Roger Geiger: Higher education is no longer a growth industry. It’s looking forward to some contraction, as is happening in other systems. But I see American higher education right now in terms of really four different sectors. One is the commercial sector made up of online institutions, and that seems to be the only sector that’s growing, which may account for 15 percent of higher education enrollments now. There’s also the academic sector of the selective private colleges and research universities that are holding up quite well, and probably will, with a few exceptions. But the open sector—that is, less-selective universities—are losing enrollment and not doing very well. And the same is true for the fourth sector, community colleges. So, what I’m particularly interested in asking, Phil, is whether this online sector of higher education is appearing in other countries and having a significant impact?

Philip Altbach: Well, some years ago, if you looked at the list of the ten largest online universities in the world, about eight of them were in developing and middle-income countries: China; India; two of them in Turkey, surprisingly; and so on. I think the only really, really mass one in the rich countries was the British Open University, if I’m remembering correctly. So, yes, online took off at some point, maybe fifteen or twenty years ago and is still going strong. I would not say that it’s a dramatically growing sector around the world. It’s strong. It’s important. I do not know the percentage of students who are in online-only higher education.

Geiger: That would be hard to find.

Altbach: It would be probably hard to find, but would be very interesting, because it is now a major and continuing and permanent part of the global higher education environment. It’s not my impression that most of the massive online universities in the developing and middle-income countries are for-profits. A lot of them—maybe all of them—are public institutions. There might be some for-profit or private involvement there. So, that’s a variation which would be quite different from the United States.

Let me talk for a moment about the several sectors, Roger, that you mentioned. And again, it’s a little bit difficult to generalize. I think, in the rich countries, you can say with very few exceptions that most of them are underinvesting or de-investing from higher education at all levels in the public sector. That is, there’s steady-to-declining public support, as we see in the United States as well, for public higher education. And so, we see the public sector in some disarray, and certainly not doing super well. The way you characterized the US system, where the selective sectors are doing generally well, is absolutely the case globally. I can think of no country in which the top institutions are not doing comparatively well.

And the problem in countries with declining populations, demographically, and where higher education has hit its upper limit in terms of young people accessing the system (because the two are not exactly the same, of course), those non-selective institutions are often struggling.

One other point that one could make about the internationalization aspect of this is that, comparatively, the US is less dependent on international student enrollments to kind of balance the budget for the sector in general, and particularly for the non-selective sector—less dependent than countries like Britain, Australia, Canada, and a few others. Now, in the US, I think some of our private non-selective institutions are increasingly dependent on international student enrollment. We can also see in the US that our prestigious public universities increasingly are enrolling more out-of-state students. And in these cases, if you want to go to a university in, say, California, it doesn’t matter if you’re from Colorado or Cambodia—they’re both out-of-state, and they pay the same tuition. The same is not true in most other countries in the world where foreign students pay a lot more tuition. And some countries—Australia being the most egregious example here—are now pretty much dependent on international enrollments. The public sectors, and particularly the prestigious universities, are very much dependent on the money that international students bring to them.

Geiger: Okay, let me just comment: In the United States, two of the largest online universities are Western Governors University and Southern New Hampshire University. They both have about a hundred thousand students. I don’t know how that compares with the behemoths that you mentioned. But they’re non-profit institutions. I call it the “commercial sector” because they are actively marketing their services, and it’s a pay-as-you-go system. There’s no public investment in many of these institutions. They provide courses that people will pay for, basically. And, in that sense, I see them as increasing their market share because they are marketing very aggressively.

And I think that this is probably affecting community colleges and the less-selective state regional universities. International students are particularly important at the higher level of American higher education and graduate school, where they are vital for engineering and physical science—not just for the money, but to keep those programs going.

Altbach: Yes, I think that’s true. Most enrollment growth in STEM fields has been driven by international students. What will happen when it’s more difficult for international students to stay in the country after they graduate, either at the undergraduate level or at the graduate and professional level? That’s going to be quite interesting going forward because one of the reasons that international students go abroad to the major host countries is because they want to stay there afterwards. It’s part of a broader migration effort—education plus migration.

And as countries become more restrictive in the current environment, it’s kind of a contradiction. On the one hand, wealthy countries need international students for a variety of demographic and economic reasons. And, on the other hand, there are increasing restrictions on migration for political reasons in these countries. I think those things are going to conflict dramatically with each other going forward.

In Canada, they’ve recently imposed a limit on the number of visas being given to international students for several reasons. One is a lack of housing, a problem which we have in the US perhaps to a lesser extent. And the other is that there’s been a lot of underhanded migration-related admission to non-selective, for-profit vocational colleges in Canada. There have been several exposés on Canadian television about how these kids—mainly from India—are being horribly exploited. They come not because they particularly want to study, but because they want to get a good job, or any job, in Canada.

So, we see these interesting, in some ways depressing, contradictions. And when and if we have a second Donald Trump presidential term in the US, the bets are totally off as to how restrictions will be imposed. The US could become significantly less welcoming to foreigners, in general, and international students, in particular. And that will have a significant impact on the sector. Debate in the UK right now concerning migration is a great worry for the higher ed sector, and the jury is still out—and I say “jury” because there are some legal cases about this, too—about where the policy will end up. If the UK’s Labour Party wins the upcoming election, they’ll make some changes. It remains to be seen what that will mean.

Geiger: One of the big worries in the US is with demography. This is really new. We had a stagnation in full-time higher education enrollments from 1975, when we hit a peak. And then we were fairly stable for about ten years. But the kind of declines that we’re facing, I think, are new. And it’s going to mean that some institutions are going to close, which is happening in Korea and Japan.

One factor relates to college readiness. For fifty years, we’ve been trying to get more and more students to enroll. President Obama wanted every high school graduate to have at least one year of college. And back in the 1970s we talked about “College for All,” and yet this never happened. The enrollment rates were very steady from early in the twenty-first century to the pandemic, and the reason is that enrollments in higher education depend primarily on college readiness—preparation for college-level work in high schools. And that has changed little for the past forty years. A recent Brookings study showed that enrollment rates in higher education depend largely on academic preparation. And it’s not getting better. So, we’re stuck. And if the population decreases, as we know it will, that only means fewer students.

Altbach: Roger, to interrupt a little, what about cost?

Geiger: As for cost, that’s a very significant factor. Higher education simply costs too much right now. A residential four-year education is a luxury good. At a public university, the cost of a residential education is about one-third to one-half of median family income. So, even with discounts and loans—which is another problem—it’s not very attractive. The loan situation is another thing. It’s one of the things that is causing people to be less interested in going to college. Lately, there’s been a lot of public comment on why students ought not to go to college. The New York Times had an article on saying “no” to college. The Wall Street Journal had a similar article. But this is just a reflection of a much wider mood, and part of it is so much publicity about the cost and the burden of loans.

Altbach: Roger, can I ask you to comment historically on how these issues may have played out in the last century or so in the United States?

Geiger: Well, cost has not been a factor because higher education was really quite cheap up until 1980. In the 1980s, it began to escalate. Privates were first and most aggressive because they started tuition discounting, so they could raise their prices and then subsidize the less wealthy students. And they kept doing that, but that’s a slippery slope. Now, the private sector, as a whole, has tuition discounts that amount to 50 percent of the list tuition, and that’s hurting them a lot. About twenty years ago, I said we can never have tuition discounting in the public sector because there are too many students, and they’re all middle-class students. Well, we’re there. There’s heavy student subsidization in the public sector as well. And student loans are a complete mess. We’ve never tried to have a coherent public policy. Congress has never sat down and tried to figure this out. Well, it did once in the Education Amendments of 1972. It’s been ad hoc ever since.

With respect to loans, Phil, maybe you can comment. It seems like Canada, England, Australia have all come up with reasonable loan terms with payback dependent on incomes. And where the United States has gone wrong is that Congress has never faced the reality that a loan system costs money. President Obama, when he took over federal student loans, thought he would make money on them. Well, it’s a far cry from that.

And so, first of all, you have to realize that you have to make loans to help students go to college. And those who can, will pay them back; those who can’t, well, you just have to subsidize them. This is going to cost you 20 percent, 25 percent, 30 percent of loan volume. It’s costing us more than that now, but without any kind of rational policy.

Altbach: I can comment a little bit on what other countries have done. As you point out, the Anglosphere countries have been most active in developing loan programs. The three that you mentioned all do it better than the United States. As you also mentioned, they are all in different ways income contingent—that is, people who can pay them back do pay them back. A very significant portion of students who take out loans are really taking out subsidies, and they don’t pay them back because they can’t or they don’t earn enough according to the tax system. In the Australian case, which most people point to as the most successful national loan program globally, the money is paid back directly out of taxes. And so, the individual doesn’t see. They’re not paying it back on an individual basis, and it’s very much income contingent. That’s worked out, from a fiscal point of view, fine. I am not an economist, but it seems to work.

In the UK, loan programs are income-contingent. But researchers have pointed out that, like in the US, the need to repay student loan debt has constrained people’s career choices—the way they think about work and education and so on. So, as you point out, Roger, this kind of funding of higher education has implications which are beyond straight economics. In Europe, some countries— Scandinavia and Germany, especially—still provide basically “free” higher education. It’s not free, of course; it’s just government subsidized. This “loan” system doesn’t come into the thinking, either of individual students or families, as they’re considering higher education and possible career choices.

What’s pretty common—in the Anglosphere particularly and on the continent increasingly—is that government investment in higher education is declining. And that has significant impacts. In the US, it affects student access and the quality of the academic system. It also influences how people think about higher education, research expenditures, and research productivity.

Geiger: One of the problems with funding higher education with student loans, which is what we’re doing in the US, is that it affects people later in life. They may graduate. They may be able to pay off their loans, but they delay getting married. They may or may not have kids. And our replacement rate has fallen below 2.1.

Altbach: I wouldn’t blame that on student loans, though. That’s an interesting way to think about it.

Geiger: But it has a negative effect on young people’s lives.

Altbach: And the way people think about life—and this recent research in the UK, which I mentioned before, exactly supports that notion—even with a more equitable, reasonable loan environment that they have there, it is affecting the way young people think about their future, their lives.

Geiger: If we look back, in the US public sector, state appropriations for higher education declined after the 1980 recession. They went down on a per-student basis, but they still held up reasonably well until the Great Recession of 2008. And then they just took a major step down, and universities have been struggling with that ever since. Mainly, they have raised tuition in response to decreases in state support because there were federal student loans. And that’s one of the reasons why we’re in the pickle that we are in right now.

But we’re running into problems in various places. The Chronicle of Higher Education has recently publishedabout severe financial problems at the University of Arizona. And that follows similar stories about the University of West Virginia, University of Nebraska, and Penn State University, which are trying to get out from under a budget deficit. These and other major public universities are running into real problems that are causing cutbacks. And the disturbing thing about this is that this is happening during a period of enormous prosperity. States have a lot of money from the federal government, and they have a lot more money now than they’re going to have in a few years. Universities have been in pretty good shape, but they’ve overspent—partly because of competition for students.

This is very evident at Penn State. The campus has been rebuilt since I’ve been here, and it’s very beautiful. It didn’t used to be beautiful. But administrators keep investing in more and more improvements because it has to be a beautiful campus if you’re going to attract students from out of state who will pay the higher out-of-state tuition.

Altbach: Globally, this trend exists, but it is happening much less—much, much less. In China, the campuses of the major universities have seen this kind of investment. We just finished a book called Academic Star Wars on university excellence initiatives in nine countries. China, of course, is one of them. The estimate is that they’ve spent about a hundred billion US dollars over the past twenty years on their top hundred or so universities. And if you go to their campuses, they are very impressive—as impressive as ours here. But overall, expenditures on physical amenities are much less. Countries have invested much more in the academic parts of campuses.

What you also see in the US and overseas is an increasing diversification and difference in variation—in quality and in prestige—in the higher education system. Because all countries have seen massification. We saw that the US was the first country to massify. I’d be really interested to hear your views about the early twentieth century and how we did it. I’ve often said the Americans, and to some extent the Canadians, were the first to have mass higher education with enrollments of 20, 25, or more percent of the age group going on to postsecondary education. It wasn’t until the 1960s in Europe that enrollment rates were anything approaching that. After World War II, most countries had 5 or 8 percent of young people going on to universities. That was the case in the UK. So, we’ve seen massification. And as part of massification we’ve seen, of course, the need for public expenditure to go up, which it did, but not endlessly. As you say, that’s the pickle that many countries are in at the moment. And we saw a kind of diversification in the quality and in the orientation and in the complexity of systems. It’s absolutely necessary in a massified system.

California was maybe the first state in this country to create a logical massified system with UC, Cal State, and the community colleges. Other countries have sort of copied that in different ways. But we’ve also seen much less equality among the different sectors in higher education, and we can see that dramatically all around the world. China’s a very good example. Its top institutions, which have received all this extra money from their excellence initiatives, are so much better than the average Chinese university. It makes the United States look almost equal across its system. But I’d be interested in your comments, particularly on the development of massification in this country.

Geiger: Well, two major points: Mass higher education grew in this country because we had mass secondary education. If you follow the curves, and leave out World War II and the Great Depression, basically the growth of higher education follows the growth of secondary school graduates. The other point that you raise is an interesting one, and that is the qualitative differences among institutions, which have always existed in this country and in some other countries. Where it didn’t exist was in Europe, where there was one standard for higher education, for universities. All German universities, for instance, were supposed to meet that same standard, and that was a very expensive standard.

In the 1960s and 1970s, OECD started advocating short-cycle higher education in Europe: forms of higher education that could be available to more people and wouldn’t cost so much. But it’s natural to have qualitative distinctions, because there are differences in students. When you start doing research, there are enormous differences in the cost of research. In the United States—I think, more than any other country—there’s competition between independent institutions for students. This has driven a vast increase in expenditures in the private sector, as they try to become more and more selective and get more and better students.

Altbach: Talking about the private sector, because I think that’s an interesting global development as well, because we often think of the United States as the home of private higher education. But only 20 percent or so of American students are in private higher ed. Eighty percent are in the public system. The reverse is true in countries like Japan, South Korea, Taiwan, the Philippines, and most of East Asia (leaving mainland China aside). In these countries, 80 percent of enrollments are in the private sector. And what we’ve seen there is that, most—almost all—private universities in other parts of the world are what the economists call “demand absorbing.” They’re not prestigious institutions, although there are some prestigious privates in Japan, South Korea, and Latin America, too. And, by the way, Latin America, interestingly, has shifted from being mainly public universities to being 50 percent—and in some cases more—private. A lot of the private sector all around the world is for-profit, and with pretty low quality. So, it’s really been an interesting development.

One other very interesting development in recent years has been the emergence in India—which has lots of really horrible private undergraduate colleges—of a small number of well-funded private universities serving the upper-middle classes. These are not for-profit; they’re funded by the emerging class of Indian billionaires who’ve discovered, suddenly—and I think quite positively—that higher education is important for India’s development. They can also put their name on the door and get even more prestige than they already have. There are now half a dozen, maybe more, of really quite good, well-funded Indian private universities that twenty years ago didn’t exist at all. So, there are very interesting, important things going on in the private sector globally. It’s been estimated that half the world’s enrollments now are in private higher education, and that’s a big change.

Geiger: Well, my first book was about international private higher education. And my friend Dan Levy has written extensively about that in Latin America. He now has a book coming out on private higher education all over the world covering these issues.It’s because of this educational revolution that more and more people feel the need to go to college. And there’s also the limitation on government’s expenditure. Simon Marginson has pointed out that when you reach high-participation society, the government stops paying for high participation. It shifts to simply investing in what’s most important for the government. This leaves an opening for for-profit higher education, which, unlike the for-profit system in the US, is very cheap. It has to be cheap enough that people can pay for it. That’s what I found fifty years ago in the Philippines. What you mentioned about India is very interesting. I was unaware of that development. I guess it’s a function of an affluent society that you have a certain percentage of people that are willing to pay for a luxury higher education.

Altbach: That’s exactly right. And it would be interesting to see if the development of these kinds of elite privates in the middle-income countries affect the number of young people who are interested in going abroad for, particularly, undergraduate study if they can get decent quality at home. In the case of China, there are possibilities for smart kids to get into their top Chinese institutions. But they have the problem of the famous Gaokao entrance exam. Increasingly, young people over there don’t want to have the stress of taking the Gaokao tests. And so, they go to international schools in China with the idea that they’re preparing themselves to study overseas to avoid the pressure of the Gaokao. These trends are complicated and rapidly changing.

But, Roger, if we turn back to the historical perspective, you seem to be saying that you can account for the emergence of massification in the United States by looking at the spread of secondary education that prepared young people to go to college. Can you say a little bit more about this?

Geiger: Yeah, high schools, as we know them in the US, really developed in the 1890s. In 1890, most college students prepared at preparatory institutions. But by 1900, the majority were coming from high schools. And that was like 4 percent [of high school graduates enrolling in college] or something like that. The number of high school students increased greatly in the second decade of the twentieth century. By 1920, there were fairly large numbers graduating from secondary school. From 1920 to 1940, that just simply went up—more graduates and more students in higher education. So, by 1940, about 50 percent of students were graduating from high school and 15 percent were enrolled in college. Of course, there was a hiatus during the 1940s and Second World War, where everything’s all mixed up. But after 1950, the same trend continued until we reached saturation. Saturation happened in the 1960s, and the first peak of higher education enrollments was 1975.

Phil, I came across a remark of yours a number of years ago that you were skeptical about the trend towards world-class universities. You mentioned that there have been a lot of investments lately. I just wonder what your take is on that now.

Altbach: Complicated! I think I was skeptical about the use of rankings—these global rankings—which I think have had a detrimental effect on countries thinking about higher education. I’m not skeptical about world-class universities and how we define them. These are what the British call “research intensive” universities. I think they’re very important. And, in fact, I’ve argued that really every country, even small and poor ones, needs some kind of research university. They don’t need to be world-class, if they’re not doing Nobel Prize-level research. But research universities provide a pathway for understanding and participating to some degree in top-level global research. That’s very, very important for everybody. I think, for some countries, maybe even China, there’s been an overemphasis on these institutions. They’ve come at the expense of doing a good job with the broader higher education system. Of course, there’s stratification—that’s appropriate. I’ve been having some discussions with Indian colleagues recently because they’re now into the world-class biz. In India, there is not a single really world-class institution. Their top higher ed institutions—the Indian institutes of technology—are high-quality, technologically focused institutions. They’re very good. But they’re specialized, STEM-focused, and mainly engineering schools. They now want to develop some really comprehensive world-class institutions. They are considering how to do this. How many? Where should they be? How should they be funded? And, so far, very limited success.

So, I think, having research-intensive institutions is very important. One of the problems—as you mentioned earlier about the Chronicle article—is that states in the US are not paying enough attention to their flagship institutions. These are really world-class institutions. It’s a terrible thing for their states and for the nation. I think these flagships need to be protected, not cut. And as systems go about trying to rationalize in the context of demographic changes and financial pressures and so on, the flagships need to be very much protected. That’s my view. And I know, in Pennsylvania, the governor is thinking about rationalizing or changing the system.

Geiger: That’s the lower system.

Altbach: Okay, so not the Penn State system?

Geiger: Right.

Altbach: Okay. I think the lower part of the Pennsylvania system sure needs change. The demographics are changing dramatically there. But kids typically want to go to the flagships if they can. They want to go to the places that have invested in better facilities, back to another point you made, and which have the most prestige. As the population pressures decrease at some levels, it becomes a bit more possible for kids to go to these top institutions—which have become ever more competitive, partly because they’re taking more out-of-state students. This has been a significant political controversy in California, where UC Berkeley and UCLA have been placing caps on out-of-state students to deflect some of these political criticisms.

You see the same thing in other countries. In the Netherlands, which has a really outstanding higher education system, young people want to go to the top institutions in the country. Some of their more open universities of applied sciences—the same thing is true in Germany—are suffering enrollment declines as a result. Somehow, balancing these systems to make access appropriate and to make it financially workable is a global phenomenon which we’re just beginning to sort of think about.

Geiger: It’s complicated in the United States. The research universities, even when they’re in financial trouble, do everything they can to protect their research role. Research brings an enormous amount of money to Penn State. It’s up to $1.2 billion of research funding. And that supports a good part of the university. So, you’ve got to keep that part strong and find cuts elsewhere. Pennsylvania has a particular problem, because it’s the forty-ninth state in terms of state funding. The governor is going to try to rearrange this itty-bitty pot of money that goes to the state system and the community colleges and to somehow make it fairer and better. But there’s not much money there.

The out-of-state-student topic is interesting. If we go back to my day, there used to be what amounted to caps on the number of out-of-state students. The university was mainly funded with state money, and state legislators used to say, “That money is for our kids.” After 2000, when flagship universities were forced to raise tuition, that went out the window. They started saying, “Get as many out-of-state students as you can because we’re charging them three times as much.” That means that 25 percent of out-of-state students will pay as much as 75 percent of in-state tuition. That’s still going. You’re quite right, Phil, that the flagship universities are becoming more and more popular, and they’re becoming more and more selective—at least, the main ones.

There’s a competition between the flagship universities and the fairly selective privates like Boston College. This may be true or not for Boston College, but I think Boston College has the usual tuition discount. It’s probably just about the same price as Penn State’s out-of-state tuition. That’s the way it is across the country. And those two sectors compete with each other. Of course, they’re both good universities, or both kinds of universities are quite good.

At the same time, there’s public disenchantment in the US with higher education. There’s been a lot of talk about ROI—return on investment. And it’s very deceiving. These websites come up with these gross differences between different curricula and the different institutions. The important thing is to go to college and graduate from college. And the people who do that generally do well. And the worst thing you can do is go to college, take out a loan, and not graduate.

Altbach: I agree. If you go to college, you should graduate. But it’s more than return on investment, if you look broadly at every measure. There’s ROI, and some variation on, of course, the kind of job you go into. But, generally speaking, with everything you measure—satisfaction in life, getting married and staying married, suicide rates, being a good citizen, and so on—having a college degree makes it a worthwhile investment. So, it’s not only ROI in terms of income, which also is correct. But it’s also return on investment and human life.

Geiger: Absolutely!

Altbach: We are at a particularly unfortunate time in our political and societal history, with all of this criticism of higher education. It’s unprecedented, I think. Some of it is justified, given university presidents at their poor performance in front of Congress [over the rise of pro-Palestinian campus protests] and the public’s reaction. And there’s the criticisms of academic freedom, which, by the way, I think, is actually not in bad shape around the country. But you wouldn’t know that from watching the TV programs. Universities have an unprecedentedly bad image at the moment. Yet, even if you look at middle-class Trumpies, right-wingers—they send their kids to college. And if they can get their kids into Yale, they send them to Yale. So, that’s the way they act while they’re still criticizing those institutions.

Geiger: Historically, going to college used to be, for a long time, the exception. And then it sort of became the rule. As discussed earlier, in the 1970s, we had this “College for All” movement, which sort of revived itself after 2000 and continued right up through Obama’s presidency. The difference is that now people are saying that college isn’t for all—that a lot of people would be better off getting vocational educationor what have you. But it’s not clear that that’s really true. It really depends on the individual, and it depends on their capabilities. I think ACT says that 40 percent of high school graduates are unprepared for college work. For that other 60 percent, college may a good idea if they can pull it together.