2014 April 14 Monday
Will Half Of Colleges In USA Close?

Technological disruption and increasing doubt in the value of a college degree are taking their toll.

Harvard Business School professor Clayton Christensen has predicted that as many as half of the more than 4,000 universities and colleges in the U.S. may fail in the next 15 years. The growing acceptance of online learning means higher education is ripe for technological upheaval, he has said.

Mergers, acquistions, and closings are all up. Moody's is downgrading debt of more schools.

Check out the table here of ROI for degrees from different universities.

All these caveats are true. But overall, the PayScale study surely overstates the financial value of a college education. It does not compare graduates’ earnings to what they would have earned, had they skipped college. (That number is unknowable.) It compares their earnings to those of people who did not go to college—many of whom did not go because they were not clever enough to get in. Thus, some of the premium that graduates earn simply reflects the fact that they are, on average, more intelligent than non-graduates.

Smart and motivated are more likely to go to college in the first place. Which college degrees really offer a positive ROI due to skills learned? How much of the ROI comes from companies that will hire you because you have a bachelors degree? BA as IQ proxy. BA from highly prestigious school as even better IQ proxy.

Share |      By Randall Parker at 2014 April 14 09:34 PM 

bob sykes said at April 15, 2014 4:23 AM:

This is quite possible because: (1) a clear majority of currently enrolled students lack the intelligence and motivation to benefit from a college education; (2) a majority of the BA degrees awarded are worthless, both intellectually and economically, and people are becoming aware of this; (3) males (especially white males), who comprise half the potential student pool, are abused, publicly humiliated and despised and discriminated against; and (4) the total number of 18 year olds is either now declining or shortly will be. Typically for an academic, Prof. Christensen is oblivious to the main problem and focuses on a minor problem. Online courses only benefit the strongly motivated and highly intelligent and will have only a minor effect on total national enrollment.

Another problem is that the pain will mostly fall on private, non-elite schools. Many if not most state college/university systems are part of the legislatures' spoils and patronage systems, and failing state schools will likely get additional subsidies so that the politicians and their cronies will continuer to reap the benefits of the systems.

Bill said at April 15, 2014 6:32 AM:

I second all of Bob's comments.

I also agree with Randall's comments that college is a proxy for forbidden data - intellectual capacity. Businesses were interested in liberal arts colleges because they aggregated people who were good at reading a variety of different information sources, condensing it to a short paper. The subject didn't matter. When companies ran on paper, they needed a lot of those people. Now, those people are not needed, which puts a liberal arts education back where it was in the late 19th century - it's for rich kids whose parents can afford it.

These colleges are closing because they are failed business ventures - not hallowed, ivy-covered halls of learning.

CamelCaseRob said at April 15, 2014 11:14 AM:

It's a touchy thing giving IQ tests to prospective hires, but what if the prospective employee VOLUNTEERS their IQ score (with documentation)? Is that legal? Which would you rather hire, a fresh out of high school applicant with a documented 140 IQ or a B student college grad with a soft degree?

Wolf-Dog said at April 15, 2014 2:20 PM:

There is no question that many of the uncompetitive colleges will close down due to the future breakthroughs in online learning and computerized courses.

However, American universities are the most competitive in the world. The upper 50 % of American universities (hundreds of these) leave many rival foreign schools in the dust.

Here is the latest Shanghai international rankings of all universities in the world. As you can see, the best schools are American and British, while even the top German university barely received the 50th rank in the world. It is not that the German universities are weak, it is that American and British universities are surpassing them:


On the other hand, while the US population in increasing significantly (and many of the legal immigrants in the US are very competitive, which is in contrast to EU_), the capacity of good American universities has not expanded significantly. Therefore, the demand for the upper 50 % of the American universities should remain strong, but useless majors will be eliminated.

Another factor is that the tuition fees in many state universities are being used for significant research and development in useful areas like engineering (and their professors are doing very competitive research as you can see in the rankings above) even in those state universities where the quality of undergraduate students is low. So it is not a good idea to close many of the state universities that have an important function in nurturing significant R & D. But students can still be re-oriented towards better majors. German colleges provide great job training by coordinating their curriculum with industries, which is one thing the American schools should adopt.

destructure said at April 15, 2014 2:33 PM:

If half the colleges close then I hope the carnage begins with liberal arts departments.

Engineer-Poet said at April 15, 2014 4:06 PM:

Liberal arts departments are cheap to run.  As long as there's a demand for employment credentials for non-technical jobs and "disparate impact" is still enforced, some people will still get degrees in whatever studies just to show employers that they can stick with something for 4 years.

Randall Parker said at April 15, 2014 7:35 PM:

bob sykes,

I do not think the white kids who are discriminated against in undergraduate admissions are hurt that much. This bumps them down a tier in terms of the academic rating of the college they attend. But the quality of instruction does not go down much, if at all.


We need better (cheaper) proxies for brains. I already see that happening. I came across a job opening recently where they asked for links to Github submissions or other open source contributions to see that someone was a good coder. Granted, not a solution that works for many.

Here is my advice for 13 year olds: Start taking online courses. Get to the point where at the end of high school you already have a lot of college credits and in subjects with real market value. Learn hard sciences, software development, engineering, accounting, marketing, and statistics. Do it all while you are still a teenager.

Stephen said at April 16, 2014 8:34 PM:

I'm with Bill etc on this. Lower degrees are a way of communicating to future employers that the candidate is able to focus for long periods of time. That resolves much of the doubt an employer has when considering a new employee without any references.

It may not be a cheap way, but it sends a much stronger signal than online training.

Bill said at April 17, 2014 8:00 AM:

Stephen -
RE: "lower degrees are a way of communicating to future employers..."

I'm beginning to wonder if the best way for a young person to proceed is to work hard in high school, and then apply to as many top colleges as possible.

Then, DON'T go to college. Instead, take your acceptance letters around to businesses as proof of your ability.

Then tell prospective employers "Spending four years in college won't make me smarter than I am now, and probably won't train me in anything useful. Why not hire me and train me the way you want?"

Stephen said at April 18, 2014 1:31 AM:

Bill, now that is very clever.

Perhaps the flaw is that the guy selecting the new employee is likely a graduate, so there's no way he would select someone who is basically undercutting the income generating value of being a graduate.

Engineer-Poet said at April 18, 2014 5:27 AM:

The other flaw is that many colleges admit based on affirmative action guidelines.  The AA admits typically drop out or transfer, but that's enough to destroy admission as a credential by itself.

Perhaps passing grades in rigorous (STEM) intro courses would suffice as "weeders".

Wolf-Dog said at April 18, 2014 9:26 AM:

Bill: " Then tell prospective employers "Spending four years in college won't make me smarter than I am now, and probably won't train me in anything useful. Why not hire me and train me the way you want?"

Neurological research shows that it is possible to increase parts of the IQ by doing very difficult homework. Taking very challenging science courses with a lot of difficult homework exercises and test preparation would actually make an average person measurably more intelligent: certainly not a genius, but at least 5-25 IQ points higher, depending on how well the mental exercises were performed and the health of the student. This is different from mechanical learning. Parts of the brain actually reconfigure themselves as a result. It is definitely possible to learn how to calculate in the head without using a pen and paper. New GRE tests started providing a free calculator to remove the advantage of people who are trained to calculate in the head, but it turns out that even in order to read and understand the questions, it is a tremendous advantage if you have trained yourself to calculate in your head: Even algebraic calculations with abstract symbols, solving an equations, can be dramatically accelerated by learning to do these mental operations without pen and paper, but it is not just the speed, but actually the accuracy and depth of thinking that is improved this way.

Here is a very good book that demonstrates by clinical examples that even people with brain damage can train their brains to do increasingly more difficult tasks.

"The Brain That Changes Itself", bu Dr Norman Doidge:

But the problem is that a lot of students are attending college just to do their time there, without fully focusing their brains.

Randall Parker said at April 20, 2014 11:56 AM:


Some skills taught in college are useful. I think the best way to send a strong signal is to accumulate those skills sooner. Someone who gets their engineering degree at age 19 is sending a loud signal even if they got it from a state college. If I had it to do all over again I would have started attending college classes in the summer after 8th grade (taking relatively easy courses first to make sure I succeed). Rather than pass SAT AP tests I would just get the real college credits. If I did well enough on harder courses after high school freshman year I'd angle to just switch to college. You could get a master degree by age 19 if you went all year around including summer school classes.

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