What is the biggest problem facing education today? (2024)

Adapted and expanded from a paper I wrote on the prompt, “What is the biggest problem facing education today?”

The biggest problem facing education today is the lack of innovation and mobility in higher education. Because of a number of private and public factors, colleges and universities have turned into massive private businesses with multi million dollar athletic departments and multi billion dollar endowments. (Powell) Dean’s act as global CEOs trying to improve their ever-growing balance sheets. (Powell) Students are seen as customers with low price sensitivity. With student loans funding irresponsible and unsustainable debt fueled growth. (International Monetary Fund) Universities are doing an increasingly poor job preparing students for the current workforce and adapting to the rapid rate of technological change. (Abel, Dietz and Su) Students leave higher education unprepared for what the workforce will look like in coming decades. If these trends continue unchecked, the continued decline of the American educational system is certain. Reform is necessary to prepare for the future.

Schools are positioned perfectly to take advantage of a combination of public and private sector factors that have fueled this increase in monolithic structure. Their tax deference under Section 501(c)(3) of the Internal Revenue Code allows schools to eschew the largest drain on income traditional businesses face. (Exemption Requirements — 501(c)(3) Organizations) Early 21st century monetary policy and easy lending has opened the doors for a tremendous boom in student loans. Banks and organizations have access to capital at historic low interest rates (IMF). Access to cheap capital has subsequently increased the availability of debt. The US Federal Reserve states “Between 2001 and 2016, the real amount of student debt owed by American households more than tripled, from about $340 billion to more than $1.3 trillion.” Likewise, the demand for educated workers has risen with the increase in technology over the last century. (Chun) Increasing the likelihood of students being willing to take on large amounts of debt to facilitate their education. At the same time, many of the checks that are naturally imposed in free markets do not apply to educational institutions. There is no direct incentive to “create value for shareholders,” no short selling of educational stocks, no public quarterly reports. If a Dean or an administration makes poor decisions, the lack of visibility and transparency prevents free market accountability from holding them responsible in any meaningful way. Mistakes made in strategic decisions are often unaccounted for or left unchecked for years. Student loans have likewise ballooned into a $1.4 trillion market (Federal Student Loan Portfolio), primarily issued and insured by the U.S. Department of Education. The actual assets are mostly held by government agencies like Sallie Mae and PHEAA making them the federal government’s largest asset. With a neigh-infinite balance sheet, the US Government is directly subsidizing a private industry with loans (IWP).

These conflicting incentives make it increasingly unlikely that the dean or administration will take risks or deviate from the status quo in order to stay relevant. As Naseem Talib talks about in “Antifragile.” The strength of the community is often due to the strength in innovation by individual members. Risk taken by an individual is beneficial to the whole of the community. An ecosystem is strong when there are many new organisms striving to compete and succeed.(Talib) The reason startups can be successful when competing against companies with greater resources is that they can iterate and change quickly to adapt to changing market forces in consumer demand in a way that monolithic legacy organizations can’t. (Eric Ries) This is well illustrated through Facebook’s unofficial motto “move fast and break things.” Indeed the organizations that are successfully transitioning from old managerial practice is to new fast moving decentralize systems are the companies that are the most successful in today’s modern economy. (Beauchamp, Rose, et al.) Deans and college administrators do not have the incentives in place to facilitate change or adoption of new ideas. Their bloated compensation packages incentivise safe, traditional approaches with marginal improvements. (Sarros, et al) In an increasingly volatile world academic institutions are continuing to present old information and seek to improve outdated metrics. This process of optimizing a legacy system that is struggling to keep up is akin to adding an air intake to a Camry.

Unfortunately, the current system results in the vast majority of college degrees failing to prepare students for work in the current global economy. (Abel, Dietz and Su) More and more college graduates are working in the fields that traditionally did not require a bachelor’s degree. This trend has risen significantly since the 2001 recession. (Abel, Dietz and Su) A red queen scenario of educational creep. The necessity of a college education is greater than ever but it seems that colleges are increasingly failing to prepare students for entering the workforce.

Jack Ma, Chairman and founder of Alibaba, seventh largest company in the world and China’s second largest company in terms of market cap emphasizes the value of specialized education in numerous interviews. In one such interview at the World Economic Forum (Jack Ma: You’re Supposed to Spend Money on Your People), he emphasizes the importance of educational programs that directly apply to in demand jobs and skills. In a rapidly changing world, this focus on developing and continuing to train employees is critical to the long term success of any private enterprise. As the current educational model fails to provide these skills and knowledge increasing amounts of employers are developing siloed educational programs to actually train their employees. On a national level, as automation and computer intelligence increases, massive swaths of the low skill job market are at risk of being replaced by robots and computers. In Yuval Noah Harari’s book, “hom*o Deus,” he discusses the potential for 40% mass unemployment leading to the rise of what he calls “the useless class”. People with no value to industry, business, or society as a whole. While the rise of an entire “useless class” seems an unlikely scenario, change is inevitable. Economists describe these coming changes due to increases in computer processing and technology as “the Fourth Industrial Revolution.” (World Economic Forum, The Future of Jobs Report) Previous “revolutions” include the steam engine, the age of science and mass production, and the rise of digital technology. (Encyclopedia Britannica) The common parable of John Henry vs. the Steam Engine holds many similarities to modern day doomsayers of mass unemployment. While many were displaced and unemployed by these technological advances. New jobs, previously unimagined, cropped up enmasse. Train engineers, factory production workers, and computer programmers. This trend is likely to continue.

A common factor in all these previous industrial revolutions is new demands on educational institutions. The skill sets to be successful after each subsequent revolution changed. Educational systems previously unthought of emerged and thrived under the guidance of new technologies. A professor from the early 1900’s would never have imagined the rise of networking or computers. Pre steam engine theorists would not have considered teaching locomotion or steam engineering widely. Alec Ross, previous Senior Advisor for Innovation to Secretary of State Hillary Clinton, discusses in his book “The Industries of the Future” the likely advent of new industries in robotics, genetics, coding and big data over the next 30 years. Being able to train and educate populations quickly and effectively in these new domains will prove to be tremendously important. The value of a quality education system is magnified as the US fights to stay at the forefront of industry during this period.

The reemergence of Malthusian, Populist, Nationalist, and Socialist doctrine in modern parlance (Galston), and the generally pessimistic outlook (Larry Summers) on the American economy, one is painted a picture of England and France in the early 1800s. Fixed classes, landlords, capitalists, and laborers all bicker and fight with adversarial interests. Gary Rhodes in his paper “Market Models, Managerial Institutions, and Managed Professionals” discusses the worrisome trends of the American educational system at the turn of the century, “we again face the challenge of mitigating economic excesses, this time of global, hypercapitalism. The more higher education is modeled and reconstructed on a private, corporate market model, the less it can play such a mitigating role, and the more it itself contributes to the sharp polarization that promotes social upheaval.”

This does not need to be the case. Education can be used to contribute to the betterment of the entire population. However, an increase in the transactional nature of education will only deepen our growing “polarization” to the point of no return. As Friedrich List said “on the threshold of a new phase in the development of their country, statesmen should be prepared to take the long view, despite the need to deal also with matters of immediate urgency.” (Edinburgh Review) Is it a reform of policies, transparency around stewardship of trusts, realignment of incentives between student and administration, or new models of educational administration? Likely, all need to change in order to improve educational outcomes. Changes at the college level will have ripple effect across the american educational system. The purpose of the American primary and secondary educational system is increasingly to prepare students for postsecondary education. If colleges make changes, so will primary education. A lack of mobility at the college level has second order effects across the entire American educational system. Our elected parties must take into account the precipice at which we stand. The acceleration of technological systems, global trends towards populism, general political unrest, and growing distrust of government itself all increase the difficulty of the choices that must be made. But necessity demands a better long term solution to education than the current model. A failure to act in a calculated and forward looking way will have dramatic consequences for all American citizens.

So what’s the Solution?

Adam Smith cites improved production as the key to economic betterment. (Wealth of Nations) Support for the expansion into the American Frontier proved immensely valuable. (Henry Charles Carey) Similar to the way the untapped resources of the American frontier in 1835 seemed infinite, the potential of technology as we currently understand it also appears infinite. Undoubtedly it is not, but seeing that we are at the forefront of a global frontier our steering and governance would be well served to adopt similar policies. An open land grab into global cyberspace, fueled by government sponsored educational programs. Student loans are an ungainly behemoth. But, the same levels of investment into professors and the institutions themselves would be a massive infrastructural asset. Keeping the focus of investment on STEM educational programs to retrain much of the workforce into relevant growth industries would help to keep America at the forefront of the technology world for the next generation. A decentralized educational approach would accomplish many of the goals and mitigate many of the issues presented earlier. Regional specialization of educational centers can help currently enfeebled regions regain relevance. We have already accumulated $1.4 trillion in debt to fund a multitude of educational programs with middling impact. Calculated investment can not only keep America at the forefront of this burgeoning industrial revolution, it can be used to rebuild communities left behind by the last. Detroit can be revitalized as a manufacturing and research hub for robotics. Local expertise in automotive production would provide a valuable asset to jump start American development in a burgeoning industry. West Virginia coal mines can aid the development of new battery technology with their local deposits of Nickel, Magnesium, and other minerals. Sun drenched Arizona and New Mexico can provide an ample research and testing ground for new solar technology. Florida and the Gulf Coast can provide a central hub for developing predictive weather models and will be directly impacted by the success of that research. China and other nations have been pursuing a similar strategy since the early 2000’s to great success. (Wu) Our success as a global nation in the 21st century depends upon adopting similar policies.

The one true fuel the American Economy depends upon is growth. In every industrial revolution growth of industry has spurred prosperity to new heights. Instead of cannibalizing its own citizens with debt and burdening them with a subpar education in diminishing fields, the focus should turn to unexplored frontiers and how we can support expansion and innovation into them. The United States needs to decide if education is a business, then it should be run like a business. With proper accounting practices, taxes, reporting, and limited oversight in a market that has transparency. Government half measures and band-aid solutions will only deepen the trench of problems that are forming around our current educational systems. The best solution appears to be a combination of both. Stewardship and constraint on the level of national policy, and autonomy and freedom on a local level. Our current model is unsustainable and will disadvantage the United States in the future. Reform of education is necessary to prepare the United States in the coming years.

Works Cited

Abel, Jaison R. and Deitz, Richard and Su, Yaqin, Are Recent College Graduates Finding Good Jobs? (January 1, 2014). Current Issues in Economics and Finance, Vol. 20, №1, 2014. Available at SSRN: https://ssrn.com/abstract=2378472

Bauer, Philipp and Riphahn, Regina T., “Kindergarten Enrollment and the Intergenerational Transmission of Education”. IZA Discussion Paper №4466. Available at SSRN: https://ssrn.com/abstract=1486968

Beauchamp, Rose, et al. “Reorganization without Tears.” McKinsey & Company, www.mckinsey.com/business-functions/organization/our-insights/reorganization-without-tears.

Carey, Henry Charles. A Study in American Economic Thought. Kaplan, 1931.

Chun, Hyunbae. “Information Technology and the Demand for Educated Workers: Disentangling the Impacts of Adoption versus Use.” The Review of Economics and Statistics, vol. 85, no. 1, 2003, pp. 1–8. JSTOR, JSTOR, www.jstor.org/stable/3211618.

“Exemption Requirements — 501(c)(3) Organizations.” Internal Revenue Service, www.irs.gov/charities-non-profits/charitable-organizations/exemption-requirements-section-501c3-organizations.

“Federal Student Loan Portfolio.” Federal Student Aid, 25 Sept. 2018, studentaid.ed.gov/sa/about/data-center/student/portfolio.

Galston, William A. “The Rise of European Populism and the Collapse of the Center-Left.” The Brookings Institution, 8 Mar. 2018, www.brookings.edu/blog/order-from-chaos/2018/03/08/the-rise-of-european-populism-and-the-collapse-of-the-center-left/.

Harari, Yuval N. hom*o Deus: A Brief History of Tomorrow. New York: Harper, 2016.

“Industrial Revolution.” Encyclopædia Britannica, Encyclopædia Britannica, Inc., 9 Oct. 2018, www.britannica.com/event/Industrial-Revolution.

Institute of International Education. (2018). “International Student Enrollment Trends, 1948/49–2017/18.” Open Doors Report on International Educational Exchange. Retrieved from http://www.iie.org/opendoors

“Jack Ma: You’re Supposed to Spend Money on Your People.” YouTube, World Economic Forum, 18 Jan. 2017, www.youtube.com/watch?v=WsQ7ysVt-0A.

List, Friedrich. “The German Zollverein.” Edinburgh Review, 1844, p. 177.

Powell, Farran. “10 Universities With the Biggest Endowments.” U.S. News & World Report, U.S. News & World Report, 2018, www.usnews.com/education/best-colleges/the-short-list-college/articles/10-universities-with-the-biggest-endowments.

Rawat, Seema and Sanjay Meena. “Publish or perish: Where are we heading?” Journal of research in medical sciences : the official journal of Isfahan University of Medical Sciences vol. 19,2 (2014): 87–9.

Ries, Eric. The Lean Startup: How Constant Innovation Creates Radically Successful Businesses. Penguin Books Ltd, 2011.

Rhoades, Gary. “Market Models, Managerial Institutions, and Managed Professionals.” International Higher Education, no. 13, 1998, doi:10.6017/ihe.1998.13.6453.

Rhoades, Gary, and Sheila Slaughter. “Academic Capitalism, Managed Professionals, and Supply-Side Higher Education.” Social Text, no. 51, 1997, pp. 9–38. JSTOR, JSTOR, www.jstor.org/stable/466645.

Rodrik, Dani. “The ‘Paradoxes’ of the Successful State.” European Economic Review, vol. 41, no. 3–5, June 1997, pp. 411–442., doi:10.1016/s0014–2921(97)00012–3.

Ross, Alec. The Industries of the Future. New York, NY: Simon & Schuster, 2016.

Sarros, James C., et al. “The Academic Dean: a Position in Need of a Compass and Clock.” Higher Education Research & Development, vol. 17, no. 1, Nov. 1998, pp. 65–88., doi:10.1080/0729436980170104.

Smith, Adam. The Wealth of Nations. Dent, 1910.

Summers, Larry. “Reflections on Secular Stagnation.” Larry Summers, 25 Feb. 2016, larrysummers.com/2015/02/25/reflections-on-secular-stagnation/.

Taleb, Nassim Nicholas. Antifragile: Things That Gain from Disorder. Random House, 2016.

Wu, Weiping. “Cultivating Research Universities and Industrial Linkages in China: The Case of Shanghai.” World Development, vol. 35, no. 6, 20 Apr. 2007, pp. 1075–1093., doi:10.1016/j.worlddev.2006.05.011.