With students heading back to campuses, America’s universities need a reality check and businesses could drive needed reforms.

Even before recent demonstrations disrupted campuses and forced embarrassing confrontations between university presidents and congressional leaders, public confidence in higher education was declining.

According to a recent Gallop tracking poll, only 36% of Americans expressed a lot of confidence in higher education—down from 48% six years earlier.

College graduates earn more, live longer and healthier lives and enjoy more employment stability. Yet, only 22% of adults believe college is worth the cost if the student must take out loans—just 47% are OK with college if borrowing is not necessary.

The hard data says otherwise, but the student must choose wisely.

In 2023, the barebones cost of four years at the average college—tuition, fees and room and board—was about $153,000. Add foregone income—at $15 an hour or $30,000 a year—and the price tag balloons to $273,000.

For in-state institutions, the total cost was $229,000 and for the typical private college, $355,000.

Add travel, spending money, books and so forth, those figures could balloon. But if the student is careful and earns money during school breaks, those should cancel out.

The earning premiums for a college degree over a high school diploma is about $31,000 a year.

The interest rate on federally guaranteed student loans is now 6.53%. Applying that rate of discount, the present value of the income differential is about $370,000.

A student can make most private colleges work but must be careful.

You could quibble with my assumptions.

The wage rate for a new high school graduate might be lower but even at $12 an hour, the cost of the average college is still about $250,000. Conversely, college-graduate wage data includes those who spent on post-graduate training too.

Many college graduates earn much more than the average $71,000. But nearly half of all college graduates end up in jobs that don’t require their degrees, and about one-quarter earn less than the typical high school graduate.

The secret is in choosing a major and location well.

State supported Baruch College is a great investment. It sends lots of accounting and finance majors into the New York financial district, and its students generally do well.

Employment outcomes are consistently better for new graduates in just about any major that do a reasonably relevant internship.

From a strictly labor market perspective, supply exceeds demand for college graduates, and many Generation Zeers choose to learn a trade or enter an apprenticeship—often those routes pay while the young person earns.

Universities could better prepare students.

Employers often complain graduates lack critical thinking abilities and soft skills to work smoothly with others. That is not surprising given that universities often require allegiance to progressive purity when recruiting and granting tenure to faculty.

Frequently, seats in sought after majors are rationed, pushing students into many of the Humanities and Social Sciences where job prospects are not as promising.

Faculty governance procedures often make maddeningly difficult university leaders’ efforts to scale back departments that are undersubscribed to create more spaces in programs that offer better employment prospects.

Employers use diplomas as signaling devices.

Employers are eliminating degree requirements and say they are emphasizing skills more. Although a LinkedIn study found a 36% rise in job postings that did not include a degree requirement, the share of positions filled by candidates without a sheepskin rose much less.

We need a standardized exit exam for graduates that assesses the ability to organize complex information to solve problems, deal with ambiguity and tolerate disagreement. If employers used the results to screen applicants, the incentive to reform university decision-making, hiring and curriculum would become more compelling.

College should be worthwhile for non-economic reasons too.

In the words of Sydney J. Harris, a 20^th Century journalist, “The primary purpose of a liberal education is to make one’s mind a pleasant place in which to spend one’s leisure” and to turn “mirrors into windows.”

Nowadays, looking at the intolerance on college campuses—the unyielding compliance with Woke demanded of faculty and students—it’s hard to expect universities to cultivate such reflective qualities.

After the recent turmoil at prominent institutions like Harvard and the University of Pennsylvania, a few presidents lost their jobs and big donors advocated withholding contributions until progress is accomplished on antisemitism and other forms of intolerance.

But things won’t change until powerful men and women on Wall Street and elsewhere shift hiring preferences away from new graduates of Ivy-League and other elite institutions that won’t clean up their faculties and establish an atmosphere where open discourse based on verifiable facts and reason is welcome again.
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Peter Morici is an economist and emeritus business professor at the University of Maryland, and a national columnist.