Politics & Policy

The Real Problems in Higher Ed

Even federal largesse can’t prop up a doomed business model forever.

‘Race to the Top” federal handouts, increasing Pell Grants, and executive-branch decrees won’t lower college tuition or improve the quality of university degrees, despite President Obama’s bluster in his State of the Union address. If only it were that simple.

The truth is that over the next decade, many universities may bankrupt themselves by clinging to an educational approach that confuses lecturing with learning and protects highly paid, tenured faculties and administrators from a tsunami of technological change that soon will deliver transformational learning at a fraction of today’s costs.

There’s a word for business models that have high and increasing fixed costs, and are faced by disruptive strategies that offer better results at a lower price. That word is “doomed.”

The president rightly acknowledged Americans’ burgeoning student-loan debt, which last year surpassed their credit-card debt. And it’s true that rising tuition and fees — after accounting for inflation, they increased by 5.6 percent annually between 2000 and 2011 — are a serious problem.

President Obama seems to think that increasing the size of federal Pell Grants will slow or reverse tuition increases. But work done by economists Larry D. Singell Jr. and Joe A. Stone at the University of Oregon seems to confirm former education secretary William Bennett’s charge that federal aid merely allows universities to raise tuition, giving professors and administrators more pay and leaving students with the same out-of-pocket costs.

The real problems in higher education are more fundamental than tuition increases alone:

1. A public that increasingly questions the value of a college degree.

In Academically Adrift: Limited Learning on College Campuses, Richard Arum and Josipa Roksa demonstrate that 45 percent of college students show little or no increase in critical-thinking skills after two years and 35 percent show few gains after four years.

It’s no wonder employers are increasingly unimpressed by a university diploma and so many unemployed college graduates showed up at Occupy Wall Street rallies.

2. High and rising fixed costs from tenured faculty, bloated administrative staffs, and expensive new buildings at a time when tenured-faculty teaching productivity is falling.

Much attention has rightly been paid to the construction of expensive student unions and the plague of highly paid administrators.

What is even more serious is falling faculty productivity. Decades ago, a tenured professor was paid a reasonable salary for teaching up to eight classes a year, each brimming with students.

Today many tenured professors now teach three classes or fewer a year, often with only a handful of students in each. Meanwhile, the salary and benefits of many full professors have grown to $150,000 or more — for a nine-month job in which most of their effort goes toward embellishing their academic credentials by writing esoteric journal articles that few people read.

During the last 20 years, much of that teaching responsibility has been outsourced to low-paid adjuncts, teaching assistants, and non-tenured full-time faculty, who now represent up to 70 percent of the total faculty.  

The tenured faculty don’t go away; they just teach less and less, for more money. Hence, the rapidly rising cost per student at traditional universities.

3. A tsunami of technologically enabled educational change promises to deliver transformational learning at a fraction of today’s costs.

While expensive tenured faculty at most schools continue to lecture off PowerPoint slides, innovators at Stanford, MIT, Arizona State University, and Brigham Young University at Idaho are experimenting with new technologies that allow courses to be taught at a fraction of today’s cost.

Just two examples: Stanford University had over 160,000 students sign up for a recent online course in artificial intelligence. The cost of educating an additional student in such a class is near zero, and MIT has announced it will offer low-cost online certificates bearing the MIT brand.

The real threat? Given brick-and-mortar schools’ high and rising fixed costs, the defection of even a few students could put traditional universities into a rising-cost death spiral. The history of similarly disrupted businesses — such as the steel industry — suggests that a wave of bankruptcies can appear rapidly.

Will tenured faculty agree to lower salaries and higher teaching loads in the face of such threats? Will highly paid administrators give up their jobs? Not likely. Instead, it’s far easier for colleges to increase tuition on the next class, and ask the government for yet a larger bailout.

But even federal largesse can’t prop up a doomed business model forever.

— Jeff Sandefer is a Texas entrepreneur and educational innovator.


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