Human Resources: Executive Summary:Challenges Facing Higher Education

The state of higher education in the U.S. today is marked by competing pros and cons: enrollments are up, but so is tuition. Financial aid supplies are up, but grants (as opposed to loans) are harder to get. Hire rates for new graduates are up, but salaries aren't. In short, the current state of U.S. higher education is both better and worse than it was a decade ago.

Enrollment in higher education in the United States is at its highest rate since 1998. The U.S. Labor Department's Bureau of Labor Statistics reported that the college enrollment rate for the 2002 high school graduation class was 65.2%.

For students and schools both, the trend is toward more competition and less money. Although university endowments have rebounded - showing an average 2.9% return in the 2002-2003 school year - state support of higher education is being increasingly curtailed. Many states cut their higher education budgets in 2003. Some are considering privatization proposals, which would give schools more control over tuition but lower appropriations.

Tuition increased again in the 2003-2004 school year. The rise was most dramatic at public institutions - 14.1% at public four-year colleges and 13.8% at public two-year colleges - but tuition also increased a noticeable 6% at private four-year colleges.

Financial aid rose correspondingly, with the total amount of financial aid reaching $105 billion in 2002-2003. This amount reflects a 15% increase over the preceding year, and it includes all aid: grants, loans and tax credits. However, the Department of Education's May 2003 adjustment to the federal needs analysis reduced the amount of grant assistance for which students can qualify. Loans, and in particular the private loan market, make up an increasing share of financial aid.

Community colleges are another way students are coping with higher costs. The Wall Street Journal reports that an increasing number of community colleges and public university systems are entering into student transfer agreements. As enrollments rise, finance tightens, and competition heats up, community colleges are taking on a new role as a feeder school system for universities.

Students are also likely to be working while they attend college. According to the Labor Department, 42.6% of full-time college students and 75.7% of part-time students participated in the labor force.

Employment while attending school may open up another path to paying for higher education. One of the most popular employee benefits is company-sponsored educational assistance, such as tuition reimbursement. Eighty percent of all companies offer some kind of educational assistance. Such plans are a prime recruiting and retention tool.

Companies that are invested in the education and training of their employees are taking an increasingly proactive approach. Corporate/college partnerships are very noticeable in the higher education landscape, particularly among business and technology programs. In particular, there is a trend for MBA programs to custom-design training courses for the employees of their corporate partners.

Those students who have not found a job while in school have good news: the job market for new graduates is improving. The National Association of Colleges and Employers (NACE) reports that employers expect to hire 12.7% more new graduates from the 2004 class than from the previous years. This news is especially welcome because it follows two years of declines in hiring.

Starting salaries, however, will likely remain flat for 2004 graduates. If this prediction holds, it will be better than the fortune of 2003 graduates, who found that the average starting salary had declined.

To have full access to this report, become a member of i4cp today at www.i4cp.com.

The Institute for Corporate Productivity (i4cp, inc.) improves corporate productivity through a combination of research, community, tools and technology focused on the management of human capital. With more than 100 leading organizations as members, including many of the best-known companies in the world, i4cp draws upon one of the industry’s largest and most-experienced research teams and Executives-in-Residence to produce more than 10,000 pages annually of rapid, reliable and respected research and analysis surrounding all facets of the management of people in organizations. Additionally, i4cp identifies and analyzes the upcoming major issues and future trends that are expected to influence workforce productivity and provides member clients with tools and technology to execute leading-edge strategies and "next" practices on these issues and trends. i4cp is a for-profit company with offices in St. Petersburg, Florida.