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The Corporatization Of Higher Education
November 14, 2012 1:28 PM   Subscribe

In 2003, only two colleges charged more than $40,000 a year for tuition, fees, room, and board. Six years later more than two hundred colleges charged that amount. What happened between 2003 and 2009 was the start of the recession. By driving down endowments and giving tax-starved states a reason to cut back their support for higher education, the recession put new pressure on colleges and universities to raise their price. When our current period of slow economic growth will end is anybody’s guess, but even when it does end, colleges and universities will certainly not be rolling back their prices. These days, it is not just the economic climate in which our colleges and universities find themselves that determines what they charge and how they operate; it is their increasing corporatization. If corporatization meant only that colleges and universities were finding ways to be less wasteful, it would be a welcome turn of events. But an altogether different process is going on

From Master Plan To No Plan: The Slow Death Of Public Higher Education: "The California student movement has a slogan that goes, “Behind every fee hike, a line of riot cops.”"

Universities And The Urban Growth Machine
The “edifice complex” did not fade until the 1990s, and there have been at least two growth paradigms since then, both of them linked to the high-wage knowledge economy. One was the “creative city,” which Richard Florida popularized, and it revolved around recruitment of creative talent. This model was much cheaper than shelling out large subsidies for sports stadiums or to corporate investors—a few bike trails, some fair-trade coffee shops, and the semblance of an art scene (to attract the all-important gay population). But it did open up a new circuit of debt-financing for the urban growth machine–student loans. After all, student debt is what underpins the supply of the educated workforce in a “creative city.”
University of Chicago Works On Its Neighborhood - “It’s enlightened self-interest for us,” Mr. Greene said. “We’ve always been very competitive when it comes to providing a great intellectual community. But we found there was something missing when we looked at the quality of life for students and faculty who are used to the kinds of amenities you find in places New York, Boston and Palo Alto.”

All in it together? The utility of universities to military, security and resilient activities
So, finance is a key problem in higher education because without it we cannot do high end research, advance knowledge, nor teach future minds. But we also cannot carve out the areas of highly competitive activity that puts us at an advantage as UK Plc against our rivals. Should universities retain their position as a state-sponsored skunkworks, and what level of control is required for that to work?
Could Dismantling the Submerged State Surrounding Student Debt Pay for Free Colleges?
Why Subsidize College At All?, and a response to both: Liberal Metapaternalism And Higher Education
Higher Education: Why Government Should Cut The Cord

The Higher Education Bubble Isn't As Big As They Say
Often the solutions are bound to be worse than the problems. Here’s one reason why: The administrators themselves, full of models of excellence derived from business (encouraged by government when the Republicans are in power), schools of teacher education (which should be abolished or keep to themselves), and political correctness (encouraged by government when the Democrats are in power), demand quantitative, measurable, assessable solutions to tricky and often “goes with the territory” problems. A problem with techno-democracy is that it tends to harness everything to the imperatives of technology or “the measurable.” There’s more than some irony in addressing techno-democratic excesses with techno-democratic methods.

The Hole In Higher Education
Universities, particularly public research universities, have outstanding faculty. They usually have support staff to supplement those faculty members and to advise students and various other tasks. Universities also typically have highly respected Deans, Provosts and Presidents that are well published in their field and are not averse to asking for money from legislators and donors. What most public universities do not have, and they so desperately need at all levels, are business managers.
The Future Of Higher Education: Massive Online Open Disruption
The Siege Of Academe
The ongoing carnage in the newspaper industry provides an object lesson of what can happen when a long-established, information-focused industry’s business model is challenged by low-price competitors online. The disruptive power of information technology may be our best hope for curing the chronic college cost disease that is driving a growing number of students into ruinous debt or out of higher education altogether. It may also be an existential threat to institutions that have long played a crucial role in American life.
posted by the man of twists and turns (69 comments total) 153 users marked this as a favorite

 
Well, that's a thorough post. I'm back next week with thoughts.
posted by C.A.S. at 1:31 PM on November 14, 2012 [7 favorites]


The first link doesn't appear to say which schools charged more than $40,000, but I am willing to bet one of them is the notoriously pricey George Washington University. GW was just removed from the US News & World Report rankings for inflating some stats.
posted by troika at 1:35 PM on November 14, 2012 [3 favorites]


As a Canadian, it saddens me to say that this is happening just as quickly north of the border (hence the Quebec protests). While most institutions "weathered the 2008 crisis intact" (for now), university endowments took a huge hit, usually 20-40% of total value. Tuition rates have increased accordingly, and are an ever-greater proportional source of revenue.
posted by mek at 1:36 PM on November 14, 2012


University of Chicago Works On Its Neighborhood

Well, they've gotten nailed on the blue before for NOT addressing the urban blight they're surrounded by, so I guess it's only fitting that they're being dinged for fixing it.
posted by pwnguin at 1:43 PM on November 14, 2012 [3 favorites]


OH MY GOD I WISH I HAD TIME TO READ ALL THIS!

Seriously, can someone give me an executive summary? My personal scapegoat is bloated middle administration; dean's offices with 20 associate deans for a school with 200 professors, etc.
posted by mr_roboto at 1:43 PM on November 14, 2012 [2 favorites]


The above-the-fold quote is from the fourth link. If you wanted, you may consider that the 'main link.'
posted by the man of twists and turns at 1:43 PM on November 14, 2012


troika - I want to say I read it here in some related post, that GW (or Georgetown, I can't keep the two "George" schools in DC straight) charges what they do "because they can." A mix of "a rolex doesn't cost $400" type self-importance and a "that's what the market will bear" ..
posted by k5.user at 1:44 PM on November 14, 2012


You missed one:
Over the last decade, the UC Board of Regents has engaged in risky deals with Wall Street banks called interest rate swaps. Banks sold swaps to the university and other public institutions as insurance against rising interest rates on variable rate bonds. Under a swap agreement, borrowers such as the university paid a fixed rate to the bank in exchange for the bank paying the university a variable rate based on the markets' interest rates for borrowing.

Now these swaps have turned out to be losing bets. UC is taking huge losses because interest rates plummeted following the financial crisis of 2008 - allegedly in part because of illegal manipulation by the same banks that sold the swaps - and have stayed at record lows. Swap deals already have cost UC nearly $57 million, with $200 million more in losses anticipated. Of the $250 million UC expects to receive from Prop. 30*, some $10 million a year will go to swaps payments unless the deals are ended.
-----------------
*Just passed; bumps sales tax from 7.25 percent to 7.5 percent, bumps up income taxes on the rich ($250K/yr+).
posted by notyou at 1:47 PM on November 14, 2012 [3 favorites]


Debt By Degrees
The bubble analogy does work in one respect: education costs, and student debt, are rising at what seem like unsustainable rates. But this isn’t the result of collective delusion. Instead, it stems from the peculiar economics of education, which have a lot in common with the economics of health care, another industry with a huge cost problem. (Indeed, in recent decades the cost of both college education and health care has risen sharply in most developed countries, not just the U.S.) Both industries suffer from an ailment called Baumol’s cost disease, which was diagnosed by the economist William Baumol, back in the sixties. Baumol recognized that some sectors of the economy, like manufacturing, have rising productivity—they regularly produce more with less, which leads to higher wages and rising living standards. But other sectors, like education, have a harder time increasing productivity. Ford, after all, can make more cars with fewer workers and in less time than it did in 1980. But the average student-teacher ratio in college is sixteen to one, just about what it was thirty years ago. In other words, teachers today aren’t any more productive than they were in 1980. The problem is that colleges can’t pay 1980 salaries, and the only way they can pay 2011 salaries is by raising prices. And the Baumol problem is exacerbated by the arms-race problem: colleges compete to lure students by investing in expensive things, like high-profile faculty members, fancy facilities, and a low student-to-teacher ratio.
Felix Salmon at Reuters replies: Why Tuition Costs Are Rising:
On its face, this makes sense. In widget factories, wage inflation is offset by productivity growth. In universities, it isn’t. So while the cost of a widget can stay the same or go down over time even as the widget makers get paid more, the same isn’t true of tuition costs.

In reality, however, the numbers show that wage inflation is — literally — the least of the problems when it comes to university cost inflation.
Why Cheaper Computers Lead To Higher Tuition

The Economist tackles An Incurable Disease.

The American Conservative has a good roundup, including Baumol's own analysis: Time To Stop Worrying And Learn To Love Baumol's Cost Disease?
posted by the man of twists and turns at 1:54 PM on November 14, 2012 [7 favorites]


troika - I want to say I read it here in some related post, that GW (or Georgetown, I can't keep the two "George" schools in DC straight) charges what they do "because they can." A mix of "a rolex doesn't cost $400" type self-importance and a "that's what the market will bear" ..

GW thankyouverymuch.
posted by JPD at 1:57 PM on November 14, 2012


I don't think *think* that GW was over $40,000 in 2003, which is when I graduated. It was more like $35,000 to $37,000. As an alumni, I am really disappointed to hear about the US News and World Report shenanigans.
posted by Alison at 1:58 PM on November 14, 2012


University of Chicago Works On Its Neighborhood - “It’s enlightened self-interest for us,” Mr. Greene said. “We’ve always been very competitive when it comes to providing a great intellectual community. But we found there was something missing when we looked at the quality of life for students and faculty who are used to the kinds of amenities you find in places New York, Boston and Palo Alto.”

I went to the University of Chicago as an undergrad, and Stanford as a grad student. I spent my first two years as a student at Stanford living in Palo Alto, and then, when I was done taking courses full time, high-tailed it to San Francisco.

Who in his right mind would consider the U of C but turn it down because it's not more like Palo Alto, an anodyne nowhere, I can hardly conceive. The same goes for faculty: would I rather live in Hyde Park, with pretty easy access to the rest of Chicago—or just elsewhere in Chicago—or the burb one professor of mine described as having gone from being a small town to a rich-person town without ever being a college town? Well gosh, that's a hard question!

In conclusion, fuck you, Mr. Greene.
posted by kenko at 1:59 PM on November 14, 2012 [5 favorites]


Well, they've gotten nailed on the blue before for NOT addressing the urban blight they're surrounded by, so I guess it's only fitting that they're being dinged for fixing it.

IME they more often get dinged for "addressing" the urban blight they're surrounded by by basically destroying the black communities that formerly were there, thereby partially creating that blight (though really, Hyde Park hasn't been blighted for a long time), so maybe they should just leave well enough alone for a bit, or at least try to make amends to the non-collegiate community rather than making it even more bleached out (phrase chosen advisedly).
posted by kenko at 2:02 PM on November 14, 2012 [2 favorites]


The SF Gate article doesn't understand swaps. A transaction can't be both a "risky deal" and also "insurance," as the SF Gate writes in consecutive sentences. That's like calling health insurance a "risky deal" if, looking back, you stayed healthy.

The UC schools owed money on floating rate debt. When the debt was at 10%, say, they entered into a interest rate swap, thinking that the rate could go up to 12% (but could go down to 8%). In the end, they wanted the certainty of knowing that they would not be on the hook for more than 10%. Paying the fixed leg on the swap allowed them to lock in that rate of 10%.

Now the rate has gone down to, say, 4%. They still pay 10% under the swap. That's sort of a tough noogies situation. They paying for insurance they didn't need. They'd look like geniuses if the rate went up to 15%.

Also, the bank is not "winning" here. Banks DO NOT "bet" on their positions. Banks make their money from the fees. They aim to have absolutely ZERO exposure to customer positions. They are perfectly hedged. Some other customer has the upside here (maybe even another university; Harvard is essentially a hedge fund with a school attached).

Of course, the UC schools' ability to pay their insurance diminished because of the economic conditions, and I don't dispute that the banks are seriously culpable for leading us down that primrose path. But it's not because of interest rate swaps.

Higher education is a total scam, though.
posted by Admiral Haddock at 2:05 PM on November 14, 2012 [6 favorites]


In summary:

- States do a piss-poor job of managing their budgets; money to state colleges is slowly cut to make up the difference.
- Stafford loans and similar programs become accepted as ways for students to pay inflated tuition. Student debt is accepted as the norm.
- Universities compete in non-essential amenities like athletic facilities and state-of-the-art classrooms, driving up costs needlessly.
- U.S. has non-existent support for trade schools and working-class jobs are held in very low esteem. Hence, four year college education seen as sole source of success. Hence, everyone clamors to get one, causing colleges to expand indefinitely to meet demand.
- Ceaseless demand --> endlessly rising prices.
- Unfettered access to loans --> endlessly rising prices.
- Broke ass states cutting education --> increasing student debt.
posted by deathpanels at 2:07 PM on November 14, 2012 [18 favorites]


I can't search easily on my phone, but there have been some interesting pieces on price signaling by schools. You know, if all the good schools cost $50k, you'd better charge $50k if you want to be seen as good.
posted by Forktine at 2:10 PM on November 14, 2012 [5 favorites]


Oh wait: “Over the years and particularly in the 1950s and ’60s, there was a lot of development aimed at creating a barrier around the campus,” he said. “We’re now trying to reverse that trend.”

That's actually good.
posted by kenko at 2:10 PM on November 14, 2012


U of C spends a lot of money catering to parents terrified of the thought of sending their 18 year old to live on the South Side of Chicago, which, as everyone knows, is the baddest part of town. The enormous university police force, the frantic construction of Akiras and Chipotles, the fleet of student-only nighttime buses are all there essentially for the admissions department.

Hyde Park really does need that hotel, though.
posted by theodolite at 2:11 PM on November 14, 2012 [1 favorite]


One Akira is hardly a fleet. I'd actually rather have Akira, part of a local boutique chain, than a Hyatt, which is under constant protest because of how they are treating workers.

Hyde Park is changing more quickly now than at any time I have lived there. It can't undo the bad-neighbor, imminent domain tear-down bullshit that the University engaged in during the sixties. And I think shopping malls aren't the best use of TIF money. But I think the change isn't all bad - new places to eat and shop are nice for everyone and they do create jobs for everyone on the South Side.

But nothing can bring back the blues clubs of days past and the University may never repair the trust is has broken with its neighbors.
posted by mai at 2:20 PM on November 14, 2012


Thing is: other countries can offer quality tertiary education, and still charge students less in tuition.

Some of the strategies
- they offer larger classes, which is not such a big deal in tertiary education. One person lecturing to 500 people does work as well as one person lecturing to 40, and certainly is a lot more cost effective than (as my friend did as a contract lecture) than giving the same lecture three times to thirty students each time, just so that the college could claim to have small classes. Even the universities are larger: 5000 students is a tiny university in Ontario
- not offering much in the way of non-academic frills: the university I attended (a whopping $5K CND, and that was after a lot of government budget cutting) did not offer much other than a library, labs and classrooms - you know, what you need to learn. Certainly, there were very few gyms, lounges and no free snacks at study breaks -- all of which were offered to students at another uni that charged $30k USD tuition (not including room and board).

I'm not saying that small classes and frills aren't nice, but like the article says, not everyone can go to Club Med. University is not meant to be a "life experience", it's an education and research institution. Everything else is superfluous -- and if you want the majority of your population to be able to access that tertiary education, you have to cut costs so that they can.

Or raise the marginal tax rate on the top 10% by a tiny amount. But that's crazy talk.
posted by jb at 2:21 PM on November 14, 2012 [3 favorites]


Baumol's cost disease doesn't explain the recent and steep rise in the cost of university, and it certainly doesn't explain the disproportionate cost of health care delivery in the USA as a percentage of GDP compared to other nations. In fact given that real wages have been stagnant since 1970 or whatever in the USA, Baumol's cost disease explains little if anything about the current situation.
posted by mek at 2:21 PM on November 14, 2012 [1 favorite]


er, sorry for the derail, but what is Akira? Googling just shows me Anime/Manga things.
posted by troika at 2:25 PM on November 14, 2012 [1 favorite]


Sorry, it's a clothing boutique chain in Chicago. Trendy. I think the point of bringing it up is that in encouraging certain kinds of development, the University is trying to create a certain image, one that not coincidentally goes hand-in-hand with its higher price tag and higher US News and World Report rankings.
posted by mai at 2:28 PM on November 14, 2012 [1 favorite]


er, sorry for the derail, but what is an Akira? Googling just shows me Anime/Manga things.

a manifestation of the innate power of the human spirit, UC should know what happens when they use science to harness human nature to the demands of the military in NeoChicago...
posted by ennui.bz at 2:29 PM on November 14, 2012 [7 favorites]


m not saying that small classes and frills aren't nice, but like the article says, not everyone can go to Club Med.

Not everybody does, if we're talking about most American universities and not elite schools. Even the larger schools might have the fancy rec centers (which are paid for via separate fees, but ones students can't get out of, typically), but backdated offices, barely working elevators, etc.
posted by raysmj at 2:33 PM on November 14, 2012


The idea that capital must always be maintained at comparable or higher levels to the present--and at any cost--is pretty much the problem of every institution, learning or otherwise, in this country.

Bad capitalists! Infinite growth isn't possible silly geese!
posted by whimsicalnymph at 2:34 PM on November 14, 2012 [1 favorite]


One person lecturing to 500 people does work as well as one person lecturing to 40

Says you.
posted by raysmj at 2:37 PM on November 14, 2012 [10 favorites]


The idea that capital must always be maintained at comparable or higher levels to the present--and at any cost

Educational services aren't capital, they're labour. The capital involved here is negligible (though yes the cost of textbooks is pretty silly too).
posted by mek at 2:39 PM on November 14, 2012


One person lecturing to 500 people does work as well as one person lecturing to 40

But not as well as twelve people talking to each other.
posted by kenko at 2:42 PM on November 14, 2012 [16 favorites]


Hyde Park is about to E-X-P-L-O-D-E
posted by adamdschneider at 2:42 PM on November 14, 2012 [2 favorites]


Education is not a "service" which implies a "product" that is "delivered". But its impossible to argue that with corporate-minded university managers.
posted by Zzedd at 2:47 PM on November 14, 2012 [2 favorites]


University is not meant to be a "life experience", it's an education and research institution. Everything else is superfluous

Well, sure, that's one way to view it, but just judging from how higher education is viewed in the US, there are a lot of people who apparently disagree, or have been convinced otherwise. Rather than just stating that "university is not meant to be a 'life experience'", I think we need to figure out how to convince people that should be the case.

I'm not really sure how to do that.

At least to some extent, I think the Boomer generation triggered it unwittingly: I know a lot of Boomer-age folks who look back fondly on college/uni as a watershed moment in their lives, but I think that's largely because—at the time, anyway—colleges and universities happened to be at the center of a lot of social change that was going on. (And I'd argue that they are not the same today.) But if someone remembers college as a really significant, life-changing experience rather than simply education, then it's reasonable that you might encourage your kids to seek out the same thing. And colleges cater to that desire in its various forms, all expensively.
posted by Kadin2048 at 2:47 PM on November 14, 2012


How did the urban growth machine get into all of this anyway? I'm sorry, but as one who's spent some time studying that theory in an academic study, I can tell you that it applies to actual urban areas. It's an urban studies and sociology/urban politics-oriented theory. And it's weird to see that brought into higher ed culture and economics at large, since so many American colleges are located in small towns. The old, 19th to mid-20th Century idea of state legislatures and educators alike was that traditional age students were better off in some garden of learning, away from the big scary cities, with their pollution and crime and distractions. I sometimes think we'd be better off with more comprehensive universities in major urban areas, not so many small and gigantic campuses alike in small to mega-dinky towns. (And the universities and colleges in small towns have the same problems with rising tuition!)
posted by raysmj at 2:51 PM on November 14, 2012


One person lecturing to 500 people does work as well as one person lecturing to 40

Lecturing to 500 people is an entirely different skill than lecturing to 40: there are new problems related to projection, eye contact, verbal interaction, movement, and so forth. It's not simply a matter of scaling up.

Another U of C alum here (for grad school), and I was also fascinated by how much that article talked around the U's ongoing problems with Hyde Park's Black communities. I don't recall the U exactly playing good neighbor in the 90s.

(But wow, a good hotel would be awesome. The only one currently in the neighborhood is not what you'd call well kept-up.)

Who in his right mind would consider the U of C but turn it down because it's not more like Palo Alto, an anodyne nowhere, I can hardly conceive.

Up until fairly recently, new faculty were unofficially "required" to live in Hyde Park if they wanted tenure, which didn't make anyone particularly happy. (This was part of the U's program to forcibly gentrify the area.)
posted by thomas j wise at 2:55 PM on November 14, 2012 [3 favorites]


There are many issues related to tuition increases. A lot of the discussion focuses on the maximum tuition, however colleges have figured out how to get away with discriminatory pricing, which really is a game-changer. Thus the full picture would require discussion about the composition of the student body, *relative* affordability, and distribution of net tuition paid.

As a start, let's look at average net tuition paid (net of grants and so forth). This is still increasing, though interestingly non-profit private colleges have had a relatively small net tuition increase. Even for public colleges reality is a little more subtle than what is often touted.

Moreover, we should recognize that colleges are educating more people than ever before. For a variety of political reasons, the public system especially seems hard-pressed to bear via taxes these additional costs of education. For instance, the University of California system has added about 50% more undergrads over the last 2 decades; consequently, state government funding per student has gone down ~50%.

I try to imagine the incentives of college administration, and it really is a strange thing. Perhaps some of these changes come from college rankings, which emphasize endowments so heavily? Perhaps the popularization of higher education has shifted alumni demand, going hand-in-hand with the now-tremendous power of athletics departments? Is there something about the budgeting system that discourages efficient spending? Isn't it weird how they chase reputation and yet simultaneously help define what makes a college reputable?
posted by helot at 2:56 PM on November 14, 2012


University is not meant to be a "life experience", it's an education and research institution. Everything else is superfluous

But the thing is, college is a life experience - it just doesn't need snack bars and so on. I guess if I were marketing this idea, I would emphasize that friendships, mentorships, intellectual discovery, the experience of sports (playing soccer, biking, using a regular old-style gym), reading, exploring the city/town/countryside - that those are the "experience". Just like under our comparatively new leadership, our Large Land Grant Institution has switched to emphasizing the social uses of the university instead of our previous "we are a corporate engine of brilliant marketizable discoveries" that was just playing straight into the hands of the privatizers.

When I went to college back in the nineties, it felt like we had plenty of amenities - a nice library, an adorable student coffee house in the international students/weirdos dorm, an adequate gym and pool and a cafeteria administration which turned a blind eye to the borrowing of cafeteria trays for sledding purposes. I felt like I had my share of "life experiences" there.

And yet every time I pass by the campus on my way through town, I am struck by how much more fanciness has been added - they privatized the food service, took away food service worker tuition breaks, built a huge new student center, built a bunch of new dorms, lots more parking lots (hardly anyone had a car when I went there)...I wonder whether the kids are really having more of an enriching experience than I did.
posted by Frowner at 3:03 PM on November 14, 2012 [7 favorites]


It is a wonder, isn't it? Tuition is sky rocketing while for the first time in history, higher ed is now out-fundraising every other sector in the non-profit world. Among the top 100 fundraising charities this year, 34 were universities - Stanford, Yale, Harvard, Columbia, Johns Hopkins, USC, UCLA, UT Austin, Duke, UPenn, NYU, UWashington, Cornell, UWisconsin Madison, UIndiana, UMinnesota, UPenn, Penn State, UMich, UOhio, UChicago, Princeton, Northwestern, UVirgina, UIllinois, Georgetown, Washington University in St. Louis, Colorado, Notre Dame, UFlorida, Washington U in St. Louis, MIT, UCSan Francisco. Universities are raising almost as much money as places like United Way, Red Cross, American Cancer Society. And that's just fundraising. That doesn't include earned revenue.

Where is all this money going? As the articles before the fold pointed out - lots of places. Lots of growth places, because if you aren't growing - adding a sister campus in Southern France, adding a rock wall, getting a nuclear reactor, getting Ghost Face Killa to perform at Spring Fling, then your rankings in US News will go down and your admissions for the next year will be fucked. But how to fix it? Kick out the administrators? Less luxuries for the students? But how? Who can make those decisions? Who is in charge and who is being served? Are the students in charge? Is the president? Is the state? Are the profs? The answer is all of these. All of the proposed solutions ignore I think the stochastic nature of the situation, a nature largely due to allocations and bad promises and lots of tied hands. And who is making these promises and getting the universities into all sorts of financial binds? The answer is everyone. The students, the profs, the admins, the boards, state oversight, the public.

A lot of the fundraising money goes to endowments. We talk about endowments as these monolithic things. But they are really groups of hundreds of funds, each one earmarked to pay out a certain percentage each year for some certain pet project or cause as dictated by the donor. The president cultivated this one, this professor another one, the major gifts officer another one, this alumni another one. Each for some identified purpose. Those fancy gyms? Many of those were voted on and approved by students who agreed to pay an extra $150 a year in fees for it. Problem is, the class before them voted to pay an extra $150 fee for better dining. The class before them voted to pay an extra $250 for better apt-style dorms. And so on. Now marketing says they need $350,000 to buy all prospective students a water bottle and a tote bag. It's only $350k. But the philosophy department needs $2m to establish a new Center for Existential Butt Studies. They got a grant for half, but they need to match it so can't the uni ante up? And all the unclassified folks need a raise because it's only 3%. The local university needs to repair the arts building but state funding has been cut so they put a levy on the ballot and spend a bunch of money campaigning to vote some public funding essentially back in at a net loss. And so on. And you can't now use endowment funds to pay off the gym, or the gym fee to hire profs, or the dorm fee to pay for the new lab equipment. Don and Donna Rich Alumnipants want to give the university $25 million dollars, but they don't want it to go to paying for building maintenance or dining hall staff or librarian salaries, they want their name on a new building. So what do you do? You build the new building because you want that 25m. But you still have to pay the dining hall staff and the electricity bill and so where did that $25m get you except another building to maintain.

And at the end of the day, why do you do all of these things? To recruit more students, in order to raise more tuition dollars so you can then recruit and retain more students. If you don't increase enrollment, the state will cut your funding even more and your rankings in US News will go down (I disagreed with Mill on some things, but he was spot on about the rankings nonsense).

How do you stop it? I don't know the answer. Heck, at a public university system I'm familiar with, they pay in $70m more a year into the public employee benefit program than they get back, effectively floating the benefits costs for other public institutions. And as that goes up every year, so does tuition, because that's on the students' backs. It would take an act of state congress to change that, and it won't happen.

It will probably take some serious philosophical shifts in how we define the priorities of the university. What it is and why does it exist? To give students 'an experience'? To get students jobs? To do research? To employ academics? To raise funds for the state? To serve as community enrichment institutions? To compete in sports? I think until we stop answering that will "all of the above" it will be difficult to figure out the higher ed financial crisis.
posted by Lutoslawski at 3:18 PM on November 14, 2012 [13 favorites]


One person lecturing to 500 people does work as well as one person lecturing to 40.

Oh dear god no. If you can't do a better job lecturing to 40 than to 500, you're doing it wrong. (On preview, what thomas j wise said.)

The old, 19th to mid-20th Century idea of state legislatures and educators alike was that traditional age students were better off in some garden of learning

Actually, it was more "learning to garden" than "garden of learning". The 19th-century land-grant idea was to offer working class folks a practical education in agriculture and engineering and military tactics and oh yeah since we already have the buildings we might as well have some science and humanities like those fancy-pants city folk I guess maybe.
Provided, That the moneys so invested or loaned shall constitute a perpetual fund, the capital of which shall remain forever undiminished (except so far as may be provided in section 305 of this title), and the interest of which shall be inviolably appropriated, by each State which may take and claim the benefit of this subchapter, to the endowment, support, and maintenance of at least one college where the leading object shall be, without excluding other scientific and classical studies and including military tactics, to teach such branches of learning as are related to agriculture and the mechanic arts, in such manner as the legislatures of the States may respectively prescribe, in order to promote the liberal and practical education of the industrial classes in the several pursuits and professions in life.
away from the big scary cities, with their pollution and crime and distractions.

I think you misspelled "liberals, brown people, and restaurants".
posted by erniepan at 3:20 PM on November 14, 2012 [2 favorites]


I can't search easily on my phone, but there have been some interesting pieces on price signaling by schools. You know, if all the good schools cost $50k, you'd better charge $50k if you want to be seen as good.

MeFi has discussed this specifically re: George Washington University previously.
posted by naoko at 3:49 PM on November 14, 2012 [1 favorite]


There needs to be a new system that rises up, via the intelligent use of online education and impartial exams that qualify students, an alternate system that educates people for a couple thousand dollars a year. Once this system is established, federal student loan aid should be limited to that amount. Meanwhile some of that money should be channeled towards other things: funding entrepreneurship, travel scholarships, a governmental service corps, and so on.

There need to be enticing, respectable, job-getting alternatives to spending federal money on expensive traditional university educations. That will exert downward pressure on their prices.
posted by shivohum at 3:58 PM on November 14, 2012 [2 favorites]


Pretty sure St. John's College was one of the two referenced in the first post - I was enrolled then, and I'm pretty sure it worked out to something like $23k a semester including room and board.

Source: I'm broke now.
posted by clcapps at 3:59 PM on November 14, 2012 [3 favorites]


In 2003, only two colleges charged more than $40,000 a year for tuition, fees, room, and board. Six years later more than two hundred colleges charged that amount.

I just wanted to point out that this tells you essentially nothing about whether those colleges got more expensive. If you charged $37,000 in 2003 and $43,000 in 2009, you actually got less expensive in real terms, not more. (I'm not saying this actually happened, but the Lede of Great Outrage is pretty much meaningless, because it doesn't tell you anything useful about the numbers.)
posted by one more dead town's last parade at 4:05 PM on November 14, 2012 [2 favorites]


government money and far too easy-to-get student loans ensures that tuition will skyrocket. There is no limit in place. Without the ease of someone else paying the tuition, colleges would have to charge would people could afford to pay. The present system is much like public employees forming a union. There is what appears to be an infinite amount of money so the sky is the limit.
Charging more makes you school seem better and matching the tuition is just getting a check from the bank.


I have long stated we need to offer colleges that just teach classes. No multi-million frivolous crap.

Think of that professor teaching a class of 40. Say s/he only taught 4 classes a day. If each student paid him $500/month that would be $20,000 per month or $240,000 per year for that one professor. Not a bad living. Those numbers are pulled out of my hat and could be adjusted depending on which sort of courses are being taken. There would be other expenses of course but by and large simply taking a class shouldn't cost anywhere near what is charged now.
posted by 2manyusernames at 4:15 PM on November 14, 2012 [1 favorite]


There need to be enticing, respectable, job-getting alternatives to spending federal money on expensive traditional university educations. That will exert downward pressure on their prices.

If you do that without making a huge change in the current administrative culture of most US universities, what that will get you is wholesale destruction of knowledge-generating departments while student lifestyle amenities and the management structure that supports them continues.

Oh dear god no. If you can't do a better job lecturing to 40 than to 500, you're doing it wrong. (On preview, what thomas j wise said.)

Yeah. IME, big lecture classes may not make that much difference for the top students (who'll likely do well no matter what you do), but they make it much harder to ensure the middle students are really learning, and much easier for the bottom of the class to flunk out.
posted by junco at 4:25 PM on November 14, 2012 [3 favorites]


Johns Hopkins is notoriously expensive.

In 2002 I was looking at financial offers from schools. My family's ability to pay was essentially zero. We weren't living hand to mouth, but that's as far as our finances went. All that we could afford to pay on tuition was the $600 first-semester deposit.

Of course, I had no idea how to secure funding or whatever, I just knew that I needed to accept one of the offers that I got. I had applied to RIT, the top choice for a quarter of the college-bound kids at my school. My financial aid would have come $7000/semester short, after federal loans. I would have also faced similar, but smaller aid gaps had I gone to one of the SUNY schools that sent me offers.

The Hopkins offer came in at the 25th hour. They covered my entire obligation, after federal loans. If not for the financial aid schemes and stratospheric ticket prices at top schools like Hopkins, I would have either a) involves my family in a horrific financial train-wreck, b) had to borrow four times the loan amount I graduated with, or c) not gone to college. So yeah, it's crazy, but sometimes it works.
posted by Nomyte at 4:28 PM on November 14, 2012


erniepan: Most major American state, larger private and liberal arts colleges were established long before mass immigration to the US happened, and while the black population was largely rural. So your pithy line doesn't quite hold, sorry.

Ohio State, Texas, UCLA, etc, and NYU, the latter as discussed in the article, are still largely exceptions to the rule in the location of American Institutions of higher learning. (Only Austin wasn't always a larger city, and Columbus has grown more important in Ohio in the post-industrial era.)

Even most of your historically black colleges and universities are located in smaller cities and small towns.
posted by raysmj at 4:31 PM on November 14, 2012


Of the $250 million UC expects to receive from Prop. 30*, some $10 million a year will go to swaps payments unless the deals are ended.

And guess who was the largest institutional investor to the Obama run in 2008? UC And, they were in the top 3 or 4 in 2012.

I have spent a LOT of time in and around public education. The sheer volume of administrative waste, ass-kissing, politicking, barriers created to stifle innovation, willful refusal to adapt, hypocrisy, double-dealing, lying to students, lying to taxpayers, and so on, would and SHOULD make a good book. Maybe I'll write that book.

"Education" in America?
1) K12 systems where teachers work their damn fool heads off, trying to contain the 10% of budding sociopaths in their classrooms while they are forced to "teach to the test", and other garbage that has been shoved down their throats by local, state and national politicians (not to mention CLUELESS school boards) - doing all this, as we watch American K12 students made ready fodder for the "remedial" classes that universities and Community Colleges are all too happy to offer - for a fee. Welcome to your future low-wage jobs, suckers!

2) A university system that has evolved to a place where massive administrative apparatus has choked off adaptation; where grades and a USEFUL education have become inversely correlated; where textbooks cost more than tuition (and please don't blame the publishers - it's college instructors and administrators who let prices get out of control - THEY are the buyers, and THEY made the market!!); where "getting in" to a Top Tier school is all you have to do, once you get in, you're set with a lead over those who attend lesser-known schools. (Won't help with law school, though - that game is over!!)

3) Part of the blame goes to lazy-ass and ignorant parents who use TV and mobile toys to keep their kids entertained; parents who don't value education; parents who don't let their kids know that it's their (the kid's) JOB to get educated. NO compromise! Some parents understand this - too many don't: I recently visited a public library in a very violent neighborhood, on a Saturday afternoon; every one of the 4-dozen-or-so kids there was of Asian descent. As I walked back from the library to my car I watched a huge number of white, latino and black kids playing basketball, noodling on their skateboards/scooters/jumper bikes, etc (many with expensive GoPro cameras affixed to helmets, dreaming of becoming the next youtube extreme sport or "fail2012" video star, no doubt = FAIL!). I see the same thing on weekdays. Sure,. go out and have fun, but what about your FUTURE, kiddo?

3) The entire system is broken, and it's too late to be fixed. the soft underbelly of the bloated university system is going to be disintermediated, little-by-little. It can't happen too soon. Same goes for K12 (and I feel sorry for the teachers, who are mostly just as victimized as the kids, by ignorance, administrative bloat, and politicians who use education to gain points with the electorate)

What irks me is that some of the Johnny-come-lately, inbred class of University administrators who have helped our public universities become the failed institutions that they are, are now finding themselves on the boards of a pile of new education startups. Reminds me of how the Commie bureaucrats took over most of the key infrastructure of the USSR after the Wall went down.

American universities and their K12 precursors continue to get a failing grade. That said, America will not suffer, because it's very easy to import talent these days, and the new group of serious ethnic groups whose parents value hard work and education will meet future demand. There is going to be LESS work to go around, as we automate. Maybe scootering will keep the idle ignorant physically healthy, and from becoming anything more than a long-term welfare drain.
posted by Vibrissae at 4:35 PM on November 14, 2012


The entire system is broken, and it's too late to be fixed.

I'm hysterical… and I'm wet! I'm in pain! And I'm wet! And I'm still hysterical!
posted by Nomyte at 4:40 PM on November 14, 2012


Think of that professor teaching a class of 40. Say s/he only taught 4 classes a day. If each student paid him $500/month that would be $20,000 per month or $240,000 per year for that one professor. Not a bad living. Those numbers are pulled out of my hat and could be adjusted depending on which sort of courses are being taken. There would be other expenses of course but by and large simply taking a class shouldn't cost anywhere near what is charged now.

Your numbers are... a bit off. A 3-credit course will generally have 3 contact hours a week, and the general estimation is roughly twice that in out-of class time. If you are teaching 3 courses a semester, that's roughly 27 hours/week right there. Add to that advising, committee work, various administrative time, you are quickly at 40 hours, and then you have the research you are expected to do. In the sciences, you'll teach less, but make up for it pursing and carrying out grants.

Teaching Assistants are getting harder to come by, so, if you are in a writing intensive discipline, keeping on top of a reasonable amount of work for 25-40 students takes way more than that 6 hours outside of class for that week, too (40 papers in 6 hours means less than 10 minutes/paper, which is hard to do if you are correcting grammar, making helpful comments, or even doing a serious evaluation of arguments). So 4 classes/day is not going to happen, and my time assumptions are for established courses -- if you are doing serious lesson planning, your time expenditure goes way up.

Also, $500/month for a 3 credit course is going to be roughly $7500/semester just for the tuition, not figuring in any of the books, room, board, etc, etc, so we end up with over $40K per year quickly, and you've left out paying for any administrative or support staff -- there is no one to clean the classroom, do maintenance, recruit students, deal with layers of state, regional, and federal bureaucracy, and so on. So your professor isn't making anywhere near that $240K/year. And we haven't even gotten to the fancy dorms.

I'm also not sure about the "universities are like newspapers" idea, if only because newspapers don't have to be accredited, and switching to another newspaper or a web news site is trivial in ways that transferring schools (much less to a "non-school educational experience") isn't. Online education is a problem because most beginning students don't do that well at it. The drop rates in online courses are very high, which suggests that students generally have more "endurance" in face to face courses....
posted by GenjiandProust at 5:13 PM on November 14, 2012 [2 favorites]


kenko: "But not as well as twelve people talking to each other."

So what you're saying is, we need google hangout university?
posted by pwnguin at 6:06 PM on November 14, 2012 [1 favorite]


mek: "Baumol's cost disease doesn't explain the recent and steep rise in the cost of university"

Indeed. Baumol's argument is theoretical. This report suggests in Appendix table A1 that total operational revenues have gone up a little more than 10 percent over 10 years. Very much in the ballpark for inflation. Total expenditure, aka costs, follows a similar pattern.

You can see that tuition has been increasing to cover a drop in state and private contributions*. Since expenses are being well contained to inflation, tuition growth should slow down as state contributions approach zero. Sure, it sucks that society isn't granting students free college education as a right, but I don't think Baumol's is a concern any time soon.

*Unfortuately 1999-2009 is a bad range to inspect, simply because it marks the trough of a huge bear market and uncertainty. 2009 represents a bad year to inspect, as charitable giving was on hold while donor portfolios weathered the storm. I suspect it's bounced back some, while state aid has not.
posted by pwnguin at 6:41 PM on November 14, 2012 [2 favorites]


Hyde Park is about to E-X-P-L-O-D-E
Everyone I know who works at U Chicago lives on the north side. So yeah, no.
posted by deathpanels at 8:12 PM on November 14, 2012


Everyone I know who works at U Chicago lives on the north side. So yeah, no.

Most of the students live on the south side, though.
posted by kenko at 8:17 PM on November 14, 2012


So what you're saying is, we need google hangout university?

No, I'm not.
posted by This, of course, alludes to you at 8:39 PM on November 14, 2012 [1 favorite]


2manyusernames: you've brought this idea up before, and it's been refuted quite well. :)
posted by tapir-whorf at 9:15 PM on November 14, 2012


One person lecturing to 500 people does work as well as one person lecturing to 40.

Other people have addressed the problem with this statement, but I'll just add as someone who teaches large classes that you have no idea of how much work this is and the impact that that has on the quality of teaching and research you get. Do you have any idea of the email that 500 1st year students can generate? A LOT. Even with TAs it's near impossible to keep up with their email alone.

(Maybe I'm bitter because I haven't had a day off in 3 months. And I'm tenure-track. Sessionals have it far worse.)
posted by lesbiassparrow at 9:22 PM on November 14, 2012 [4 favorites]


Who in his right mind would consider the U of C but turn it down because it's not more like Palo Alto, an anodyne nowhere, I can hardly conceive.

Because if you want to get between Hyde Park and anywhere north of the river on public transportation it takes about as long as getting between Palo Alto and SF? As things stand location is a con when selling UofC. I'd be surprised if this redevelopment were really about anything but that. Not that I'm complaining.
posted by matildatakesovertheworld at 3:16 AM on November 15, 2012


I don't know about tuition, but I remember that room and board were way more than living off-campus. I went to Rensselaer and lived on campus from 1994 to 1996. My dorm room cost $500/month per person, double occupancy, with one bathroom shared with 5 other people. After those two years, I moved into a 3BR off-campus apartment which was the bottom floor of a house. Rent was $435/month combined, and utilities came to about $50-$100/month.

Likewise, the cheapest meal plan came out to $70/week for unlimited access from 9 AM to 2 PM. Do you know how much goddamn food you can buy for $70/week in upstate NY in the mid-90s? A lot, that's how much.
posted by disconnect at 6:56 AM on November 15, 2012


I'd be surprised if this redevelopment were really about anything but that. Not that I'm complaining.

This redevelopment won't bring you closer to any of the stuff happening on this list and why else would you want to go north of the river?
posted by kenko at 7:14 AM on November 15, 2012


Likewise, the cheapest meal plan came out to $70/week for unlimited access from 9 AM to 2 PM. Do you know how much goddamn food you can buy for $70/week in upstate NY in the mid-90s? A lot, that's how much.

Not to particularly defend dining hall pricing, quality. or anything, but there is something of a difference between "meal plan" and "food you can buy." You really need to compare how much prepared food you could get for $70/week. Not sure where you were living in the 90s, but where I was, $10/day in even cheap restaurants wouldn't get much.
posted by GenjiandProust at 7:40 AM on November 15, 2012


The solution to this problem, as with the healthcare problem in the U.S., is to raise public awareness that higher education is not an "industry." A college degree is not a product or a service, and it does not need to be subject to supply and demand in the way that, say, iron ore ought to be.

There is a limited amount of iron ore available, and we have to distribute it, and the market is great at doing that. Supply and demand work out the "right" price for the limited resource of iron. We very well could give every person a college education and never run out of college education. Yes, we need to pay faculty, but we could always "make" more faculty by granting more doctorates and opening new colleges and funding them with the tuition they generate. Education is not a limited resource. The size and shape of our educational system is determined by how we apportion funds to it and at what priority we place it in society.

If we treat education like what it is, instead of pretending it's the same sort of thing as iron ore, a saner picture of the real situation develops.

Somehow the entire nation is confused about what education even is. Somebody is getting rich off exploiting this confusion; they need to be identified and shot out of a cannon.
posted by deathpanels at 1:33 PM on November 15, 2012 [3 favorites]


The situation, along with widely available broadband, will inevitably change the whole face of higher education. Those schools which became machines, with their conveyor-belts streaming product, will sink into history, their empty halls lined with more historical photos than students.

Students will go elsewhere for a much better education. It's been in the cards since the 1980s, and there's no escaping it. It can be organized by the students themselves ... or they can leave it to the sharks to do, to their eternal detriment.
posted by Twang at 4:40 PM on November 15, 2012


One thing that has not been mentioned is the value that these colleges and universities provide to the economy overall. There is something to be said for the fact that the U.S. owns almost every list of top universities in the world and has for some time. Attract top young talent and they stay and make the economy stronger long term.

While I'm not particularly proud of the fact that my student loan bills are almost double my rent, the macro reality is that the university system is a crucial engine for innovation and sustained prosperity.
posted by erikvan at 5:46 PM on November 15, 2012


This redevelopment won't bring you closer to any of the stuff happening on this list and why else would you want to go north of the river?

To grab a meal somewhere other than the two or three decent restaurants that Hyde Park has now? To watch a movie? Oh and they're opening a new music venue as well.
posted by matildatakesovertheworld at 6:40 PM on November 15, 2012


Just listened to a podcast last night from the London School of Economics on this topic by Prof. Craig Calhoun. Wordy, but relevant.
posted by pwnguin at 6:44 PM on November 15, 2012 [3 favorites]


Pomp and Exceptional Circumstance - 'How Students Are Forced to Prop Up the Education Bubble'

The same tranching and reselling, packaging and AAA rating ("securitization") that infected the mortgage markets spread into the student loan market. At least this one has a neat name: Student Loan Asset Backed Securities (SLABS).
Twenty billion dollars in defaulted loans sounds like a lot of money for the government to back, but that doesn’t take into account the money defaulted debtors will pay on these loans despite defaulting. Of the $20 billion in dud loans the government guarantees, it expects to recover $22 billion from debtors. If you subtract the $3 billion the feds will pay in collection costs, they still recover around 95 percent of principal from loans that default. When you default on your mortgage, you can walk away from the house, but when you default on a student loan, you can’t give your degree back. All you can do is work and pay. There’s no escape from student debt, and the government and markets both know it.
posted by the man of twists and turns at 1:24 AM on November 20, 2012


A college degree is not a product or a service, and it does not need to be subject to supply and demand in the way that, say, iron ore ought to be.

No, it's far worse — because if you have ten tons of iron ore, it doesn't really affect the value of my ten tons of iron ore.

But if you have a college degree, and I have a college degree, and we're both competing for the same job in a slack labor market — which looks like it's going to be the case for the foreseeable future, if not "the new normal" that our children and grandchildren have to look forward to — then your college degree basically cancels out the value of mine, at least insofar as getting a job is concerned, and that's probably 95% of the value in most buyers' estimation.
posted by Kadin2048 at 5:00 PM on November 22, 2012


The Troubling Dean-To-Professor Ratio

Zero Hedge: The Scariest Chart Of The Quarter: Student Debt Bubble Officially Pops As 90+ Day Delinquency Rate Goes Parabolic

The Imaginary Party: Housing Speculation, Student Debt, Fees and Dispossession - a 21st Century Love Story
posted by the man of twists and turns at 3:45 PM on December 2, 2012


Paying Tuition to a Giant Hedge Fund
Meanwhile, during most of these years, Harvard’s own endowment has annually grown by five or ten or even twenty times that figure, rendering net tuition from those thousands of students a mere financial bagatelle, having almost no impact on the university’s cash-flow or balance-sheet position. If all the students disappeared tomorrow—or were forced to pay double their current tuition—the impact would be negligible compared to the crucial fluctuations in the mortgage-derivatives market or the international cost-of-funds index.
and then Harvard Replies
posted by the man of twists and turns at 3:19 AM on December 11, 2012


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