(CNN)The pandemic forced many American college campuses to close and move classes online. Some are now wondering whether the high cost of college tuition is worth it. CNN Chief Medical Correspondent Sanjay Gupta talks with NYU Professor Scott Galloway about what Galloway believes may be a disruption of higher education.
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Scott Galloway, professor of marketing, NYU Stern School of Business: I went to UCLA at Berkeley on a total of $7,000 in tuition for undergraduate and graduate. And now you're looking at students who have taken on more debt than credit card debt.
There is a collective statement across America among parents watching their kids on Zoom going, "This is what I've been paying for?"
Dr. Sanjay Gupta: That's Scott Galloway, a professor of marketing at the NYU Stern School of Business.
He says that the US higher education is about to be disrupted — in a big way — and the pandemic may be the catalyst.
We already know Covid-19 has forced campuses to close and classes to move online. And Scott says this is going to put pressure on universities to justify their price tags and potentially rethink how they operate.
Is he right? Could the pandemic change college forever?
I'm Dr. Sanjay Gupta, CNN's chief medical correspondent. And this is "Coronavirus: Fact vs. Fiction."
This year, some college freshmen will be sitting in front of computer screens at home instead of moving onto campuses.
That would mean not meeting new friends, not attending sporting events, no clubs. And without all of those meaningful experiences, Scott Galloway thinks it might be a tough sell to get students to pay the same tuition.
And if there are students who don't even choose to enroll, Scott says universities without long waiting lists to turn to will be in serious trouble. He thinks they may even shut down.
These are certainly provocative ideas. And, as a parent to three children, I wanted to hear more.
Gupta: Let's just back up. Even before this Covid pandemic. Is college worth it? How do you, how do you think through that? How do you, how would you help my daughters think through that?
Galloway: So that's the No. 1 question I'm getting every day. I get between a half a dozen and a dozen e-mails, usually from parents, where they describe the school, the situation they're in economically and ask for advice on whether to go or not to go, which is unusual, because back in the day, it was sort of, you just went.
And the math I encourage them to go through to help guide them to a better decision is to look at what you're getting, the value of the product over the price you're being charged.
And I would largely or loosely just articulate the value into three components: The first is the certification. The second factor is the education you receive. And then the final one is the experience. It's those three things over the price. Now because the prices has escalated so dramatically, that ratio no longer yields an automatic yes, as it did when we were going to school.
So now parents are faced with situations where if the certification isn't great, it's a tier two brand, the education is just so-so and maybe the experience isn't great because now they're doing Zoom classes, for the first time, that ratio may have been flipped upside down and the answer might be no.
I would argue, the two most disruptable industries in the world are US health care and US education. You walk into a class, it doesn't look, smell or feel much different than it did 40 years ago, except tuition's up 1,400%. Only one in five people, as I understand it, are satisfied with their health care. Those costs have exploded. So those are — that all, that spells disruption.
Gupta: Eventually there will be a vaccine, hopefully, for this pandemic. We don't know for sure, but hopefully there's going to be some, some return to societal normalcy. Are universities going to go back to, to that normal or not, do you think?
Galloway: I think the genie is out of the bottle. I think we're having an open, honest conversation. I think it's revealing some very ugly things. College is no longer a source of joy and upward mobility. It's a source of anxiety and debt for American households.
I think there will be a new normal, mostly inspired by probably what could be hundreds of thousands of universities just going out of business.
Gupta: You know, it's interesting. I do spend a lot of time still talking to, to various people at my university, my alma mater at Michigan, and they paint a pretty dire picture. I mean there's deferrals that are happening. International students who often pay full tuition are talking about not showing up. The states are obviously hurting.
What are they going to look like, public universities, in a few years from now, five years from now, say?
Galloway: Most international students aren't eligible for financial aid. So at a university like an NYU, 28 percent of our student body is international, but they're probably 50 percent of our cash flow. So when you have an administration that comes across as xenophobic, when you have a virus that doesn't — that ignores borders and it creates all sorts of negative externalities: the notion of people going cross-border. You lose your killer whales, you lose your cash flow.
Now, where do we go from here? I would argue there's a huge opportunity. Two-thirds, two-thirds of students are at public universities. They want to educate more, more young men and women at a lower cost. I think online is part of that solution to, to just, again, kind of a loose ratio here: If you took half your learning online, you kind of effectively double the size of the campus. You double the capacity.
So, I do think there's opportunity for our large land-grant public universities to cut costs, leverage technology and for taxpayers to recognize the importance of education and reallocate more capital while holding these universities accountable on cost per student and dramatically expand the freshman seats at some of these outstanding universities.
Gupta: Cost cutting. Nobody wants to talk about it. But I think also sort of baked into that is this idea that what we're experiencing right now is this idea that the online classes may need to happen because of these health concerns. But that's just a semester or two. That's not going to be the way that it is. Do they have a point?
Galloway: Even if there's just a 10 percent decline in enrollment then the question becomes, well, what do they do? But when you lose 10, 20% of your top-line income in a university that just has not prepared in any way in terms of cost cutting and has no endowment, a reduction in students showing up, enrollees by 10% could put them out of business in 90 days.
It's going to create a certain level of chaos at certain parts of the university system. It's going to be a very, very interesting few years for what is one of the largest industries in the world that has raised its prices faster than inflation, which all spells one thing: disruption.
Gupta: Yeah, it's, you're making a strong case, I think, that disruption needs to happen. But there is a value in this that may be harder to quantify. What about that? I mean, this, college does play an important role just in human development.
Galloway: It's a great point. I don't have an elegant answer. Um, I'll share my experience, and I would bet at Michigan you had a similar experience. You know, I tested my limits with, with alcohol and drugs in college. And that sounds bad, but I think it was an important part of maturing. I tested my limits when I joined the crew team. I fell in love for the first time. I developed resilience when I had my heart broken for the first time.
Having all of these things happen in a safe, joyous place is wonderful. It's just — it's an extraordinary experience. So I agree that, that the nonquantitative benefits here, the, the opportunity to spill into adulthood in a safe, joyous place and to explore topics outside of your, maybe your career interests that create empathy, that create curiosity, that's an amazing thing. It's an amazing thing.
Right now, it's, it's only open to about a third of kids. And those third that go are putting more debt on households than credit card debt. So, you know, no silver bullet here.
I would flip the script back to you, Sanjay. As someone with three kids thinking about college, how has this changed your viewpoint or has it?
Gupta: Well, I think I'm sort of grappling with this in real time. I do think as someone who, who went to college and then went to medical school, college was absolutely necessary.
You know, when we first started talking about the internet many years ago, there was this idea that it was going to be this democratizing force, that millions of more people were gonna become more educated. And yet it didn't happen. Not, not at least the way that I think it was predicted.
And this, I guess, goes back to me trying to answer your question, Professor. Made me think there's something else. The fact that evolutionarily we didn't go in that direction, that we still showed up at campus every year, it made me wonder. There's, there's something else that I'm not quite getting.