Kaplan Interview with Robert Rodriguez, Ph.D
Why is Education Important During Tough Economic Times?How could the current downturn in the economy affect state-spending on higher education?
While I hope it doesn’t, when budgets get tight, governments sometime shift their focus to immediate concerns instead of investing in future gains. It is likely to affect resources for education because it doesn’t address their immediate budget crisis.
How does the credit crunch affect student loans?
Some students might find it more difficult to access credit and loans for educational needs. With banks now setting tighter loan standards, students have to find other sources. In fact, instead of trying for state or bank loans, a growing number of students are seeking loans from individuals who are willing to loan money directly to students. Individual investors see students as a lower risk option than other investments. Additionally, short-term student loans that provide just enough for their next term, is found to be appealing to some investors.
How could this affect the number of college graduates entering the workforce?
Education tends to be counter-cyclical. Some employees may actually leave the workforce to complete an MBA for example, since career options are limited during an economic downturn. They are hoping two years down the road when they graduate, the economy will be better with more job opportunities available. Top-tier, full-time MBA programs are seeing a spike in enrollments already. Employees realize that an MBA makes them more marketable and provides more job security in a bad economy than being without a graduate degree.
How could this affect education funding for working adults?
Employers may require employees to share some of the cost. We may see some changes in tuition assistance policy. Employers may argue that the main beneficiary of education is the employee, and have concerns that employees will leave once they obtain their degree. The U.S. Dept of Labor estimates the average tenure of an employee is now 3.6 years. In the nineties it was 9.5 years. For that reason, employers think it makes sense for employees to share more of the cost. Of course, the counter argument is, does not investing in your employees really encourage them to stay? Believing employees will stay longer if their education benefits are cut makes no sense. It is simply not true.
Many employers are also looking to speed up the time it takes to get a degree, always asking whether we have accelerated programs. This provides more value to the employer in a shorter period of time. They look for programs designed specifically for working adults, where employees can apply their educational attainment directly to their jobs. If the average length of employment is only 3.6 years, employers want to recoup their investment by making sure the education is useful immediately. To the employer, it is the right approach. Why pay for education if by the time the employee can apply the knowledge, they can also take it somewhere else. So instead, accelerated programs shorten the time to degree attainment, allowing the employee to add value to the company for a longer period of time. Employers want higher education to help employees add value quickly.
Employers may also go to academia and ask for a reduction in tuition cost by forming alliances and partnerships. The employer, in turn, offers the institution to employees as a preferred provider of education and training.
Why should employers continue to invest in tuition when many other programs are being cut?
Many employers are talking about managing their risk in this economy and are thinking about whether education can help manage that risk. Is there a risk of a mismatch between what employers need to reach their goals, and what skills their employees have? Can higher education help manage this risk?
Education lowers the risk of not having employees with the right skills. It also lowers the risk of losing your top professionals. When employees feel their employers aren’t investing in their growth, they will go to a company that will. The best and the brightest are always in high demand by any employer, but they can go anywhere. The right approach to retaining employees is actually counter-intuitive. If an employer grooms employees to have the education and skills that would empower them to leave, employees actually stay. If the employer is not helping them grow professionally, they leave. Educating employees also provides the employer a larger talent pool for more career options. If an employee’s growth and education is limited, you can only give that person certain roles in the organization. But education can make employees more versatile – they can take on different roles. Employers have more opportunity to manage their talent.
Offering tuition assistance is a recruiting tool. Besides making companies a more attractive employer, it ensures a constant flow of talent coming through the organization. In this market where people are constantly looking for their next job, a degree makes them more marketable and has a substantial effect on income over the long-term. A person with a bachelor’s degree will, on average, make a million dollars more over a lifetime than someone without a degree. Master’s degrees result in approximately $10,000 more per year in income. Education is expensive, but there is no degree program that costs a million dollars.
How might this affect the delivery of education?
Academia and universities are going to have to take more of a consumer perspective in this economy. Colleges and universities are used to looking at society at large as their customer, instead of employers. However, the preferred vendor structure is bringing more students into universities, and companies want more value for this investment. But colleges have a tendency to say employers are not the customer, society is. This is the reason why for-profit institutions are leading the way in treating the employer as their primary customer. But I think more traditional schools will be heading in this direction and looking more closely at meeting employer needs. Higher education needs to be more responsive to employer needs, leading to a healthy marriage between the two to successfully meet these challenges.
Does the value of education in the mind of public tend to go up or down during a bad economy?
It tends to go up, because when things are fine and the market is humming, not having a master’s degree is no big deal. There is no sense of urgency. But when things are tight and lots of people are looking for a job, a degree is a differentiating factor. Education is always valuable, but when times are tough, it increases as a priority in the minds of many people.
What could the payoff be for employers investing in education over the short-term?
The biggest payoff in the short-term is their ability to retain top performers. If they don’t make the investment, top performers will go elsewhere. Even though the economy is bad, we are still competing based on intellectual capital. The A players still have choices, and will always have a job available. A bad economy tends to affect low-skilled employees more than high-skilled employees. There is still a war for talent.
What could the payoff be for employers investing in education over the long-term?
Over the long-term, a mismatch of employees’ skills to what the company needs to perform effectively carries the greatest risk. For example, if an employer cuts Six Sigma training and then needs to increase efficiency the next year, they will not have enough employees with the skills to create that efficiency and it becomes a lost opportunity.
There is also a growing number of retiring baby boomers. Employers need to manage that risk and find ways to recoup all that lost talent. Additionally, there is a growing Latino workforce which will become the workforce of the future. Employers will have to be more responsive to the needs of a diverse workforce. More Latinos will be available to fill workforce gaps, but if we don’t provide educational opportunity, it will affect the whole economy. The economic crisis has caused us to lose sight of these issues because we are focusing on the here and now. This could be very detrimental over the long-term.
