By Kevin Brown and Steve Clements
It seems a de facto standard has emerged for determining the value of higher education: show me the money. Pressure is increasing across the country for schools to lower costs and enhance the revenue potential of graduates. This includes the President of the United States, who has tasked government with creating a new measurement tool that rates schools so that families can choose the institution that provides them the best “value.” The goal, according to one White House release, is for institutions to provide “high value at low cost.”
The use of cost-benefit analysis is ubiquitous in the realm of business, but this approach is now infiltrating the educational realm as well. For example, for those seeking to maximize value, one website provides prospective students with a “college risk report.” Using input data such as school and major, the report provides users with a Net Present Value (NPV) equation to guide them in assessing their degree’s market value. Firms use NPV analyses as a cost-benefit framework to establish the financial viability of various company projects. Whether it is a new fleet of cars, brick and mortar buildings, a product line expansion, or any other initiative—NPV output allows analysts to determine whether the initiative’s future revenue, expressed in present value terms, exceeds the costs. The rules are simple. If NPV is positive and acceptable, the initiative should be pursued. If not, it shouldn’t.
It is easy to appreciate such an approach. The math is simple, the criteria seem objective, and the logic is clear. But while it may be incumbent on institutions of higher education to meet the various standards set for them, educators must equally play an active role in not simply meeting—but defining—those very standards.
As social scientists, we appreciate the simplicity and elegance of cost-benefit tools such as NPV, as well as the impulse to deploy such tools to help determine the relative worth of the college experience. But as academics who work at a faith-based liberal arts institution, we assert that the application of NPV to our setting, and likely many others in higher education, turns out to be neither simple nor elegant.
First and foremost, if our raison d’etre as an institution is to maximize the future earning potential of our students, there would be no reason not to shift all our productive resources towards preparing students for careers on Wall Street. While we argue to our constituents that a traditional liberal arts education can prepare students for an array of alternative career futures, an NPV-style rating approach would strongly encourage institutions such as ours to further weaken, if not completely eliminate, liberal arts based undergraduate programs.
Furthermore, appraising schools solely upon the present value of future earnings is a particularly harmful methodology for faith-based schools. Students from a variety of religious backgrounds may be more likely to self-select into lower paying job fields by virtue of their faith commitments. Specifically, many feel called to work in certain areas. These fields might include mission work, ministry, social work, or international-aid initiatives. While their degree could in theory command a higher paying job, many of our students seek to engage in lower paying work environments that enable them to impact the lives of the poor and needy, or those in third world nations. Such moves cannot be explained under the rationality of a cost-conscious consumer.
Finally, this approach risks the assumption that a dollar figure can be placed upon all goods—a college experience included. But is this true? In one sense, the answer is yes. Using simple economic models we can place a dollar value on anything (pollution, human life, etc.). The question becomes: Does a monetary figure accurately reflect all relevant attributes of value for the good in question? If the object in question is, to use a phrase by Philosopher Elizabeth Anderson, a “higher good”—or a good with a defined essence—then the answer is no.
Furthermore, essential goods are irreducible. That is, their value is such that to express it in terms of dollars and cents would be to change—or worse, degrade—its meaning. Beyond mere market considerations, it is appropriate to conceive of the higher education experience as a formative period of human development in mind and heart, the cultivation of virtue and excellence, and a refining process culminating in preparation, application, and maturation. Such a process might lead to a highly remunerative career that generates huge NPV. But it might just as easily lead one to spend part or all of one’s work-life in service to humanity (an ethos upon which many schools were founded). A college rating system that promotes the former and subverts the latter will, we believe, undermine the purposes for which a great many higher education institutions exist.