Do College Rankings Matter and is a Bachelor’s Degree Even Worth It?

It's commencement season for The Class of 2023, for those in college and in high school. And Jeff, that means everyone is talking about what's next.

Yeah, where they're going, Michael. To college and what job they hope to land. And so today we're going to talk about what shapes those next steps. Two issues that have been in the headlines this spring. One is the future of the college rankings and the other is the value of the bachelor's degree. That's next on this episode of Future youe.

This episode of Future youe is sponsored by Ascendium Education Group, a non profit organization committed to helping learners from low income backgrounds reach their education and career goals. For more information, visit ascendiumphilanthropy.org this episode is brought to you by the Bill and Melinda Gates foundation, working to eliminate race, ethnicity and income as predictors of student success through innovation, data and information policy, and institutional transformation. How much would $2,000 help your class project this fall semester? Course Hero, an education technology community with more than 150,000 educators, is awarding 50 teaching grants to fund fall 2023 class projects that promote digital literacy and equity. Imagine new ways to use technology to support learning and understanding, and you might just receive up to $2,000 in funding. Apply by May 26 at coursehero.com educators grant. That's coursehero.com educators grant applications are due by May 26, 2023. Subscribe to Future you wherever you get your podcasts. And if you enjoy the show, share it with your friends so others can discover the conversations we're having about higher education.

I'm Jeff Salingo.

And I'm Michael Horn. As we come to the end of another academic year, I'm thinking of all the transitions that happen around now, Jeff. One is, of course, the high school to college transition that we have essentially ended the admission cycle into college for the high school class of 2023. So we get to start the cycle all over again for this year's juniors, the class of 2024. And that will mean a whole new crop of students developing their college lists, going on tours, consulting the rankings. You know, all of this, it really is as automatic as the cherry blossoms in your neck of the woods that are kind of like clockwork, although earlier each year. And one question that we want to talk about today is how much of the rankings will be really part of that rite of passage. And then the other transition is the one from college to career. And in the coming weeks, we're going to hear a lot of pomp and circumstance on campuses as the class of 2023 graduates. These were freshmen, by the way, in the spring of 2020 when Covid hit. So we'll let that sink in for a minute. But Jeff, you just co wrote a paper that we want to dig into about what they will receive on graduation day, the bachelor's degree, and of course, what its value is actually in today's job market. But, but let's start with the rankings first. There have been a ton of alarmist headlines, Wall Street Journal to the trade publications everywhere, that the U.S. news rankings in specific are literally collapsing. But Jeff, at the undergrad level, is that really what's happening right now?

Well, Michael, I think it's a great question because just like so much when we talk about higher education, we tend to really conflate things that are very different now at the professional level, particularly with law schools, I think the answer to that question is yes, they are collapsing. The rankings are collapsing. You know, last fall, Yale was the first to pull out of the law school rankings. And within three months, more than 40 law schools, which the Wall Street Journal recently estimated to be about 20% of the programs that U.S. news ranks said they would no longer share data with the U.S. news World Report, including 12 of the top 14 law schools, and then a bunch of medical schools followed. At the undergraduate level, however, it's been a little bit more of a drip. The Rhode Island School of Design, risd, which is number three among regional universities in the north, and Colorado College, which is number 27 in the latest rankings of national liberal arts colleges. They withdrew this spring. And.

But, Jeff, what does it mean to withdraw from the rankings? Is that like, literally they're. They're not going to appear? What does that mean, actually mean, tactically?

Well, I think that's the million dollar question, Michael. You know, as you know, I interned at U.S. news World Report, and I worked on the rankings back in 1994. And back then, the amount of information the federal government collected about higher ed, or really the lack of information they collected about it, was frankly criminal, given how much of a federal subsidy institutions were receiving. So back in 1994, U.S. news relied a little bit on the federal government and a lot on colleges to give them data to put together the rank. Indeed, a huge part of my job every day was to call colleges and check data as well as to harangue someone at the college to give us the messing data. Then in the 1990s and early 2000s, government data got a lot better. We got A lot more of it. In terms of what was collected in ipeds, that's the integrated post Secondary education data system that was expanded. And then in 2002, the College Board, Petersons, and US News got together to create what's called a common Data set to stand, standardize, and improve college transparency. Data transparency. And the Common Data Set is a great resource now. I always recommend it to students and parents. It's something you could Google for almost every college because they usually put it up on their website. And this is exactly what it says. Common Data Set. It's a common form that colleges and universities fill out for a bunch of publishers that essentially asked the same information every year. You know, what's your enrollment? What's your enrollment of men and women? How many applications did you get? How many early applications did you get? How much financial aid did you give out? And so they. They templatized this all and asked this Common Data set every year. Now, all this is to say that when schools say they won't cooperate, you know, what does that mean? Now they have to fill out ipeds under federal law, though no one audits those numbers. And years ago, I did a story about a bunch of schools for the Chronicle that didn't cooperate with ipeds. And to be honest with you, they didn't get dinged for it for not even filling it out on time. They eventually filled it out. So does that mean they won't complete the common Data Set? Well, that' also hurts them with other publishers, not just U.S. news World Report. And it increasingly hurts with the public that uses those numbers, particularly in admissions. Now, most of all, does that mean they won't do the peer assessment? That the peer assessment is where administrators rank their peers, but that doesn't necessarily hurt your own school. So I could. Maybe they won't do that. And the response rate for that has been falling anyway. According to Melissa Korn at the Wall street journal, just 34% completed the peer assessment last year from 70% in 2008.

Jeff, I'm curious because, like, I know all the things that annoy me about the rankings, but is that what really annoys colleges themselves about the ranking? Like, I can't imagine a president or someone in the administration wanting to fill out that peer assessment, which it's incredibly qualitative, and it accounts for like 20% of the overall score.

It's a big number when you think about it. And it's essentially a beauty contest that counts for 20%. And I think that's part of it in terms of their annoyance. But as you know, Michael, Higher Ed thinks it's different and diverse and differentiated. And thus you can never compare Harvard to Yale or my alma mater, Ithaca to Skidmore and so on. You know, colleges say, look, our numbers are public. You could find out what our graduation rate is, you could find out what our retention rate is, you can find out what our net tuition rate is, default rates on loans, et cetera. So just let them speak for themselves. We don't need rankings. Let's just put the numbers out there and let them speak for themselves. But US News and World Report maintains that this is a big purchase and parents and students deserve to have that information. All the. All those numbers curated and compared, and that's the service they're providing. And I'll be honest with you, this is where I agree with U.S. news World Report. But here's something that was surprising in that Wall Street Journal piece that I mentioned that I didn't even know about the rankings. And this is true, at least when it comes to law schools. So the Journal reported that Bob Morris, who is the chief data person for the rankings and who worked there when I was there in the early 1990s, that he doesn't commit to a particular mathematical model until after receiving the school's data. Again, this is something he said about the law schools. And then what happens is when they get all the data, they run various simulations to see what the outcomes are by weighing different factors in different ways. In other words, they want to see who is going to come out on top before they settle on a formula. Now, in some ways, that makes sense because you need the rankings to change every year in order to keep interest in them high. But you also don't want a year where Yale or Harvard or Princeton aren't in the top five, because then no one will trust the rankings or believe them.

In a cynical way, I see why that makes sense, but we'll leave that there. But I'm curious, what's the path forward in your mind?

Well, when you charge something that is probably the biggest purchase in a person's lifetime, a college education, and that there is declining trust in that product, there is always going to be some sort of ranking. So just if U.S. news and World Report goes away, or we boycott U.S. news and World Report to make it go away, that doesn't mean the rankings are going to go away. Someone will fill that void. Now, can they improve? Sure. First, I think that we need better data. We know that there's a lot of data we're not collecting about higher education in terms of learning, in terms of student learning. We need to start collecting that. Even the data we collect, for example, we don't trust it all the time. We don't verify it, we don't audit it. It's why Columbia was able to get away with a lot of things they got away with in the rankings because even the data that they're giving to the US Government, no one audits it. So I think that there needs to be a lot more oversight of the data that is being collected on higher ed so we at least know that if we put better data into the rankings, we're going to get better data out. Second, I really like what the New York Times did recently, where instead of a one size fits all formula, it created a tool that helps students and families build rankings on what is important to them. And I think that as we collect better data and more data about higher ed and generative AI gets better. I imagine this could be the future, Michael, where we could have a lot more personalized rankings based on what is important to us. We could tell chat GPT, you know, build a rankings based on these are the five most important things to me as a student. And then we would get our personalized rankings back in terms of what we want rather than this kind of one size fits all that we have today.

That's fascinating, Jeff. And I like that New York Times ranking as well. It's, you know, personalizing to your criteria. Maybe even more exciting. Could be like, help me eliminate all the colleges that, that miss out on these criteria because sometimes elimination might be a better strategy than the mythical fit, if you will. But the other thing I liked about, frankly, the New York Times ranking was that it was the New York Times because there's all these other rankings out there that I'm not sure a lot of students are actually really looking. But the New York Times has a greater chance, I would think, of getting some traction. But Jeff, the whole reason these rankings really matter, of course, is for one other reason, and that's because the signal of the degree, its real value in the marketplace, still matters. People are still enrolling in college. Yes. Even in spite of those trends and headlines around that. And so when we come back, we're going to be talking about what the degree really means in a world where degree optional, not test optional, but degree optional is increasingly becoming a term. We'll be right back after this quick break. This episode is being brought to you by the Bill and Melinda Gates Foundation. Today's College students are more than just students. They are workers, parents and caregivers and neighbors. And colleges and universities need to change to meet their changing needs. Learn more about the Foundation's efforts to transform institutions to be more student centered@usprogram.gatesfoundation.org

this episode of Future you is sponsored by Ascendium Education Group, a nonprofit organization committed to helping learners from low income backgrounds reach their education and career goals. Ascendium believes that system level change and a student centric approach are important for our nation's efforts to boost postsecondary education and workforce training opportunities. That's why their philanthropy aims to remove systemic barriers faced by these learners, specifically first generation students, incarcerated adults, veterans, students of color, adult learners, and rural community members. For more information, visit ascendiumphilanthropy.org so Michael, it's not just the rankings that are coming under attack. So is the bachelor's degree increasingly.

And Jeff, in the last year and a half, get this, it's Maryland, Pennsylvania, Utah, I suspect there's a couple other states in there have stopped requiring a four year degree for most jobs in their state governments. There's some big name parts of the private sector too, that have moved away from the degree based hiring towards skill based hiring. You've got Delta, General Motors, Google, Apple, IBM dropping the degree prerequisite for many open positions. And even the federal government is urging its agencies to rely on skills rather than the degree to fill vacancies. Jeff, help us sort this out what's going on here, because the headlines will have you believe that the degree has completely seen its better days. Is that true?

Well, Michael, that's the exact question that Matt Singelman and I wanted to answer. Now, as some of our listeners know, Matt is president Burning Glass Institute, which is a spin off of Lightcast, which is a real time labor markets analytics firm that looks at job ads in real time to see what employers are hiring for. So working with this team over the last year, we wanted to determine if the degree is valuable, where it's valuable, and how can colleges make it more valuable, especially in the face of increasing competition with Micro Credentials and other alternative providers to higher education.

So Micro Credentials and all those things are getting a lot of buzz right now. This report that you recently published with Matt, we'll put a link into the show notes, but what was the big headline out of it for you?

Well, I'd probably say that the headline is that the bachelor's degree still carries with it a wage premium. Now, in many ways I can't believe, I'm saying that's the big headline. But given how much people don't believe a college degree is worth it, I feel like we really need to come out to say it is. In big capital letters, right? We found that the four year degree delivers an immediate 25% wage premium within a year of graduation. And the wage premium is the difference in wages somebody with a college degree gets than somebody without. That's the difference. And it's 25% as soon as they get out of college. Now what's more, what was interesting to us is that that dividend, that 25% wage premium, it held steady over the 12 year period that we studied. So it didn't go down, didn't go up a lot either, but it held steady over that period. Okay, so maybe that's not surprising for those of us who haven't discounted the bachelor's degree. But it's more than just the wage premium that comes with the bachelor's degree, Michael. The four year degree gives people options. So it allows them to get a better job right off the bat. It allows them to move up in that job and perhaps most important, it, it allows them to move out of their firm to get another job somewhere else, in another organization or in another industry. And what's interesting to me is that that mobility extends even to those people with BAs and non BA jobs. So let's take the typical stereotype, Remember the barista, the Starbucks barista with a degree. Those with a college degree in those jobs are likely to earn more than those without a college degree in those non BA jobs. But here's the thing, Michael. They are also more than twice as likely as those without a degree to move to a position with higher degree requirements. Again, so they have mobility. So even if you end up as that barista at Starbucks with a bachelor's degree, the likelihood of you being there very long is not really that high. You're going to be able to move out of that job pretty quickly. And why is that? Because you have a bachelor's degree.

All right, that's fascinating because there's been all this stuff about under matching and so forth in recent years. Let me ask a different question, which is, does it matter what you get your degree in or from where that degree is?

Well, it's a really good question, Michael, because even though the bachelor's degree is worth it, not all bachelor's degrees are created equal. Now, not surprisingly, we found that money wise, graduates from selective institutions start out ahead of those who earn their degrees from less selective institutions. Now that said, those with degrees from less selective institutions still benefit from a wage premium over someone with no degree. So again, no matter where you get that degree from, it still matters. Now second, not only does institution matter, but not surprisingly, majors matter. STEM majors, for example, are most rewarded on average by the wage premium. Indeed, the major we found might matter more than the selectivity of the institution when it comes to the wage premium. We found technology and engineering degrees even from less selective institutions can actually outearn business and social science, health and life science majors from top ranked institutions. So what you major in sometimes matters more than where you go.

It's a set of fascinating findings. But does that mean that the most rewarded are the students who major in STEM at a selective college?

Jeff yeah, so that may be. If you really want to make the most money, that's probably what you should do. Major in STEM and go to the most selective college you could get into. But Michael, there's another important finding about the bachelor's degree that I think is really important to our listeners to understand from this study. You know, after working on this paper, I've come to understand that there are three legs to the value stool of the degree. The first leg is the institution, again more selective, more its worth. The second leg is the major. Now those we've known about for a long time, we've always talked about the importance of major and institution, but the third leg is important and I don't think we talk about it as often. And that is the skills you get while you're getting the degree at a particular institution. We've always assumed that as long as you went to college and got a degree that you would get the skills that employers want. And what we found is that the degrees with the biggest wage premium have a mix of foundational skills. So think of those skills that are broadly applicable across fields such as leadership and negotiation. Things you might get in the liberal arts, for example, as well as specialized skills which are usually concentrated in a few majors. In every major there are specific skills that increase graduate earnings significantly. That's as true of liberal arts degrees as it is of STEM degrees. And indeed we found one skill can sometimes deliver big value. For instance, a public administration major with a skill set in investments can see their wage premium rise by nearly 1/3. The wage premium also for a specific skill can differ across majors. For example, knowing SQL, a programming language, delivers 11 an 11 wage premium to a natural resources and conservation major, where I would imagine having SQL is a relatively scarce skill. Not everybody has it. But it only delivers a 4% return to a math and statistics major where I would imagine everybody knows SQL.

It's really interesting. So before I ask the so what final question, is there anything else that might interest our listeners?

Yeah, Michael, here's one big thing and we've talked a lot about community colleges on this show, so I, I really wanted to bring this one up. The four year degree is more valuable than the two year associate's degree. In fact, one of the more surprising or shocking things or worrisome things that we found is that wages for those with no degree are nearly the same as those with a two year degree. It didn't really give a lot people a lot of a bump, much of a bump, the two year degree. And why is this distinction important? Because we know the goal of most community college students. 80% of them say that their goal is to transfer and earn at least a bachelor's degree. But only 31% actually end up transferring to a four year institution. And only about half of those students actually complete a bachelor's degree. Now, many community college students who had higher goals end up earning just a two year degree, a degree that as we saw from our study, really doesn't have much of a payoff in the job market. So that makes it really critical for higher education and policymakers to improve the transfer pathway from community colleges to four year institutions and then for those colleges, universities to ensure that transfer students actually get that bachelor's degree.

Well, that's a tall order, Jeff, as we've discussed on this show. But that's why it matters that the two year degree holders eventually get more education somewhere. But what's the bottom line then of the study, in your opinion? What should we really take away from it?

So simply put, Michael, colleges and universities are mistaken if they think they could continue to coast on the historical value of the degree. They need to make it more valuable. And in the paper we lay out several ideas from regular program reviews, academic program reviews, to embedding skills in degrees. And why do they need to do that? Well, we know from previous episodes that enrollment is down in higher ed. There's a demographic cliff coming. The college going rate is going down. Higher education really needs to boost demand. It's going to be really hard for colleges to persuade more students to buy its product as is.

Wow, it's just fascinating, Jeff, to hear all this. And in a dynamic market that's attracting a lot of attention, it's going to impact a lot of decisions. We'll keep track of all of this. But, Jeff, I think we might have a Course Hero question from an audience member as we wrap up.

We do, Michael and this is one of our favorite segments this year is the listener Q and A brought to you by Course Hero. This episode's question comes from Sarah Mabey, who is an associate professor and faculty chair at Hiram College. And Sarah asked this how can we help students and colleagues understand that care does not equal soft or low expectations? How do we make sure that a caring classroom includes appropriate strictness?

Michael It's a great question, Sarah, and I'm glad you asked it. And I think we can actually take a lot of lessons here from the no excuses charter school sector in K12. And what they've shown, I think, is that higher expectations for your students shows them that you care. It shows you, it shows those students that you believe in them. And it's frankly developing them so that they're going to be prepared for life after school, after their program, when frankly, the world, their employers, they're not going to give them a free pass or lower expectations if you can't actually do the job. They're not just going to sort of let them pass through. And so the other piece, I would say is if we're frankly serious about mental health right now. And some of these issues, Jeff, that we've talked about in the show, showing students not only that they can do the hard work, but that we believe in them and that we're going to give them the tools so that they can get there. You know, those social, emotional, learning tools like executive functions, self efficacy, growth, mindset, perseverance, you name it. So, yeah, like as Lisa Damore talked about on the show, like, sometimes life gets hard and actually being mentally strong is not that you get take the hit, it's that you can recover from it and that you can work through it. And so that, you know, these students can accomplish these things and start to believe in themselves, too. Clay Christensen, whose birthday would have been the day before recording this, actually always told his kids, quote, you can do hard things. Well, I think the message from that for us with our students in higher ed is true love for our students is when we show them through our actions that we believe they can do hard things as well by holding to high expectations.

Yeah, I think it's a great way to end the show, Michael. And that's all the time we have for today. And thank you for joining us. And we'll see you next time on Future

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