The mass production of credentials: subsidies and the rise of the higher education industry.

• Author: Bankston, Carl L., III

During the past half-century, the conventional view of American education has held that the nation needs more college graduates and that increasing the rates of college attendance and completion should be a national goal, advanced and subsidized by the federal government. During his presidential campaign and after his election, Barack Obama stressed his commitment to ensuring that a greater percentage of the population obtain higher-education credentials. In January 2010, President Obama proposed a budget that would transform Poll Grants into entitlements, on the model of Medicare or Social Security. This change would extend the college funds that Poll Grants provide to an additional one million students. This proposed entitlement is based on the idea that everyone with the desire to go to college should be able to do so (Parsons 2010). This idea has reshaped higher education in the United States in a very short historical period, turning what was a guildlike activity into an industry for mass-producing credentials.

In this article, I make the case for an alternative to the conventional view expressed in the president's proposal. My examination of the evidence and my own experiences in higher education have led me to conclude that massive federal subsidies have changed the higher-education industry and have produced a number of negative consequences. I describe these changes and lay out their consequences. This article, then, provides a response to the position taken by policy analysts and economists such as Claudia Goldin and Lawrence F. Katz (2008) that a race between education and technology requires extensive federal investment in higher education as well as a response to the popular view that putting more individuals through college is necessarily a good thing.

Figure 1, which shows the percentages of Americans age twenty-five and older who completed college between 1940 and 2008, illustrates the transformation of the country's educational setting in the decades leading up to President Obama's proposal. On the eve of World War II, fewer than 5 percent of Americans held credentials from institutions of higher education. By 2008, about 30 percent were college graduates. This enormous increase by itself might raise questions about whether we really need to be concerned about pushing people through postsecondary schooling even more rapidly. But concern about public issues responds to expectations. The more common a good becomes, the more we tend to expect that it should be readily available.

At the beginning of the transformation, some questioned whether college education really could enter the realm ofmass consumption. When government planners first proposed the Servicemen's Readjustment Act, or GI Bill, James Bryant Conant, president of Harvard University, and Robert Maynard Hutchins, president of the University of Chicago, expressed concern over the possible rapid expansion of higher education. Hutchins worried "that college may be made so attractive that you may go there even if you should not" (qtd. in Altschuler and Blumin 2009, 77). Although Hutchins did not entirely oppose educational subsidies for returning veterans, he advocated national examinations to identify those with the highest aptitudes to pursue schooling beyond the secondary level. Conant voiced similar views, arguing that educational opportunity should be made available to veterans on the basis of demonstrated ability, and he advised that the GI Bill be revised to subsidize only "a carefully selected group" (qtd. in Altschuler and Blumin 2009, 77).

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The bill did in fact greatly stimulate enrollments directly by subsidizing the education of veterans and indirectly by making college seem to be a realistic option for the veterans' families, neighbors, and associates. The debasement of college education that Conant and Hutchins predicted apparently did not occur, however, or at least did not occur immediately. Before we dismiss their concerns entirely, though, we should consider at least three reasons why the growth of higher education did not quickly lower the quality of that education. First, a version of the kind of testing these educators advocated did limit access, at least to the most highly ranked institutions. Second, it took several years for the increase in credentials to exceed the demand for the kinds of occupations most closely associated with postsecondary schooling. Third and perhaps even most important, the real rise of college as a mass industry began only decades later.

A Broader-Based Elite

Hutchins and Conant worried about an influx of unprepared students into the academy and proposed using methods of selective admissions to prevent it. Although the pool of applicants expanded in the years following World War II, new techniques of selecting students ensured that the elite institutions, such as Chicago and Harvard, became more able to admit on the basis of academic preparedness. In The Education of Henry Adams ([1918] 1983), Henry Adams laments the general intellectual level at Harvard, which then had something of the character of a club for young gentlemen. The tools for student selection in the postwar period allowed the most highly reputed schools to draw talent from across the nation, not only among the sons of wealthy families.

Universities were still largely elite institutions during the decade after World War II, although the elite was expanding in more ways than numbers alone. As shown in figure 1, by 1960 the number of Americans older than twenty-five with college degrees had risen to just less than 8 percent from slightly less than 5 percent in 1940. Statistics on enrollments show that although college entrance did jump in the late 1940s, the number of postsecondary students remained relatively constant until the middle of the 1950s, then began to rise. According to historical data from Statistical Abstracts of the United States, college attendance in the "traditional" college age group of eighteen- to twenty-four-year-olds increased from 11 percent in 1950 to 17 percent in 1960, accounting for part of the growth in enrollments that I discuss later. Nevertheless, as the 1960s began, 83 percent of people in their late teens and early twenties were not attending colleges or universities. More than 92 percent of American adults did not have college degrees. Higher education remained an experience for a relatively small number of people, even as the number was growing.

If higher education was still restricted to an elite in 1960, this elite had a broader base across social classes. Even the top colleges were now expanding their geographic and social range, pulling students from different social backgrounds and distant parts of the country. At the same time, many institutions of higher education combined consideration of broader pools of applicants with increased selectivity. Standardized testing took on new importance in determining who should study and who should not. The Educational Testing Service, which administers the Scholastic Aptitude Test (SAT), opened on January 1, 1948. By 1957, more than half a million students were taking the test each year (Lemann 1999). In that year, about a million more students enrolled than ten years earlier.

As I discuss later, a period of federally subsidized expansion of higher education began at the end of the 1950s. Government policy and public expectations encouraged the view of postsecondary schooling as a normal part of the lives of Americans in general, not as only an achievement to which any individual might aspire. The information on SAT scores published by the College Entrance Examination Board goes back only to 1966-67, after the era of mass higher education had already begun. However, the scores on the mathematics section of the test plummeted from 1966-67 to the early 1980s and then climbed back to the level of the 1960s by 2008. Reading scores went down even more steeply than math scores during the 1960s and 1970s even as the expectation of college attendance for everyone became more entrenched. The reading scores never recovered: in 2008, they remained far below their level in earlier decades (Snyder, Dillow, and Hoffman 2009, table 142). Although some highly selective institutions still used meritocratic standards to choose students, testing no longer restricted higher education to the top ranks of test takers.

Demand for Occupations

Alter World War II, U.S. nonmilitary output boomed. The orthodox view has attributed the continuous expansion in the period just after the conflict to the unleashing of pent-up demand (see, for example, French 1997). However, Robert Higgs (2006) has argued that the robust economic activity after the war resulted from the lifting of Depression-era fears and wartime government controls and the consequent restoration of business and investor confidence.

As the nation's economy grew in the postwar era, it also became more white collar, with a growing demand for the professional and technical occupations that historically have required relatively more workers with postsecondary credentials. Figure 2 shows the growth in the percentage of Americans in professional and technical jobs and the percentage of all Americans in the labor force with college degrees. Until the 1970s, a higher proportion of workers were in these kinds of elite jobs than held degrees, which meant that the steady growth in professional and technical positions could absorb the growing numbers of graduates. This situation helps us to understand why the great rise of mass higher education in the 1950s and 1960s did not appear to be flooding the market with degree holders. The trends also help to explain why the common wisdom took hold that the American economy was becoming ever more knowledge intensive (or at least credential intensive) and that however many graduates we produced, we always needed more.

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By 1980, the...