The Student Loan Takeover

The unilateral seizure of the student loan program by the Obama administration carries extremely serious implications for the future of higher education in America, especially in view of a confluence of market forces that have the potential to effect the greatest changes education has seen in decades.

Outside the liberal academic community, there is general agreement that the traditional university model is broken. Institutions founded for purposes of education and learning have become bloated and dysfunctional conglomerates with vastly oversized administrative staffs and a voracious appetite for money from students, taxpayers (state schools), and alumni (private schools). 

Although history can explain how the present university model evolved as it did, nothing can justify the unwillingness on the part of university administrations to ask, "How did we become like this?" and "How can we improve our performance as service providers to our customer base?" Consider for a moment the multiple business activities conducted by large universities in addition to education. These can include housing, building and ground maintenance, food service, placement, marketing and public/alumni relations, fundraising, travel, retailing, cooperative external services (research and consulting), publishing, information technology and management, finance, portfolio and real estate management (non-university holdings), security, political activities, entertainment, museums, collection management, and health services. Add to this the whole spectrum of sports and athletics, including everything from broadcast rights, licensing, and stadium and field house management for big name schools to intramural activities. 

Where universities maintain multiple facilities, as with most state schools, many of these expenses can occur multiple times.

Although opportunities for streamlining operations and eliminating waste exist in such strategies as outsourcing and cooperative ventures, they have, in most cases, been avoided in favor of developing a larger, more expensive, and monolithic structure. Elaborate facilities; themed dining areas with extensive selections including organic foods, fair trade coffee, and other specialties; and a plethora of sponsored student activities are all nice to have, but in the end, they contribute to a cost structure that is unrealistic and unsustainable in the long term.

Nor, in most cases, has the educational experience improved commensurately with the investment. This is especially true at the undergraduate level -- the "cash cow" for most institutions. The undergraduate curriculum has been watered down with required ethnic and/or sensitivity courses. Many basic courses are handled primarily by teaching assistants, and high-powered faculty are most often reserved for upperclassmen or the graduate program.

In recent years, however, several factors have emerged which, depending on one's point of view, have a potential to either threaten the existing structure or to encourage much-needed reform.

In 1997, addressing the parents of the future class of 2001, the then-president of the University of Minnesota commented, "According to our research, in the course of their working lives, your children will have six careers. I did not say jobs. I said careers."

Rapid advances in technology and communication at every level have emphasized the truth of his statement. While higher education was once considered to be four years' preparation for life and work, entrants into many professions today realize that continuing education and training will be an ongoing part of their professional life. Businesses have also realized this, and in many cases, it has informed their choice of locations. This demand has opened new opportunities that both schools and training providers have sought to fill. This has largely been on a discreet and individual basis. It has not as yet inspired significant new and creative thinking with regard to the structure of a total (university plus continuing post-graduate) package. Nor have any solutions arisen for the necessity of bringing costs under control amid the competitive demands of business -- a very real possibility in an online environment.

The second major factor impacting the educational establishment has been the emergence and proliferation of so-called market-funded educational institutions. These would include such names as Kaplan University (owned by the Washington Post Corporation), DeVry University, and the University of Phoenix, among many others. Because they derive from a heritage of specialized and/or technical training, their primary emphasis has been career-oriented. The student base is highly motivated and more concerned with costs and practical considerations than lifestyle.

Because of their "for-profit" orientation, the market-funded institutions have consciously avoided many of the high overhead factors that plague traditional universities. As they expand, they frequently make use of rented space and other economical measures. Existing in a more competitive atmosphere, they take great pains to cultivate relationships with employers and have achieved an enviable success record in placing their students. Their urban locations and no-frills approach have made them attractive to many minority students. 

Though initially regarded as glorified trade schools by the traditional academic establishment, the success of market-funded institutions has enabled them to move up-market rapidly. DeVry, for instance, currently operates an offshore medical school and a law school and has instituted a liberal arts-based curriculum.

While Americans have always regarded the college experience as important beyond just the educational component, cost considerations -- especially in a tight economy -- and the realization that in a modern world, education does not end on graduation day have caused an increasing number of students and their parents to have second thoughts about mortgaging a large part of their young adulthood. Perceived value is now a larger part of the equation. 

In a free and open market, the likelihood might exist that the threat of competition would encourage the traditional colleges and universities to observe and adopt some of the practices and efficiencies of the market-funded sector so as to hold down or even reduce costs and improve their competitiveness in other areas. Unfortunately, there is not only a social, but also a political quotient in play. With some notable exceptions, the academic community has long been the province of the left and the laboratory of political correctness. Some of the most extreme and notorious so-called "professors," such as Ward Churchill (University of Colorado), Sámi Al-Arian (University of South Florida), and Obama confidante Bill Ayers (University of Illinois at Chicago), have made their home in the alternate reality of the faculty lounge. It is not likely that those on the left will willingly surrender their private preserve of irrational thought.

With the government in complete control of the student loan program, the possibility, if not the probability, exists that political ideologues will be in a position to determine the winners and losers in any form of academic competition. Questions of accreditation, school status, student eligibility, and other criteria could be raised to direct funding to preferred institutions and courses of study. Given the leanings of the present administration and the academic community at large, there is little doubt who the winners might be. If this plays out, the losers ultimately will be the students and our society.
The unilateral seizure of the student loan program by the Obama administration carries extremely serious implications for the future of higher education in America, especially in view of a confluence of market forces that have the potential to effect the greatest changes education has seen in decades.

Outside the liberal academic community, there is general agreement that the traditional university model is broken. Institutions founded for purposes of education and learning have become bloated and dysfunctional conglomerates with vastly oversized administrative staffs and a voracious appetite for money from students, taxpayers (state schools), and alumni (private schools). 

Although history can explain how the present university model evolved as it did, nothing can justify the unwillingness on the part of university administrations to ask, "How did we become like this?" and "How can we improve our performance as service providers to our customer base?" Consider for a moment the multiple business activities conducted by large universities in addition to education. These can include housing, building and ground maintenance, food service, placement, marketing and public/alumni relations, fundraising, travel, retailing, cooperative external services (research and consulting), publishing, information technology and management, finance, portfolio and real estate management (non-university holdings), security, political activities, entertainment, museums, collection management, and health services. Add to this the whole spectrum of sports and athletics, including everything from broadcast rights, licensing, and stadium and field house management for big name schools to intramural activities. 

Where universities maintain multiple facilities, as with most state schools, many of these expenses can occur multiple times.

Although opportunities for streamlining operations and eliminating waste exist in such strategies as outsourcing and cooperative ventures, they have, in most cases, been avoided in favor of developing a larger, more expensive, and monolithic structure. Elaborate facilities; themed dining areas with extensive selections including organic foods, fair trade coffee, and other specialties; and a plethora of sponsored student activities are all nice to have, but in the end, they contribute to a cost structure that is unrealistic and unsustainable in the long term.

Nor, in most cases, has the educational experience improved commensurately with the investment. This is especially true at the undergraduate level -- the "cash cow" for most institutions. The undergraduate curriculum has been watered down with required ethnic and/or sensitivity courses. Many basic courses are handled primarily by teaching assistants, and high-powered faculty are most often reserved for upperclassmen or the graduate program.

In recent years, however, several factors have emerged which, depending on one's point of view, have a potential to either threaten the existing structure or to encourage much-needed reform.

In 1997, addressing the parents of the future class of 2001, the then-president of the University of Minnesota commented, "According to our research, in the course of their working lives, your children will have six careers. I did not say jobs. I said careers."

Rapid advances in technology and communication at every level have emphasized the truth of his statement. While higher education was once considered to be four years' preparation for life and work, entrants into many professions today realize that continuing education and training will be an ongoing part of their professional life. Businesses have also realized this, and in many cases, it has informed their choice of locations. This demand has opened new opportunities that both schools and training providers have sought to fill. This has largely been on a discreet and individual basis. It has not as yet inspired significant new and creative thinking with regard to the structure of a total (university plus continuing post-graduate) package. Nor have any solutions arisen for the necessity of bringing costs under control amid the competitive demands of business -- a very real possibility in an online environment.

The second major factor impacting the educational establishment has been the emergence and proliferation of so-called market-funded educational institutions. These would include such names as Kaplan University (owned by the Washington Post Corporation), DeVry University, and the University of Phoenix, among many others. Because they derive from a heritage of specialized and/or technical training, their primary emphasis has been career-oriented. The student base is highly motivated and more concerned with costs and practical considerations than lifestyle.

Because of their "for-profit" orientation, the market-funded institutions have consciously avoided many of the high overhead factors that plague traditional universities. As they expand, they frequently make use of rented space and other economical measures. Existing in a more competitive atmosphere, they take great pains to cultivate relationships with employers and have achieved an enviable success record in placing their students. Their urban locations and no-frills approach have made them attractive to many minority students. 

Though initially regarded as glorified trade schools by the traditional academic establishment, the success of market-funded institutions has enabled them to move up-market rapidly. DeVry, for instance, currently operates an offshore medical school and a law school and has instituted a liberal arts-based curriculum.

While Americans have always regarded the college experience as important beyond just the educational component, cost considerations -- especially in a tight economy -- and the realization that in a modern world, education does not end on graduation day have caused an increasing number of students and their parents to have second thoughts about mortgaging a large part of their young adulthood. Perceived value is now a larger part of the equation. 

In a free and open market, the likelihood might exist that the threat of competition would encourage the traditional colleges and universities to observe and adopt some of the practices and efficiencies of the market-funded sector so as to hold down or even reduce costs and improve their competitiveness in other areas. Unfortunately, there is not only a social, but also a political quotient in play. With some notable exceptions, the academic community has long been the province of the left and the laboratory of political correctness. Some of the most extreme and notorious so-called "professors," such as Ward Churchill (University of Colorado), Sámi Al-Arian (University of South Florida), and Obama confidante Bill Ayers (University of Illinois at Chicago), have made their home in the alternate reality of the faculty lounge. It is not likely that those on the left will willingly surrender their private preserve of irrational thought.

With the government in complete control of the student loan program, the possibility, if not the probability, exists that political ideologues will be in a position to determine the winners and losers in any form of academic competition. Questions of accreditation, school status, student eligibility, and other criteria could be raised to direct funding to preferred institutions and courses of study. Given the leanings of the present administration and the academic community at large, there is little doubt who the winners might be. If this plays out, the losers ultimately will be the students and our society.

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