"Most of the methods of [residential colleges and universities] have become hopelessly obsolete. Probably over half of the universities in the world will disappear quickly over the next thirty years," wrote Sir John Templeton in 2005 in his last memorandum. As 85 percent of college graduates move home with their parents and confront the reality of paying off huge student loan debts, I wonder how many of them would agree with the global investing pioneer.
Today's college graduates were still in high school when Sir John made his prediction. Titling his memorandum "Financial Chaos," Templeton prophesied about tectonic financial changes, including the collapse of the housing market, the demise of residential college education, and the rise of electronic education. He predicted 90 percent of education would one day be delivered electronically.
Why? As with all bubbles, Templeton knew that residential higher education was overpriced due to artificial high demand created by a glut of cheap financing. No doubt he saw that students' ability to pay loans would wane just as the economy collapsed and cheap electronic education would begin to slay the campus dinosaur.
Residential education will not go away completely. The best colleges will survive. Employers will have a say in which ones make the grade-human resources departments will hire the most competent graduates among residential and electronic colleges regardless of the source of their sheepskins.
Certainly, many HR departments already understand what a recent college graduate-now graduate school student and undergraduate teaching assistant-reported to me last week:
"[T]he mental capacity demonstrated by my students this past semester shocked me. I don't think any of them are honestly dumb, but they lacked the ability to reason through ideas. Determining whether a simple argument form was valid or invalid was an extremely difficult task for them. They would not have been able to survive the first week of my [Grove City College] symbolic logic class."
These students paid too much for the value they received from their residential university. Sadly, the marketplace increasingly will punish graduates from this institution. Fewer jobs will be forthcoming for them. And fewer high school graduates will enroll at their alma mater as they seek out better residential colleges and cheaper forms of online education.
Although it was written six years ago, parents and high school students should read Sir John Templeton's last memorandum. Its wisdom lives on.