Is It Valid to Assess Higher Education Using the Concept of ROI?

The smorgasbord of post-secondary education in the United States includes public and private colleges and universities, community colleges, and a variety of types of technical training institutions. In addition, some businesses have begun issuing certificates confirming a student’s mastery of that business’s software; these certificates are sometimes held to be as valuable as a college degree.

There is a wide range of options for students who have successfully completed high school.

There are also a wide range of motives for seeking post-secondary education.

Students matriculate because they want:

• a good-paying job
• to master a field of knowledge and gain skills to explore it
• a certain social standing
• to find a future spouse
• to make friends and enjoy a vibrant social life
• to get away from their parents
• to please their parents
• to live in a place far from their hometown
• to gain the skills to be a good voting citizen

In addition, students choose many private colleges and universities because they seek spiritual guidance and the opportunity to research and explore questions of worldview.

Given that students are attending different types of educational institutions for different reasons, how can one evaluate this system — if indeed it can be called a ‘system’ at all?

Some researchers have hoped to use the concept of ‘return on investment’ (ROI) to assess institutions of higher education. Simply put, how much does it cost to get a diploma, and how much money can a graduate earn with that diploma?

The method of investigation has a strength: it involves unambiguous numbers. It also has two weaknesses: it applies only to those students who attend college in order to get a good-paying job, and leaves open the question of cost: If a certain diploma costs N dollars, to whom does it cost? To the student? To the parents? To society at large? To the government?

If a student, or the student’s parents, or the student and parents together, pay N dollars to get a diploma, then is the actual cost of that diploma greater than, or less than, N?

Government-owned and government-operated colleges and universities in the United States carry the label “public” and receive large amounts of taxpayer dollars from state and federal governments, as well as funding from private-sector foundations and corporations. Given this financing model, whatever amount students and parents pay for tuition, the total cost of the diploma is a much greater number.

On a case-by-case basis, numbers vary, but in general, it can be said that many diplomas issued by public colleges and universities do not deliver a good ROI. If a degree costs tens of thousands, or even hundreds of thousands, of dollars to the students and parents, and additionally costs many thousands to the government and to private-sector charitable foundations, then it will be found that over a forty-year working career, such a diploma offers a poor ROI: the student could have taken that amount of money, invested it, spent forty years working at a slightly less remunerative job, and finished with a larger net worth, ceteris paribus.

Again, this type of ROI analysis applies only if (1) the student attends college for purely financial reasons, and (2) a distinction is made between costs to students and parents in contrast to costs to government and society.

A less precise, but still perhaps meaningful, type of ROI analysis can be built around the question: “Was it worth it?”

While it is difficult — more probably, impossible — to place a dollar value on “finding a future spouse” or “becoming a good voting citizen,” one can still ask the graduate, perhaps decades after graduation, if there is an intuitive sense that the financial sacrifice was justified. The answer will be necessarily subjective, but subjective satisfaction is an important factor both in society and in the economy.

In this second type of ROI analysis, it is also important to ask society as a whole if “it was worth it.” Given the burden on taxpayers and private-sector foundations, is it worthwhile to fund students and universities, if the goal of that college experience is finding a spouse or being an informed voter?

Either, or both, of the two versions of ROI analysis presented above highlight the role of cost. In the first version, the question arises: Can a student find competing degree-granting institutions which have different prices on a degree which allow them to earn the same income? If so, then the lower priced degree gives a better ROI. In the second version, the question is: Are there competing institutions which offer the same amount of personal fulfillment at different prices?

ROI analysis of higher education should produce a downward pressure on tuition prices, but it seems to produce little or no such pressure. Why?

One reason is the inflationary effect of student loans. When loans are available to students, tuition prices go up. This is a recursive cycle: students take out loans to pay the higher tuition; once the university sees that the students can pay the tuition price, it raise the tuition still further, causing the students to take out more loans, and then the university again sees that the costs have been covered, so it feels free to raise the prices again, and so on.

The very existence of student loans makes college more expensive.

There is double damage here: Tuition is driven up instead of down, and the bills are paid with money taken by force from taxpayers.

Because student loans are offered by governments, or guaranteed by governments, or coerced out of private lenders by governments, there is no ROI analysis conducted.

Normally, a lender examines a loan application to determine if there is a probability of a reasonable, i.e. market-level, ROI. If a person wants to borrow $500,000 to start a shoe store, there's a reasonable chance that it will yield an acceptable ROI. But if a person wants to borrow $10,000,000 to open a shoe store, a lender might well decide that an ROI at equilibrium rates is unlikely, and therefore refuse the loan.

Yet student loans are issued regularly to students whose chance of making a tolerable ROI is very small.

If a student wishes to pursue any particular course of study, then there is no problem with allowing that student to matriculate and graduate if the student and the parents are paying for the degree. The sense of personal fulfillment may perhaps constitute a good ROI in their view.

But if a student is receiving taxpayer dollars, then the question is put, not to the student and the parents, but to the taxpayers, whether it is “worth it” to fund such an education.

As seen, student loans are a cost to the taxpayer because they are either (a) issued by the government, (b) private loans guaranteed by the government, or (c) private sector loans issued under government coercion.

Now, to be clear, it is often an excellent ROI for a student to get a four-year degree, and additional graduate degrees, in disciplines like philosophy and literature. Students with above-average academic abilities should be encouraged to explore those fields. But it is quite a different question about whether the taxpayers should be compelled to pay for those degrees.

The damage caused by student loans can shackle graduates for decades, and economist Carol Roth notes that twenty-first century graduates burdened with student loans are suffering under a thinly-disguised version of “indentured” servitude as it was practiced in the early 1700s. She writes:

The opposite of creating wealth through the ownership of appreciating assets is the accumulation of liabilities and debts.

It is permissible, and sometimes even good, to take on personal liabilities and debts. But to impose those debts on society at large, i.e. on the taxpayers, amounts to abuse.

Rather than wonder how society can “free up more money for education,” it would be wise to ask whether the cost of tuition can be lowered. Ending student loans would give universities reasons to try to cut costs.

Fewer Men Enroll in Colleges and Universities: Why Our Educational Institutions Don’t Work for Boys

During the last decade or two, a troubling trend has manifested itself at American institutions of higher learning. Uniformly, more girls than boys matriculate and graduate. More girls are applying to college, more girls are being admitted to college, and among the students at college, more girls than boys succeed in reaching graduation, and girls have higher average grades than boys.

There is a serious gender gap here.

The generalizations above can be seen in, and confirmed by, reams of statistics. Not only does this gap exist, but it is also growing larger.

In September 2021, Douglas Belkin wrote an article titled “A Generation of American Men Give Up on College.” In that article, he concluded that “The number of men enrolled at two- and four-year colleges has fallen behind women by record levels, in a widening education gap across the U.S.”

The obvious questions are: What causes this pattern? What can be done to correct it?

It is likely that there is more than one cause for this gender gap: It is probably a multifactorial phenomenon. One of the causes may be societal and cultural attitudes about boys and masculinity. Another cause may be the structure and habits of the system of secondary education: high school.

In 2021, Belkin wrote:

At the close of the 2020-21 academic year, women made up 59.5% of college students, an all-time high, and men 40.5%, according to enrollment data from the National Student Clearinghouse, a nonprofit research group. U.S. colleges and universities had 1.5 million fewer students compared with five years ago, and men accounted for 71% of the decline. By 2024, those numbers had amplified the gap: women were more than 60%, and men were less than 40% of the incoming freshman class. During the years at college, more boys than girls dropped out, increasing the gap at commencement ceremonies even further.

This gap held consistently against other variables like race, income level, ethnicity, religion, etc.

This gap was a long time in the making, as Belkin’s 2021 article reported:

This education gap, which holds at both two- and four-year colleges, has been slowly widening for 40 years. The divergence increases at graduation: After six years of college, 65% of women in the U.S. who started a four-year university in 2012 received diplomas by 2018 compared with 59% of men during the same period, according to the U.S. Department of Education.

Indeed, by 2024, the graduation rate for men was still lower, and falling.

Coherent efforts to rectify this trend are rare, but some reasonable attempts have been made to matriculate more boys than girls, as Douglas Belkin explains:

At Baylor University, where the undergraduate student body is 60% female, the admission rate for men last year was 7 percentage points higher than for women. Every student has to meet Baylor’s admission standards to earn admission, said Jessica King Gereghty, the school’s assistant vice president of enrollment strategy and innovation. Classes, however, are shaped to balance several variables, including gender, she said.

At Baylor, which was trying for some form of gender equity already in Belkin’s 2021 article, there was still a significant gender gap.

The experiences of the admissions officers at Baylor shed some light on data which would apply to nearly all colleges and universities. One factor was the application process itself.

College applications require attention to detail, and that is a skill which is less common among twenty-first century boys than among twentieth-century boys, as Belkin explains:

Ms. Gereghty said she found that girls more closely attended to their college applications than boys, for instance making sure transcripts are delivered. Baylor created a “males and moms communication campaign” a few years ago to keep high-school boys on track, she said.

Given the ubiquity of the problem and the various causes of it, what’s to be done?

Any effective solution would need to be thoroughly and consistently applied across the secondary educational system. High schools, which are four years in most places but three years in some, might reshape themselves along these lines:

• More structure
• More discipline
• More competition
• More rigor
• More physicality

Boys thrive in structure, even when — perhaps especially when — they bump up against the boundaries of that structure and find them intact. In a consistently structured environment, boys know the rules of the process, and know that there is a consequence to not following those rules. Boys are drawn to video games and computer games because the machine applies the rules with ruthless reliability. By contrast, many schools currently operate with “soft” rules, leaving boys to wonder which, if any, of the rules are real. One older high school student was kindly helping a new freshman to understand the school; he pointed to a list of rules in the student handbook, and said, “I can tell you which of these rules are actually enforced.”

Discipline has become a politically incorrect concept in many current American high schools, but this does a disservice to boys. Boys need to know what the boundaries are, and what the consequences for violating those boundaries are. Psychologist Carol Gilligan authored a book titled In a Different Voice in which she argued that boys conceptualize interaction in terms of systems and rules, whereas girls conceptualize interaction in terms of relationships and mutual care. One need not accept all of Gilligan’s hypotheses in order to see the relevance of her insights.

Competition is a key motivator for boys. Some high schools have stopped publishing a “rank in class” statistic for graduates. Some boys excel in competitions, e.g., for playing musical instruments or academic games, but fail to put forth effort in classroom situations which contain little competition.

Boys and girls are both aware if they are receiving meaningful academic content, or if they are receiving fluff. If an assignment is to write about how a poem might make the reader feel, and if it is therefore perceived as less rigorous, boys are inclined to devote less effort to it. Girls will also perceive the assignment as less rigorous, but are more likely to comply and give effort to it. By contrast, when the assignment for the same poem is to count the number of syllables per line, and see if there is a mathematical pattern present, boys are more likely to engage, seeing the assignment as a mental challenge. Rigor is a skill needed in order to successfully complete the college application process.

Boys and girls both benefit from physical fitness. At the secondary level, that can take different forms. Outside the United States, some high schools have a fifteen- or twenty-minute exercise program for all students every morning. Requiring more physical education (“gym”) classes is also an option. The solution could even be as simple as encouraging students who live near the school to walk instead of drive to school. The existence of high school athletic teams and programs muddies the perception on this question. Most students are never a part of a high school athletic team or program during their four years.

These are merely a few preliminary ideas which will require much more examination and refinement. But nothing will change if no action is taken. In Belkin’s 2021 article, he states:

​​Men are abandoning higher education in such numbers that they now trail female college students by record levels.

By 2024, things had only gotten worse.

Hope is to be found: increasingly, high school administrators, college administrators, and parents are seeing the systematic disadvantages confronting boys. A century or two ago, Americans worked to make education available to women. Now they work to make it available to men.