Considering a liberal arts degree? Or maybe something in STEM? What about economics or finance?
The gravity of picking a major as a college student cannot be understated. A person’s major can have a large impact on a student’s lifetime earnings and overall wellbeing. No matter what major they choose, it will undoubtedly have a large impact on their post-college plans.
Public colleges and universities have a responsibility to these students to ensure that they will learn the skills necessary to have successful and meaningful careers.
These institutions also have a tremendous responsibility to the public. They must ensure that enough individuals are receiving an education that prepares them to work in high-demand/growth sectors. This helps to avoid labor shortages that could damage the economy.
Unfortunately, many universities have been unable to fulfill these responsibilities.
Universities are letting down their students and communities when it comes to creating a well-educated and prepared workforce.
Specifically, colleges and universities are not doing enough to create student populations with high-demand majors, like those in the fields of science, technology, engineering, and math (STEM). In fact, “73% of firms serving engineering industries, and 65% of those in information technology, finance, and insurance fields listed skill shortages as one of their top challenges.”
An additional report also concluded that “the United States will have to fill 3.5 million STEM jobs by 2025, with more than 2 million of them going unfilled because of the lack of highly skilled candidates.”
If these STEM openings remain unfilled, Utah’s economy will suffer. Businesses will be unable to operate and could ultimately decide to leave Utah for states with a more qualified workforce.
In contrast to the dearth of applicants for STEM jobs, openings requiring degrees in social science, humanities, and liberal arts are overwhelmed with qualified candidates. Too many individuals are receiving these degrees. This surfeit of applicants is resulting in the declining growth of non-STEM jobs.
An imbalance between major choice and job availability must be corrected by public universities to ensure the continued prosperity of Utah.
Universities can correct this imbalance by utilizing differential tuition.
Differential tuition allows colleges and universities to vary the tuition of students depending on their major or field of study. This differs from more traditional ways of setting tuition, which rely on a flat rate for all majors.
Utilizing differential tuition correctly can solve workforce shortages by incentivizing students to pursue degrees that are in demand and have a high return on investment (ROI). Differential tuition, when used this way, allows the market to be in control. This market-based approach to tuition should be pursued in Utah.
When tuition is raised for degrees that lead to jobs that are in low demand, have fewer shortages, and lower ROIs, students will be discouraged from pursuing those majors. However, when more in-demand majors have lower tuition many students will pursue these degrees over their more costly counterparts. This will lead to more college graduates being able to fill jobs that are in desperate need of qualified workers.
Differential tuition is not only good for the job market but is also good for the students and universities.
With differential tuition, students will have increased opportunities to pursue degrees that result in high-paying jobs, like engineering which has a median salary over $87,000. The ability to obtain high-paying jobs gives recent graduates the ability to achieve financial freedom and stability.
For universities, differential tuition has the potential to help fund historically underfunded programs. Historically underfunded programs are usually those that fall outside the scope of STEM.
By raising the cost of attendance, the revenue of underfunded majors could increase. This will give underfunded departments access to better equipment, necessary staff, and funding for important research.
Students will always have the choice to pursue whatever degree they desire. Differential tuition doesn’t deny them this freedom. This policy is only meant to allow the market to dictate tuition in a way that creates a workforce necessary to meet the economy’s demands.
Ben Shelton is a policy fellow at Libertas Institute.