Now that for-profit higher education firms, along with the minority and low-income advocates who represent most of the sector’s students, have negotiated a truce with the Education Department over “gainful employment” rules meant to ensure that graduates end up in jobs that pay enough to service their student loan debt, it’s time to focus on the broader issue that all sides (and the media) have ignored: Soaring student loans unintentionally subsidize practices by both for-profit and not-for-profit colleges that drive the cost of college up.
Changing this equation in ways that lower the cost of college for everyone could be the surprising contribution the for-profit sector makes to the country, if for-profit firms are farsighted enough to seize the opportunity.
Matt Miller
A senior fellow at the Center for American Progress and co-host of public radio’s “Left, Right & Center,” Miller writes a weekly column for The Post.
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Before explaining why, a few disclosures are in order: The Washington Post Co. owns Kaplan, a for-profit educator; my wife is on the board of a company that operates another for-profit university; and I was once approached in my consulting life about offering paid advice to yet another, though I have not done so. Also, I serve on an Education Department commission looking at questions of how the nation funds K-12 schools. Ordinarily these affiliations might counsel leaving this subject to others, but there have been perspectives missing from the “gainful employment” battle that could now usefully move to the center of public discussion.
Start with two points on which most of us can agree. First, college in America costs too much. Second, it’s shameful that in the United States, alone among advanced nations, students routinely incur heavy debts (now averaging $27,000) to get a diploma.
What most of us don’t stop to consider is that federally backed student loans have enabled these tuition hikes. The late economist and university president Howard Bowen famously investigated what influences the expenditures of the typical (nonprofit) college. His conclusion was simple: Colleges will spend whatever revenue is available. Nonprofit colleges have long lobbied for more grants and student-loan availability under the banner of ensuring “access” — a manifestly worthy goal. But surging loans have effectively ratified price increases while also helping fund the pricier dorms, gyms, theaters and other parts of the “amenities arms-race” many college presidents privately decry.
Broadly speaking, the student-loan racket has also let traditional colleges maintain bloated cost structures largely immune to innovations in how education can actually be delivered. Perhaps that’s not surprising, because these schools are run by tenured faculty, and faculties have generally been happy with long-standing norms concerning teaching loads, course design, research priorities, campus amenities, summer vacations and the like.
If you doubt that changes to the traditional model are seen as a threat, consider one prestigious public university that recently decided to offer online courses and degrees. When I asked an administrator behind this initiative if the online students, most of whom were expected to be from lower-income families, would enjoy sharply reduced tuition (reflecting the much lower cost involved in delivering instruction online), he shook his head. “Not at all,” he said. “The faculty would go even more bananas than they already have.” The only way the online program could win faculty approval was to have it become a profit center that subsidized other activities. This in a nonprofit school whose avowed mission includes expanding access to underserved students!
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