#021: Rick Hess (American Enterprise Institute) on If Ivy League Schools are Worth It &...

Welcome to the hackiversity Podcast, where your host, Kyle Whine, deconstructs higher education inside the new economy. Get ready to learn how students can hack their way to the best results before, during, and after college. It's hacking time. Ladies and gents, welcome to the hackiversity Podcast, where I, Kyle Whine, am continuing a trend. Typically, I interview recent college graduates who had rapid success immediately after college and deconstruct the reasons why. But today marks the second edition of me interviewing more established influencers in the education space. And that trend is because you asked for it. Today, I'm excited to welcome onto the show Rick Hess. Rick is the Director of Education Policy Studies at aei, which stands for American Enterprise Institute. In essence, AEI is a national leading think tank that, among other things, spearheads and researches certain educational policies. In other words, if you want to know where the world of education is going, ask someone at aei. Or you can just listen to Rick in this episode and he'll tell you. Rick also has served as a professor at Harvard, Penn, Georgetown and Johns Hopkins, to name a few. Rick's time teaching at these elite colleges is fitting because the value of going to an elite college versus going to a university, for example, is something at the forefront of our conversation. So without further ado, let's dig in. Rick, thanks for coming on the show today.

Hey, good to be with you, Rick.

I'd like to set the stage by giving our audience some perspective on who you are and why you do what you do. So currently you are the Director of Education Policy Studies at the American Enterprise Institute, or AEI for short. So can you explain what is the mission of aei?

Sure. AEI is one of the nation's, I think, typically described as one of the nation's premier think tanks. We're a place that has about 50, 50 odd scholars supported by a couple hundred terrific colleagues, research assistants, what have you. We work on issues spanning from foreign defense policy to economics to monetary policy to domestic policies like K12 and higher education and early childhood issues. And we're really a place that is organized around a commitment to ideals like liberty, opportunity, the importance of personal responsibility and enterprise. And these are vague words and they can mean a lot of things. And that's why you find people at AEI who disagree about some important stuff, but who, in different ways, I think, reflect a passion for those core principles.

So just to give the audience a flavor, what are some of the projects that you are working on right now as a director at aei?

I'm working on One is right now there's a strong push for more attention to social and emotional learning and education, which is in principle a hugely healthy and useful thing. I am also very worried that it's going to turn out to be a train wreck filled with silliness and bad ideas and more headaches and distractions for students and teachers. So we're trying to work with folks to make, to do what we can to help steer this in a healthy and productive direction. I am working on a project trying to identify some of the ways that K12 schools can spend dollars more cost effectively, can think about the spending decisions they make. So those are a couple of the current projects.

Great. And so Rick, when you were talking about describing your first project that you're working on, is that like a push toward developing softer skills? Is. Is that what I'm hearing?

Yeah, that's one way to characterize it. You know, one of the things with so many education reforms is there's a lot of, you know, the blind man touching the elephant, whichever part of it you touch is what you think it is. I think some people, it feels like it's about character education, teaching kids to be responsible and good citizens. I think for others, it's about making sure that children feel safe and valued so that they can actually learn academic content. For others, it is about teaching some of those softer skills that we want to do school to do better at. And you know, part of, part of where these reforms get into trouble is there are frequently a lot of different things under one roof and that can create headaches.

And is this primarily driven in The K through 12 arena?

The social, emotional learning stuff is, you know, when we talk about those same ideas in post secondary or in workforce preparation, you know, we tend to talk about them exactly the way you just did, which is we tend to talk about soft skills, workforce skills, you know, non cognitive skill building. But you know, it's part of that same large family of stuff.

Okay, great. Well, that kind of ties in because you're right. I. You could probably notice a bias in my thinking already that I'm very bent toward career readiness skills. And so what I'm wondering from you is someone who's very plugged into the educational reform arena is how are career readiness skills driving educational reform?

You know, I think one they increasingly are. If you think about, say the last 20 or 25 years of education reform, the huge center of gravity crystallized by the Bush administration's no Child Left behind act was really about moving reading and math performance in K12 and particularly moving reading and math performance for, you know, low income kids. And that has been, you know, it's an important thing to do for us to be better at. And it has lent a real focus. But part of what it has done, I think, is pulled the center of gravity away from other things that matter. Some of those other things that matter are kind of the soft skills that make kids employable, that teach them how to work in teams, that teach them, you know, to teach them how to write or, you know, analyze in ways that don't necessarily show up on annual reading and math assessments. And so, you know, so I think one of the things you're seeing is the pendulum has swung over the last four, five, six years back away from no Child Left behind. Relentless focus on reading and math scores is towards things like career and technical education, towards soft skill building, towards, you know, higher ed reform. One big enthusiasm is free college. And so I think, you know, I think part of that is that there is growing appetite and interest for doing better on employment skills.

How are we doing right now on the softer skills side, particularly regarding the analytical abilities and the critical thinking abilities that say, seniors in high school graduate with?

You know, I mean, it depends who's, you know, whose surveys and analyses you believe. But I think, you know, the general consensus is we're not doing very well to the extent that we're doing decently. I think a lot of it is the sense that, you know, we're not adding a lot of value in community college or four year colleges that what, you know, the pla. You know, the colleges that everybody graduates from and where people get jobs. I think there's a lot of sense that folks show up in these colleges with a lot of skills and aptitudes and they graduate with the same skills and aptitudes. And I think there's a sense that, you know, there are certainly some programs and some institutions which seem to do a better job of skill building, but on the whole, higher ed has not done a good job of owning responsibility for really helping students, you know, get systematically better on this stuff.

Yeah, one of my favorite books on that is Academically Adrift. And it basically says, you know, that colleges are doing very little, if anything, to improve critical thinking skills for students. I work with so many employers who say, Kyle, the number one thing that we want is we want our new hires to have great critical thinking skills and so many of the college students right now don't have them. And so, yeah, I think that's a really relevant topic for a lot of People in the audience, Rick, you know, I know that you are also a professor and you've taught at places like uva, Penn, Georgetown, Harvard and many of these schools are considered elite. And so what I am curious about is what does an elite school have to offer students that say a bottom tier state school could not.

The chance to meet classmates who are, you know, who are accomplished and connected. The chance to get a prestigious stamp on your diploma. Honestly, I'm not at all sure, you know, the chance to be around a lot of great resources. Honestly, I have little or no, there's little or no reason to believe, as I see it, that you actually learn better, that you think that the teaching is better, that you are learning anything more in four years at an Ivy League college than at your average less selective four year institution.

So just to put a fine point on that, what you're saying is that the quality of education that a student will receive or can expect to receive at one of these elite colleges is not materially better than what they can receive at a less prestigious school.

Yeah, I think that's right. I mean, I think what you're really paying for is three things. One, there's kind of a Club Med effect that what you're paying for, and this is whether you're paying to go to some highfalutin fancy college or a place that has a great lazy river and climbing wall, is you're playing paying for the chance to, for the luxury aspect of this, which is pretty darn expensive when you're paying, you know, 100 plus thousand dollars for four years of that luxury.

If it stops.

The second thing you're buying for is a fancy name brand. They may not be teaching you any more fancy places, but they'll give you a piece of paper which shows that you have been stamped and approved by a fancy place and that can be beneficial. And the third thing they're doing is they are connecting you to a peer network, to other driven, type A accomplished students that could become your friends and contacts you can plug into that alumni network. None of this necessarily means you're learning more or learning skills, but it does mean basically that you are paying for access to a network.

Rick, I am speaking of that. I'm launching a college selector tool so families and students can make better decisions about where the actual value is in terms of selecting the right college inside the college arena. And one of my theses is that for the reasons you just mentioned, there's a tremendous amount of value of going to these elite schools. But the question always Comes in is where do you draw the line between what constitutes an elite school versus what constitutes something other than elite school? So, you know, is. I think many people would say, well, Harvard, Yale, Princeton, Stanford, those schools are considered elite. But, you know, where's the line? Is Berkeley in? Is, you know, toughs are they in? And so where would you draw the line for what constitutes an elite program and what doesn't?

You know, it's a great question. I think it's a lot, you know, I think it's a lot like nightclubs. We don't, you know, most of us, you know, if you're, you know, 20 some or whatever, you're going out, you haven't really been to a lot of these clubs. So you hear that a place is great. It's because people. There's good buzz about it. There's lines to get in. It's because, you know, you. You read that, you know, big stars show up and hang out there. And I think colleges are the same way. I think a lot of what makes them elite doesn't necessarily have anything to do with how good they are academically, with how good the scholarship is, with whether their places that foster free and vigorous conversation. I think it's with, you know, to a large extent, how much buzz they're able to generate in various ways. And I think elite colleges are the ones that at any given point have managed to get on the right side of the buzz divide.

And are there metrics to kind of measure these things about what constitutes an elite? Would it be like what college has the highest number of applicants? What kind of objective measures can we put in to define what is an elite college and what's not?

Yeah, you know, I think that's part of it because honestly, like I said, I think a lot of what you're paying for is, you know, you're paying for people to think, you know, to think good of good things about you because you went to a place that can give you a fancy piece of paper. So one is sure. One is whether a lot of people are trying to get in, so what's their acceptance rate? Another is just, you know, when you say to somebody at a PTA meeting, my, you know, my son or daughter is going to X, you know, a really good objective indicator is do they look impressed or not? Yeah, you know, a Third is like U.S. news and, you know, these other rankings of colleges, part of it literally is them mailing around forms asking folks at universities, hey, what are the most respected institutions or most, you know, or the best Institutions. Fact, you can literally take just a subset of like the US News World Report rankings. And that is basically just a popularity contest which tells you everything you need to know about which places people, you know, think of as most prestigious.

Yeah, yeah, I completely agree. Kind of speaking to the other end of the spectrum, Rick, is there a spot on the rankings where at some point the quality of education just completely deteriorates and you're like, look, there's the threshold, right? Here's the threshold. Don't go to any schools below this line. Is there a point like that on the chart?

Not, you know, I mean, so that that point certainly exists in the real world. I think it exists if, for instance, if you look at what the federal data we collect on people completing college, we collect it. Do you finish, for instance, four year college in six years? Do you finish a two year program in three years? And look, there are places where 20%, 30% or less of people finish a four year college degree in six years. It's one thing if these are places that are, you know, that tell you they're places where people go to college for a decade because they're only taking a couple courses at a time because they're working, that's fine. But generally speaking, you know, rather than look at those rankings, I'd say if you're looking at institutions where only one in four people are finishing a degree in six years or, you know, in three years at the two year level, that's a place that I would steer clear of, I think, unless somebody gives me an incredibly good reason to want to go there.

Yeah, I love it. Great. Rick, One last question I have for this segment is how do we address the student loan crisis? I know that is a really loaded term. It's you can take in a variety of directions, so I will let you do just that. How do we address the student loan crisis?

Sure. I mean, I think one, first off, I think we mischaracterize it with language a lot. I don't think it's a uniform crisis. The average student loan debt for people who've taken out loans is, you know, depending on exactly how you count it, but generally in the ballpark of $20,000 for their entire college career, a $20,000 loan to go to a four year college in America is not unreasonable. The really big debts that folks wind up with are generally because their parents use, their parents borrowed to let them go to really expensive elite colleges. These places, these liberal arts colleges where people are paying 50,000, 55,000 a year to major in things like poetry or romance literature that don't obviously lead to jobs. And it's great to major in poetry, romance, literature, if that's what you want. I got no problem with it. But if you borrow a ton of money to go do that, I don't really think of that as a borrower crisis. I think of that as, hey, you know, it's a choice you made. The other huge, the other big pot of loans people take where you can borrow unlimited federal funds is to go to graduate school. So when people hear about 150, $250,000 loan debts, what we're generally speaking about is people who took out huge loans to go to law school or medical school. And again, I don't think of that as a crisis. I think that you're making a series of choices. And if you want to practice medicine or practice law in a way that doesn't pay very well, then I think, you know, people should probably seek out more cost effective alternatives when they're choosing medical schools or law schools. But look, I mean, there certainly are people who do, you know, who are in huge problems from this, mostly people who borrowed money to go to college and then didn't graduate. So they've got the loan debt, but they don't have the added earnings. And I think there are, you know, sensible policy responses, sensible repayment changes that can help, you know, that have helped with that and can help with that. But I think a little bit of it is, you know, one of the problems when we talk about these crises, we sometimes wind up talking in such sweeping language that we forget the practical stuff of all right, what should students and families be expected to do responsibly? What should we expect of colleges which are encouraging people to borrow money to go there? And then what kinds of policies can we put in place that make sure people who are making a good faith effort aren't getting taken advantage of or losing out?

Rick, to your point about there only being $20,000 on average worth of debt that students incur, I just want to kind of push back on that and see what your thoughts are real quick. Isn't it true, though, that a lot of that stuff, a lot of the debt is kind of off balance sheet for the students themselves? So maybe the student themselves didn't go into $20,000 worth of debt, but their parents mortgaged their house so, you know, little Susie or Johnny could go to college. And so really it's the parents taking on a tremendous amount of debt that isn't reflected in that $20,000 you mentioned. Or maybe it's the students spent all their savings to the extent that they had savings. And so yes, they're not in debt up to a certain point, but they spent all their savings and then with the balance they had to go into debt. So isn't the 20k just, it's not fully capturing the full financial costs that a lot of these students and families are bearing. Right.

I mean, so there's different ways to think about this. I mean, one thing to keep in mind is when we talk about $50,000 tuition, that sticker price, you know, at Harvard, for instance, you know, we mentioned Harvard a moment a couple months ago. You know, Harvard, you know, basically I forget the exact figure nowadays, but if your family income is under 100,000 or under 80,000, you're going free. So, you know, at a lot of these really expensive places, the sticker price bears, you know, except for people who are, you know, who have been done really well economically, the sticker price doesn't bear much relationship to cost. So just two specific facts. One, as my AEI colleague Jason Delilah has pointed out strikingly, the average default balance for people who can't pay off their loans is about 6 or $7,000. So the people who are defaulting are not defaulting because they have large loans. They're defaulting for a variety of reasons even though they have pretty, in general, pretty modest debts. The second to your point, which is an interesting one about how do we account for off balance sheet expenses? You know, I mean, again, partly this is a matter of choices. You know, the average cost of an in state four year institution for tuition across the US is generally about 10, $12,000 a year. So you know, it's one thing if you want to go live on campus, that adds a chunk of cost and use dormitories and residents. But it's important to remember that only about one American student in seven is going off to residential college at age 18. 85% of higher ed students are either living at home or going to college part time or in community college or any number of other things other than that residential kind of experience. And for those folks who do do it, you know, if you go to a four year in state institution, the most you should be spending, you know, to cover full sticker and books and stuff is typically going to be about $60,000 over four years. For family, you know, that's not cheap, that's $15,000 a year or, you know, or a little less. For families for whom that's a challenge. You know, economically challenged, there's Pell Grants and then of course there's institutional aid, you know, if your income's below certain levels. But if you know, you're a family that, you know, you've got two working parents, you're making 80 or 100 or 120,000 a year, that's a non trivial bite. But I think the notion that we have reached crisis levels is more the product of people choosing to go to extraordinarily expensive institutions and then either not graduating and having a lot of debt as a result, or going to extraordinarily expensive institutions, not acquiring useful skills or studying useful subjects, and then turning around at age 22 or 24 or 26 and saying, Gosh, what do I do about this?

Yeah, yeah, I agree that there is a lot to be said about student choice. And so that's why I'm excited to be launching my college selector tool. So, Rick, I want to be sensitive of your time. That's why I want to transition to our last segment, which is the rapid fire question section. And that's where I offer up some quick hitting questions. But that doesn't mean that your answer has to be quick hitting. I think we'll probably have time for one to three of these. So let me ask you the first one. Suppose that you are, Rick, the 18 year old high school senior preparing to graduate high school in four months, but this time you're graduating in 2019. Where are you going to concentrate most of your energy.

In terms of, in.

Terms of the next step in your life?

But my basic advice is we spend a lot of time trying to guess what the world's going to look like in five or 10 years and then telling young people. And I think there's a couple of simple truths that if you do something that you, you know, if you find things to do that you like, it's easier to work hard at them, that the key to any of this stuff is working hard, taking ownership, going above and beyond what's minimally expected. And so that's what I would do. I would, I would say, look, Rick, you know, find things that you're excited about, find opportunities to work hard at them, find opportunities to work in an organization or intern or volunteer or submit writings or reach out to people who've written things that you think are neat and just be proactive about your passions rather than waiting to show up in class and start getting told what to read.

Great. I love it. Rick, what is one thing you want a college sophomore listening to this podcast.

To know spend less time on social media.

Well, in light of that, I'll ask you my final question, which is a social media related question and that is if you could recommend something to a college student in the form of a tweet, what would it be?

Go read more. Vonnegut.

Cool. I love it. Rick, where can people learn more about you and anything else that you find interesting?

Sure, I'm easy to find. You know Rick Hess99 on Twitter? Heaven forbid. If you just google Frederick Hess aei, you can check out my AEI webpage which has books, articles, all that kind of good stuff.

Awesome. I will put all that in the show notes so listeners can click on those things and it will take you directly there. Rick, thanks for coming on the show.

Hey, my pleasure. Great to be with you.

Hey everyone. One major takeaway that I want to emphasize. Prior to wrapping up, Rick and I discussed a lot about elite colleges and why they matter. According to Rick, the two valuable elements of an elite college comes from number one, the signal sent to the job market from having a brand name diploma from an elite college, and number two, the value of the network developed at these elite colleges. Importantly, Rick emphasized how the quality of teaching and the content taught at these schools is not significantly different than colleges which people often consider inferior. The third thing Rick says as to why people choose to pay $50,000 a year for a college degree is more of a consumption decision. It's the amenities these colleges offer like a lazy river. For fun, I looked up some of these crazy perks offered by colleges. Here's some of what I found. Michigan Tech offers an on campus ski resort. The University of Missouri offers a lazy river and beach club. And High Point University offers a steakhouse where students can buy filet mignon with meal plan points. Look everyone, here's the deal. If you want to go skiing or if you want to go to the beach, or if you want to go out for a fancy meal, that's fine. I'm not against any of those things. But you don't need to pay $50,000 a year in the form of college tuition to do it. Just go and do those things directly. The reason why you go to college then shouldn't have anything to do with the amenities offered there. As Rick mentioned, and as I discuss over and over again, the value of going to college, particularly elite colleges, boils down to the brand name and the network you develop there. That's it. It's not because the professors are better. It's not because you learn more inside Harvard classrooms. It's the brand name and the network I know that probably leaves you with a lot of questions like, well, what if I can't get into Harvard? Where should I go? Or what school is best for me? Don't worry, we got your back. Hackiversity just launched a college selector tool where we provide you with those answers. Simply go to hackavercity.com, enter your information and we recommend a list of colleges just for you. Unlike other college lists out there, this list actually considers the practical aspects of going to college, such as cost of tuition, likely job prospects, and average student loan debt. Check it out and let me know what you think. That's all for now and until next time, Happy Hacking. If you want more hackiversity and our optimized approach to hacking college, subscribe to this podcast on itunes or grab the book on Amazon. For the show notes and the latest on Hackiversity, check out Hackaversity.com don't forget to follow Ackiversity on Instagram, Twitter and Facebook. Until now. Next time, Happy Hacking.