As is the case in any supply and demand driven market, the cost of a college education today has been driven to a point where it would seem impossible that demand for a diploma at prices in excess of $70,000 per year would continue.
Flash back to circa 1980. Tuition at some of the best private liberal arts schools was around $5,000 per year. No, that is not a typo. That was the tuition at Gettysburg College in Pennsylvania in 1980. And believe it or not, that figure was still difficult for many families to pay at the time. Is it all relative? Perhaps not.
In an interview with Malcolm L. Cowen, founder and CEO of Cornerstone Asset Management, an investment firm in Bethlehem, PA with over $8 billion under management, he discussed the metamorphosis going on in college education today. As a board member of several liberal arts colleges, Mr. Cowen explains that the current financial model is unsustainable. “A five year financial forecast shows that such colleges will not be able to cover their costs unless things change,” according to Cowen. “We don’t have all the answers right now, but we have ideas. Attempting to court more full-pay students and offer business-style curriculums are things that are being studied.”
What is behind this change? You can begin with the core academic structure of the typical liberal arts college. What was once primarily focused on a more parochial set of subjects, has today expanded into social sciences, et al, that have increased the need for additional faculty. Full-pay students whose parents’ income allows them to pay their entire tuition are declining. Endowments paying the difference for those who pay almost nothing to attend are shrinking.
At some point you have to ask yourself, is the investment in a $70,000 college education today worth the return. Educational scholars over the last 30 years have proposed that every child needs a college degree. That we all can become doctors, lawyers, and wholesale jewelers. That simply hasn’t turned out to be the case. As such, we are now littered with students coming out of college with degrees that are watered down and unlikely to achieve a near-term return on investment.
What was common place in high schools in America in the 50’s and 60’s is coming back into play. Careers once considered “blue collar” are making a resurgence, as reflected in the fact that high schools are dynamically changing their course offerings to reflect the employment marketplace. Wando High School in Mt. Pleasant, SC is one such example. From a state of the art automotive shop facility, to a golf course architectural landscaping program, youth are flocking to these new fields. Not all kids want to go to college.
This may be the next “new normal” in education. Yes, students coming out of the Ivy League and other top tier schools will still draw the attention of top ranking employers, but the inability of colleges to sustain continued tuition increases, and a combination of changing attitudes toward skilled labor, may just bring us back to the way things used to be.