What is the Future of Higher Education?

From Minnesota Alumni Magazine Fall 2015

In July, Minnesota convened a roundtable discussion among four University of Minnesota alumni who lead major American research universities. They discussed public financing, student and alumni debt, academic freedom, and the changing landscape of higher education.

The participants: f2015_futureofhigheredkalerUniversity of Minnesota President Eric Kaler (Ph.D. '82) earned a doctorate in chemical engineering from the University of Minnesota. His undergraduate degree, with honors, is from the California Institute of Technology. Prior to being named president of the U in 2011, he was provost and senior vice president for academic affairs at Stony Brook University in New York

f2015_futureofhigheredrebeccablankUniversity of Wisconsin-Madison Chancellor Rebecca Blank (B.A. '76) holds a degree in economics from the University of Minnesota. Her doctoral degree in economics is from the Massachusetts Institute of Technology. Prior to being named chancellor of UW-Madison in 2013, she held several positions in the United States Department of Commerce, including acting secretary. In 1987, when Blank was a professor of economics at Princeton University, Minnesota named her one of 40 outstanding alumni under 40.

f2015_futureofhigheredrobertbrownBoston University President Robert Brown (Ph.D. '79) has a doctorate in chemical engineering and mathematics from the University of Minnesota. His bachelor's and master's degrees in chemical engineering are from the University of Texas at Austin. Prior to being named president of Boston University in 2005, he was provost and professor of chemical engineering at Massachusetts Institute of Technology.

f2015_futureofhigheredhansonUniversity of Minnesota Vice President and Academic Provost Karen Hanson (B.A. '70) holds a duel degree, summa cum laude, in mathematics and philosophy from the University of Minnesota. Her master's and doctoral degrees in philosophy are from Harvard University. She was named vice president of academic affairs and provost in 2012. Prior to returning to the U, she was provost and executive vice president on Indiana University. Hanson moderated the discussion.

Karen Hanson: Let’s begin by talking about student debt. It’s something the public talks about a great deal. Student debt also becomes alumni debt, which can affect individual and community well being and even allegiance to the institution from which one graduated. Why has debt increased so much and what can be done about it?

Eric Kaler: The clear cause is disinvestment in the University of Minnesota by the state. Our state appropriation was cut dramatically and those dollars were replaced with increased tuition dollars. At the same time, the institution became increasingly efficient. To illustrate, look back 10 years or so and do the following exercise: add together the state appropriation per student and the tuition paid by the student to get a total that is a very rough measure of what it costs to educate a student. That total is 11 percent lower today after accounting for inflation, showing a pretty remarkable improvement in efficiency. But the total state appropriation per student is lower today than it was at the beginning of the century. So what has changed dramatically is who pays the cost. It used to be mostly the state, and now it’s predominantly the student and her family.

Rebecca Blank: I think the biggest thing that has changed for public institutions is that up until about 15 years ago anyone who wanted to go to these institutions could work their way through college. When I went to the University of Minnesota, I worked part time in the winter and full time in the summer, and I saved money. I was living at home, and I wouldn’t have saved money if I had been living in an apartment. I would have spent it all. But it was not a problem for me to pay my way through college. It’s almost impossible to do that now. You have to have other forms of financial help, whether from family, scholarship, or student debt, for exactly the reasons that Eric mentioned: Disinvestment.

But I will also make a larger comment as an economist. We’re financing much more in our lives with debt in America in 2015 than we were in 1975 or 1985. Lifestyles have changed.

Kaler: That’s extraordinarily important. When I was a child and my mother wanted a new piece of furniture for the house, she took $15 a week to the furniture store until she paid for it and then she brought it home.

Blank: Yes. It’s not clear that colleges and universities are to blame, which tends to happen in the public conversation, for the fact that parents are not saving as much for college as they used to. Of course, there are many reasons for that.

Kaler: It really is a shift toward consumerism, instant gratification, and less concern for saving for the future. I feel that there’s much more of a buy-it-now-and-pay-for-it-later mentality.

Blank: You end up with a double whammy: the amount of money that individuals have to pay for their education at public institutions goes up at the same time that family lifestyles have changed in such a way that they save less. Put those two together, and you see a rise in student debt.

Robert Brown: I have spent my entire professional career in private research universities since leaving Minnesota. Private research universities look at some of these things a little bit differently than do the public universities.

The media’s focus on debt is not totally substantiated in terms of the numbers on a capitation basis. If you look at, for example, College Board data for 1999, the average debt for a graduate at a public university was $21,200 for someone borrowing. That has risen in 2012-2013 to $25,000. That ends up being a 1.5 percent annualized increase in debt load. The numbers don’t bear out the hysteria. What has happened is that more people are borrowing than did so 25 years ago, when more people were self-financing college. But the actual amount of debt on an average value for the person borrowing hasn’t gone up very much. And if you look at the private schools, that annual debt increase annualizes at about 2 percent, going from $24,000 to $31,000 between 1999 and 2013.

That’s not to diminish the impact this debt has on families and individuals, but the fact is that the increases over a long time scale are not very large.

When I went to the University of Minnesota . . . it was not a problem for me to pay my way through college. It’s almost impossible to do that now. —Rebecca BlankIn the private university sector we give enormous amounts of financial aid, and that amount has gone up proportionally to offset increases in tuition. We don’t have a state appropriation, so we have to fund all of our expense increases either off tuition or other sources. If you look at our freshman class at Boston University, 58 percent of our domestic students receive financial aid and the average award is almost $30,000 per year for an institution with an annual tuition of $44,000. It’s a very different economic model with the large amount of financial aid given to students with financial need. I don’t think the institutions are very good at telling our story about the real numbers.

Kaler: If you look at the average net price—the cost after financial aid—for a family of a student that makes less than $75,000, there are only a handful of public institutions in the state of Minnesota that are cheaper on a net price basis than the University of Minneosta Twin Cities—and three of them are our fellow system campuses in Crookston, Morris, and Duluth.

Blank: I agree with Bob that the public discussion on student debt is way overstated and almost reaches a level of hysteria at times. If you take the average debt load of $25,000, all of the economic studies that look at the returns on investment in a college education come up with returns of somewhere between a half million and $800,000 return on a college education. Now if I asked you, would you borrow $25,000 in order to make half a million or $800,000, you should say yes because that’s a very good deal.

When I went to the University of Minnesota . . . it was not a problem for me to pay my way through college. It’s almost impossible to do that now. —Rebecca Blank

That said, there are two ways in which debt is a problem. One is there is a very small share of people who do borrow excessively. A student with a social work degree who borrowed $200,000 is not going to be able to repay that very easily. That’s a problem.

Secondly, you’ve got certain populations, particularly low- income and historically disadvantaged minority groups, who are very wary about this sort of borrowing, because they’re not at all sure of what the returns are going to be. Some simply won’t go to college rather than take on debt. So historically, for instance, African American students are far less willing to borrow. So you’ve got to really worry about how you deal with that.

Kaler: Only in discussions of student debt do we use a very perverse definition of average. What gets left out of the discussion is that we talk about the average student debt of students who have debt. That’s important, because 39 percent of our students graduated last year with zero student debt. So the real average of all the debt spread across all students is about $17,000 or $18,000, not the higher figures often cited. The lower number is important particularly, as Becky mentioned, in communities where people are reluctant to borrow. I suspect we all package financial aid that covers or exceeds the cost of tuition, but getting a lower debt number that’s also more accurate into the conversation may prompt a student to consider college rather than immediately reject taking $27,000 or $28,000 in debt.

Brown: To reinforce what Eric said, the student debt discussion is often based on anecdotes. You see the stories built around individuals burdened with massive amounts of debt. One of the things that is not parsed well in the discussion is the difference between someone’s undergraduate debt and someone who went to graduate or professional school on loans and has piled up significantly more debt than he or she would have as an undergraduate.

What do you think higher ed can do to reassert its value as a public good? —Karen Hanson

I can’t speak for the publics, but in the private schools, even among undergraduates, the difference between the median debt and the average debt is very significant. What you have is a few people borrowing large amounts of money that will skew the debt level significantly. The average is much larger than the median, even factoring in that you’re only doing the debt on people who borrow.

This is something the private universities are trying to deal with in admissions without discriminating on the basis of ability to pay. When we use what we call need-blind admissions, we admit everyone who meets our academic requirements and is capable of being successful, independent of their ability to pay and of our ability to finance their aid. What you see in the privates today, which I don’t think is very good for either the universities or the students, is need-aware admissions, where students who may be academically qualified are not even being admitted because the institution is worried that they will take out massive amounts of debt and skew the university’s debt numbers. This is a perverse consequence to this debt conversation.

Hanson: That is alarming.

Kaler: That is, and we see some large distribution of debt, too. Two years ago, out of more than 7,500 students who graduated, we had two who graduated with more than $120,000 in student debt from the University of Minnesota. I have no idea how you can do that, but they did.

Brown: They lived in a very nice apartment.

Kaler: I bet they did.

Only in discussions of student debt do we use a very perverse definition of average. What gets left out of the discussion is that we talk about the average student debt of students who have debt. 39 percent of our students graduated last year with zero student debt. —Eric Kaler

Blank: It goes back to the point we were making earlier about people having individual choices: to live in a very nice apartment, to start a family—they may have chosen to live in a way that we might not associate with student life. I think that complicates things with some of these students.

Hanson: When we talk about the benefit of higher ed in terms of return on investment, for many people it leads to the idea that it is a private good that people ought to be paying for. But in the past, the assumption was that education, even if it was a private goal, was also a public common good. The change in that perception seems to have some effect on funding decisions, either in legislatures or in personal households. What do you think higher ed can do to reassert its value as a public good?

Blank: I think we’re at a moment in time coming out of the deep recession of five or six years ago where people are still very focused on the utilitarian value of education. So a lot of folks say that everybody has got to be in STEM [science, technology, engineering, mathematics], everyone has to have a degree that’s going to lead immediately to a job that pays a reasonable wage. I suspect my colleagues and I emphasize the utilitarian value of education whenever we talk to the public or our state legislators.

Trying to figure out how you make an institution work . . . when state dollars have fallen rapidly for the last 15 to 20 years is, to me, the biggest challenge of the big publics. If we could solve that, everything else is pretty minor in comparison. —Rebecca Blank

As the economy remains strong for several years, I think that will go away a little bit. Talking about the value of humanities, of good citizenship, and of an educated citizenry becomes a little bit easier to do when you’re a little further away from everyone feeling very economically pressed. But I do think we have to continue to talk about what education provides, and particularly what the state university provides for the state in terms of public benefits, economic and cultural. It’s not by chance that one of the first things new territories did when they became states is set up a public university. They believed they needed them in order to create a citizenry that could grow the states.

Kaler: The words of the Land Grant Mission and the Morrill Act line up with that. We also are in a time in the United States in which there is a group for whom facts don’t really matter. Once you have a culture where everybody is entitled to their own facts, the value of logic and common sense and therefore of education begins to fade. I think that’s being played out in parts of the country today.

Brown: In this context, I think it is important to look at the evolution of higher education in this country and the increase in the proportion of the high school cohort seeking to attend college or university. We think about the wonderful research universities that are represented in this discussion as a public good. The fact is, they serve the public in a broad sense of the word, but they have never really truly been open to everyone. We have always had a specific number of seats in our institutions and we have only a specific number of faculty we can hire. But universities have had the ability to try to craft a balance between access and quality. That balance has come under fire.

I think private universities are a little bit immune to that, but not totally. The public land-grant universities have to deal with this day in and day out in terms of balancing the view of them as a public good, in which case they would be open to all, versus maintaining quality.

Hanson: Aren’t there other ways in which they are a public good, though? For example, when we educate a doctor, and the doctor goes to a small town where there were no doctors, we have served the public, even those who haven’t attended our institution.

Brown: I think you have to have that broader definition of public good, but that is not the pure definition of a public good. When you start looking at what I call the second-order effects of higher ed—the research we do, the scholarships and education we provide, and the impact of the people we educate—that’s how we have to tell our story.

That’s how we have our expanded impact. At the same time, when you talk about access and student debt, what you’re really doing is coming back to a purer definition of the public good. You’re asking, as you mentioned at the very beginning, can everyone go to these universities and graduate debt-free, which is in some sense a purer definition of public good.

Kaler: As we all know, the University of Minnesota has gone through that transition, as an essentially open access university in the 1960s to one now that is aspirational for most Minnesota students.

Blank: I will say that this particular moment in time, and attacks on the “elitism” of the universities, has nothing unique in it. Anyone who reads the history of public universities knows that these moments come and go regularly in our history. In fact, the Progressive Movement that swept both Minnesota and Wisconsin a century ago had a very strong egalitarian and anti-elite aspect to it. Here in this state, real battles were fought between those who wanted to fund higher education and those who thought university expenses were not helpful to the state. So you’ve got to take a bit of a long view when you are in the midst of these moments. They come, but they do go as well. Particularly at the university, we just have to keep advocating for our value to this community and this state.

Hanson: That’s clearly one challenge, and apparently a recurrent challenge that faces our reputation. How are you addressing it at your institution? Is it something that’s at the top of your list of presidential challenges?

Blank: The top of my list of challenges is trying to figure out how to create financial stability for an institution where our long-term model has included substantial subsidies from the state, and that model is being eroded year after year. The state at the same time wants to continue to demand that we provide the same subsidy to our students, even though they aren’t providing it to us. They want the same low tuition rates for the citizens of the state because that’s good politics and good for the state. Trying to figure out how you make an institution work in the midst of those financial challenges when state dollars have fallen rapidly for the last 15 to 20 years is, to me, the biggest challenge of the big publics. If we could solve that, everything else is pretty minor in comparison.

Kaler: Yes, but it is an iron triangle. Minnesota struggles with the same thing, although we do have the blessing of constitutional autonomy and can raise our tuition to the degree the Regents will allow. But the model is under attack, and it’s difficult to see how we maintain the research quality in the land-grant mission without the support from the state we’ve had. It will be a very different future.

Brown: From the private university perspective, I would change the language slightly. It really comes down to the same thing, which is maintaining our value proposition to our students and our funders. The value proposition is to maintain the quality of education and student experience that justifies the cost of the education, both in launching people’s careers and creating a well-educated citizen. But that value proposition is a balance between financial aid and net price, as Eric said, versus the quality and the experience we give. It’s a slippery slope for us as a quality private university totry to cut costs and decrease net cost to people, and then at the same time lose value and the quality of what you’re doing. We all struggle with the same challenges. I think that our challenges are different and less than the challenges for a public institution today.

I can tell you a dozen anecdotes about various obscure research projects done in the early 1960s that became absolutely central to technologies invented or improved in the last 20 years. What’s very hard to do is to track research done today in terms of its effects over the next 10, 20, or 30 years. —Rebecca Blank

Blank: The big issue for the publics, one of the reasons we are all here and why we value these places so much, is the access they provide to people who might never have access to higher education. The changes in finances make that access more difficult. It’s the combination of the decline in state funding and its impact on access which fundamentally challenges the very mission that we were created for more than 150 years ago.

Hanson: As you think about the original mission and value proposition for your institution, you’re doing so in the context of a national discussion about educational outcomes at all levels, from local school boards to President Obama. How do you measure the success of your research, teaching, and outreach missions?

Kaler: The research mission, at least in the quantitative social and physical sciences, is pretty easy to document. The liberal arts and the performing arts are much more challenging to quantify in terms of outcomes. There certainly are those who would argue that we’re really not transforming our students at all, just providing them an opportunity to get four years older—which is a value in and of itself, if you’ve raised teenagers!

The idea of a standardized test to gauge higher education outcomes is fairly challenging. Probably the best thing we could do is to track how our students do once they enter the workforce. But Bob will remember that there was an engineering accreditation effort to do that around the turn of the century, and employers’ interest in providing that feedback was pretty negligible. So meaningful data in this space is going to be hard to get, which of course leaves room for rhetoric and posturing by people who want to have a voice in it.

Brown: One of the least productive outputs of higher education today are students who do not finish a degree. And so retention and graduation rates are something I strongly believe are the first measures of outcomes. The numbers that Becky quoted about the value of higher education in terms of lifetime earnings are for a graduate, not someone who just has one year of college.

Universities are places where you should be able to have discussions and discourse about what the public, or at least some subsections of the public, view as uncomfortable topics. That’s the nature of university. —Robert Brown

And then I’d like to support exactly what Eric said about any effort that tries to look at the economic consequences. This country can do that only if it actually puts in place serious longitudinal data tracking systems that link people’s educational records with their income records long term. We’re a long way from having that data, and to talk about the economic outcomes is all rhetoric until real data becomes available.

Blank: I agree with that, though I also want to say, as an economist, you don’t want to be caught again in the utilitarian argument, where the only reason for an education is to make more money than you otherwise would have. There are a number of people who go to college and take jobs where they almost surely make less money than they might have had they taken some other path in life. They’re doing that because of various other life goals.

I think only half of what happens to people at college is what they learn in the classroom and how it prepares them for the next job. The other half of what college is about is getting into an environment where there are a whole lot of people really different from you. Where professors engage you in thinking about things you’ve never thought about before. It gives you a sense of possibilities and a sense of the breadth and width of the world in all its diversity that changes the way you think about your life. And that’s an incredibly difficult thing to measure by any standard.

Brown: Well said.

Kaler: Very well said. You really can’t deconvolute the person, their ambitions, and the education they receive. We all know wonderfully successful people who probably got a quite mediocre undergraduate education, and we know the opposite. I would second Bob’s point that retention and graduation are very important. It also links back to the student debt issue. If you really want to rack up student debt, pay for years five and six. That’s where you see a spike in student debt acquisition.

Brown: To follow on that point, if you really want to see student debt default rates, look at the student who borrowed money for the first two years and then dropped out. That’s where you see the largest default rates.

Blank: And we know those are the students who get very little out of their college education. The completion of college is enormously important.

Hanson: Discussing debt really conveys the complexity of measuring outcomes. Do you want to say more about measuring the research impact of our universities?

Blank: I think Eric’s point is that the immediate research impact is quite easy to measure. You consider federal research dollars awarded on a peer basis, you look at publications, you look at the number of faculty who are admitted into various honor societies, or win Fulbrights, those sorts of things. What we have more difficulty measuring is the long-term effect of the basic research that American universities do. I can tell you a dozen anecdotes about various obscure research projects done in the early 1960s that became absolutely central to GPS systems, or to computers, or to other technologies invented or improved in the last 20 years. What’s very hard to do is to track research done today in terms of its effects over the next 10, 20, or 30 years.

We were talking about state disinvestment in education. But federal disinvestment in the research enterprise and the slowing down of federal dollars and declines in the National Institutes of Health or National Science Foundation budgets are equally concerning on the innovation and competitiveness side for the American economy. I have difficulty giving you hard numbers that show exactly the magnitude of that, but it is there, and it is large, I believe.

Brown: I think what Becky says is absolutely right. If you look around the world today, you see that developing countries and other developed countries are trying to emulate our research universities. Other countries are building institutions based on hiring faculty who are leaders in their fields and are trying to supply them with research support to compete with us. They view research universities as economic engines within both local and national economies. It’s not a perfect measure, but people duplicating you is a metric that says other people think you’re doing it right.

Kaler: Yes. Imitation is flattery. Fortunately, we have a 100- year head start, and we also have a foundation of openness and academic freedom that lets people do unfettered research and be contrarian. That foundation does not exist in the societies that are trying to catch up with us.

Hanson: Let’s turn to academic freedom. While it’s true that colleges and universities in the United States regard academic freedom as a fundamental condition of the academy, lately there have been high-profile cases where professors’ comments out of the classroom, or on social media, have stretched the public’s and alumni’s tolerance for free speech. How should an institution navigate that balance between academic freedom and excessive speech? Or let me put it more strongly: they’re worried about a hostile climate for those at the university.

Blank: I want to make it very clear that there should be no question that any subject area is thinkable and researchable at a university. A university is a place where any thought can be thought and anything can be debated. I understand there’s a very gray area where you get into what becomes hate speech and really limits learning rather than helps it. To the extent that the concerns are sometimes about people in the public sphere who simply don’t like some of the topics that the university is working on, that has been historically what created the arguments for why universities need protection for academic freedom.

I suspect all of us would say you cannot tolerate public intervention in terms of what topics people can study and how they go about studying them. What may seem crazy today may not be at some point in the future, and freedom is important for the process of discovery. That doesn’t answer the question of what if someone becomes very hostile in the way they communicate about their work or about certain topics, and there is such a big gray area, it’s just hard to draw lines.

Brown: I have been involved in one of these high-profile cases over the last several months. Our position is that freedom of speech is just that. It’s freedom of speech. Having public opinion try to define the line between what is appropriate and not appropriate runs the risk of letting the public decide what is freedom of speech. That’s not tolerable on our campus.

Estimated cost of attending the University of Minnesota in academic year 2015-16 for a resident undergraduate living on campus:

Tuition/fees $13,840 Books/supplies $1,000 Room/board $8,744 Transportation $200 Personal/misc. $2,000 TOTAL $25,784 Source: University of Minnesota

We are committed to having an open and nonthreatening environment for education and research for all of our students and faculty. But nonthreatening does not mean comfortable. Universities are places where you should be able to have discussions and discourse about what the public, or at least some subsections of the public, view as uncomfortable topics. That’s the nature of university, that’s the nature of an educational environment. What we see today is more and more of a push from the public to exclude those conversations from the university. That happens in all kinds of facets around race, religion, and national borders. The university has to create a nonthreatening environment internally so we can be one of the few places in our society where those discussions can happen.

Hanson: That is the way we think of ourselves, but is there something more we could say about why it is so important?

Brown: In the process of educating a well-informed citizen it’s essential that students, faculty, and staff have talked openly and discussed these very hard issues that society has to deal with. The idea that you would create an educational environment in which those issues were not discussed openly, and sometimes in very uncomfortable settings, creates a citizenry that then cannot make the decisions the country has to make.

Kaler: It is such a challenge to draw a line in an area that can be incredibly gray and viewed in dramatically different ways by different people. Creating a physically safe space in which to be emotionally and intellectually uncomfortable is a challenge, made more so by some of the divisiveness and polarization in American culture.

Blank: You asked the question of why we care about academic freedom. One is the educational reason. If you’re really going to understand what you believe and how you believe and be able to defend it, you have to be challenged. If that challenge leads you to change your mind, so be it. If it leads you to think more clearly about why you believe, that is the process of education. A place that’s constantly challenging you is a place of education. Though again, it has to be a place that doesn’t feel unsafe to people.

The other reason we care about academic freedom is that universities are constantly evaluating the society around them, whether challenging people on issues related to science—like whether Earth actually orbits the sun—or on social issues. How does that population engage with society, and how should it, and how does society discriminate? Those are very difficult questions for many people historically to think about.

Universities are places that lead people to think in new ways. Free societies need universities with academic freedom. Universities are always the cutting edge, and often on the incredibly uncomfortable cutting edge of where change is coming from and where societies are moving. You’d have much more stagnation and fewer opportunities to challenge and change and improve if you didn’t have academic freedom.

Hanson: It’s particularly challenging to make a general argument about this amid conditions where people have already gotten stirred up about something.

Brown: It is terribly challenging. When you state it in the abstract, most people agree until an issue comes up that hits their nerve.

Hanson: Yes.

Kaler: Oh yes. Putting this in practice is the challenge. You really come into situations in which you have to make hard decisions that absolutely will not make everybody happy.

Brown: In fact, one measure of doing the right thing is that everyone is mad at you.

Blank: Part of the problem is that intellectual freedom and constant challenging are absolutely antithetical to institutions, and the three of us are trying to run institutions. You can’t run an institution when every time you say something, people question it. At some point, you’ve got to move forward and make things happen inside of the organization.

That makes the chancellors’ and presidents’ job quite challenging, because we’re telling our students and our faculty: don’t think that way. Ask questions. Find out what’s wrong. Think outside the box. But we have to keep order in some form or another to make these institutions operate.

Kaler: And make payroll every two weeks.

Hanson: We’re glad all of you are leading these universities and are connected to the University of Minnesota. We thank you for taking part in this today. Now I’ll let you get back to your day jobs.

MINNESOTA ALUMNI MAGAZINE, Fall2015

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