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Journal Issue: Postsecondary Education in the United States Volume 23 Number 1 Spring 2013

Postsecondary Education in the United States: Introducing the Issue
Lisa Barrow Thomas Brock Cecilia Elena Rouse


Since the introduction of the GI Bill in 1944, college has been part of the American dream, in large part because it is viewed as a ticket to economic security. Currently, about 21 million individuals attend a postsecondary institution, and the vast majority of high school students aspire to earn a bachelor's degree or higher.1 While the popular image of college may be dominated by Ivy League schools, flagship state universities, and elite liberal arts colleges, in fact only a minority of students attend such institutions. Many go to less-selective regional four-year colleges and universities and vocational institutions, and nationwide close to 40 percent are enrolled in open-access community colleges. A small but growing number of students are working toward college degrees mostly or entirely online.

Students pursue postsecondary education for a variety of reasons. Some are looking for a broad liberal arts education, while others are more career focused. Still others enroll to take only a class or two to keep up their skills or simply for the joy of learning. U.S. postsecondary institutions serve not only those students with the best academic preparation but also those who were not well served in the nation's elementary and secondary school system and need a second chance. This range is reflected in the differing degrees of "college readiness" among entering postsecondary students and in the increasing proportion of students who are "nontraditional" in that they are older, from less advantaged families, financially independent of their parents, parents themselves, or working while going to school.

As enrollments in postsecondary education have increased, so have private and public investments in education. Federal, state, and local governments combined contribute about 1 percent of the nation's gross domestic product ($160.9 billion in 2011) to postsecondary education, largely predicated on the belief that it addresses long-standing economic inequalities and leads to economic growth.2 Namely, investment in education benefits the individual in many forms, including higher lifetime income, and benefits society by increasing labor force productivity, which in turn generates faster economic growth. Growing evidence backs these claims. For example, individuals with a bachelor's degree earn 50 percent more during their lifetime than individuals with no more than a high school diploma, and their unemployment rate is less than half as high.3 Research also suggests that college graduates have higher job satisfaction and better health outcomes than those without a college degree. Finally, economists such as Enrico Moretti have documented significant benefits to the broader society: workers earn more in cities with higher proportions of college graduates, suggesting that more educated workers generate positive "spillovers" to other workers. In fact, he documents that cities with more highly educated populations are hubs of innovation and experience faster economic growth than those with less educated populations, again generating positive spillovers to all residents.4 Increased globalization and advances in production technology suggest that postsecondary education will become even more important to the economic security of individuals and society in the future, as suggested by the work of economist David Autor. He has documented that the occupations that have grown over the past two decades require more "non-routinized" skills, many of which are associated with postsecondary education.5

Despite these data, critics are starting to ask whether current high levels of investment in postsecondary education are still worth it. Nowhere is this question more starkly voiced than by Peter Theil, cofounder of PayPal, who two years ago began offering young entrepreneurs up to $100,000 not to go to college. His reasoning is that traditional postsecondary institutions do not teach the critical skills that individuals need to succeed in the "real world" of business. Because timing is everything in business, Theil argues that young people with good ideas should not wait an additional two to three years to complete a degree before fully developing a new product.6

Others agree that postsecondary education may not be worth it, but their reasons primarily concern the relationship between the high price of postsecondary schooling and the future return, especially in the form of employment and income. For example, based on the Consumer Price Index, overall prices increased by an annual average of 2.4 percent between 2001 and 2011, while college tuition and fees grew by an annual average of 6.8 percent—the highest among all major expenditure categories, including energy (6.6 percent) and medical care services (4.3 percent).7 Many critics argue that much of the increased cost of postsecondary education is unnecessary and the result of institutions becoming "inefficient" in the sense that they could provide a better quality education for the cost or could provide the same quality education at a lower cost if they simply reorganized. Critics contend that, among other factors, this inefficiency arises because most states finance their public institutions according to the number of students they enroll rather than the number who complete their course of study, and because these institutions have been slow to adopt technology that provides or enhances teaching. The result, these critics say, is a bloated, expensive, and inefficient system in which half of all students who start at a postsecondary institution fail to complete a degree or certificate within six years.8

Finally, rising student debt is a subject of widespread concern. While increases in grant aid have helped offset the increases in cost, more and more students (and sometimes their parents) are financing college by taking out large student loans. In some cases, the levels of debt are simply too high relative to what students can earn after leaving college, particularly early in their careers. As a result, some analysts suggest, many young people are delaying marriage or starting a family, still living with their parents, or putting off buying a home.9 In the eyes of some critics, these costs outweigh the benefits that a college education provides.

And so policy makers at all levels are faced with several challenges regarding postsecondary education policy. For example, efforts to broaden access have been so successful that many students arrive at college unprepared for the work. This lack of preparation results in large expenditures by state and local government—perhaps as much as $3 billion annually—to help these students acquire the skills they need to succeed in school.10 The large numbers of students in developmental education also raise questions about its efficacy and about what high schools should do to better prepare students for postsecondary class work.

Financial aid raises another set of challenges. In fiscal year 2011, 9 million students received Pell Grants at a cost to the federal government of $36.5 billion.11 While acknowledging that these federal grants have been increasingly important as state support of public institutions has declined, policy makers want greater assurance that the investment is worthwhile. One result has been increased efforts at oversight and regulation, especially of the for-profit sector and public institutions that have the lowest graduation rates. Innovative ways of financing institutions that go beyond enrollment to focus on completion (or "quality") are also attracting growing interest, as is the development and adoption of new technology that may help curb costs.

The articles in this issue of the Future of Children are designed to address these and some of the other most pressing concerns in postsecondary education. Before reviewing their major points and conclusions, however, we emphasize that space constraints made it impossible to cover many important topics. For example, we do not discuss graduate education, compare the U.S. postsecondary system to those of other countries, or focus explicitly on community colleges. We hope that this issue will be viewed as the beginning of a dialogue on addressing the challenges facing postsecondary education rather than as an end in itself.