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Higher Education and the American Dream

Marvin Lazerson

Part I. The Gospel of Getting Ahead

Chapter 1. Building the dream (and worrying about it)

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If you build it, he will come.
(From the 1989 movie Field of Dreams)

1Has higher education become too successful? That’s something of a rhetorical question, given that in the United States Americans like to say, “You can’t argue with success.” Are the expectations for higher education too grandiose? Absolutely, and therein lies one of the industry’s dilemmas.

2Higher education has indeed been one of the American wonders. Fueled by aspirations for an educated citizenry and upward mobility through expanded educational opportunities, with aspirations that put more young people into school for longer periods than had ever occurred, education became central to the American way of life. Colleges and universities became part of this phenomenon, with escalating intensity after World War II, propelled by expansive government investments, by growing income returns and greater access to professions, and by regional competition that impelled states and localities to build new campuses and expand existing ones. Higher education quickly changed from its relatively minor role in American life before the middle of the 20th century into a major industry.

3Images of absent-minded professors, raccoon coats and fraternities, quiet out-of-the way campuses, of Cary Grant, Mickey Rooney and June Allison, with an occasional Katherine Hepburn to leaven the mix—movie stars of the 1930s, 40s, and 50s—continued in revised form in such movies as The Absent-Minded Professor and the alcohol consuming campuses of Animal House, images that continued to suggest how frivolous college could be. But these images were also complemented, and to a significant degree replaced, by the reality that in the second half of the 20th century professors were taken to be studious academics interested in research and their laboratories, people who could be seen on television and writing in newspapers commenting on current issues. Their work supported national defense—the research that produced the atom bomb was largely done by professors—their breakthroughs in medical research were astounding, and they became central figures in articulating economic and social policies. Millions of Americans clamored for access to college and their aspirations soon made college entry the stuff of politics, with debates over affirmative action and financial aid taking center stage. The numbers and the money that flowed into higher education were staggering.

4In almost every regard, the last half of the 20th century was good for higher education. Three sets of data tell the story of growth: more institutions, increasing enrollments, and more money. Between 1950 and 2000, the number of degree granting institutions more than doubled, from 1,851 to 4,084. Enrollment growth was even more impressive with total enrollment increasing from 2.6 million to 14.8 million students, more than fivefold in the same fifty years. The amount of money was extraordinary. In 2008 dollars, annual expenditures went from $2.2 billion in 1950 to $134.6 billion in 1990 (National Center for Education Statistics, 2008, Table 187), and the amounts kept on growing thereafter. The growth in each of these areas reaffirmed what Americans had come to believe: America was a forward-looking nation, a point of view articulated by the actor Ronald Reagan, soon to become Governor of California and President of the United States, whose television voice in the 1950s and early 1960s told the American people, “At General Electric, progress is our most important product.”

5Progress was not smooth and the picture was sometimes not so glamorous. Just as American industries—textiles, steel, and automobiles— found themselves threatened by foreign imports and global competition, by managerial miscalculations and worker demands for higher wages, shorter workweeks, and full-coverage medical insurance, so too did higher education find itself troubled. In the immediate postwar period anticommunist mania led to charges that the Reds and their fellow travelers had invaded America’s campuses. The Soviet Union’s launch of Sputnik in 1957 raised doubts about whether American standards of academic achievement were stringent enough for the Cold War era. Demonstrations, strikes, and violence during the 1960s and early 1970s divided higher education from within, and diminished enthusiasm for it among politicians and the public at large. One version of the criticism was colleges and universities had become yet another mistaken entitlement of the welfare state. A slowdown in income returns to those with a college education during the 1970s combined with the rising costs of going to college—the industry seemed unable or unwilling to rein in its expenditures—opened higher education to even more strident criticism, complemented by efforts to reduce federal and state expenditures. During the 1980s, state appropriations, the largest source of government funds for higher education, increased only slightly per student, in fact, remaining unchanged when measured in constant dollars. Government funding as a percentage of funding for higher education declined during the 1980s. Questioners challenged whether colleges and universities were teaching students anything, whether higher education really added any “value” to the students or whether it just certified them for the labor market. With remedial programs for entering college students proliferating, the notion of “higher education” sometimes sounded like a misnomer. The media joined in with increasing glee, as it found itself yet another institution corrupt in its ways, reporting on the misuse of funds, luxuries for administrators and students, and professors who taught very little and were often jetting off to somewhere else rather than being on campus.

6And yet as irritating, threatening, and confusing as these moments were, most times of trouble were transitory. Each rocky moment was followed by renewed enthusiasm, more applications for admission, expansion of facilities, and greater success at raising money. The anti-communist McCarthyism of the 1950s shook some campuses, frightened many faculty, and ruined careers, but it hardly made a dent in the industry’s growth or prestige. Sputnik produced considerable criticism and worries, but out of it came the National Defense Education Act of 1958, which gave unprecedented federal fiscal support for the sciences, foreign languages, area studies, and campus growth. A few years later the Higher Education Act of 1965 opened the doors to even more people through a massive program of financial aid for low-income students, part of the growing sense that higher education was critical to national defense and economic growth. The campus rebellions that shocked the nation in the 60s and early 70s led to angry diatribes directed at overly entitled youth, but the public’s shifting attitudes toward the civil rights movement and the Vietnam War ultimately gave legitimacy to the demonstrations. Certainly few if any young people turned away from attending college because students had protested. The most obvious direct impact of the student demonstrations was to give students more freedom. Campus restrictions to student life effectively disappeared in the 1970s, as in loco parentis became a dirty word. The number of required courses declined and the size of the overall curriculum increased, giving students more choices in what to take and faculty more freedom to teach what they wanted. Income and status returns to college attendance remained high, and if the rate of growth slowed and may have even declined slightly after 1970, attending college was still a wise decision in comparison to not going, as the job market for high school graduates collapsed. With predictions at the beginning of the 1980s that the declining number of 17- to 21-year olds in the population would substantially diminish the market for students, higher education discovered that greater proportions were seeking enrollment and also turned to nontraditional students (more accurately returned to them, since the G. I. Bill after World War II, which provided tuition and living expenses to returning veterans, had brought millions of young adults to the campuses). While it was becoming more difficult for families to pay for their child’s college education, as tuition costs rose faster than the rates of inflation and average family income, the numbers scrambling to get into college kept going up. Community colleges in particular burst at the seams enrolling high school graduates and dropouts, adults seeking job preparation, and others simply wanting a place to learn more about the world and themselves. The precipitous drop in the stock market in 1987, which looked like a major threat to the higher education industry, was quickly followed by an incredible run of income returns, making it seem that every college and university with the right investment strategy could be secure, if not rich.

7Despite the ups and downs, during the last half of the 20th century, higher education built its field of dreams. One had to let the public know the field was there, market the products, build student-friendly facilities, and create a number of different leagues, from high prestige expensive to low prestige budget institutions, so that everyone had a place to go. Sometimes rain fell and conditions were poor, some teams operated in the red and folded. But like the newly constructed domed stadiums, higher education’s field of dreams was a remarkable invention, able to resist all kinds of bad weather. Higher education could take pride in its success.

1.1 Building the dream

8The times for higher education were so good that the management guru and social commentator Peter Drucker proclaimed in 1958 that “we cannot get enough educated people. In the past the question had always been, how many educated people can a society afford? Today it is increasingly, how many people who are not highly educated can a society afford?” (Blumberg, 1980, p. 26). In 1992 a historian would simply refer to the two and one-half decades after World War II as “academia’s golden age” (Freeland, 1992).

9The Servicemen’s Readjustment Act of 1944 (the G. I. Bill) and the President’s Commission on Higher Education in 1947 (the Truman Commission) set the terms of postwar expansion. Although many Americans had, by the 1930s, come to see college enrollment as an important ingredient of the “culture of aspiration” (Levine, 1986), the veterans’ determination to go to college was mind boggling. Under the G. I. Bill, between 1945 and 1949, 2.2 million veterans (overwhelmingly men) enrolled in college and post-secondary institutions, three times more than the maximum projected during the Act’s passage. Older than the traditional college students, more explicitly vocationally oriented, and impatient with the traditions of college life, especially since many were married with children, the veterans dramatized and reinforced the inextricable link between getting ahead, grabbing a piece of the American dream, and enrolling in college. At least three consequences emerged from this early post- War success. Although the G. I. Bill was initially seen as a way to keep returning veterans from immediately entering the labor market, and thus flooding it with more job seekers than jobs, the federal grants to support college attendance linked federal largesse to the expansion of educational opportunity—a fact which surprised both the original supporters of the Bill and the higher education community itself, which had been wary of too many of the wrong kinds of students coming. Second, the veterans, older and often with families, were less interested in “college life” and more interested in their studies; they helped make going to college a serious endeavor. And third, the veterans’ academic success demolished the traditional idea that only a select few could benefit from college. As a result, a new conception emerged of who and how many should go to college and who would pay for it.

10The Report of the President’s Commission on Higher Education (1947), significantly titled, Higher Education for American Democracy, had no immediate effect on public policy. What it did was to articulate the twin themes that fueled higher education’s prosperity. First, it asserted that equality of higher educational opportunity was essential to America’s economic growth and national defense. An expansive higher education system with public funding would fulfill simultaneously the possibility that every American would have the opportunity to achieve the American dream while ensuring that the nation would be more prosperous and more secure. This would require active, indeed aggressive, federal involvement and investment in post-secondary education, including free, tax-supported public community colleges. As the Commission wrote, “To meet the needs of the economy our schools must train many more young people for employment as medical secretaries, recreational leaders, hotel and restaurant managers, aviators, salesmen in fields like life insurance and real estate, photographers, automotive and electrical technicians, and…medical technicians, dental hygienists, nurses’ aides, laboratory professions” (President’s Commission on Higher Education, 1947, vol. I, 68–69). Few had ever spoken so bluntly about public sponsorship of post-secondary education for the labor market. The Commission’s prediction that higher education would in the coming decades enroll millions more students and that their explicit focus would be jobs was totally accurate. As America began the 1950s, higher education was about to enter a whole new world.

11The G. I. Bill initiated and the 1947 President’s Commission on Higher Education blessed the postwar expansion, but the directions higher education took evolved in ground that had already been well-prepared. Over the course of the previous decades, four established themes combined to lay the foundation for the postwar era: vocationalism, public higher education, multiple sectors of post-secondary schooling, and research. America’s appetite for higher education grew out of these earlier developments but with an intensity that had never before been seen. The battle over vocationalism— the direct application of schooling to jobs and economic opportunities— for example, had been joined since the 19th century. Seeking students and public approbation many nineteenth century colleges adapted their liberal arts traditions to become multipurpose schools, diversifying their curricula and becoming sensitive to local and regional economic needs and job opportunities (Geiger, 1995). For women especially, vocationalism was always central. Overwhelmingly, female students traditionally had prepared for teaching.

12Between 1880 and the 1930s, vocationalism took form through development of professional schools, the creation of an educational ladder between high school and college, so that there was a structured progression through levels of schooling into the labor market, and because employers began to rely upon college credentials as a criterion for hiring. Each of these was important. The appearance of business schools, engineering, education, social work, nursing, and dental schools and the growth of law and medical schools pointed higher education toward direct application to specific occupations. The creation of an educational ladder that went from elementary and secondary schools through colleges and universities made the latter the apex of the educational system, while simultaneously reducing 19th century competitors, like academies, high schools, one- and two-year normal schools, private proprietary schools, and apprenticeships, to institutions that were merely preparatory to college or even of a lesser status. By the 1930s, the high school, which had once paralleled college, had become its subordinate; increasingly, without a high school degree there was no entry to college and without a collegiate education, no entry to graduate schools. Entry into professions meant extended schooling.

13The shift in the criteria for employment was generated in part by the growth of white collar jobs within corporate and public agencies and by the expansion of professional occupations, which seemed ideally suited for the kinds of learning and socialization that occurred at college. This generated much of the consumer-driven growth in post-secondary enrollments before World War II, much of which was connected to a large number of part-time young adults enrolled in professional degree programs in America’s cities. Still, the movement of young people into higher education before World War II was hardly massive, especially since large numbers of youth left high school without graduating to enter the labor market. The foundations of post-World War II expansion, however, had been laid. Going to college rather than not going meant greater returns to income and professional status. That was a phenomenon the veterans of World War II recognized before anyone else.

14A second critical ingredient of postwar expansion had also been put in place earlier, the growth of the public sector in higher education. Although Americans tend to associate public higher education with the post World War II period, large proportions of young people had always attended publicly supported colleges and universities. The Morrill Acts of 1862 and 1890, provided federal support for state universities, and furthered the notion that higher education was a public responsibility, a mechanism for developing national and regional economies. Individuals might gain from going to college, but the primary gain was to the public good. Whatever the obvious differences between elementary/secondary schooling and college, an argument was well-established before World War II that all levels of education enhanced the social and economic needs of the nation, state, and locality, and thus deserved public support.

15The third critical ingredient of postwar expansionism was the organizational forms that had been previously established, principally decentralization and differentiation. Because higher education was always a decentralized industry, made up of relatively autonomous institutions competing within a deregulated market, it expanded in whatever ways it thought necessary or could find support. Often this meant changing admissions requirements to attract more students (or, in a few cases, to become more selective), providing fiscal incentives to students to attend, revising the curriculum to make it more attractive, expanding student life activities, and seeking funding from alumni and philanthropists. Higher education had thus established its entrepreneurial orientation well before the mid-twentieth century. Added to this was the existence of segmented and differentiated institutions. Higher education accepted the equation that access to college could be widespread if the system was segmented. A complex web of different kinds of post-secondary institutions was already in place by the late 1930s: including junior and community colleges that provided one to two years of schooling to anyone who chose to come, normal schools for future teachers (almost all women) that required varying lengths of time, state universities available to residents, a small number of selective liberal arts colleges, and large research universities. The variation and the gradients of status increased opportunities for students while allowing individual institutions to choose their admissions requirements, although this was something of a non-event since many colleges and universities desperately needed students anyway. American higher education could thus claim—rightly—that it provided widespread opportunities for many, and was meritocratic. The combination seemed irresistibly compelling.

16The fourth strand in the pre-World War II era that later proved potent was the “research university.” The American research university took shape in the last decades of the 19th century drawing upon German antecedents. With the founding of new institutions, like Johns Hopkins University, the University of Chicago, and Cornell University, and the remaking of older institutions like Harvard, Columbia, and the University of Pennsylvania, American higher education began to take on the mantle of research as its defining ethos. In part, this reflected a controversial shift in what higher education stood for, a movement from responsibility to transmit existing knowledge to students through teaching to taking on responsibility for discovering new knowledge. The former required an informed teacher who told students what was known; the latter required professors who understood how to discover the unknown, and to transmit that to more sophisticated students so that they too could engage in the act of discovery. The emergent research orientation required not simply classrooms, but laboratories, archives for the collection of primary documents, and scientific rigor. The shift toward a research orientation involved a belief that ultimately research, particularly in the natural sciences and social sciences, would find applications, something that the experiences of World War I suggested would occur. Although the research enterprise remained a modest feature of higher education before 1940—indeed, most professors have never been highly active researchers—the successes and structure of research that had evolved received a tremendous boost during World War II, and American higher education entered the last half of the 20th century ready to give luster to research and receive money far beyond what anyone could have imagined.

17With the war’s end, Americans built upon the organizational forms, vocational expectations, public commitments, and research agendas to accelerate the expansion of their higher education system. The veterans’ response to the G. I. Bill showed just how effective the prewar developments had been; the Truman Commission gave voice to the expansive behavior of the veterans, pushing the ideology of higher educational opportunity further than it had ever previously gone. Higher education was organized so that all kinds of students could go to all kinds of places. Research had established its value. Few truly understood it at the time, but the rush for places and money was on.

1.2 Why did they come?

18Why higher education expanded and why students went to college have been the subject of countless interpretations. The most commonly held view of why the system expanded—and one that remains the most prominent explanation (Goldin and Katz, 2008)—is that the modernization of American society, especially its adoption of advanced technologies, made education more important. Governments and corporations invested in it because it would pay off. During most of the 20th century, the United States was at the forefront in the uses of sophisticated technology and thus the demand for education increased, with gains for the economy and for the individual. The downside of these developments was that those with less education were less likely to benefit from economic growth. In this human capital model—nowadays commonly referred to as the Knowledge Society or the Knowledge Economy—an economy that depends upon technological growth requires individuals with sufficiently advanced education both to invent the technology and to take full advantage of it. Those individuals with the appropriate technical and literacy skills are worth more in the marketplace because they are more productive and effectively make greater contributions to the national economy. The gains to increasing participation in advanced education were thus three-fold: educated people contributed more to the economy; they received greater fiscal rewards and greater prestige for doing so; and higher education itself grew at rapid rates. Almost every discussion of the need for a mass-producing higher education system repeated and continues to repeat these arguments. This has had the effect of making higher education a central driver of economic growth and the path to the American dream of success. As Goldin and Katz (2008, p. 41) conclude: “Human capital, embodied in one’s people, is the most fundamental part of the wealth of nations. Other inputs, such as natural resources and financial capital, can be acquired at world prices in global markets, but the efficiency of one’s labor force rarely can be. Not only does more education make the labor force more efficient, it makes people better able to embrace all kinds of change including the introduction of new technologies. And, for some extraordinary individuals, more education enables them to create new technologies.”

19Although the human capital interpretation of the growth of higher education remains the most common, it is not the only interpretation. An alternative view of expansionism is less positive: higher education expanded in a segmented and hierarchical fashion in ways that preserved the social structure of inequality. This was an artful process in which those with more to start their lives—in terms of monetary, social, and cultural capital—gained more than those who did not. Individuals went to those colleges that roughly paralleled the social class from which they came and, if they experienced some upward mobility, the overall effect was to leave the nation as socially divided as in the past. In particular, the lengthening of educational requirements for jobs, with increasing numbers of professional jobs requiring schooling beyond the bachelor’s degree, made it easier for those who could afford to stay in school longer to rise to the top of the occupational hierarchy. Almost every advocate of the shift toward a greater emphasis on more open admissions, affirmative action, greater commitment to remedial programs, and the priority of equity draws upon this interpretation, calling for public policies that break the system’s tendency to replicate the social class structure.

20A third interpretation has focused on the way credentialing served to accentuate the expansion of educational opportunity. This view suggests that higher education provided a cultural currency that status- driven employers found especially attractive, less because of the technical skills learned in college (the human capital model), than because of the organizational and behavioral attributes necessary to be successful in college and because the existence or nonexistence of a degree was easily measurable. The college degree was a credential that certified a modest level of knowledge and literacy, but also certified the kind of person who could work within a complex organization or as a professional. In that sense, higher education is more a signal or symbol than a concrete contribution to real life productive skills.

21These interpretations are not mutually exclusive, and in fact all have been at work over time. All in some measure are oversimplifications of complex processes that are themselves very hard to measure. Indeed, a modest scholarly industry has sprung up in order to ascertain what higher education adds or does not add to the economy and returns to individuals. In addition, this industry has been active in trying to determine what are the indirect returns to higher education—the social and personal skills gained by individuals (including their contributions to social life via, e.g., learned levels of tolerance), as well as the indirect payoffs in terms of job provisions in areas surrounding colleges and universities. Every time a governor or state legislature suggests that the public investment in higher education is too high, institutions immediately produce long reports showing how important they are to the state and local economies.

22The answer to the central question of “why did individuals go to college” is that they saw the issue in relatively simple terms: they believed and continue to believe that it paid to go to college. And, in broad terms with numerous caveats they were right. Large numbers of Americans were and remain willing to pay substantial fees, borrow large sums of money, and support public subsidies to higher education because they are convinced that it is in their best interest, including believing that higher education furthers national defense, economic growth, and equality of educational opportunity. As Grubb and Lazerson (2004, p. 161) conclude: “formal schooling increases earnings, protects individuals from the effects of inflation, and increases earnings by more than the costs involved.” Or, as Goldin and Katz (2008, p. 325) put it, “education is still a very good investment. In fact the marginal individual who does not graduate high school, who does not continue to college, and who does not complete college, is leaving large amounts of money lying on the street.” Students and their families who realize that going to college brings better jobs, higher income, professional status, and greater security are reading the labor market correctly.

23Still, if the overall story is that it has and continues to pay to go to college and beyond, the caveats are numerous and not widely understood, with the result that the individual benefits have often been exaggerated, “leading to disappointments and a suspicion of formal schooling when its promises are not realized—for example, when cyclical variation in demand leaves well-educated engineers or computer programmers unemployed, or when college students fail to find high-status employment after graduating and wind up driving taxis or working in restaurants, or when training does not increase earnings as promised. Higher levels of schooling cannot guarantee access to better employment and higher earnings; they may be necessary, but they are often not sufficient” (Grubb and Lazerson, 2004, Ch. 6).

24More detailed examinations of the income returns to college attendance reveal, for example, that substantial variations exist by fields of study, by gender, and by race. “Among two-year [community college] associate degrees, only those in business, engineering-and computer-related fields, and health (dominated by nursing) are substantially more valuable than others, while those in education (largely child care), public service (like fire and police protection), and various craft occupations yield no greater benefits than a high school degree. At the baccalaureate level, these differences become even clearer: graduates in engineering and health enjoy the highest benefits, followed by business and science/mathematics majors: those with degrees in the humanities, the social sciences, and education rank at the bottom” (Grubb and Lazerson, 2004, p. 161). The differences by field of study become even greater at the post-baccalaureate level. Graduate degrees in law, medicine, engineering, and business pay substantially more than do those in education and social welfare.

25When one adds gender and race to the mixture, the portrait related to fields of study changes, since both women and underrepresented racial minorities have benefited relatively even more than white males from the expansion of higher education opportunity. Under the impact of the women’s movement, rates of enrollment for women soared beginning with the cohort of women born in the 1960s, who by the early 21st century comprised 56 percent of all undergraduate students (Goldin and Katz, 2008, pp. 251–253). Income returns to women grew substantially compared to men. Levy and Murnane (1992, pp. 1355–1357) found that between 1979 and 1987, there was an “eight percent increase in the median earnings of 25–34 year old male college graduates” but a “21 percent increase in the median earnings of 25–34 old female college graduates.” Racial and ethnic minorities continue to lag behind whites in participation rates and income returns—although it is significant that minority enrollments have grown dramatically in the last half century and the proportional financial gain to minority students, especially minority women who complete college, is higher than it is for whites. Still the differences remain disturbing. While about 40 percent of the white college-age cohort attend college, around 30 percent of blacks and some 25 percent of Hispanics attend. Perhaps even more telling, whites graduate in higher proportions than do minorities, and minorities are considerably more likely to be enrolled in community colleges (Altbach, Reisberg, and Rumbly, 2009, pp. 41–42).

26Added to this is the disturbing phenomenon, found by McPherson, Bowen, and Chingos (2009). Using data drawn from students entering four-year colleges in 2003, they found that only 56 percent graduated. Minority students graduate at even lower rates, as do students from low income families. If one were to put community college students completing two-year degrees, the proportions would be much worse. And this comes at a time when income returns to getting a college degree have been rising.

27These challenges to the American dream of “go to college, get a better job” are serious, in the sense that they reveal how far Americans have to go to achieve a genuine equality of educational opportunity. It is also true that overall economic conditions as well as individual characteristics have an effect on levels of success, as do gender and race, choice of field of study, and the kind of higher education institution one attends. Still the fact is that going to college and beyond has been and remains a smart choice for most Americans, and they appear to have known that since the end of World War II. The expectation of a brighter future and the fear that without education one was substantially less likely to participate in the American dream turned out to be accurate enough to become self-reinforcing to build and maintain the higher education industry.

28Public money helped in producing the growth. Indeed it was probably crucial to the industry. As World War II ended, elite universities worried that expanding higher education through public funding would open the doors to too many unqualified students, thereby cheapening the product. Yet they too soon found themselves caught up in the opportunities of expansion. The Cold War, which made advanced education a weapon against the Soviet threat, combined with an enhanced ideology of equality of opportunity, which took form in an emergent civil rights movement, to propel public investment further. The high stature of research led to investments unparalleled in American history. State pride led to increased investments in state systems of public higher education, while local pride—and the economic gains of large numbers of students and job opportunities—led to demands to have “our” college or university. Federal and state governments reinforced the cycle, either by providing grants to colleges and universities to be redistributed primarily as student aid or by giving funds directly to students, thereby keeping the costs of attending college low and allowing colleges to increase their tuition fees, a situation in which everyone seemed to win.

29Perhaps no series of events encapsulated the postwar faith in education than the reaction to the Soviet Union’s sending of the Sputnik rocket into space in October 1957 and the subsequent passage of the National Defense Education Act of 1958. What began as a technological and national defense crisis—the Soviets are going to overwhelm the U.S.—quickly became translated into an educational crisis. The immediate response was that American education was at fault and colleges in particular had failed. These harsh attacks that America’s students were neither learning enough—too busy doing other things—nor learning the right things (too little science, mathematics, and foreign languages) quickly became converted into the first substantial all-purpose federal legislation and financial support for higher education. As Barbara Barksdale Clowse writes: “The Sputnik crisis transformed the politics of federal aid to education; it altered the terms of the debate and temporarily neutralized much of the opposition. The Cold War rivalry seemed to dictate that the nation mobilize her brain power, including schoolchildren and undergraduate and graduate students, on an emergency basis” (Clowse, 1981, p. 4; Divine, 1993).

30Sputnik’s launch, followed by a second orbit a month later, shocked the nation. If there was one seemingly immutable assumption that had come out of World War II, it was that the United States was scientifically and technologically ahead of the Soviet Union. That faith was tested when the U.S.S.R. exploded its first atom bomb, but even if the U.S. was no longer the only scientific superpower, it was still nonetheless the most advanced. With the Soviets first into space, nothing seemed secure anymore. Higher education quickly jumped into action, converting a wave of criticism about its failures into calls for federal financial support. Success was almost instantaneous. Three weeks after the launch, the New York Times ran the headline, “Eggheads Called Hope of Country” (Oct. 26, 1957, p. 6). Less than a year later, the Congress passed with presidential approval the National Defense Education Act, which authorized $635 million, more than 55 percent of which went to colleges and universities to aid students in the form of loans and graduate fellowships.

31Much the same phenomenon occurred in the mid-1960s, when the War on Poverty replaced the Cold War as the basis for federal action in education. The Higher Education Act of 1965 brought together and expanded existing financial aid programs—work/study, student grants and loans, college facilities funds—and joined them to a new focus on access through grants to the financially needy. The Act provided guaranteed student loans for moderate income families and established Upward Bound to improve access for the poor and minorities. Seven years later, the Higher Education Amendments of 1972 went even further, making equality of opportunity the core of federal higher education policy.

32The effect of the federal legislation of the late 1950s through the early 1970s, as well as parallel efforts at the state and local levels, was to increase dramatically the stature of higher education, to fund its expansion, and to contain the costs to individuals seeking to go to college and graduate schools. Students and their families responded. College going was truly a field of dreams, providing opportunities for young people to do better than their parents. In absolute terms, between 1950 and 1970 income returns to college graduates increased in a steady fashion. Each annual cohort of college graduates was likely to earn more money than the previous cohorts, as employers heavily recruited college graduates. Relative to high school graduates and high school dropouts, returns to college graduates during those twenty years grew or remained stable annually, again peaking around 1970. In the words of one commentator, “jobs sought graduates” (Gumport, 1997; Hecker, 1992).

33There was, it seemed, in the twenty-five years after World War II, little restraint on the possibilities for higher education. Although the 1960s student rebellions provoked substantial criticism, the decade ended with the largest growth higher education had ever seen. Substantial state and federal funding existed; the commitment to civil rights and educational opportunity opened doors for minorities; women were a growing proportion of the college population. Income returns to college graduates were high and had been growing in a seeming unending progression, and the wage gap between women and men and between African-Americans and whites was closing, larger as a result of increased educational opportunities. There was little reason to think that the discontents then surfacing would become any more than discontents, and little reason to believe that the field of dreams was about to be unsettled.

1.3 A field unsettled

34The meteoric growth of higher education in the decades after World War II created a large and self-confident industry, one that regularly assured itself that it simultaneously met the public’s desires—by strengthening the nation through its research and training of professionals with the capacity to meet the nation’s economic and social needs—and the more personal goals of economic returns and professional status to individuals. The criticisms that periodically appeared served primarily to strengthen higher education’s commitments to its own successes. Few in higher education expected that the undertones of anger during the 1960s would turn into persistent and threatening discontents during the 1970s and 1980s. As early as 1971, some commentators worried that higher education had lost its capacity to manage itself and suggested that a number of colleges and universities were in serious fiscal trouble. Some critics complained about the continuing lack of access for minorities despite substantial gains, the neglect of undergraduate teaching, the uniformity across institutions, the remoteness of higher education from the rest of society, and its exceedingly close association both with government and with left-leaning social activists. The contradictions among the various criticisms were easily apparent, yet the critics’ voices coalesced in the public’s mind around the notion that there was something terribly wrong with higher education (Freeland, 1990, pp. 97–115).

35Initially, the sourest notes focused on the behavior of students. The protests in the 1960s and early 1970s, the in-your-face dress and provocative language, and the violence of some of the protests raised questions about whether the entitled were worth the expenditure. As a young assistant professor, I encountered President Nixon’s urban and domestic affairs advisor, Daniel Patrick Moynihan, soon to become a U.S. Senator, who was also a former advisor of mine. Moynihan was furious and he spoke for many Americans when he angrily complained to me that “even the mathematics students were protesting” and in the wake of the demonstrations and violence at Columbia University, he was apoplectic that parents were bailing their children out of jail and protesting against undue violence on the part of the police. Why didn’t these parents, he fumed, let their children take responsibility for their illegal and uncivil actions?

36But there was also a deeper malaise affecting higher education after 1970, one that would have an even more substantial impact: the intersection of rising costs of college and stagnant incomes. Higher education presumed that its importance allowed it to increase its expenditures substantially faster than the gross national product, the rate of inflation, and average family annual income. That thinking quickly became an albatross. As the U. S. economy in the 1970s and 1980s faced soaring inflation, high unemployment, oil crises, wage and price controls, loss of markets to Japanese and German goods, and corporate downsizing, the seemingly unconstrained costs of higher education began to look obscene, with tuition increases sometimes going above 10 percent per year.

  • 1 The measurement of earnings return is one of the most technically complex areas in the economics o (...)

37Concern about costs coincided with uncertainties about the income returns to higher education. After 1970, depending upon the source, income returns to college graduates either flattened, declined, or increased only modestly over the next two decades (Goldin and Katz, 2008; Levy and Murnane, 1992).1 Although the data were in fact complicated, consensus quickly emerged that going to college was no longer “paying off” in the ways that it had over the previous decades. Why this happened is the source of controversy, with interpretations pointing to an oversupply of college graduates, the deskilling of many managerial and technical jobs, corporate downsizing, the poor quality of elementary and secondary schools, declines in the quality of academic and technical skills possessed by college graduates, lowered admissions standards to college, the larger proportion of female college graduates entering the labor market who were paid on average less than equally schooled males, and a mismatch between the skills college graduates possessed and those required in the advanced labor market.

38If the field of dreams got rocky in the 1970s and 1980s, it also became even more imperative to play the game. Relative to high school graduates, the differential earnings to college graduates declined during the 1970s. In 1971, male college graduates aged 25–34 earned 22 percent more, on average, than male high school graduates of the same age. In 1979, the earnings differential had shrunk to 13 percent, thus suggesting that for males it seemed less important to graduate college. For women aged 25–34, the changes were similar, with the earnings premium associated with college education declining from 41 percent in 1971 to 23 percent in 1979 (Levy and Murnane, 1992, pp. 1354–1357). It was thus reasonable to have doubts about going to college in the 1970s, although for women especially the benefits continued to be better than for men.

39During the 1980s, in broad terms, graduating from college became an even wiser idea. The educational premium for male college graduates aged 24–35 over the same aged high school graduates jumped from 13 percent in 1979 to 38 percent in 1987; for women in the same categories, the premium rose from 23 percent to 45 percent, but with a substantial difference. Whereas the median real earnings of male high school graduates working full-time declined by 12 percent in the 1980s—as did the likelihood of even working full-time—it did not decline for female high school graduates working full-time (Levy and Murnane, 1992, pp. 1356–1357). In the case of both women and men, the gap between high school and college earnings was even greater, since the likelihood of high school graduates holding full-time jobs year-round declined considerably during the 1980s. With women entering new professions and with the income inequality gap between men and women narrowing, the experiences of college-going for the two sexes had shifted. For men, graduating from college after 1970 was considerably less positive than the golden era between 1945 and 1970; for women, college graduation had become in terms of earnings much more positive. For both, however, the gap between going to college or not going was huge. It quite simply paid to graduate college. This phenomenon has continued into the present and, in fact, has probably increased. The difference between college graduation and high school graduation is substantial (Goldin and Katz, 2008).

40If college and beyond has remained enormously important in economic terms, why then did the value of a college education become such a source of controversy? As I suggested earlier, the data on returns to education are often misleading, in that they fail to account for the enormous differences even among groups that went to college. The data are misleading in often not paying enough attention to the impact of fields of study on income returns. The data are often misleading in not emphasizing the impact of cyclical job demands in the labor market. And the data are often misleading in not emphasizing the change in psychology that came to dominate college attendance in the 1980s. College was as much about avoiding falling behind as about optimistically choosing one’s future. What one could be reasonably assured of is that your income and occupational prospects were much better if you graduated college than if you simply entered the labor market after high school.

41Still, there always existed a kind of shadow around the dramatic growth in higher education and the enthusiasm with which millions of individuals went to college. Academic scholars and the popular press played into a curious debate about whether individuals should go to college, even as few would advise their children not to go. They kept asking the question: did it pay for individuals to go to college rather than enter the workforce directly out of high school? The question had been around for some time. Just after the publication of the report of the President’s Commission on Higher Education in 1947, calling for a dramatic expansion of higher education, a Columbia University economist warned against the potential un - employment and underemployment of too many college graduates in an economy that was not producing college-skilled jobs fast enough. Others complained that parents were pushing their resistant children into college. At the height of the Vietnam War, Yale University President Kingman Brewster worried about “involuntary students,” those males in college solely to avoid military service. The media’s doubts and occasional questioning, however, were at odds with public opinion. A 1965 national survey of public attitudes toward higher education found that when asked how they would advise a young man or young woman who could finance only two years of college but who had a good job offer, 90 percent of the respondents recommended that the young man pass up the job and pursue college and 77 percent said they would give the same advice to a young woman. “Our responses,” the survey’s authors concluded, “correspond to the findings of earlier research—that Americans think of higher education in terms of income. Newspaper stories and magazine articles from time to time remind the public that every year of education adds so many dollars to income, and it is easy to see that the college graduate has an advantage in the job market” (Survey Research Center, 1965).

42The doubts persisted. In 1975 Caroline Bird’s The Case Against College (1975) argued that college had become a “holding pen” for high school graduates who could not find jobs other than unskilled and poorly-paid ones. Having established that many young people did not want to be there, she concluded that it was not worth the cost for many of the students and their parents, especially for those youth who were likely to wind up at the economically lowest quartile of college graduates. A year later Richard Freeman’s The Over - educated American (1976) concluded that the United States had become “a society in which the economic rewards to college education are markedly lower than has historically been the case” and that further investments in higher education are likely to earn decreasing rates of return (Freeman, 1976, pp. 4–5). Because there was now an oversupply of college educated people, jobs no longer sought college graduates. That Freeman’s overall conclusion was limited to white males got lost in the hyperbole. His own evidence suggested that relative to white males, the returns to higher education would increase for African-Americans and for women. Lost in the resulting discussion was more than half the American population (Levin, 1977).

43The media pounded away, using provocative headlines and lead-ins, like “Is College Worth It?” Almost always, however, they reached the same conclusion. The answer to such questions was Yes! (Newsweek, April 29, 1985, pp. 66–68). The media raised doubts about the worth of a degree and complained about rising costs, but agreed, as the 1985 Newsweek article put it, that “it would be a mistake for any student—or for the nation—to begin believing that the whole enterprise is a waste, that less schooling is better for anyone’s child.” Commentators argued that going to college was not as profitable as it once was and that it was socially irrational to have so many people attending college, but they rarely, if ever, recommended that young people not go.

44The argument over whether it paid to go to college or, more accurately, whether it paid as much as it used to, quickly became tied to a criticism about learning: college students were graduating without knowing very much. To those who reached this conclusion, almost anything could serve as evidence: open enrollment (a place for everyone) and affirmative action which allowed too many unqualified students to enter college, employer complaints that the quality of employee skills was responsible for the economy’s troubles, grade inflation and the takeover of higher education by political correctness, declining SAT scores, and the failures of elementary and secondary school education. What was relevant in the public and political realms was that doubts about the worth of degrees coincided with doubts about whether anyone was learning anything anywhere.

45The attacks on higher education’s economic worth hit like a bombshell during the 1970s and 1980s. The most popular manifestations were stories of Ph.D.s driving taxicabs in major American cities, as the media probed such questions as “Who needs college?” the title of a 1976 Newsweek article that pictured a University of Colorado Phi Beta Kappa student working as a day manager in a restaurant (Newsweek, April 26, 1976, pp. 60–69). Yet there was something surreal about the controversies over income returns to higher education. Although the hand-wringing was persistent and the criticism intense, economists and the media agreed that there were still substantial economic advantages to graduating from college with a baccalaureate degree. As Ernest Pascarella and Patrick Terenzini concluded in an extensive review of studies done primarily in the 1970s and 1980s, “The evidence in support of this, based on the simple lifetime earnings differential between college graduates and high school graduates, is dramatic and unequivocal.” Indeed, they believed, “the evidence on earnings is consistent with that on occupational status in suggesting that completing the bachelor’s degree may be the single most important educational step in the occupational and economic attainment process.” There may have been controversy about why this was the case and there certainly were differences in returns by ethnicity, gender, class, college or university attended, majors, economic conditions, and individual characteristics, but the bottom line remained the same: it was better to go than not go (Pascarella and Terenzini, 1991, Ch. 11; Grubb, 1992).

46The evidence suggests that students and their families agreed that college was, if not a good thing, necessary to get ahead. The percentage of recent high school graduates enrolled in college, which had climbed from 45 percent in 1960 to a height of 55.4 percent in 1968, slid down during the 1970s, but then began to rise again in the 1980s. While there was a brief drop in full time undergraduate enrollments in the early 1970s—partly as a result of the elimination of the draft deferment for college students—and again around 1977 and between 1983 and 1985, the trajectory was upward, sharply between 1973 and 1975, then more gradually between 1977 and 1983, and again after 1985. The number of part-time undergraduates showed a slightly different profile, but the overall trend between 1971 and 1991 was decidedly upward. Among African-Americans, participation rates increased in the 1960s, declined in the early 1970s, increased briefly and then flattened or declined until the mid-1980s, before turning upward again. Among African-Americans, sharp differences by gender appeared with female enrollment increasing between 1976–1985, while male rates went down. Between 1986 and 1990, when participation rates went up for both sexes, they did so by almost 16 percent among African-American women and by about 9 percent for African-American men. Between 1976 and 1990, participation rates for Hispanics and Asian-Americans also increased, with female enrollment in each group increasing more rapidly than male enrollment (Hauptman & McLaughlin, 1992, pp. 168–178).

  • 2 Increased financial aid and tuition discounting helped the flow of students continue. The prevaili (...)

47Despite the unsettling in the field of dreams, higher education seemed to flourish. In the 1980s college costs outpaced inflation while median family income stagnated. Yet enrollments grew from 12.1 million in 1980 to 12.8 million in 1987 (Breneman, 1994, pp. 31–32). For all the expressions of concern about costs and income returns and the doubts about whether it was worth it, tuition at private colleges skyrocketed and grew substantially at public institutions. Endowments flourished as the stock market went upward (broken only by the extreme but short-term crash of 1987). And most surprisingly, federal and state funding kept on growing. Despite the avowed intent of the Reagan administration to reduce federal commitments, federal funding of higher education increased in real dollars between 1980 and 1990 by 42 percent, while state and local funding increased in real dollars by 27 percent (Hauptman, 1992; Hauptman and McLaughlin, 1992).2

48Much of this came as a surprise for, as David Breneman (1994) pointed out, the 1980s began on a dreary note. The 1970s had witnessed substantial concerns over higher education’s ability to balance its budget, public debate over quality and political correctness, and, as has been discussed, questions about the “over-educated American.” The 1980s continued these themes, but began by suggesting that demography was the next great threat to the higher education industry: an anticipated 25 percent decline in the number of 18-year-olds over the next 15 years. Even if larger proportions of high school graduates enrolled in college, the likelihood of actual enrollments dropping by 5 percent to 15 percent was substantial. Combined with high inflation, unemployment, little if any productivity gains, and anticipated drops in real income, the situation looked bleak.

49The catastrophic projections at the beginning of the 1980s did not come true, but enough things happened during the decade to shake higher education’s foundations. For one, higher education was saved by a dramatic influx of older, nontraditional students, many of them attending part-time. Although their participation had been growing since the 1960s, between 1970 and 1975 the number of students aged 22 or older increased by more than 50 percent, while the number of traditionally-aged students remained relatively constant. Between 1978 and 1989, the number of college students aged 25 and older grew by 44 percent, while the number of 18–24 year-olds in college increased by only 7 percent. The number of female college students in that same period grew by 26 percent, accounting for the largest growth among older students. After 1975, students aged 22 or older became the majority of the college-going population; in the late 1980s, those 30 and older were the fastest growing percentage of matriculates (Gumport, 1997). Older students were also much more likely to enroll part-time in the 1980s, accounting for almost all the growth in part-time attendance. In their determination to enroll in college, older students affirmed what was higher education’s greatest triumph: college was the necessary license for middle class status, and they were starting to demand that higher education pay attention to them.

50For women, any doubts about the worth of college seemed to get blown away. Women went from 40 percent of the student population to a majority during the 1970s, and up to 54 percent by 1990, and then to 56 percent early in the 21st century. The income returns to women college graduates went up faster than those for men, so that by the end of the 1980s, while women with comparable education and jobs still earned less than men, the wage inequality gap was closing. Women had achieved a comparably greater earnings premium than men for going to college.

51The expansion of college-going rates has not been matched by a parallel expansion in degree attainment, and therein lies one of the most unsettling features in the field of dreams. Whereas rates of enrollment among 20–24 year olds increased from 44 percent in 1980 to 61 in 2003, college completion rates did not keep pace. (High school graduation rates similarly slowed down during the period.) As Robert Zemsky pointed out, between 1950 and 1982, “the proportion of those who started, but did not complete, a college education declined from more than half to less than 30 percent. By the 1990s, however, the gap was again widening, as more than 40 percent of those students who started college quit before receiving a baccalaureate degree” (Zemsky, 1997; Gumport, 1997). Goldin and Katz (2008, p. 326) summarize the overall trends as follows: “College-going rates among 20–24 year olds… have increased substantially in the United States—from 44 percent in 1980 to 61 percent in 2003 largely in response to the post-1980 rise in the college wage premium. But college completion rates have not kept pace and the United States has fallen to the middle-of-the-pack among OECD nations in four-year college completion rates for recent cohorts.” The theme has been reiterated by McPherson, Bowen, and Chingos (2009). Americans became convinced that it was necessary to go to college, but they stopped receiving the degrees that were so much a part of the reason they bothered to attend.

52Part of this has to do with a terrible “price-income squeeze” that became serious after 1980 and has continued to undermine higher education’s ability to fulfill its aspirations. The direct costs of going to college—tuition, fees, room and board—increased dramatically beginning in the 1980s, initially at private universities and then with an even harsher reality in the public universities, substantially outpacing inflation and the family incomes of most Americans. At the same time median income in constant dollars stayed either the same, declined, or increased only slightly. With financial aid shifting from grants to loans and declines in the proportion of public dollars supporting higher education, the pace of inequality increased. The differences in college attendance rates, Goldin and Katz (2008, p. 149) conclude, “by parental income, race, and ethnicity are large even among students with similar academic grades and achievement test scores. The combination of the high costs of college, credit market constraints, and student debt aversion leaves many youth from poorer and middle-income families behind in the pursuit of a college education.”

53This has been tragic for the field of dreams retains its extraordinarily powerful pull. High school graduates are still seeking to attend college in substantial numbers. New populations are attending in record-breaking numbers, signifying how powerful higher education’s license to middle class income, respectability and status has become. For the selective colleges and universities that promise entry into the upper class, the fight to get in has all the characteristics of a gold rush. Income returns to college as compared to high school continue to be high. As David Breneman (1994, pp. 31–32) wrote, “Largely because the bottom fell out of the job market for high school graduates [especially for males], the economic returns to a college education reversed itself, with the wage premium for college graduates increasing between 1979 and 1986 to larger than those found in any earlier period” (Breneman, 1994, pp. 31–32). Goldin and Katz (2008) and McPherson, Bowen, and Chingos (2009) make clear that income returns to higher education remain high today.

54The rush for gold through college access continues, but the institution of higher education seems shaky, more uncertain today than at any time in the last 60 years. A huge proportion of those who believe it is necessary to go to college to succeed are finding it hard to attain a degree. Those who hope that higher education will translate into high incomes are finding just paying for college harder and harder and, when they get out, must worry about finding or holding a job and paying their debts. And without a college education, one would be in even bigger fiscal trouble. During the last decade a hard and perhaps embittering reality has set in. Going to and graduating from college is a near necessity for those who aspire to get ahead, it is a necessary route to professions that are unavailable without a degree or increasingly without more than one degree. With the labor market for high school graduates in a continuing state of disrepair, college and beyond really is necessary. But even those who recognize it are stumbling badly. The field of dreams has become a troubled place.


1 The measurement of earnings return is one of the most technically complex areas in the economics of higher education, in part because overall data frequently mask differences by gender, race, and field of study, and because it is extremely difficult to connect income return issues to the state of the economy at any given time. For a summary of studies on returns to college prior to 1990, see Pascarella and Terenzini (1991).

2 Increased financial aid and tuition discounting helped the flow of students continue. The prevailing wisdom is that financial aid and net tuition costs influence low-income families more than middle- and upper-income families. Direct grants have some impact on whether low-income students go to college, whereas for middle- and upper-income students such grants influence their choice among colleges rather than whether to go to college at all. The shift from grant aid to loans in the 1980s and 1990s appears to have adversely affected the enrollment of low-income students and constrained their choices since they are less inclined to incur substantial debt. See Hauptman and McLaughlin (1992, pp. 159–185).

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