Economic Trends Affecting College Enrollment
The national economy is improving steadily, although recovery itself has been cyclical. By the start of the second quarter 2014, it seemed that the recovery was more normal than unusual.
Predictions are that second-quarter GDP will grow at 3%, a very respectable growth rate, if sustained for full year. Internationally, the global economy is poised to grow between 3 to 4% over the coming year. It is supported by more stability in industrialized countries, even if growth declines in rapidly developing countries.
Jobs have increased household income and this has led to an increase in spending. Business fixed investment has increased as corporations are no longer as cautious and are spending cash balances. The budget deficit has declined sharply over the past few years, from $1.4 trillion in 2009-$514 billion in 2014. The deficit is now 3% of GDP, the same as the average over the last 40 years.
Although the economy is growing and unemployment is declining, it is important to note there is still significant a significant segment of the workforce that is has either dropped out of the labor market or become marginalized. For example, while the unemployment rate was 6.3% last month, 800,000 people dropped out of the labor force.
For those who are working, the biggest challenge is the quality of employment. That is, a large portion of the jobs that were lost were relatively high-paying jobs in construction, manufacturing financial services and the government. By contrast, jobs that are being added are in low paying sectors such as retail trades, hospitality and temporary staffing.
This means there is less financial resources available to finance the rising cost of a college education and a growing divide between the rich and poor in society.
The system of college education as we know it today was first started almost a thousand years ago. Since that time, nothing much has changed – unlike every other industry in the economy.
- Imagine the changes that have occurred over the last 30 years and microcomputers (from desktops, to laptops, to notepads, to smart phones).
- Think about the changes that have occurred in the last 20 years in telecommunications (specifically mobile broadband)
- Consider the changes that have occurred in the last 10 years regarding how we shop and spend our money, how we bank, how we invest in the stock market, and how we search for knowledge of the world around us (i.e. Google).
Now, think about how the delivery of education (as a service good) has changed over the last 100 years. Students still leave home for campuses where they become residents. They gather in halls to hear professors deliver lectures and debate intellectual knowledge. They take notes, study for tests, take tests and receive degrees.
Online education in the form of MOOCs (Massive Open Online Courses), may finally bring about that change in college education.
We are waiting to see if MOOCs will be the disruptive technology that will change the nature of education. What we know so far is that MOOCs breakthrough the traditional technology constraints of classroom instruction.
They reduce the cost of delivering educational services. Specifically, the cost of adding additional students to a course of instructions is virtually zero. After the initial fixed cost of the online investment, marginal costs are zero. Therefore, it is in the University’s interest to add as many students as is possible. Some courses now reach hundreds of thousands of students internationally.
Georgia Tech was the first university in the country to offer an online Master’s Degree in computer science. It is doing so for less than $7000 a year and the courses are taught by top faculty members.
While the full Technological impact remains to be determined, society should clearly should brace for the onslaught of technology to disrupt the teaching and learning model in higher education.