Can U.S. Universities Make a Comeback? A Debate

(Bloomberg Opinion) -- The coronavirus pandemic forced almost all U.S. colleges and universities to cancel classes in March and resort to remote learning for the rest of the spring semester. But the lockdowns also brought to a head long-simmering issues: Was the four-year on-campus experience worth the exorbitant cost, which many students could only afford by taking out huge loans? And how sustainable is the entire model, with tuition increases that outpace inflation and ever-more extravagant amenities offered in a bid to lure students? Bloomberg Opinion writers Tyler Cowen and Noah Smith met recently online to debate the future of American higher education.  

Noah Smith: Both you and I agree that U.S. universities are about to come under enormous stress. Many colleges were already in trouble before the pandemic because of declining enrollment, heavy student debt and a declining value proposition for many institutions. Now coronavirus will make the situation much worse. Absent a generous federal bailout, state funding for public universities is likely to decline, as it did during the recession of 2008-9. And this time, the collapse in the number of high-paying overseas students -- due to Covid-19 and to Trump administration restrictions -- will add to the misery.

Where we may differ is in our proposed responses. You’ve suggested that colleges should shift to more online education. But universities do much more than teach students; they’re also an essential engine of research. Money from tuition and state governments pays for professors' salaries, research-assistant salaries, lab facilities and many other essential components of research. How can that money be replaced if colleges shift to a cheaper online education model?

Tyler Cowen: I am more optimistic about the online education model than you are.

First and most importantly, it will bring in many more students and thus additional revenue, thereby supporting financially ailing institutions. Consider parents who are raising children, people in the military, retirees, disabled individuals and many others who would like to take online courses, whether or not they finish the degree. The same classes could be sold abroad, often at lower prices, to what is a very large and growing market.

Online education doesn’t have to mean no face-to-face instruction. Let’s say an Indian college shows its students 10 weeks of Noah Smith lectures on video, and offers supporting tutors throughout -- isn’t that a great deal for everyone involved? The students could even sit in the room together and watch you.

In a tier-one American research university, I envision something like 20% of the curriculum being on line. No more Monday-Wednesday-Friday 8 a.m. classes, fewer boring classes and some people will be able to graduate in three years. Professors will have more time to meet with students, and I am happy to demand more from the faculty in this regard. Virtually every class will be on tap, once cross-university registration and credit exchange is allowed.

The product will be much better, more convenient, and face-to-face meet-ups will be more alive than ever, at least once Covid-19 recedes.

NS: That’s certainly a pleasant vision. Shifting to 20% online classes will certainly help colleges on the cost side; it’ll mean fewer professors, lecturers, adjuncts or teaching assistants required to teach a certain number of students. That’s good for educational productivity (if not for the careers of many graduates who have their hearts set on academia).

But I’m not sure it helps much with the revenue side of the equation. State funding will still be cut. Foreign students will still be unable or less willing to come to the U.S. American kids’ appetite for taking out large loans to pay for education will still be diminished.

U.S. universities could try hawking some paid online classes to people in foreign countries, but will face stiff competition from local schools that can teach people in their native languages. Meanwhile, it seems unlikely that moving to a 20% online model will gather more paying students from the U.S.

So this still leaves the question: Don’t we need a massive injection of federal money to support university research?

TC: I think you are conceding some of the big benefits of online education I laid out, though I certainly agree that it won’t make up for all of the financial problems of higher education in the current environment.

I do favor a big boost in federal money for higher-education research, but I want to spend pretty much 100% of it on anti-Covid-19 efforts. Nothing extra for the economists then, I am sorry to say. Surely you would agree with this, correct? There is only so much to be spent, and the highest research returns are to be found in the coronavirus field.

I also favor a federal-aid package to the states, though I am not sure how much the states will allocate to higher education. I would say that higher education needs to stop looking so politically partisan.

I don’t see why you believe this claim: “Meanwhile, it seems unlikely that moving to a 20% online model will gather more paying students from the U.S.” I think it will gather millions more paying students, if only for individual classes. Universities should have a much bigger share of this market than they do right now, but they have been complacent -- I hope now that can change. And plenty of people in emerging economies would prefer an affordable class from say the University of Michigan, even if it is taught in English, or maybe because it is taught in English. Furthermore, artificial intelligence will give us accurate subtitles soon enough, so I think you are neglecting numerous possibilities for innovation and market growth.

NS: As for research spending, I strongly disagree that it should all go toward Covid-19. That is likely to be an extremely short-term challenge, with a vaccine and/or effective treatments available in as little as a year. And at some point, spending on one field hits diminishing marginal returns. Meanwhile, there is no shortage of research fields that would benefit from a large influx of government money. The Endless Frontier Act, a bipartisan bill that would spend $20 billion more a year on university research, identifies a number of these areas. In addition to helping maintain U.S. leadership in high-tech industries, a policy like this seems like it could throw a lifeline to college towns threatened by declines in tuition money.

As for online classes, they seem to only address one piece of the bundle of goods that college represents. For young people, college is a place to meet a human network, open up to new perspectives, receive mentoring and experience personal growth; none of these can be replicated with online classes. Perhaps they can be replicated with a basket of online services. But it seems unlikely that many American kids will pay large sums of money just for college classes, when college is about so much else.

Finally, could you say a little more about the partisanship of higher education? How could colleges look less partisan, in your view?

TC: Too many faculty members take it as their appointed mission to use their positions to preach left-wing politics. The net result is that support for higher education becomes polarized and now we are reaping the costs from that, in red states most of all. I don’t favor any regulation on this matter at all; I simply think the professors need a broader sense of their proper mission.

Covid-19 is costing us billions every day, and there is no magic bullet around the corner. Even a good vaccine won’t protect a lot of the elderly, whose immune systems create fairly weak responses to vaccines. It is likely to be a long, tough slog on the public-health front, and I don’t see comparable returns elsewhere. Right now the key scientists are not getting nearly enough money, and they are not getting it quickly enough.

I do favor more funding for other sciences -- once we have made more progress on Covid-19, which in turn will allow a permanent and orderly reopening of our universities.

To close on our initial point re: online education -- I taught online this spring for George Mason University, and that was started pre-Covid. The class was oversubscribed, and the students very much appreciated it. Until the health crisis arrived, they got the full university experience and then some, due to their greater flexibility with time.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Tyler Cowen is a Bloomberg Opinion columnist. He is a professor of economics at George Mason University and writes for the blog Marginal Revolution. His books include "Big Business: A Love Letter to an American Anti-Hero."

Noah Smith is a Bloomberg Opinion columnist. He was an assistant professor of finance at Stony Brook University, and he blogs at Noahpinion.

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