Remaking College: Innovation and the Liberal Arts

2. Challenges and Opportunities in the Changing Landscape

Chapter 2 Challenges and Opportunities in the Changing Landscape Daniel H. Weiss President, Haverford College The greatest challenge facing higher education today—both for individual institutions and for the system as a whole—lies in the ability of its leaders and key stakeholders to realize an academically compelling, publically comprehensible, and economically sustainable vision in an environment of profound uncertainty . The major factors driving this uncertainty are well known to all who maintain an interest in American colleges and universities: a distressed and (presumably) unsustainable economic model; the proliferation of dazzling and potentially transformative technologies; a seismic demographic shift in collegeeligible students; and increased public skepticism about the purpose and value of a college education, or more cynically, a college degree. Collectively, these factors are likely to have an impact on the mission and purposes of higher education comparable to, if not greater than, that of the GI Bill on college enrollments following the Second World War or, shortly thereafter, the impact of government-sponsored research on the rise of the American research university . In some ways we might compare the current situation to the so-called revolution of the 1960s, which achieved, among other changes, coeducation as normative at most selective institutions, the “democratization” of the curriculum, and the emergence of community colleges as an essential part of the national system of higher education.1 In order to conceive of what such a leadership vision might encompass for liberal arts colleges, it would be useful to assess more closely the precipitating factors that are driving much of this change as well as the disparate and complex competitive environment within which liberal arts colleges currently operate. 26 Reimagining the Liberal Arts College in America Precipitating Factors Economics Clearly, the most obvious and long-standing problem facing higher education has been the dramatic, and presumably unsustainable, rate of increase in college tuitions and fees. Even after adjusting for inflation, during the last twenty years tuition and fees at private four-year colleges and universities have increased by 280 percent, while that for public institutions has increased 370 percent.2 It is for good reason that many families no longer believe that they can afford to send their children to college. Whereas in 1992 educational costs represented 30 percent of median family income, by 2012 the number had risen to 55 percent and is continuing to rise.3 The problem of escalating costs is highly complex and, perhaps not surprising, poorly understood by the public and even by many key stakeholders. The impact, however, is becoming increasingly clear to all. Following the economic downturn of 2008, the connected problems of rising costs and declining affordability have attracted much attention from leaders in higher education, economists, and the national media. Once thought to be largely the consequence of shortsighted management practices and an excessive focus on consumerism, the root causes of these financial problems are now generally recognized to be systemic and cumulative. I will review briefly five major factors: (1) the skilled labor productivity problem, also known as “cost disease”; (2) the cost premium for investing in quality and innovation; (3) the consequences of an overheated competitive environment; (4) historical management practices; and (5) the impact of increasing market demand. First identified by William Baumol and William Bowen in their study on the economics of the performing arts, the cost disease problem in higher education has received much recent attention, including a comprehensive study on rising college costs by Robert Archibald and David Feldman.4 Put briefly, the problem concerns the costs associated with supporting a highly skilled workforce in laborintensive industries such as higher education or the performing arts. Since at least the 1970s, industrial productivity gains have lifted the overall economy, and therefore the standard of living, for a highly educated workforce. Whereas productivity improvements have generally led to substantial salary gains for skilled workers—clearly benefitting some more than others—this has not been the case in labor-intensive industries such as higher education. For skilled labor in higher education, including especially professors and administrators, salaries have grown to keep pace with the general economy, but productivity growth significantly lags behind that of other sectors. As a result, educational costs per student Challenges and Opportunities in the Changing Landscape 27 have inevitably risen faster than the overall economy.5 Increasing faculty productivity would be very difficult under the current system without either increasing class size or redirecting...