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In March, the Mark Twain Prize for humor was awarded to Conan O’Brien. When the announcement came in January, Conan commented he was “’honored to be the first winner of the Mark Twain Prize recognized not for humor, but for my work as a riverboat pilot.”
The ceremony at the Trump-transformed Kennedy Center was a gathering of comedy’s ancien régime for an honor now heading right for the likes of Joe Rogan, Jeff Foxworthy, Rob Schneider, and Roseanne Barr. Will Ferrell joked it was difficult for him to be there because “I’m supposed to be shutting down the Department of Education.” Sarah Silverman told O’Brien: “I really miss the days when you were America’s only orange a--hole.” But Conan may have had the best line, claiming his WiFi had been out since January and wondering where the Kennedy Center’s president and board chair were: “Honestly, I don’t know why they’re not here tonight. I guess they’re stuck in traffic.”
It wasn’t Conan’s first bit about being out of the loop. Eighteen months earlier, on his podcast Conan O’Brien Needs a Friend, Conan hosted SNL writing legend Jim Downey, the man who wrote Norm Macdonald’s O.J. Simpson jokes (and was subsequently fired by NBC executive and Simpson friend Don Ohlmeyer) and the genius who encapsulated presidential candidate George W. Bush with the word strategery. As soon as Downey sat down with Conan, he launched right in:
Downey: There are many figures in our society who contribute an enormous amount to our culture and… who have unconventional personal lives. And yet they seem exempt from criticism. You know, Jeffrey Epstein…
Conan: Wait a minute.
Downey: No, let me finish. No one criticizes him.
Conan cuts him off:
Conan: Much has been said about Jeffrey Epstein. Terrible things.
Downey: I’m talking about Jeff Epstein, the New York financier.
Conan: We’re talking about the same Jeff Epstein.
Downey: No.
Conan: Yes.
Downey: What? I never heard.
Conan: Oh, it was a big story in the news. Huge.
Downey: Jeff Epstein? With the island?
Conan: Yes, he had an island. That I’ve never been to.
Downey: I’m pretty sure, with respect, if there was some news about Jeff Epstein, I would have heard.
After Conan breaks the news that Jeff Epstein, the New York financier, is no longer of this earth (Downey’s response: “Sorry. Nice try. If Jeff Epstein were deceased, I’m pretty sure I would know about it”), Downey proposes an easy way to resolve the controversy:
Let’s call Ghislaine Maxwell.
Conan and Downey aren’t the only ones out of the loop, blissfully unaware of unspeakable facts. So is the Georgetown Center on Education and the Workforce, as demonstrated by its continued blanket statements on the return on investment from college.
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I first wrote about Georgetown CEW around the time of Conan’s Jeff Epstein argument. The Center’s 2011 report, The College Payoff, calculated a $1M “college premium” based on the fact that college graduates have lifetime earnings of $2.3M while high school graduates earn $1M less. CEW updated the report in 2021 and, employing the same methodology, declared the college premium had swelled to $1.2M. But the methodology was deeply flawed. First, it didn’t account for the cost of attending college or the opportunity cost of not working full time. Second, it made no attempt to correct or control for self-selection: characteristics that contribute to college matriculation and degree completion (i.e., talent, persistence, stability, health, family support, wealth) are correlated with higher income, degree or no degree. So even if CEW’s numbers were correct, the $1M+ premium is at least partially (and perhaps entirely) explained by the fact that degree earners are the kind of people who were going to make more anyway.
This conspicuous conflation of correlation and causation and the continued constant citations of CEW calculations warrant vigilance. But I thought I’d leave CEW alone until, in February, it made a big deal about an updated online tool that takes income data from the Department of Education’s College Scorecard and ostensibly calculates the return on investment (ROI) for 4,600 colleges and universities.
Updated from a prior version in 2022, CEW placed the tool on its home page and claimed it sets the record straight. But CEW’s tool is as flawed as friends of Jeff Epstein. First, it’s likely that the new calculations are less accurate because, in evaluating future income, CEW “decided that the concept of net present value added an unnecessary source of confusion.” So according to CEW, a dollar earned 10 years from now is equal to a dollar earned today despite the fact that current income could be saved, invested, and worth a lot more down the line. The effect decreases the cost of college in the ROI calculation.
But the bigger problem is how the new tool calculates ROI. According to the methodology:
The ROI is the cumulative sum of earnings minus the total out-of-pocket costs based on the average net price. For example, we calculate the 10-year ROI for a predominantly bachelor’s degree-granting institution as follows: 10-year ROI = year 6 earnings + year 7 earnings + year 8 earnings + year 9 earnings + year 10 earnings – average net price x 5.
In other words, CEW assumes it takes a student five years to complete a degree and then adds up total income over the next five years (presumably the first five years of work) while subtracting the cost of college. On one hand, this is an improvement over The College Payoff which ignored cost. But on the other, CEW isn’t calculating a return on investment. Return on investment could be determined by estimating incremental income earned as a result of (or at least subsequent to) a degree. But CEW’s ROI calculation puts total income in the numerator. The implication is that the non-college population makes nothing, an absurd assumption that dramatically exaggerates the college payoff.
I don’t know what CEW’s new tool is calculating, but it’s not ROI. That’s bad enough. Worse, even exaggerated calculations – lower cost of college, total income instead of incremental – with the new College Scorecard data yield surprising results for CEW. Among public and nonprofit bachelor’s degree-granting institutions, 260 have negative ROI at 10 years; the problem isn’t limited to “predatory” for-profit schools. And “ROI” at the 10-year mark, and in most cases at 20 years, is lower for bachelor’s degree-granting colleges than for schools offering certificate programs and associate degrees.
CEW’s response is to extend the timeframe. By going out 30 or even 40 years, the return is almost always positive. So in the email announcing the updated tool, after acknowledging 10- and 20-year challenges, CEW brightens up:
However, over 40 years, the value of bachelor's degrees becomes more obvious, as the earnings of students who attend institutions that primarily offer bachelor’s degrees outpace, in almost all cases, those of institutions that predominantly offer associate's degrees and certificates.
Here’s two things about 40 years. First, it’s a long time. Try telling recent high school grads to go to college and take on student loan debt because it’ll work out financially by the time they’re 60. Second, introducing a 40-year timeline opens the door to what’s transpired over the past 40 years. Those who graduated high school in 1985 and went onto college probably did just fine. That’s because the cost of college was much lower and grads launched into a very different job market. Although CEW isn’t using data beyond 10 years (it’s extrapolating with 10-year income data from College Scorecard), any tool purporting to help high school graduates and their families make the right enrollment decision has to consider employment outcomes, digital transformation of the economy, the resulting skills gap, and the growing experience gap that AI is in the process of widening into a chasm which will be the downfall of millions of well-intentioned students unless we stop telling them that the only pathway to career launch and economic mobility is to enroll in college and earn a bachelor’s degree.
Just as Downey hasn’t heard any criticism of Jeff Epstein, just as Conan hasn’t kept up to speed on the Kennedy Center, CEW is out of the loop on employment outcomes:
It’s likely that data from a decade ago – data CEW used to update its ballyhooed tool – are irrelevant and misleading for making such a consequential investment decision. Other researchers have looked at the ROI question and come up with different answers. Douglas Webber, an economist at the Federal Reserve, calculates that if the total cost of college is $50,000 per year or more, the odds of coming out ahead today are no better than a coin flip. Last year Preston Cooper completed a comprehensive program-by-program ROI analysis with a sound methodology: considering net present value (albeit at a low discount rate), then estimating “the increase in lifetime earnings that a student can expect when they enroll in a certain degree program, minus the costs of tuition and fees, books and supplies, and lost earnings while enrolled.” Unlike CEW, Cooper constructed counterfactual earnings i.e., what individuals would have made sans degrees. And his conclusions were a lot more nuanced than CEW’s college cheerleading:
College is worth it more often than not, but there are key exceptions. ROI for the median bachelor’s degree is $160,000, but that median belies a wide range of outcomes for individual programs. Bachelor’s degrees in engineering, computer science, nursing, and economics tend to have a payoff of $500,000 or more. Other majors, including fine arts, education, English, and psychology, usually have a smaller payoff — or none at all.
I asked Cooper about the impact of digital transformation and AI, and he responded as I thought he would:
It's true in both the stock market and higher education: past performance is no guarantee of future results. Students can use measures of college ROI as a starting point to help them decide on the path they want to take after high school. But they should also think about how the changing economy and labor market might affect their preferred future career--and adjust their decision-making accordingly.
Based on the aforementioned trends, employment outcomes haven't gotten better over the past decade and are likely to deteriorate further.
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Although College Scorecard data exist for each degree program, CEW’s updated tool reports college-level ROI. Per Cooper’s analysis, 23% of bachelor’s degrees have a negative lifetime ROI. But in averaging institutional ROI – like emphasizing a 40-year timeframe – CEW is masking the scope of the problem. Which leads to the conclusion that the purpose of Georgetown’s Center on Education and the Workforce is to convince the public – and most important families paying tuition and taking on debt – that college is still the sure bet it was 40 years ago.
In announcing its updated tool, CEW complained that “the American public is inundated with mixed messages regarding the value of postsecondary education.” Well, there’s a good reason for this: results are decidedly mixed. College is worth it for many, but not for all, or – when you add the growing legions of underemployed to stop-outs and drop-outs – even most. As currently constructed, college is an increasingly risky proposition and none of CEW’s bad assumptions or blanket assertions will change that.
Just like everyone knows New York financier Jeff Epstein did very bad things, everyone knows college doesn’t work for all. Everyone, that is, except for the leading defender of higher education’s ancien régime . Next week at ASU-GSV I’ll be on stage for a live podcast debate on Is College Worth It? set against the brilliant and hilarious Bridget Burns, founding CEO of University Innovation Alliance. If you’re in San Diego, please join us. Because in a homage to Downey’s bit with Conan, I plan to launch right in with the following:
There are many centers at universities which contribute an enormous amount to defending higher education… which have unconventional methodologies. And yet they seem exempt from criticism. You know, the Georgetown Center on Education and the Workforce…