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more higher education bashing or the end of univerisities as we know them?

In the past couple of weeks, two journalists who I enjoy reading wrote controversial diatribes about the travesties of contemporary higher education. Both Matt Taibbi  and Thomas Frank, each in their own brilliantly polemical ways, compared higher education to the housing bubble that led to our last serious financial crisis. Both writers attacked the integrity and ethics of the administrators of the current regime of academia. Both bashed a system that would allow students to acquire more debt than they could possibly pay given the job prospects for which their education prepares them. These are real nuggets that academics ought to consider seriously. Ignore, if it offends you, the abrasive rhetoric, but at the heart of both of their arguments is a logic that ought to resonate with our sociological sensibilities.

Here is Taibbi:

[T]he underlying cause of all that later-life distress and heartache – the reason they carry such crushing, life-alteringly huge college debt – is that our university-tuition system really is exploitative and unfair, designed primarily to benefit two major actors.

First in line are the colleges and universities, and the contractors who build their extravagant athletic complexes, hotel-like dormitories and God knows what other campus embellishments. For these little regional economic empires, the federal student-loan system is essentially a massive and ongoing government subsidy, once funded mostly by emotionally vulnerable parents, but now increasingly paid for in the form of federally backed loans to a political constituency – low- and middle-income students – that has virtually no lobby in Washington.

Next up is the government itself. While it’s not commonly discussed on the Hill, the government actually stands to make an enormous profit on the president’s new federal student-loan system, an estimated $184 billion over 10 years, a boondoggle paid for by hyperinflated tuition costs and fueled by a government-sponsored predatory-lending program that makes even the most ruthless private credit-card company seem like a “Save the Panda” charity.

And here is Frank:

The coming of “academic capitalism” has been anticipated and praised for years; today it is here. Colleges and universities clamor greedily these days for pharmaceutical patents and ownership chunks of high-tech startups; they boast of being “entrepreneurial”; they have rationalized and outsourced countless aspects of their operations in the search for cash; they fight their workers nearly as ferociously as a nineteenth-century railroad baron; and the richest among them have turned their endowments into in-house hedge funds.

Now, consider the seventeen-year-old customer against whom this predatory institution squares off. He comes loping to the bargaining table armed with about the same amount of guile that, a few years earlier, he brought to Santa’s lap in the happy holiday shopping center. You can be sure that he knows all about the imperative of achieving his dreams, and the status that will surely flow from the beloved institution. Either he goes to college like the rest of his friends, or he goes to work.

He knows enough about the world to predict the kind of work he’ll get with only a high school diploma in his pocket, but of the ways of the University he knows precious little. He is the opposite of a savvy consumer. And yet here he comes nevertheless, armed with the ability to pay virtually any price his dream school demands that he pay. All he needs to do is sign a student loan application, binding himself forever and inescapably with a financial instrument that he only dimly understands and that, thanks to the optimism of adolescence, he has not yet learned to fear.

The disaster that the university has proceeded to inflict on the youth of America, I submit, is the direct and inescapable outcome of this grim equation. Yes, in certain reaches of the system the variables are different and the yield isn’t quite as dreadful as in others. But by and large, once all the factors I have described were in place, it was a matter of simple math. Grant to an industry control over access to the good things in life; insist that it transform itself into a throat-cutting, market-minded mercenary; get thought leaders to declare it to be the answer to every problem; mute any reservations the nation might have about it—and, lastly, send it your unsuspecting kids, armed with a blank check drawn on their own futures.

 

We could accuse Taibbi and Frank of simplifying the story. They don’t pay attention to the nuances of status and economic rewards or how economic outcomes vary between different degree-granting institutions. They don’t appreciate that some kinds of Phd programs are predatory, while others are really advantageous to students (despite their being subsidized by the hyperinflation of undergraduate tuition). They ignore the fact that in most universities new buildings are paid for not by student tuition but by wealthy donors. And as Frank himself is aware, people have been predicting the university’s demise for a couple of decades, and yet the university as an institution is still in a very strong position. But both made me wonder, how long can this current state of affairs sustain itself? What are the long-term consequences of student indebtedness for our society? What are the long-term consequences of the professionalization of university management? Will faculty voices and interests eventually be squeezed out entirely?

The other big concern I have is that we seem to be moving toward a world of big winners and big losers. We can think of the entire university system as akin to the college football race. Every university wants a top notch college football team because of the advantages it gives to recruiting new students and donors, and so most Division I universities are investing heavily in these programs, but only a few universities actually realize the benefits that come from having an elite team. There are only so many national championships to go around. Those perennial middle-status teams are not realizing the same returns from their investments. And those schools in the lower tier conferences probably ought to stop investing in football altogether if they really want to be efficient. The losers of this status race have a lot to lose, which is why schools keep spending more money, seek more donors, and raise tuition.

Here are some past orgtheory posts about the state of higher education (the end of higher education as we know it; the “future” of higher educationbetting on future of higher education; questioning the higher education bubble; the u-shaped theory of higher education. Fabio has written so much on this topic that I’m sure I’ve left some out, but it will get you started if you’re interested in reading more on the subject.

Written by brayden king

September 8, 2013 at 1:13 pm

9 Responses

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  1. It seems to me much of the college crisis debate rests on severe selection bias. While the average college graduate student loan debt is in the $20,000 – $30,000 range, it is easy to find students who have six-figure debt loads, and they make the best copy for journalists and the most emotional stories for education critics.

    Example: I believe the person who caught Derek Jeter’s home run that was his 3,000th hit was a recent college grad with more than $100k in student debt. Instead of selling the ball and paying off his loans, he gave the ball back to Jeter. My takeaway from this is that the people with crushing debt loads make very bad financial decisions, but that they are outliers in the college debt story.

    Even $30,000 is a manageable debt load, assuming you come out of school and find a job. Estimated monthly payment on 30k debt is $333 under standard repayment and $191 per month under extended payment. those are hardly crushing numbers or numbers that would take away a grad’s free will, also part of the crushing debt load narrative.

    In my opinion, $30k-40k (average loan debt plus repayment interest at about 6%) is a small price for 4 years of support to explore your interests and become proficient in something you want to do for many years of your life. Seeing college education as simple job training is so sad.

    This is from an interview with Christian Lopez, who caught Jeter’s home run (http://www.sportingnews.com/mlb/feed/2011-07/jeters-3000/story/christian-lopez-yankees-were-shocked-he-wanted-to-give-ball-to-derek-jeter):

    Is it true your girlfriend jokingly wanted you to keep the ball so you could pay off student loans?

    “Yeah I am a couple of hundred thousand dollars in debt thanks to St.Lawrence University. I mean it’s crazy. I guess there are Facebook groups for me trying to raise money for my student loans or something. It’s crazy. I woke up to Facebook this morning and I had 278 friend requests. These are people I don’t even know.”

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    Nicholas Poggioli

    September 8, 2013 at 2:57 pm

  2. Why is even $20k or $30k in debt acceptable for a BA/BS from a “public” institution? Flagship state schools pull in a great deal of money from sources other than tuition (and fees). 18-22 year olds aren’t the best at making long term financial decisions, either.

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    jmir

    September 8, 2013 at 4:03 pm

  3. Demand for college educations has risen exponentially in the last few decades because consumers aren’t idiots and see that it’s a good investment, and because the demand for skilled labor increases concomitant to economic growth. Supply of education is inelastic because it’s hugely difficult to bring new, accredited institutions on line. Prices go up. People continue to pay them because the benefits outweigh the costs and they’re loans are still getting paid back.

    Like Nicholas said, I have yet to see any evidence that the modal college graduate is unable to service her debts with the verified income increase she enjoys with her degree — a situation which makes the decision to finance rational for both her and financiers.

    What really drives this debate is the violent clash of two archetypal characters in lefty and man-in-the-street stories of the economy, Capitalism and Education. Capitalism drives exploitation, and financiers are the epitome of exploiters; Goliath wins and people become poorer. Education drives community, civility, empowerment; David wins and people become richer.

    Since the story is so strongly believed by both the left and the right that markets usually win, people are willing to believe on virtually no evidence that American higher education is being systematically debased, and that financiers are once again the principle villain in the battle.

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    Graham Peterson

    September 8, 2013 at 4:47 pm

  4. Let’s find out who are unreasonably over-paid in our lovely universities and colleges. Don’t just pay attention to administrators, deans, or chairpersons. You would find it is Michael Jordan vs. the rest of us.

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    OverlyUnderPaidCollegeProf

    September 8, 2013 at 6:57 pm

  5. I don’t believe the debt accumulated from college expenses is too high, it just seems like it. There are many ways to reduce your debt, but a person does need to get to work after college even if the job is not your preferred job, just to get cash flow and start making a small payment on the debt to avoid delinquency. There are many ways of paying down the debt if you want to take up a public service or community worker position. I received a 10% per year discount on one of my college loans and 15% a year on another because I was teaching in an eligible school. Many people believe that they should be making a large sum right after graduation because they heard of the 1-2 ppl who were given enormous offers. But, today, any starting position will only give 30-40K at best until you prove yourself. So, no more exaggerating, don’t think about getting too much, just get a job to start the ball rolling and stay alert for opportunities. In 10-15 years, you will be debt free and making extra bucks to afford the house, the cars, the kids, and their college education. Complaining is not worth it, find a job.

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    Fred Welfare

    September 8, 2013 at 8:38 pm

  6. […] follow up on Brayden’s post on higher education, which focused on alleged problems in higher education. There is one issue that nearly all […]

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  7. The US doesn’t have a crisis of higher education as much as it has a crisis of unemployment and of falling median wages for HS grads and for college grads. If there were more jobs for HS-educated workers that paid a decent wage and benefits, there’d be less economic incentive for non-academically inclined students to take out loans to go to college. If wages in middle-class jobs and for the college-educated had kept pace with productivity gains in the last 20 years, fewer college-educated students would be unable to pay back their loans.

    Why, then, all the hating on higher education? From the political right, it’s expedient. But, I also suspect it’s just safer and easier for the employed punditariat, left or right, to blame those mean and nasty administrators/boards of trustees for raising tuition, even if the BoTs are doing it because of declining public funding for higher education, rising health care costs in a labor-intensive industry, external pressures for “accountability” (which requires ever more bean-counters), or rising student demand for fancy dorms and winning football teams. It’s much less comfortable for the punditariat to question a political and economic system that’s set up to funnel virtually all of the income gains to the top 1-5% while middle class wages stagnate or decline. “Don’t bite the hand that feeds you,” after all.

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    krippendorf

    September 9, 2013 at 11:34 am

  8. I’m surprised to see no mention here of the now TEN part series “The Tuition is too Damn High” on WaPo that’s been ongoing lately. Latest entry: http://www.washingtonpost.com/blogs/wonkblog/wp/2013/09/06/the-tuition-is-too-damn-high-part-x-so-how-do-we-fix-it/

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    jimi

    September 9, 2013 at 2:30 pm

  9. […] How sustainable is our current higher education system? In his recent article, Brayden King raises the question on OrgTheory.org why students “acquire more debt than they […]

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