One topic that has been getting lost in the discussions about our economy is higher education. We hear a few sidebars about it when attached to larger stories, such as the Occupy Wall Street Crowd asking for forgiveness of their student loans, or discussions about the housing bubble dovetailing into a discussion about growing student loan debt in our country. A few people have offered up piecemeal solutions, but nobody has connected all of the dots to propose a sweeping reform change – until now.
One of my favorite things about being a weekend tour guide for groups made up of mostly young people from abroad is that when I get to chat with them I have the chance to hear some interesting views I might not otherwise be exposed to. For example, earlier this year over lunch after the tour one gentleman at the table was a student from Germany, and he explained how their education system differs from the American model. Under the German system students will receive an education similar to the K-12 model that we have in the US, but as they approach their final years the focus shifts. Students will select an area of concentration and most of their classes will focus in that direction, and if appropriate will lead to paid apprenticeships. Since students are moving toward an area that interests them and no longer have to study classes that do not, Germany enjoys a dropout rate far lower than ours here in the US. Ironically, just a few weeks after I had this conversation Cafe Hayekposted a link that discussed this point in greater detail if you’d like to learn more.
Rick Perry’s short campaign sadly died out before the public could get any meaningful exposure to his seven points on improving higher education.
His first four ideas focus on improving the quality of teaching and rewarding high performance. Ideas 5-7 address accountability from the schools, giving students greater control over their tuition funding, and exploring lower cost solutions for accreditation. Unfortunately Perry’s debate performances were highlighted by a combination of not remembering which agencies he wished he could abolish and a strange obsession with Mitt Romney’s lawn care preferences, which led him to an early exit. Sadly, these ideas never got the national traction that they deserved. But they should have then and they should now.
I’m also the rare conservative who actually likes to read leftist sites – however flawed their ideas may be it’s always useful to learn more about the opposing viewpoints. One article in The Nation (For anyone unfamiliar imagine a leftist version of National Review) cited a few sources that talked about issues with for-profit colleges and issues with the standards for reporting their job placement rates:
The methodologies that schools use to calculate these rates vary state by state and accreditor by accreditor, making them impossible to compare. And because neither accreditors nor state regulators put much of an effort into verifying these rates, the schools don’t seem to have any qualms about inflating them.
The Obama administration took aim at these problems in June 2010 when it proposed, as part of a package of draft regulations designed to improve the integrity of the federal student aid programs, requiring for-profit colleges to use a single standardized methodology when calculating these rates. Under the plan, the administration would have extended the standards the government requires short-term programs to follow in calculating their rates to all for-profit college and vocational programs that are subject to the Gainful Employment rules.
I actually agree with the author’s point of of calculating job placement rates, and it should be applied across the board to all colleges, both public and private. And we need to take this a bit further… Recently National Review’s cover story addressed higher education and offered its own two part solution. In a nutshell, the first proposal is to basically prevent states from insulating schools from competition, such as preventing competing schools from opening campuses on “the other school’s turf.” Personally I don’t agree with this one, as online learning is quickly tearing down the ivy-covered protected walls. Their second was to level the playing field between public and private schools by allowing private colleges to develop partnerships (like a charter school) with the state to remove the state college’s advantage of public subsidies. While I like the idea of leveling the playing field, I don’t agree with the methodology. Rather than get the government more involved, I’m thinking that we should move in the opposite direction. And I have a plan…
Before we get to the solution, first let’s look at some basic economics to identify the problem. Let’s say I run the shop that sells the best fresh lemonade in Washington, DC. I am of course, referring to the dessert stand named “Just Desserts” located at the food court in The Old Post Office at 12th & Pennsylvania Ave.* Despite the superior quality of their beverage a pint of their fresh squeezed lemonade only costs $2, with a large costing around $3. The word gets out that in addition to being refreshing, this lemonade is a great way for visiting students to cap off a morning of touring the monuments. Demand increases, and sales take off. Naturally with any finite good when demand increases so does price. We soon find ourselves at a point where not every student who visits us can afford our now $6 pint and $8 large lemonades. Since we as a society feel that every child should have the right to sample our fine lemonade, we set up government programs to assist them. We set up cash grants that they can use to redeem at various lemonade stands, or even outright subsidies to my stand to assist some of the needier lemonade customers. Now as I see more sources of revenue coming in I raise lemonade prices to $8 and $10 per cup. Granted, the extra money is not going toward improving the quality of the lemonade, but I can instead use the extra funds to build a world class Diversity Outreach department. Who cares where I spend the extra money as long as the students get their lemonade?
OK, that may not be a perfect comparison to higher education, but you get the idea. The point I’m trying to make is that we have a product that is becoming more expensive and we are taking no steps to bring down its cost, and instead are bloating the supply side. Sadly college costs become this chicken and egg upward spiral with no end in sight. Isn’t there something we can do? I’m glad you asked!
First off, we should start to look at the German model. Rick Santorum actually made an excellent point that college is not for everyone and that intellectual elites should not sneer down their noses at those who don’t have advanced degrees. When Sister Babe woke me up one Sunday morning to tell me that our kitchen sink was leaking you can bet I was quite thankful that the man who showed up in 20 minutes to fix our sink chose to learn plumbing and not Anti-Western Studies.
Next, let’s get the government out of the student loan business. Don’t we have budget crisis and exponentially growing federal debt? Something that the private sector has already proven it can handle might be a good start for shifting a government program out of the public sector. Put student loans back in the hands of private lenders and let them compete for students’ money. Don’t allow the government to subsidize the loans, either. So far to any leftist this sounds like a wonderfully predatory system for the banks to plunder students seeking loans. Hang on, I’m not finished.
When I say to let the banks compete for loans I mean it. Let them base their interest rates on whatever factors they choose – school placement rates, choice of major, and GPA. Think of this as if you were loaning this money yourself. Who is more likely to pay back a loan – the student who graduated from Stanford with a 4.0 in chemical engineering, or the Marymount student with the 2.1 in Transgender Studies? My money is on the engineer. If students need to transfer or change majors, that’s fine too – let the rate be dependent on whatever their final data is upon graduation. Needless to say, dropping out or failing out would have their own penalties, but it would give students better incentive to choose carefully and be diligent in their studies. If this means the Engineering major can shop around until he finds a place that will offer him a 3% rate while the best that the Transgender Studies major can get is 7% so be it. As an added bonus, this will discourage people from wasting money on these various navel-gazing degrees whose only career path would be college campuses or the permanent victimhood cottage industry run by the left.
As an added bonus, as we get fewer graduates with these worthless degrees we get fewer graduates marching in protest because they actually have useful skills that can get them employed. Better still, with fewer people seeking employment in useless roles like Consultant for Gender Equality in Education ** these parasitic professions will begin to die out.
So now we have the banks with extra information to help them decide how their money will get loaned, but what about the students? I’m glad you asked! Let’s arm them with information as well. We’ve started by revamping their High School education to help them find a direction to help them after graduation that may or may not involve college. By reducing the pool of high school applicants we’re already forcing colleges to compete from the supply side of the equation (Fewer applicants means colleges must improve their product, price, or both). We’re also having schools report on what their placement rates are on graduation. Let’s break it down further by degree so that students can manage what to expect at graduation. More specifically, let’s get the students involved in tracking this data. Offer a small discount for loan paybacks for any student who provides their employment data at the end of each year. Have them report not only on if they’re employed, but if they’re employed in their field, their salary for the year and if they’re working second jobs. Suddenly a Transgender Studies degree might not seem so desirable when one sees how many recent grads are employed, but at Bennigan’s or via a temp agency.
Let’s have the schools give more information about where their students’ tuition is going. How much is going toward teaching, toward research, and toward various overhead programs? Include explanations for changes to any categories. For example, did your school just combine two of its science departments to cut costs but found the money to hire five Diversity outreach employees? Thanks, but no thanks.
Let’s not stop there. When applying for these student loans each applicant should also be given recent data to show what kind of salary they can expect to make both upon graduation and later in their careers - like here. Let’s also provide them with a worksheet so they know what kind of burden they’re assuming, say in a grid showing length of loan, how much they will pay over the life of the loan, and how much they will be paying each month, like what UC – Denver does.
Unfortunately I don’t have a solution to offer everyone out there who is already carrying loan debt and is underemployed or unemployed, but at least what I’ve given you here is a plan to stop the bleeding and help the next generation. We owe it to the children – after all, they’re the ones who will be choosing our nursing homes someday.
* For the record I have no financial stake in Just Desserts, nor do I receive any compensation for plugging their lemonade. Trust me, if you go there you’ll be glad you did.
** Yes, I actually came across an individual online who listed this under the category of Job Title.