“How am I going to pay for my kid’s education?” is a nerve-wracking concern to
most middle-class parents. “Why do college tuitions keep going up?” they ask.
College tuitions have risen above the rate of inflation for twenty-years, not
because costs have gone up, but because higher education has found that parents
will continually pay more for their children’s education. If you are charging a
dollar a doughnut at your store, and you double the price, and the line does not
go down, you keep raising the price. Eventually, the price will go down by a
lower price being charged by the store across the street.
But education is not the same as a free marketplace. Students apply for
admissions to a college and the college accepts you or not. You do not apply to
buy a doughnut. Each college occupies a unique position on the educational
hierarchy, and all parents want their children to go to the “best” school
possible. Therefore, there is a constant demand to move up the educational
ladder, not the typical marketplace controls that exist with consumer
products.
The rankings of U.S. News and World Reports are extremely important in this
regard. They give parents the feeling that their child has accomplished
something if the student is enrolled in a number ten school as opposed to a
number twenty school. The ranking system is composed of many useful pieces of
data such as the SAT scores of the students and the student-to-teacher
ratios.
What is horrendous is that the USNWR rankings also include faculty salaries
and the amount spent per student. While this sounds harmless or positive, the
effect is to drive colleges to spend more and more money, and to never be
economical. If a college doubled its salary to faculty, making no other changes,
it would rise in the rankings. And the rankings are what a used by parents to
determine the relative desirability of the schools. Consequently, every college
is in a race to raise and spend more money. Tuitions go up because colleges want
more money to stay in the rankings game. No administrator or college can charge
less or reduce expenditures because their rankings would plummet. Tuitions
continue to go up because parents are willing to pay. College tuitions have gone
from about 20% of the mean family income in 1960 to over 50% today. It is
vicious circle that needs to be broken.
Colleges with universities with higher endowments do not charge less for
tuition. The money is simply spent. Williams College, the wealthiest private
college, has $1.2 billion dollar assets but it does not charge any less than
schools with a tenth of its assets. It simply wastes more. It stays on top of
the rankings by outspending everyone else.
The financial tactics of modern private education are akin to the rape and
run tactics of U.S. mining companies. These companies have historically stripped
the land of all the valuable ore and then run from the billions of dollars
environmental damage. The citizens of the state and federal funds pay for the
mining companies’ short-term horizons and their denial of the secondary effects
of their policies.
In a similar fashion, tuitions are set by the colleges based on how much
money they can extract from parents and students. There is absolutely no thought
about the long-run consequences to the students, the parents or the society.
Colleges and universities regularly expect parents will go into long-term debt,
such as a second mortgage, to finance their children’s education. When parents
apply for a college aid the question is not just “How much have you saved for
college?” The question is “What is the value of your house?” Higher education is
engaged in financial asset stripping of both parents and students.
The secondary effect of the rapacious policies of higher education is the
impoverishment of the middle-class family, which leaves many students with a
mountain of post-college debt. It further destroys the middle-class with young
families deciding to have fewer children because of the “high cost of a college
education.”
Eventually, the rapacious policies of the mining companies were changed by
enraged environmentalists, who brought the situation to the public’s attention.
Eventually the public changed its mining practices because of stringent
environmental laws. Similar corrections are now needed in the world of higher
education.
In order to correct the financial, social and educational faults of modern
education, the boards of trustees must be removed from operational and financial
control of private colleges and universities. Without the later, the former is
impossible.
Control of colleges and universities must go into the hands of
Parent-Student-Alumni Associations. Tuition would go into an escrow account. The
associations would then collectively bargain with the administration as to
levels of tuition, staffing, social and academic issues.
Parents and students pay million dollars a year in tuition, alumni contribute
thousands, but they have no voice in the decisions of the colleges and
universities.
That must be changed.
Mr. Streitz has just published The Great American Tuition Rip-Off. (Available
on Amazon.com) This fall his Bring Back The Jobs will be published. He was a
candidate for the Republican nomination in Connecticut for U.S. Senate.
