Shifts in Higher Education Create Winning and Losing Colleges
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This is Your Money Matters from The Wall Street Journal.
Welcome to Your Money Matters. I'm Anne-Marie Fertoli in New York. An analysis by The Wall Street Journal finds U.S. colleges are increasingly separating into winners and losers, marking a big shift in higher education. Joining me now from Chicago is Wall Street Journal reporter Doug Belkin. Doug, the Wall Street Journal ranks over 1,000 colleges each year as part of its higher education reporting. And the analysis you write about in your piece tracked two decades of enrollment data. Can you explain what we're seeing in the numbers? Is it that the gap is growing between colleges that are prospering and those that are struggling to keep enrollment up?
Yeah, this gap is forming. It's been forming for about five or six years, and it seems to be breaking out along the lines of quality.
What enrollment split did The Wall Street Journal find between 'winning' and 'losing' colleges?
For this analysis, we use the WSJ rankings as a proxy for quality. The rankings look at return on investment, so how much kids are earning when they graduate 10 years after they start college, how many of them are defaulting on their loan, how much money is being invested into their education by the schools themselves. And when you look at this What it turns out is that the schools that are ranked by the journal in the bottom fifth have begun to see an enrollment decline, while essentially the top 80% of the schools continue to grow as they have for decades now.
And what are some of the factors you found behind this trend? As you note, for a long time, enrollment rates had been on the rise. So what's happening here?
There's a lot of forces that are converging at the same time to create this gap. The number of people who've been going to college in the United States has been increasing as the population is increasing and as the rate of college going has increased since the 70s. As that has happened, pretty much every school in the country has experienced a surge in enrollment and sort of a high tide lifts all boats. That began to change around 2011 when two things happened. There was a demographic dip among the number of kids who are graduating high school, and that is going to get a lot worse over the years to come. And the perceived value of a four-year degree has begun to diminish, and so that has begun to impact whether or not kids go to school in the first place.
And obviously, we're seeing cuts in funding to public colleges and student debt rates continue to rise. How are those factoring in?
College was considered a public good for a long time in this country. And as a result, for state schools, for public schools, taxpayers footed the bill for most of that education. That has shifted. Lawmakers have pulled money out of higher education in a lot of cases, and the burden has moved on to students. So tuition has gotten much higher. As a result, it's a much more risky proposition to go to college today than it was 20 or 30 years ago. And you're seeing that in two ways. The student debt numbers are climbing through the roof. It's about $1.4 trillion in student debt. And the numbers of folks who cannot pay that debt, who are defaulting on that debt, is rapidly increasing as well. So you've got kids who are dropping out of school at a pretty significant rate, and even kids who are finishing are oftentimes getting jobs that don't demand their college credential, so they're underemployed, and oftentimes they're not earning as much as they thought that they would.
So these things have made a college degree less of a sure thing than it used to be, and that has given folks pause about whether or not they should be investing significant money in getting a degree and what kind of risk they want to take on.
Doug, you talked to some experts working in higher education who had some pretty dire predictions about what's to come. One compared what we're seeing now to what bookstores faced, the kind of reckoning they had when Amazon emerged.
So for a long time, a four-year college was sort of the only game in town. That was the credential you needed to enter the professional classes or to be considered a sort of a well-educated American.
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