David Leonhardt on the ‘College Money Crisis’ — Bret Devereaux on ‘The Corner That State Universities Have Backed Themselves Into’ | FREE WHITEWATER
FREE WHITEWATER

David Leonhardt on the ‘College Money Crisis’ — Bret Devereaux on ‘The Corner That State Universities Have Backed Themselves Into’

Well worth reading in full —

In his Thursday morning newsletter, David Leonhardt of the New York Times writes of The College Money Crisis:

The coronavirus has caused severe budget problems for American higher education. But many colleges’ financial troubles are much larger than the virus. They have been building for years and stem, above all, from a breakdown in this country’s hodgepodge system of paying for higher education.

Given the importance of higher education — for scientific research, entrepreneurship and ultimately American living standards — I want to use today’s newsletter to talk about this breakdown.

The current system arose after World War II and depended on three sources of money: students (and their parents); the federal government; and state governments. Of those, state governments were supposed to provide the most money. That’s why many Americans attend something known as a state college.

Over time, though, state officials came to a realization. If they cut their higher-education budgets, colleges could make up the shortfall by raising tuition. Many other state-funded programs, like health care, highways, prisons and K-12 education, have no such alternative.

“In every economic downturn since the 1980s, states have disproportionately cut college and university budgets,” Kevin Carey writes in a new Washington Monthly article that offers an exceptionally clear description of the problem. Since 2008, states have cut inflation-adjusted per-student spending by 13 percent, according to the Center on Budget and Policy Priorities.

These budget cuts have left most colleges struggling for resources, even as elite colleges, both private and public, can raise substantial revenue from tuition and alumni donations. Not surprisingly, inequality in higher education has grown. Many poor and middle-class students who excel in high school attend colleges with inadequate resources and low graduation rates — and end up with student debt but no degree.

From The Atlantic in August, Bret C. Devereaux contends there’s a Corner That State Universities Have Backed Themselves Into (giving his own assessment of the economics of college applied to conditions of the current pandemic):

Now that universities face the emergency of a pandemic, they are stuck. Calling a halt to on-campus operations and going totally online, thereby waiving on-campus fees, was the right, moral choice. And yet it was the option that this reckless system could never take, because those inflated fees were needed to pay the fixed costs of the business model. Without sufficient state funds, universities are reliant on federal grant money, which requires students to enroll. If online courses drive away even a fraction of those students, the house of cards will collapse. For the university to do the right thing would be financial suicide.

This problem doesn’t exist just for big state schools. Even smaller schools are caught in the trap, because they are forced to compete in the ecosystem created by the state schools. What is to be done?

An obvious point: no one should take satisfaction in the economic distress in which colleges find themselves. Although I have been a critic – strongly and rightly – of serial administrative failures on our local campus, I have always believed in university life for persons individually and for society collectively.

Among even my earliest memories are especially happy ones of my father and uncle often taking me through a university campus.

Financial strains, made worse by the pandemic, are calls for lasting change long after the pandemic fades.

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