As a Wall Street Journal subscriber for the last four years, I firmly believe that most young people would be better off if they had skipped their college education entirely and if they or their parents would have purchased them lifetime subscriptions to the Journal instead. And it’s articles such as these, in which the author (a Ms. Finley) interacts with Dr. Richard Vedder, that convince me of this strategy.
In order to whet your appetite and keep you longing for more, I’ll just include a few choice quotes from this excellent article and critique of America’s pathetic system of higher education. We desperately need to recognize what we’re doing wrong and how we’re bankrupting our lives and the lives of our children.
- “College costs have continued to explode despite 50 years of ostensibly benevolent government interventions, according to Mr. Vedder, and the president’s new plan could exacerbate the trend. By Mr. Vedder’s lights, the cost conundrum started with the Higher Education Act of 1965, a Great Society program that created federal scholarships and low-interest loans aimed at making college more accessible.
In 1964, federal student aid was a mere $231 million. By 1981, the feds were spending $7 billion on loans alone, an amount that doubled during the 1980s and nearly tripled in each of the following two decades, and is about $105 billion today. Taxpayers now stand behind nearly $1 trillion in student loans.
Meanwhile, grants have increased to $49 billion from $6.4 billion in 1981. By expanding eligibility and boosting the maximum Pell Grant by $500 to $5,350, the 2009 stimulus bill accelerated higher ed’s evolution into a middle-class entitlement. Fewer than 2% of Pell Grant recipients came from families making between $60,000 and $80,000 a year in 2007. Now roughly 18% do.”
- “Or consider Princeton, which recently built a resplendent $136 million student residence with leaded glass windows and a cavernous oak dining hall (paid for in part with a $30 million tax-deductible donation by Hewlett-Packard CEO Meg Whitman). The dorm’s cost approached $300,000 per bed.
Universities, Mr. Vedder says, “are in the housing business, the entertainment business; they’re in the lodging business; they’re in the food business. Hell, my university runs a travel agency which ordinary people off the street can use.”
Meanwhile, university endowments don’t pay taxes on their income. Harvard’s $31 billion endowment, which has been financed by tax-deductible donations, may be America’s largest tax shelter.”
- “Former Ohio State President Gordon Gee (who resigned in June after making defamatory remarks about Catholics) earned nearly $2 million in compensation last year while living in a 9,630 square-foot Tudor mansion on a 1.3-acre estate. The Columbus Camelot includes $673,000 in art decor and a $532 shower curtain in a guest bathroom. Ohio State also paid roughly $23,000 per month for Mr. Gee’s soirees and half a million for him to travel the country on a private jet. Such taxpayer-funded extravagance has not made its way into Mr. Obama’s speeches.
Colleges have also used the gusher of taxpayer dollars to hire more administrators to manage their bloated bureaucracies and proliferating multicultural programs. The University of California system employs 2,358 administrative staff in just its president’s office.”
- “Mr. Vedder notes that, by contrast, “you don’t have to worry about this at the University of Phoenix. One thing about the for-profits is that they are laser-like devoted to instruction.” Although for-profits like the University of Phoenix and DeVry spend more money on marketing, they don’t contain as much administrative overhead.
‘The Obama administration has been beating up on [for-profits] pretty hard for the past two to three years,” Mr. Vedder says. “It’s true that drop-out rates are disproportionately higher at the for-profits, but it’s also true that the for-profits are reaching the exact audience that Obama wants to reach”—low-income minorities, many of whom are the first in their family to attend college.
Today, only about 7% of recent college grads come from the bottom-income quartile compared with 12% in 1970 when federal aid was scarce. All the government subsidies intended to make college more accessible haven’t done much for this population, says Mr. Vedder. They also haven’t much improved student outcomes or graduation rates, which are around 55% at most universities (over six years).”
- “Nor is the president addressing what Mr. Vedder believes is a fundamental problem: too many kids going to college. “Thirty-percent of the adult population has college degrees,” he notes. “The Department of Labor tells us that only 20% or so of jobs require college degrees. We have 115,520 janitors in the United States with bachelor’s degrees or more. Why are we encouraging more kids to go to college?”
Mr. Vedder sees similarities between the government’s higher education and housing policies, which created a bubble and precipitated the last financial crisis. “In housing, we had artificially low interest rates. The government encouraged people with low qualifications to buy a house. Today, we have low interest rates on student loans. The government is encouraging kids to go to school who are unqualified just as it encouraged people to buy a home who are unqualified.”
The higher-ed bubble, he says, is “already in the process of bursting,” which is reflected by all of the “unemployed or underemployed college graduates with big debts.” The average student loan debt is $26,000, but many graduates, especially those with professional degrees, have six-figure balances.”