported in late May, hiring of recent college graduates is up five percent from last spring—encouraging news for UW students graduating in a few days’ time. The Seattle Times confirmed that this trend is followed in Washington State as well, with the unemployment rate falling from 9.2 percent in April to 9.1 percent in May. Seniors seem more confident and optimistic as local companies like Amazon and Boeing announce their intent to hire more professionals, particularly in the science and technology fields.

Unfortunately, the impact of the recession is still felt by many looking for jobs. Less than a third of college graduates have jobs lined up before graduation, and only 70 percent find one within six months. Some college graduates are forced to take jobs unrelated to their degree, and many—according to the New York  Times, close to 49 percent—take jobs that do not require degrees at all, which edges out high school graduates and teenagers looking for work. Finally, median salaries for college graduates have decreased from $30,000 in 2006/7 to $27,000 in 2009/10.

According to graduates the New York Times and the Seattle Times interviewed, the best way to land a job in tough economic times is networking—most seniors with jobs lined up after graduation had found the position through an acquaintance or college job fair. Many students indicated they wished their schools had done more to prepare them for job hunting.

To see what the UW is doing to help students find jobs in the current economy, check out the UW Career Center website, which offers a wealth of job-related information and services, including résumé building, networking opportunities, career fairs, and mock interviews. For more detailed information on official unemployment statistics, visit the Bureau of Labor Statistics website.

Importance of Need-Based Aid for Achieving Attainment Goals

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A recent Pell Institute Report proposed a new way to think about reaching President Obama’s goal of increasing the proportion of adults with a college degree to 60 percent by 2020. The Institute suggests that income inequality creates a two-tier educational system in which 25-34 year-olds in the top half of the income distribution have degree attainment rates of 58.8 percent, while individuals in the bottom half of the income distribution exhibit attainment rates of 12 percent. The Pell Institute claims that, by focusing on funding and supporting disadvantaged students, higher education can make progress towards achieving President Obama’s goal.  Specifically, the Institute recommends:

  • Improving access to four-year institutions for disadvantaged students
  • Provide data, disaggregated by family income or Pell receipt status, more readily and widely
  • Focus on changing the eligibility requirements for the Pell grant (such as GPA in high school or increased credit hour requirements), instead of cutting the maximum Pell amount
  • Bolster programs like TRIO and GEAR UP that support students academically and improve retention rates

The University of Washington’s commitment to disadvantaged students, through Husky Promise and other forms of need-based aid, are key institutional efforts to provide access to quality higher education for low-income students. In light of potential double digit tuition increases for resident undergraduate students in 2011-12, Husky Promise, as well as the State Need Grant and federal Pell Grant are critical programs for our students.

Pew Survey of College Presidents Highlights Divergent Views from General Public

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Along with its survey of the general public, the Pew Center recently published a survey of 1,055 two- and four-year, public, private and for-profit college presidents, concerning the quality, accessibility, and affordability of higher education. The two surveys were conducted around the same time and asked similar questions.  However, there were notable differences between the opinions of college presidents and the general public on key issues in higher education. On the whole, college presidents were less concerned about affordability and access, and more concerned with student and academic program quality. Some highlights of the data include:

  • 38 percent of college presidents think higher education is moving in the wrong direction, with only 7 percent believing the US system will be the best in the world in 2021
  • 42 percent of presidents believe college is affordable for most families (compared with 22 percent of the general population)
  • 17 percent of presidents believe students get excellent value for their money (only five percent of the general population agrees)
  • The majority (58 percent) of college presidents believe students come to college less qualified than their counterparts ten years ago, and only seven percent think current students study more than students ten years ago

Interestingly, leaders of for-profit schools were most likely to be pessimistic about the affordability and direction of higher education and student preparation. Conversely, presidents of the most selective schools were most optimistic about those factors. Furthermore, the majority of college presidents think it is unlikely that the nation will meet President Obama’s degree attainment goals by 2020. To find out more, check out the Chronicle’s analysis, our blog post on the general public survey or the full Pew Center report on its website.

Recent Pew Survey on College Affordability and Quality Released

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The Pew Research Center recently conducted a large telephone survey of 2,142 Americans to gauge opinions about higher education quality, affordability, and importance. While many respondents reported anxiety about affordability, most valued a college education highly and reported a belief that it would provide career benefits in the future.  Some of the key findings of the survey included:

  • Only 22 percent of respondents believe most Americans could afford to pay the cost of college.
  • 48 percent think families should pay for the majority of the cost of a college education.
  • Of young adults who are not in college, 57% say they chose not to attend because they preferred to work and save money, and 48% claimed they cannot afford to go to college.
  • Average loan debt for students with bachelor’s degrees has hit an all-time high of $23,000, which respondents say has made it harder to make ends meet, buy a home, choose a career, and start a family.
  • Only five percent of the population thinks the higher education system is providing excellent value for money.

These results seemed to reflect a growing concern about college affordability as well as the shift in the responsibility of families versus the government in covering educational costs. Nevertheless, among college graduates, 86 percent believed college had been a good investment for them. Of parents with children aged 17 and younger, fully 94 percent expected their children to go to college. Additionally, most respondents were aware of the large financial benefit of holding a college degree: Another recent Pew survey showed that college graduates make about $650,000 more than high school graduates in their lifetimes. The survey seemed to reflect the belief that, while college is a valuable personal investment, affordability and quality persist as a significant concern.

Note that these results are consistent with other recent surveys we have reported on:

Legislature Authorizes Tuition Setting for WA Institutions

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As of today, House Bill 1795 has passed both the Washington State House and Senate by wide margins and is on its way to the Governor. As outlined in our previous post, this bill gives Washington’s four year public institutions the ability to set resident undergraduate tuition rates, alongside new financial aid and accountability requirements, for a limited time.

Note that due to the ongoing state legislative special session, as well as the need for time to discuss the policy alternatives authorized in HB 1795, the Board of Regents will likely approve the FY 2012 UW operating and capital budgets, including tuition rates for the 2011-12 academic year, at their July 21 meeting instead of in June.

In the meantime, Interim President Phyllis Wise will be holding two community conversations where she will discuss and answer questions about the budget and tuition-setting:

We hope to see you there.

Tuition Setting

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Friday, the Seattle Times published an article about a potential agreement between lawmakers to, given several years of steep funding cuts, allow Washington’s universities to set undergraduate resident tuition rates for a limited number of years and with new financial aid and accountability requirements.

News of this agreement comes as the Legislature is in the middle of a 30 day special session, and while a negotiated budget and resolution on tuition rates for resident undergraduate students is not yet final, a new OPB brief provides some national context for and information about tuition setting policy.