A Reform Worth Considering

I have long believed that America’s patchwork, complicated method of financing higher education makes no sense. I watch working students taking one more class than they can really manage in order to meet aid eligibility requirements; I see the university employing dozens of people to shuffle the paperwork; I see parents struggling to complete complex forms–and of course, we’ve all seen the reports of unmanageable student loan debt. The need to repay that debt constrains the choices of graduates who might go into lower-paying but more satisfying jobs, makes periods of unemployment more terrifying, and probably restrains the sort of consumer spending that would boost economic growth.

An article in the recent issue of the Atlantic suggests scrapping the whole system and replacing it with a far simpler, more transparent approach. I hope a couple of paragraphs from that article will tempt you to click through and read the whole thing.

With what the federal government spent on its various and sundry student aid initiatives last year, it could have covered the tuition bill of every student at every public college in the country. Doing so might have required cutting off financial aid at Yale, Amherst, the University of Phoenix, and every other private university. But at this point, that might be a trade worth considering.


The under-funding of public university systems and Washington’s attempts to compensate have also helped nourish a giant barnacle on the side of higher-ed: the for-profit college industry. As scarce classroom space at community and open-admission state colleges has filled up, students turned towards alternatives like Kaplan University and University of Phoenix, which charge tens of thousands of dollars for degrees with dubious job market value. They get away with it because of federal aid. I call it the 10, 25, 50 problem: They educate ten percent of students, who take out about a quarter of all student loans and are responsible for about half of all defaults. In the meantime, they suck up about $8.8 billion, or around 25 percent, of all Pell Grant money.


  1. But, there’s MONEY to be made off them poor suckers!! And the ripoff of tax monies for private enrichment isn’t so transparent. LOTS of politicians (and their friends, of course) ride that gift horse. LOTS.

  2. University of Phoenix licenses their program to Indiana Wesleyan…Ponder that too please…

  3. Some of our politicians believe that services are somehow better when they are privatized, but I’m afraid that is another one of those evidence-free assumptions. If you think public universities have problems, just check out the for-profits. There is no magic bullet, but some bullets are destructive.

  4. I was just discussing today the unusual relationship between tuition craptastic schools like the U of Phoenix, vs the state university systems – a credit hour at Phoenix is $400+ or something like that. Such ridiculousness has enabled schools like IUPUI to bloat up their staff, because by comparison their tuition is lower than Phoenix et al.

    The phrase “The under-funding of public university systems” is about as absurd as pro sports franchises being underfunded by government.

    The ratio of staff:professors at IUPUI is about 4:3

    Professors (any tenure-track) spend most of their time NOT teaching. Get rid of most of the staff, make professors teach, eliminate TA’s, and tuition at IUPUI would drop by two-thirds. What would be lost ? Nothing of value; “research” done by state universities is close to useless. All useful research in the sciences ends up being privatized by the professors. All research in the humanities is a waste…none of it matters.

    In the mid-70’s, the use of TA’s at IUPUI was rare.

    So instead of providing education at an affordable price to the people of Indy, IUPUI has become a jobs program for liberal arts majors and educational bureaucrats. But by god, let’s throw more money at it !

  5. Never forget – the goal of most privatized endeavors is
    profit, regardless of whether the privatized entity is in K-12, higher ed., or the post office.

  6. Never forget – most public endeavors are less efficient than private endeavors, regardless of whether the public entity is in K-12, higher ed., or the post office.

  7. You have to carefully analyze any area where you believe that’s true, and get really specific about what “efficiency” is. While no postsecondary system is perfect, nor ever has been, most of the for-profits are really efficient at draining students dry, leaving them high and dry. I have found for-profit CEOs make decisions based on the idea that “I’m the boss and we are a business so we can do what we want”, on a pretty consistent basis. Concern about student needs is just a cover story. I could get really specific on that. They hate the government, calling attempts to make them accountable “interference”, despite the fact that most of the money coming in is public.

  8. The idea that public is less efficient that private is a matter of belief, not fact. Medicare is FAR more efficient than private insurance. That is, if you define efficiency as a measure of how well it delivers its services to its customers, rather than how much profit it makes by reducing services.

  9. My my…so much economic illiteracy. Mrs. Kennedy should do another topic about that subject, as it appears many of the people who comment on her forums are in great need of some lessons in economics. It’s quite depressing to see such ignorance on the subject. I can only hope it is willful evasion of reality, as that would at least make more sense.

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