#2 – Money
From endowments to tuition to the student loan system to the dwindling return on one’s educational investment, money lies at the heart of higher education’s malaise, says Riley.
She’s previously cited the work of Mark Taylor in this regard. The chairman of Columbia University’s religion department, Taylor is also the author of Crisis on Campus: A Bold Plan for Reforming Our Colleges and Universities.
Writing about Taylor’s findings for the WSJ, Riley observed:
But Mr. Taylor believes that reform is inevitable, because there is indeed a crisis on campus, akin to the one that financial institutions faced when the housing bubble burst.
“The value of college and university assets (i.e., endowments) has plummeted,” he writes. “The schools are overleveraged, liabilities are increasing, liquidity is drying up, fixed costs continue to climb, their product is increasingly unaffordable and of questionable value in the marketplace and income is declining.”
Mr. Taylor’s rhetoric may be overheated, but the gist of his claim is certainly correct. As he notes, Harvard has a formidable endowment, but it is also $5 billion in debt.
Since Taylor’s book came out a few years ago, warnings about the “higher education bubble” have increased exponentially, but concrete solutions or prevention strategies seem scarce on the ground. Perhaps the inevitable is simply too horrifying to contemplate.
And the average American is understandably complacent. After all, as long as the federal government is in charge of the student loan business, says Riley, taxpayers, parents, and students can remain mostly ignorant of the real costs of higher education.
Universities know they can charge whatever they want for tuition — after all, “the government” will happily foot the bill.
Right up until the moment they can’t….
For those unafraid of confronting and possibly averting the looming meltdown, Riley recommends looking at the research performed by the Center for College Affordability and Productivity. This free market think tank offers a report called 25 Ways to Reduce the Cost of College, and is dedicated to diminishing what it aptly calls the “stagnant efficiency of higher education” in the United States.