Memo to the Presidential Transition Team
December 15, 2008
Lumina Foundation for Education believes our country faces social and economic challenges that can be addressed only by educating many more people beyond high school. As a nation, this means that we must continue to focus on approaches that make higher education more accessible and affordable for all. It also means, however, we must ensure all students who come to college leave with meaningful, high quality degrees and credentials that assure their ability to contribute to the workforce and to provide both for themselves and their families. Current economic conditions have only made this priority clearer and more urgent.
In response to your request for ideas and comments that might be useful during this transition, we have outlined below four broad policy strands, each with specific ideas for consideration by the transition team. If it would be helpful, we have additional information on each of these points that we would be pleased to share.
Make human capital development a cornerstone of U.S. economic policy
The top priority of the Administration must be the renewal of the American economy, both for short-term economic recovery and long-term economic transformation. In both cases, the key to progress lies in the development of the knowledge economy, which in turn requires the American workforce to develop the skills that are required in a globally-competitive environment. Higher education attainment is increasingly important to the U.S. economy as the workforce demands education and training leading to higher levels of skills and knowledge. The implications of this shift can scarcely be overstated. For generations, the American economy has created large numbers of middle class jobs that did not require high levels of skills or knowledge. As a consequence of global competition, these jobs are rapidly disappearing. It is not that low-skill jobs do not exist in the United States — it is that the Americans who hold them are not likely to enter or remain in the middle class. This means they are not likely to have access to quality health care, save for retirement, or assure their children access to higher education. The consequences of failing to reach the middle class are increasingly severe. What has changed is that access to middle class jobs is now mostly dependent on completing some form of postsecondary education.
Higher education attainment rates are rising in almost every industrialized or post-industrial country in the world, except for the United States. Lumina Foundation estimates that at current college graduate production rates there will be a shortage of 16 million college-educated adults in the U.S. workforce by 2025. Today, roughly 39 percent of American adults hold a two- or four-year degree. That attainment rate, which has held steady for four decades, led all other nations for much of the post-war period. Unfortunately, this is no longer the case. Based on data published by the Organization for Economic Development and Cooperation (OECD), our nation now ranks only 10th in the percentage of young adults (25 to 34 years of age) with college degrees. Today in some countries more than half of young adults are degree holders. Even more disturbing for the United States is that attainment rates in these other countries continue to climb while ours remains stagnant.
Some argue that it is not really necessary to expand the numbers of Americans who complete postsecondary education because it is enough for the United States to continue to educate a small elite to drive innovation leading to economic growth. The rest of the developed world disagrees. The advanced economies of Europe, Asia, and Oceania are increasingly acting on the assumption that the overall level of educational attainment is the truest measure of the vibrancy of the economy, not the fact that a few people are educated to high levels. There is good evidence that they are right.
The clearest evidence that rising attainment rates in the rest of the world reflect real economic demands is that the gap in earnings based on level of education continues to widen. In 29 of the 30 OECD member countries, the gap in earnings between people who have completed some form of postsecondary education and those who have not is widening despite the fact that the proportion of postsecondary graduates in the workforce is increasing. If the economy were not demanding higher levels of skills and knowledge, the gap in earnings would be expected to narrow as the supply of graduates increased — a case of simple supply and demand. This trend is evident in the United States as well. Since 1975, the average earnings of high school dropouts and high school graduates fell in real terms (by 15 percent and 1 percent respectively), while those of college graduates rose by 19 percent. In other words, the economic benefits — both for individuals and the society — of completing higher education are growing.
Dangerous stagnation is evident in another area as well: Rates of college attainment among our nation's underserved students — first-generation students, low-income students and students of color — are significantly lower than those of other students. These achievement gaps have endured for decades, and they're now widening —an ominous sign when one considers current demographic and economic trends. More than 30 percent of white, non-Hispanic American adults have at least four years of college, but only 18 percent of African Americans and 12 percent of Hispanics have reached the same level of attainment. Because the average income of Americans with a four-year degree is $43,000 per year, compared to $27,000 for those with just a high school diploma, this chronic gap in educational attainment contributes to the disparities in income between racial and ethnic groups in the United States. This issue is of growing importance as the proportion of the population from groups traditionally underrepresented in higher education grows rapidly. Of the total U.S. population growth of 56 million between 2000 and 2020, 46 million will be members of minority groups. The United States is projected to become a "majority minority" country by 2050.
At Lumina Foundation, we have embraced a single, specific goal that will help us address this issue. Our Big Goal is this: to increase the percentage of Americans with high quality degrees and credentials from 39 percent to 60 percent by the year 2025. How do we as a nation achieve this goal? Lumina Foundation makes the following specific recommendations:
Make postsecondary education the nation's workforce development system
Federal policy should encourage and support the role of the postsecondary education system in meeting America's workforce development needs. One way to do this is to strengthen the nation's community colleges, particularly by aligning their programs to workforce needs. The Federal government should provide incentives for partnerships involving postsecondary education, employers, and labor. Federal policy and action also should be aligned across initiatives of the Departments of Education, Labor, Defense, and other agencies.
Expand adult learning opportunities
The current economic crisis has made clear that the nation must do more to expand adult learning opportunities. As the number of dislocated workers rises, programs to support retraining and skill development (both basic and advanced) are increasingly vital. In addition to retooling adults in the workforce with new skills and knowledge, much more can and should be done to increase educational opportunities for returning veterans and recent immigrants, among other high priority populations. Two specific ways that federal policy can support progress on this agenda is through expansion of programs providing recognition of prior learning and through research on and dissemination of more effective models of developmental education.
Assure every child is prepared for success in postsecondary education
We know from analysis conducted by the American Diploma Project and others that the skills necessary for success in higher education or to succeed in the workforce are essentially the same. We know the consequences of not being well-prepared for success in college are increasingly dire. We also know almost all students have the ability to perform at the level that will lead to postsecondary success. Given this, the goal of the nation's elementary and secondary education system should be to prepare all students for success in postsecondary education.
Adequate preparation is essential for student success. According to Achieve, as many as 39 percent of recent high school graduates enrolled in college and 46 percent in the workforce say there were significant gaps in their preparation. Professors and employers agree, estimating that four out of 10 graduates aren't ready for college or employment. Currently, postsecondary remediation can't make up for inadequate preparation; 76 percent of all students who take remedial courses in reading and 63 percent of students who take one or two remedial courses in math fail to earn degrees. Some might argue that these numbers simply mean that many current students don't "belong" in higher education, but when we must as a nation find ways for far more students to succeed in postsecondary education, these chronic problems of inadequate preparation are intolerable.
Align standards between K-12 and postsecondary education
The first step in improving preparation is to align K-12 standards with college readiness. While No Child Left Behind (NCLB) requires states to set standards, most states have not assured that their standards for K-12 performance adequately prepare students for success in postsecondary education. The American Diploma Project is working with states to accomplish this, but progress is slow and only 34 states are participating in the effort. Alignment of standards should be an NCLB requirement in every state.
By 8th grade, provide all children and families with information needed to plan for college success
Lumina Foundation has partnered with the Advertising Council and the American Council on Education in a national public awareness campaign designed to encourage low-income, first generation students to take the necessary steps to prepare for college. Prior to developing the public awareness messages, we commissioned quantitative and qualitative research to identify the audience and messages for the campaign. In national telephone surveys, more than 90 percent of low-income teens said they planned to attend college, and a comparable share of low-income parents said they thought that their children would go to college. Sadly, the reality is quite different from these high aspirations. It is deplorable that only half these kids will actually enroll in college. A big part of the reason is that neither parents nor students know what it will take to actually attend college, much less complete a degree. As a result of this lack of information, nearly 60 percent of low-income adults said they leave the initial decision to go to college up to their child. Research is clear that low-income, first-generation students don't get college access information from their teachers or school counselors, meaning that many if not most of these children are not able to turn their dream of college into a reality. This is nothing less than a national tragedy.
It has become apparent to Lumina Foundation that a public outreach campaign by itself will not be enough to enable low-income young people to take action. We are working to develop a ground campaign to link youth to local resources of caring adults and organizations to help students take the steps needed, including developing stronger state and local college access networks. Federal policy can and should support efforts to make college access information readily available to every student and family in America.
Define student outcomes for postsecondary education, including expectations for both completion and learning
As the role higher education plays in society and the economy grows in importance, it is critical that colleges and universities define quality learning outcomes in terms of the knowledge and skills needed to meet the needs of individuals, the workforce, and society. Everyone agrees that higher education should offer high quality courses and programs targeted to student, societal, and workforce needs, and support the success of students in meeting their goals. Unfortunately, research suggests that there is little consensus on what this means, and further that we are unable to identify if institutions are providing quality courses and supporting student success. Much of the reason for this failure is that federal data systems, states, and colleges and universities collect limited data on the results of higher education, and almost none on the learning outcomes of students. Institutions that actually perform learning outcome assessments cannot compare their results with other institutions, and so it is difficult to learn how alternative approaches might improve student outcomes.
Federal policy should support the development of student learning outcome measures. This can be accomplished by supporting national efforts to encourage institutions, systems, and states to adhere to a higher standard of transparency and accountability regarding their ability to help students attain high learning outcomes. Our work has led us to the conclusion that higher education must establish a clearer commitment to institutional effectiveness based on the success of students. Improving higher education success rates is a critical national priority, particularly in community colleges, where most low-income, first-generation students begin higher education. This will be impossible without better data.
Foster the development of the Collegiate Learning Assessment, Voluntary System of Accountability, and other assessments of higher education learning
Right now there is progress in defining and measuring the learning outcomes of higher education. We should not, however, be complacent. Many in higher education have resisted efforts to make the outcomes of higher education clearer or more transparent. More than likely, these interests fear that better measures of outcomes would lead to increased accountability. We believe those assumptions are correct, and there is reason enough to support developing better outcome measures. Even more valuable will be empowering the many faculty and others in higher education who want and need the tools to improve learning. Federal policy can play a key role in supporting these highly constructive efforts to define and measure the outcomes of higher education.
Explore the lessons of the Bologna Process and other international efforts to improve higher education
While the United States comes to grips with the challenges facing higher education, particularly relating to higher education's role in the transformation of the economy, other advanced economies are pursuing extensive higher education reform agendas. Other countries are increasing participation and completion, restructuring higher education to focus on student learning by defining what a degree represents to the student and to society, and redefining higher education's role in society. In particular, the European Bologna Process is transforming higher education in 46 countries and is being emulated in Latin America, Australia, North Africa and Southeast Asia. Some in the United States are starting to pay attention to the Bologna Process because they perceive it as a threat to America's traditional hegemony in higher education. A more constructive response would be to study and even participate in certain elements of it in order to learn from and build on the lessons it offers for improving higher education in this country. Lumina Foundation is actively studying the Bologna Process and other international higher education developments for the lessons they hold for U.S. higher education, but the Department of Education could and should engage the U.S. far more effectively in international dialogues and collaboration regarding higher education.
Include data on outcomes in national postsecondary data systems
Aside from financial aid, the most important role played by the federal government in higher education is in maintaining the national data systems that track enrollment, progression, and finance. These data systems influence every aspect of the higher education system, but they contain little reliable information on the results of higher education. With current federal data, it is impossible to calculate accurate graduation rates, track student flows from K-12 education into higher education or from higher education into the workforce, determine the relationship between spending and results, or say anything at all about what students are learning in postsecondary education. In today's environment, this situation is intolerable.
The difficulty in making progress on improving higher education data should not be underestimated. But neither should its importance. All the objections to making data on the results of higher education available, including concerns about privacy, can and must be addressed. Dramatic progress in improving higher education data must be a high priority of federal policy.
Approach affordability in new ways
Of course, promoting affordability has been a hallmark of federal higher education policy for decades, as it should continue to be. The problem is severe. The costs of higher education are increasing at rates faster than both the consumer price index and public support of higher education, and tuition has gone up at even faster rates. There is clear evidence that an increasing number of potential students cannot afford higher education.
However, approaches to affordability relying exclusively on financial aid will not be successful in assuring that a much larger proportion of the U.S. population will complete college or other postsecondary education. As we explained earlier in this memo, Lumina Foundation estimates that the United States needs to increase degree production by about a third—from 41 million to 56 million — over the next 17 years. We believe that public support for higher education should be increased, but there is no realistic scenario under which public funding will increase by a third over the next decade and a half. Even if it could, there is no evidence that increased funding would result in the completion of significantly more students. The only alternative is to make higher education more productive.
Dramatically simplify financial aid
Federal policy can be significant in helping first-generation students succeed in higher education. Aside from the key role played by financial aid, making information on college cost and aid more readily available and transparent is essential. This includes dramatically simplifying the financial aid application process, including simplifying or eliminating the FAFSA form.
Apply tax policy to benefit low-income students, such as progressive 529 plans
The use of tax abatements to promote higher education affordability is one of the more important and potentially innovative approaches in recent years. However, tax-based approaches like 529 plans tend not to benefit very low-income families and students. Tax-based programs could be made more effective in support of low-income student access by incorporating features that make them more attractive to low-income families, such as initial deposits and matching of contributions.
Improve higher education productivity, particularly by improving data on costs and results
Lumina Foundation believes that a more efficient and effective system of higher education is a desirable national goal. By definition, improved higher education productivity cannot occur at the expense of either quality or access to underrepresented or at-risk students. When all is said and done, there are only a limited number of ways to significantly improve productivity in higher education. These include increasing the ratio of degrees to credits by reducing the number of credits that students take; implementing lower-cost delivery systems on a wide scale; and implementing cost-saving strategies throughout higher education. Federal policy can help higher education to address all three of these approaches.
In particular, federal data systems could help by developing new analytical tools to understand productivity and how to improve it. Even though the definition of productivity should be clear and simple, it is difficult for higher education institutions and systems to measure. The reason is that current federal and state data systems do not provide adequate information on either completion or costs, making it difficult or impossible to measure the relationship between costs and outcomes in higher education. Without this information, it is unlikely that higher education will adopt new strategies to improve productivity. Federal data systems can and should include much better data on finance and costs related to outcome. Better data could be used by higher education institutions and systems to assess their current cost structures and the relationship between spending and outcomes, which would lead to better strategies to improve productivity.
We recognize that Lumina Foundation's goal of increasing higher education attainment to 60 percent of the population by 2025 is an audacious one. We are convinced, however, that meeting this goal is essential to the future economic, social, and cultural well-being of the nation. Achieving this goal will require fundamental change in almost every element of the U.S. higher education system. Change of this magnitude will not be possible without the active support of federal policy. Lumina Foundation is ready to partner with the federal government, states, employers, our peers in philanthropy, and all others committed to making the promise of American higher education a reality for millions of Americans today and in the future.
For further information please contact Jamie P. Merisotis, President, Lumina Foundation for Education jmerisotis@luminafoundation.org or visit our website at www.luminafoundation.org
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