Most Universities and Colleges worldwide are facing challenges due to the unique difficulties resulting from the Corvid 19 pandemic. The loss of campus-based students has stressed numerous schools that were operating at the margin over the past years to the breaking point. Even those with significant endowments are making deep cuts to deal with the losses in revenues. The current situation might provide an opportunity for consumers, the parents and students and in many cases the government itself (government student loans and veterans educational payments for example), to review the last decades escalating costs associated with many of most institutions. It also provides an opportunity for consumers to weigh the social and economic benefits that they obtain from the experience considering the cost of that experience. That cost has risen to between $80,000 and $180,000 for a public or private school undergraduate education and has resulted in $1.6 trillion in U.S. student debt. Setting aside the differing quality of academic institutions 8 in 10 families say cost governs decision-making not quality. The reality is that quality as a decision maker is secondary to cost. U.S. News reports that the average tuition and fees at an in-state public college is about 73% less than the average sticker price at a private college, at $10,116 ($40,464 for four year degree) for the 2019–2020 year compared with $36,801 ($147,204 for the degree). It is important to keep in mind that schools are increasingly avoiding sticker shock by posting tuition rates and then adding hundreds, and in some cases thousands, of dollars in additional add on fees and charges. With these costs in mind and the over whelming student debt that they have caused it is reasonable to look at rate of return for the money invested in college as well as the skills and abilities in relation to alternative experiences. This is particularly true given the massive free or reasonable cost information available online. One can pay Lynda.com fifty dollars to learn Java, pay a junior college about $300 or pay a prestigious university $3,000. Fortunately for many schools many people have not yet calculated these options. Unfortunately for some schools, some have and if I were a college president this observation would bother me. Also, what would bother me is that 2015 Microsoft bought Linda.com. Lynda.com started out as a simple teaching platform for computer science and expanded into many areas including management. A year later in 2016 Microsoft bought Linkedin, the successful networking media. Linkedin by then had expanded to introduce networking with skill notes moving toward a broader human relation recruiting tool. With Lynda.com Linkedin could not only have endorsements of abilities but could teach them and certify the ability. Then and here is the wake up call to education, in 2016 linkedin (Microsoft) bought Lynda.com renaming the service to Linkedin Learning and that is the platform that offers that $50 Java course I mentioned competing with the university $3,000 experience. Scary part - remember that Microsoft has a Microsoft University and now owns Linkedin Learning and Linkedin. This ties together lower cost learning, knowledge, ability verification into one location with a social network built in. Did I not note that cost is a major decision factor and hear repeatedly one reason to go to college is to develop a network?
Some important student knowledge is, of course, harder to evaluate from a cost/benefit analysis. History, Communications or written English abilities, appreciation for the arts maybe even a second or third language for example. Some abilities such as computer programing, program management, accounting, finance have more direct education to benefit ties and cost. To students (and parents) credit, however, the questions are being asked and answers demanded. Simply put, “is what I am going to get worth the $40,00 to $100,000 or should I look at alternatives. For $10,000 a student could most likely tour the major art museums of the world take in the guided tours and read free online materials leaving $90,000 to direct to other specific needs. Given that many of todays most significant companies were started by people with no college or degrees in areas other than business is it not germane that the question of relevance be addressed directly to business education.
To help pay for tuition the combined student debt of 44 million Americans, who borrowed to attend college, is $1.6 trillion and growing. To bring that down to a more personal level, according to the College Board, the average cumulative student debt balance in 2017 was $26,900 for graduates of public four-year schools and $32,600 for graduates of private nonprofit four-year schools. Relatively “easy” government money in the form of loans that include not only tuition, but housing, meals and incidentals is somewhat responsible. This is particularly true in what are considered predatory institutions that promise a lot while providing low quality and even at times unmarketable degrees. While borrowing is not in itself inappropriate the question always is, “what is being borrowed for.” If you borrow for self-improvement (with forward rate of return) that is different than if you borrow for a luxury car or fifty-inch TV (that has no forward revenue potential and depreciates). It may be different to go into $80,000 debt for a computer degree than one in sociology from a pay back perspective. It is often stated that on average college graduates earn 80% more than those with just a high school diploma. This is, however, an apple and orange comparison as it fails to take into consideration vocational schools, union training, online personal education or community colleges.
Part of the value question answer might reside in how much for the student cost of education is derived from teaching and how much is attributed to other functions. While faculty to student ratios have remained fairly constant, around 16 students per instructor, administrative numbers have increased from a 1975 level of one administrator for every 84 students to a 2005 level of one administrator position for every 21 students (Washington monthly, 2011). To put another way from 1978 to 2014, administrative positions rose 369 percent, according to the AAUP report. This same report noted the number of part-time faculty increased by 286 percent; and full-time, non-tenure-track positions grew by 259 percent. Conversely, full-time tenure and tenure-track appointments increased just 23 percent during the same period. While eye opening it is important to recognize that while at private colleges and universities, top administrative salaries increased at least 97 percent, with presidential salaries rising 171 percent faculty salaries increased a less than half of this, by 50%. It is equally note worthy that college full time faculty and tenure positions are increasingly being shifted to lower paid lecturers and part time faculty lowering faculty total costs. Apparently, as colleges and universities have had more money to spend, they have not chosen to spend it on expanding their instructional resources—that is, on paying faculty. Obvious questions are why the academic world has not seen decreases in costs due to efficiencies observed in other service sector areas and are the increases in administrative costs related to the quality of an individual student’s education. In many cases significant cost increases have been due to what schools see as student wants in nonacademic related areas such as sports complexes, more counseling services and wider choices in meal and living options. Most European institutions feel their job is education and leave the students to find housing, their own workout centers and dining. This is, or has not been, the American experience but as costs for these amenities continue to escalate becoming a larger part of the academic bill a bit of a shift might be worth consideration.
The intent of the editorial is not to find fault or cast blame. The problem is complex and thus a simple solution is a fool’s game. The intent is to bring up the question, “Is education a good investment on a cost benefit analysis?”. With decreasing enrollments in graduate business education across the country and across school types consumers may be voting with their feet. The challenge, if this is the case, then is asking the hard question of how we demonstrate the reality, not the marketing version, that the specific education is worth theRE expense. This is particularly true given the rapid pace and constate changes in technology. One quick indicator would be, is it possible for a student pay off a student loan in a reasonable time frame. If not; has the government lent for, and the student borrowed for, the equivalent of a car that still has payments due but is out of date and does not run?
About the Journal of Transnational Management
The Journal of Transnational Management seeks the interesting balance in maintaining its self as a high quality professional publication while continuing to distinguish itself as a leader in providing authors from developing nation’s editorial assistance. This is deemed essential in order to optimize the opportunity for these authors to present their management articles to an international audience. The journal has a dedicated editorial board that is multinational in scope and prepared to provide the assistance needed to encourage authors from nations that are not the traditional contributors with their submissions. The journal, in addition to research publications, is interested in receiving media/book reviews. Information concerning the JTMD relating to past volumes and submission information is available on the web site of the IMDA www.imda.cc.