College, once seen as an unalloyed good by a majority of Americans, has increasingly come under scrutiny for a number of reasons. Citizens of all political persuasions are flummoxed by the rising cost of college, which has shown no signs of abating. All of this is happening as a backdrop to a workforce that is increasingly automated and requires the kind of knowledge work that a four-year degree provides. 
With the number of college students each year decreasing, what will college look like in the future? Will this have impacts on the workforce? Will that have larger impacts on society as a whole? What can (or should) be done to bring the system into a greater balance?
I graduated with my undergraduate degree in 2007, right before the Great Recession started. I graduated from graduate school in 2014, so I feel qualified to speak to some of the trends that I have seen between those time periods. When looking at more recent trends, I will use mostly what I have read and heard on websites or podcasts. 
Let’s begin by looking at the enrollment cliff.  Writing on the website Best Colleges, Mark J. Drozdowski notes in an article from 2023 entitled, “Looming Enrollment Cliff Poses Serious Threat to Colleges,”  The "enrollment cliff" refers to the dramatic drop in the college-age population beginning in 2025. Forecasting the number of college-age youths is a relatively simple task. Take the birthrate of a given year and fast forward 17 and 18 years — when most kids start college. Now consider birthrates during the Great Recession, which began in 2008. During that time of economic stress and uncertainty, notes Carleton College economist Nathan Grawe, people were having fewer children. The number of kids born between 2008 and 2011 plummeted dramatically. So if you graph demographic projections, the precipitous descent resembles a cliff beginning in 2025. Over the succeeding four years, the number of 18-year-olds will decrease by 15%. How does that translate into enrollment figures? During that four-year span, colleges will lose approximately 576,000 students. Unfortunately for higher education, this situation isn't an aberration. College enrollments have been declining steadily since 2012. During COVID-19's apex — from 2019 to 2022 — undergraduate enrollment dropped by 7%.”
As I’ve noted in episode 4 of this podcast, I don’t think, unless there is a deep cultural and economic change in the country, that we will see birthrates above replacement rate. This is not to say that the population can not (and will not) grow from immigration but, in my opinion, getting the US birthrate above the replacement rate of 2.1 births per woman, which would make the US an anomaly among rich countries, is highly unlikely. 
If the number of college graduates continues to decrease, what happens? Well, it depends. 
If the gap between jobs that require a college degree and the pool of qualified domestic workers looking for jobs is relatively small, then employers are likely to take one of two actions, investing more in domestic recruiting and training in order to compensate for this gap or recruit from a wider pool of workers – international applicants. What if the gaps grow? Obviously, it depends on the work being done but, if possible, over time, there will be a greater push towards automation and lobbying for either lower college costs, greater rates of immigration, or both. 
The American economy has seen a shift since the introduction of the personal computer in the mid-1970s – along with automation and globalization, the PC has helped move the US away from a manufacturing-based economy to one centered around services. 
Some may ask the perhaps obvious question, even if birthrates decline, couldn’t we simply have a larger portion of the population graduate from college, taking us from the 40% of folks with a college education to something approaching 60%, to offset the smaller pool of workers? That may be tougher than it sounds. From a Newsweek article from earlier this year, Why So Many Young Men Are Abandoning College Degrees, “only 39 percent of young men who completed high school are enrolled in college, down from 47 percent in 2011. "A lot of men don't see the point of a degree when it's so expensive and they feel a lot of nihilism about their job prospects post-college," Athena Kan, the CEO of career and technical training platform Dreambound…Men might be more likely to feel a bachelor's degree is not necessary for career success, a Pew Research study from 2021 found. "The labor shortages of the past few years have hit the trades harder than other industries," Crapuchettes told Newsweek. "High school grads, particularly men who are attracted to the trades, are finding that they can earn good salaries without racking up tens of thousands in college debt."
Before we go forward, a word from our sponsor.
The gap between college costs and the wage premium obtained from graduating may be shrinking.
Per a 2023 article from the Federal Reserve Bank of San Francisco entitled Falling College Wage Premiums by Race and Ethnicity, ”the wage premium rose substantially during the three decades starting in the 1980s but flattened out during the decade following the Great Recession of 2007–09....With data for the three years since the COVID-19 pandemic began in 2020 included, the college wage premium has declined slightly, from a peak of about 79% in the mid-2010s to about 75% in 2022. This drop of 4 percentage points may seem small, but it is meaningful by comparison with the gain of about 10 percentage points in the years between 2000 and the mid-2010s….Why did the college wage premium plateau and begin to decline? The change could reflect rising wages for high school graduates, falling wages for workers with a college degree, or a combination of the two. Both the latter half of the recovery from the 2007–09 recession and the labor market rebound after the 2020 pandemic recession were characterized by historically tight labor markets. Moreover, research indicates that tight labor markets during these two periods strengthened employment and earnings outcomes for lower wage and economically disadvantaged workers, such as certain racial/ethnic groups and those with only a high school education, compared with more advantaged groups, such as college graduates…Together, these observations suggest that rising relative wages of high school graduates may help explain the reductions in the college wage gap.”
The rising cost of college has been a political football for years, with multiple theories trotted out to try to explain why the costs have risen at nearly double the rate of inflation over the last forty years. I won’t go into detail here as to what these multiple theories are – I have left a link in the show notes to an excellent article from The Hill entitled “Health care and higher education: Key drivers of long-term inflation” if you’d like to learn more. Instead, let’s look at what the impact is and what are some possible practical solutions to align more closely the skills needed in the economy of the 21st century and a workforce trained in those skills. 
To do this, we have to ask a difficult question – how many jobs truly need skills gained from graduating from a four-year university?
In his book, The Case Against Education, professor Bryan Caplan describes a college diploma as an example of “statistical discrimination” meaning that a degree is a “true on average stereotype” that saves employers time and money when looking at whom to hire…Many employers won’t deign to read your application unless you possess the right education credentials – even when it’s common knowledge your book learning won’t come up on the job.” 
Caplan makes a very persuasive argument that most of the value of a college degree, stems from this credentialism – that is to say that most of the value gained comes from having a piece of paper (a diploma) and much less to do with actual skills gained from having completed four years of coursework. The ratio he proposes is roughly 80/20, meaning that 80% of your wage premium from having completed college comes from the credential and the other 20% comes from any human capital (ie. Skills and knowledge) gained during the time spent at university.
This, in some ways, is both goods news and bad news. We’ll come back to this later. First, let’s return to the question – how many jobs really need skills learned at college?
From a 2022 article from The List called, “How Many High Paying Jobs Require A College Degree?”,  “There is no one answer to this question as it depends on the field or industry you are interested in pursuing. However, according to a report by the Georgetown University Center on Education and the Workforce, by 2020, 65 percent of all jobs in the United States will require postsecondary education and training beyond high school. This includes both traditional college degrees as well as alternative credentials such as certificates and apprenticeships.”
I’m suspicious of the sky-high percentage of jobs predicted to require a college degree in the near future. I believe that most of what is learned in college, especially undergrad, is poorly-targeted training that could, should an employer want to invest in training a qualified workforce, be replaced with job-specific training in most instances. Employees will often bristle at this and say that they shouldn’t be on the hook for teaching basic functions like punctuality or grit. 
In my admittedly anecdotal experience, in the co-workers younger than myself, there tends to be a higher proportion of people whose first real job was after graduating from undergrad or, in some cases, graduate school.
This often times goes unnoticed by employers and the onus is on them to recognize this deficiency and (if necessary) train these basic skills into employees.
Will employers do this? Will they officially reject the ATS (applicant tracking system) and invest money (and time and energy) into doing a better job recruiting based on skills and less on credentials?
The jury is still out but I’m doubtful. 
In a recent Business Insider article bluntly titled, “You still need a degree“, editor Emily Stewart writes, “just because companies say they're not looking at education doesn't mean it's not a factor. Companies' claim that they're not looking at education as much is neat, but a recent study from Harvard Business School and the Burning Glass Institute, a nonprofit research center, found that fewer of them were actually walking the talk.
It found that while some businesses, such as Apple, Walmart, and ExxonMobil, made tangible changes to who they brought on board, most companies that made a big deal out of dropping degree requirements for workers didn't really change their hiring practices. Nearly half of the firms the study looked at just said they would shift toward more skills-based hiring, and a fifth started to make the change but didn't stick to it. The result: Skills-based hiring made a difference in fewer than one in 700 hires last year. The researchers said they looked at a sample of 11,300 roles at large companies for which they could observe a "meaningful volume of hiring" for at least a year before and after the change and tapped into Burning Glass' database of 65 million American workers' career histories. They found that nearly all the change in hiring was driven by the segment of companies it dubbed "skills-based hiring leaders," which actually did alter their hiring practices… It's not necessarily that businesses are intentionally being sketchy — it's more that instituting companywide cultural change is hard. CEOs can really mean it when they say they're focusing on skills and not education, but it doesn't make a difference if not everyone gets the memo. Old habits die hard, and if a hiring manager is down to two people with five years of experience, one with a bachelor's degree and one without, the default is the degree.”
If the demographic cliff continues, if we see a long and pronounced decrease in college graduates, without alternate pools to draw from, companies will have to change.
What could this change look like? The obvious change would be an increase in employee paid training, internships, and apprenticeships. This would be an acknowledgment from employers that college does cost too much for potential workers. This is summed up nicely in a 2023 article from The Information Technology and Innovation Foundation: “Between 2011 and 2021, the number of active apprenticeships in the United States increased from 357,692 to 593,690, a 66 percent increase. Moreover, between 2010 and 2020, the number of undergraduates enrolled at U.S. universities fell by over 12 percent. These figures suggest that apprenticeships are becoming a more attractive option for high school graduates in the United States, where apprenticeship rates lag far behind those of other advanced economies like Denmark and Germany. This increase in apprenticeships and decrease in college enrollment is almost certainly driven by students’ concerns about the costs associated with four-year universities and employers’ concerns about the skills students acquire in college versus what is needed in the workforce.”
Employers could also have paid mentorship programs where senior employees are partnered up with junior members to help them in skills such as communication and decorum. If employee bristled at the additional cost, they could reward the senior members with things such as additional PTO, free food, and other perks. 
What about the colleges themselves – will there be pressure on them to reduce costs? 
A Forbes article from 2023 entitled, “College Tuition Inflation: Compare The Cost Of College Over Time”, shows some signs that college costs are slowing: “from the academic year 2019-20 to 2021-22, average tuition, fees, and room and board dropped 0.2% at private nonprofit four-year schools, according to the College Board. From 2020-21 to 2021-22, prices dropped a further 1.7%. Costs at public four-year schools followed a similar pattern in the same timeframe. It’s unclear if this is a short-term or long-term deceleration in price growth. But some reasons for the change include pandemic stimulus funding to postsecondary institutions, which helped them increase grant aid to students, and tuition freezes across several colleges in response to the economic impact of the pandemic.”
Some believe that the enrollment cliff will cause some universities – mostly those without, in today’s parlance, “brand name recognition”, to close. This should reduce overall supply of universities and, the conventional wisdom goes, make universities more susceptible to the perceived cost on students. There are several reasons that the cost of college, even with these shocks, won’t change much. The biggest one is that the price of higher education is highly subsidized by the federal government, making everyone involved less price sensitive than they otherwise would be.
There is a Red Queen-style arms race where colleges and universities spend copious amounts of student and taxpayer money in order to climb the News and World Report rankings, only to stay in the same relative position to their competitors. I have mixed feelings about the increase in college costs – I do think that the additional costs paid by US students, when compared to the rest of the world, are not as profligate as some make them out to be – for every rock wall and lazy river built, there are also career services and academic tutoring departments that take very unpolished young adults and put them on a path towards success they would be unlikely to achieve, at least not at the speed needed to make the high cost of college worthwhile on their own. 
It’s possible that over time the enrollment cliff forces colleges to become more in tune with the needs of students and allows for more flexible degrees that cost less while granting nervous employers guarantees that specific skills were taught. 
Overall, I’m quite skeptical of any major change in higher education. In an earlier episode I talked about the possibility of artificial intelligence upending the system and forcing it to adapt to more modern sensibilities. I don’t think that’s going to happen - at least not in the foreseeable future. Higher Education is like a golf course on the edge of a desert - every year the sprinklers keep the desert at bay but every year they cost more and more to maintain. There are two reactions to this - keep pumping money into the system or let the desert take back the land. 
A rational person would look at the current system and say, if only 20% of the value of education is derived from skills gained at college, why don’t we just have 1-year school? From an employer standpoint, if they trusted the institutions of learning to do this, there would be no downside. The schools, of course, would lose out on the money that comes from having students for four years. 
Universities are institutions and like all institutions, there are norms and values inherent within them that have been built up over time and are very difficult (if impossible) to change without massive overhauls that are likely to destroy the system before changing it. 
The four-year degree is a vestigial byproduct of the original intention of colleges which was to give the second or third sons from rich families something to do that wasn’t the clergy or the army. In the same way that the k-12 system is built around an agrarian calendar that few of us use for its original purpose, the idea of going away to learn knowledge that is largely useless is a byproduct of a bygone era. 
Because universities are institutions that value all knowledge equally, they are loath to adapt to a changing world. I’m sympathetic to this argument - I was a double major English and Business as an undergrad. I did much better and preferred the English major classes 20 to 1 . I read amazing works of literature and developed a taste in art that I would not have otherwise. 
Do I use any of the things I learned in English classes at my current job (or any job I’ve held in the last 20 years)? I’d say, charitably, that 90% of what I learned is useless for any job I’ve held since I graduated. There may come a day when the essays I write for this podcast become my full-time occupation but that day is far, far away.
Having said all that, how much should the traditional model of a four-year college change and what should it change to? 
I believe that economic forces will continue to decrease the number of liberal arts majors offered at large colleges. There will still be private colleges that rely heavily on large endowments that will continue teaching the arts as a primary focus but that number, provided demographics don’t radically change, will drop. 
This is the bad news I mentioned earlier. 
If employers move from a system where the diploma stands as shorthand for a certain set of skills gained to one where knowledge is tied to a specific job, sans credential, we can expect an increase in the number of diplomaed workers holding jobs that don’t require a college degree (unless, of course, the number of college grads continues to decrease) due to a skills mismatch. 
I sincerely believe that the loss of humanities education is a tragedy - we’ve seen over the last 20 years the degradation in the ability for students to hold nuanced thoughts or tell the difference between fact and opinion. The arts are the closest thing we have to empathy machines – Unfortunately, I don’t think they’ll be able to survive a world where large cuts must be made to keep the desert from encroaching. 
Unless, of course, the federal government steps in to pump up the industry. In his state of the Union address, President Biden said that he wants to reduce the cost of college. While this is a noble goal, there are some problems. The primary one being that the only real tool that the federal government has to do this is to send money to colleges or students. It could also, in theory, have a prize-based approach to identify best practices for schools to find unnecessary costs and remove them, passing along the savings to students. Why won’t they do this? To paraphrase Tolstoy -
All happy colleges are alike; each unhappy college is unhappy in its own way.
Given the demographic, size, reputational, and geoeconomics differences of schools, it’s unlikely that a “magic bullet” solution will be found that is replicable. Also, this approach requires time and buy-in from stakeholders. Pumping money into a bloated system requires neither of these. 
A note - the median age of the US senate in 2023 was 65; in 1981, it was 51.7. The generation of this median senator came of age when there was very little statistical chance of a college degree being a bad deal. If I extend the warm kindness that is the benefit of the doubt, there are some senators who truly believe that college was a pivotal time in their life that they look back to with great fondness and it genuinely saddens them that younger generations won’t have the same experience as they did. 
This idyllic look at college was, even when I was going to college for the first time in the mid-2000s, becoming passe. I agree that, in a perfect world, everyone would have the time to discover their tastes and passions. This wasn’t true for everybody in the 1960s and 1970s and 1980s and it’s not true today. College is just much, much more expensive than it was then.
What would making college more affordable (given the federal approach) do? PS. I’m withdrawing the benefit of the doubt now. 
The biggest would be what I mentioned earlier – reduce the number of requirements it takes for someone to receive a certification that is valued in the eyes of employers. A more affordable option is one we have already – community colleges. If an associate degree becomes equitable in the eyes of employers, and the number of students stopping after two years of school increases, we would expect the cost of college (and the amount of student debt) to decrease over time – community college is, in general, much less expensive than a four-year university. 
This is the good news from before – if you believe that most of what is taught at college is largely irrelevant to job-specific skills and trainings, then reducing the time spent at college does very little to increase the amount of training that employers must do in order to bring employees up to par at their jobs. 
From the abstract of a research paper listed on Sage Journals entitled, “Did Employers in the United States Back Away from Skills Training during the early 2000s?”, the author C. Jeffery Waddoups writes, “The findings reveal a 28% decline in the incidence of training between 2001 and 2009.” It may be dated but it 100% dovetails with my lived experiences, having worked for probably over a dozen companies since I entered the workforce in my mid-teens – there is nothing in my experience to believe that this trend has reversed itself. 
Other culprits for skyrocketing costs have been put forward – administrative bloat, expensive amenities – that universities can avoid, if given the right incentives. One way to do this would be to make the universities fight for every dollar they receive – currently, with roughly half the money for education coming from government sources, the true cost of college is not fully felt by students, and thus, they have little incentive to be cost conscious. Universities also play into this by having a list price for total cost of attendance and an actual price paid by an individual and their families.  As a general rule of thumb, when your pricing practices are similar to used cars sales, you’re doing something wrong. 
Finally, and perhaps most controversially, I tend to believe that the cost of college itself is high mostly because the inputs (labor and healthcare costs and additional technologies required to train employees for high-tech roles) have risen substantially over the last 40 years. I also think that, for the majority of people, that it is still a sound investment.
Another way of saying this, if I had a magic wand and could change anything about the college experience today, it would be less to do with the colleges (though I disagree with some of their practices) and more to do with employers, who, in my opinion, have not paid nearly the amount of wage premium they should be for accessing a highly educated, highly motivated workforce. In an article from the Atlantic entitled “The Labor Shortage Myth”, writer Oren Cass notes, “market forces create a constant incentive for employers to do more with less. Faced with pressure to raise wages, the rational response is to seek productivity increases wherever possible—or even, gasp, to accept lower profits for shareholders.” 
Ultimately, if the market is able to correct for the gap between skilled workers and jobs that require said skills, the wage premium should increase. If this happens, the 1.7T student loan debt pile will, over time, decrease as workers are able to use the increase in wage premium to pay down this debt and (perhaps more importantly) those who have not yet finished school will be incentivized to do so biggest the reward is large to so. 
All this is predicated, of course, on the international pool of potential employees remaining (largely) untapped and the domestic pool remaining constant or shrinking.
Does college need to be saved? Not really. It just needs to pay off for more people.
Thank you for listening to this episode of Elegant Ramblings. If you’ve enjoyed what you’ve heard, please consider liking and subscribing to the channel on iTunes or YouTube. You’ll be able to find show notes there. We’ll be back in a couple of weeks.
Hope you enjoyed. Bye for now.