How Do You Determine the Value of a Higher Education Experience?

Consider me among those heartened by the fact that President Obama seems ready to take significant steps to shake up the status quo in higher education. Here’s the key piece from the policy document released alongside the State of the Union:

The President will call on Congress to consider value, affordability, and student outcomes in making determinations about which colleges and universities receive access to federal student aid, either by incorporating measures of value and affordability into the existing accreditation system; or by establishing a new, alternative system of accreditation that would provide pathways for higher education models and colleges to receive federal student aid based on performance and results.

For a complete breakdown I recommend Kevin Carey’s take, but for now I want to focus on the question of “value.” The bottom is line that there’s no objective way to quantify the value of your higher education experience. That doesn’t mean the government shouldn’t try to define and measure it, but because there are so many gray areas there are a lot of potential outcomes.

One question is whether to define value in absolute or relative terms. Even with skyrocketing tuition, researchers and analysts are unanimous in proclaiming that nearly every single bachelor’s degree has a positive return on investment. When you look at differences in earnings over an entire lifetime, it’s crazy not to go to college. Who cares what it costs? This is the argument the higher ed lobby will make when it pushes for absolute measures of value.

Ideally, the Obama administration will remain focused on relative value. A $50 million life-saving surgery still has “good value,” even if all the inputs of the surgery cost only $10,000. The same goes for a $200k college degree that could be administered for $25k. In competitive markets the price isn’t what people are willing to pay, it’s what people are willing to sell for. This should be the goal for higher education. Universities should be compared to every other player in the higher education arena, and the fact that Obama used the phrase “bang for you buck” suggests he agrees.

A second issue is how metrics unrelated to employment or tuition (e.g. clubs, facilities, etc.) will be used in the calculation of value. Recently there’s been discussion of the idea that high tuition is partly a result of colleges providing a lot of amenities that students value. Should these amenities count at all? If they do, should the system account for the overall tuition level when judging the value of amenities? For example, imagine a college that increases tuition by $10 in order to build a climbing wall, and each student consequently reaps and average of $11 worth of benefits from playing on it. Seems fine. But now imagine the college makes 1,000 similar investments. Tuition has now risen by $10k, and though you might say it’s ok because students are still getting good overall value from each dollar, there’s a problem. That extra $10 in spending may not be a good value for every current or future student, particularly low-income youth who have different substitution costs for each dollar of tuition. If 40 wealthy kids get $13 of value from the climbing wall, but 60 poor kids get only $9, should an accountability system view it as a good thing or a bad thing? My point is that a college could hypothetically increase tuition and and create better value, so what if they just keep doing it? At some point there will be diminishing returns, but is there a level of tuition at which the school shouldn’t get accolades for building a fancy schmancy robotics center that generates a lot of benefits? How should we handle schools that offer a great product while also being truly and unabashedly unaffordable?

A final question is how measurements of value should handle the contrast between competency and employment. For example, imagine that Stanford offers the exact same educational experience as UC-Santa Cruz, but for double the price. Due to entrenched reputations Stanford students do three times better than Santa Cruz students in the job market. Is Stanford actually offering a better value? From an employment standpoint they are, but from a pure competency standpoint they’re not. This is a complicated issue, particularly because one could argue employment is a better measure of competency than demonstrable content knowledge. I’m not sure there’s a right or wrong answer here, but it’s yet another example of the complex philosophical issues involved in determining the value of a higher education experience.

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