By Sigurd Neubauer
11/06/2022
An unnamed tenured professor at an elite university in the United States provides a behind-the-scenes look into why tuition costs only keep going up. The off the record and not for attribution interview is divided into a three-parts series. Part II.
Academia and pandemic fallout
Personnel is the most expensive line item for any university.
Throughout the pandemic, universities without significant endowments were forced to cut costs by firing staff during the economic downturn to meet their high fixed costs.
Universities requires facility and staff to operate.
Staff members are easier to fire than faculty which often enjoy protection from tenure privileges. The pandemic has led to staff shortages at universities across the nation, which has severely impacted them. The laid off staff is increasingly difficult to replace as the U.S. labor market has tightened throughout 2022 coupled with rise in wages and soaring inflation.
Universities with endowments are better positioned to weather the storm as their resources provide them with more resilience. This is true for hiring faculty talent as well, the professor reveals.
What the pandemic has illustrated, he explains, is that smaller private universities have not been able to hire faculty at the same rate as the larger public universities, which receive funding from their respective state governments.
As staff members leave, the administrative burden is shifted to faculty. This makes the university overall less competitive when applying for outside funding, thus creating a reinforcing cycle.
Competition
But the private universities – especially those with big endowments – are winning outright in the competition for high-quality talent, which in turn strengthens their already competitive edge, especially over smaller colleges with fewer resources.
Universities are also competing to attract students, especially those who generate revenue for the university based on the model where students from wealthy families ultimately give back and high achieving students bring success.
Thus, for the universities, it is about striking a delicate balancing act between paying today’s bills, which are needed to attract top quality students and those whose families can afford to pay.
The top students will over time improve the university’s reputation through their scholarship, and with it, enhance fundraising in the future, the logic goes. Reputation and brand names are what universities trade on. They also compete for wealthy people to spend on their universities.
It’s all about reputation. This includes scientific research, academic excellence and even college athletics. For universities whose scholarship are able to secure Noble Prizes, fundraising becomes inevitable easier. While this builds brand loyalty and prestige, it also helps secure donations and attack the best and the brightest, the professor explains.
Securing a good one can often be tied to college athletics, which enables the university to sell merchandize. The ability to get college athletes routinely drafted into major sport leagues such as Major League Baseball (MLB), the National Basketball Association (NBA), the National Football League (NFL), and the National Hockey League (NHL), generate revenue and prestige for the universities as well.
Are higher education costs sustainable?
Presently, there is no comprehensive plan on federal policy on how to deal with education costs, the professor explains. Different states do different things to counter the rising education costs he says, adding that “it is very American” that different universities pursue different solutions.
Existing plans, such as college saving plans, pell grants and student loan plans are all designed to pay tuition rather than address the rout causes of why tuition costs keep increasing.
The question is: will the federal government ultimately intervene?
For now, the trends point to that every university across the nations wants to emulate Harvard.
But ‘second tier universities’ cannot charge Harvard tuition as they don’t have its reputation, nor can they provide its services. This trend is partly motivated by a widespread belief that prioritizes education – compounded by the American ethos centering on the belief that everyone should have the same type of college degree – which in turn are believed to lead to a good job. These dynamics create incentive for universities to increase tuition.
The reality, meanwhile, is that the degrees produced by American universities do not necessarily lead to high-paying jobs. When tuition increases, students are prized out of the market.
The problem is that no official plan exists for how to make higher education affordable, the professor explains.
The present trajectory of accelerating tuition costs is not sustainable, expert says as higher education is increasingly slipping out of reach for a growing number of American families.
According to the Princeton Review, 98 percent of families with college-bound children said financial aid would be necessary to pay for college and 82 percent said it was “extremely” or “very” necessary.
These numbers speak for themselves.
For 2022, the average student loan debt in America is $37,013. According to the Measure One Private Student Loan Report, out of the total student debt, $1.61 trillion are federal loans according to Federal Student Aid data and $131.1 billion are private loans.
Because many families cannot afford the ever-increasing tuition costs, students are often ‘forced’ to take loans that many cannot afford. This trajectory is, of course, unsustainable.
The topic of student debt forgiveness for tens of millions of Americans is becoming an increasingly potent topic in the political arena.
While the Biden administration is expected to prioritize the issue of student debt forgiveness, Congressional lawmakers are divided over the matter.
For universities, the present political stalemate over student debt forgiveness means that as more and more families are no longer able to afford tuition, they will have to turn to wealthy individuals to finance scholarships through donations. This creates dependence on the wealthy individuals and whatever agenda they may have.
In practice, universities are becoming more dependent on big money to run their ever-expanding intuitions, which can come from either wealthy Americans or rich foreigners who can afford to pay full tuition.
Among the wealthy courted are foreigners. This opens the door to foreign influence within the American academy. Chinese funding for American universities has become particularly controversial during recent years as a national consensus is emerging in support of Washington’s aim at countering China’s economic influence and power. This has created dependence on the foreigners, whether individuals or entities, whatever agenda they may have.
Many of the international students end up returning to their home countries upon completing their education in the U.S., which often means that they do not necessary contribute to the American economy, the professor says.
The training of foreign students who ultimately end up leaving America also presents a national security threat. For instance, if they studied aerospace engineering would learn critical aspects of creating weapon systems that may have long-term national security implications. This can also be true for students focusing on cyber security and artificial intelligence, among other issues.
The counter argument here, the professor explains, is that some of them want to stay and want to contribute if the opportunity is provided. The obvious question is how many foreign students are staying and who are leaving.