The 2014 higher education financial freak-out is underway.
Earlier this month, the Obama administration released several hundred pages of comments from schools, advocacy groups and other interested parties with regard to a rating system that, when implemented, would hold colleges in the U.S. accountable for their performance—or lack thereof.
Certainly, consumer-learners (and their parents) are eager for greater transparency: an estimated two-thirds of all college students take on debt while they’re there, only half end up graduating and more than a third of those who do are underemployed and underpaid. What’s more, if all the delinquencies, defaults, forbearances and payment deferments were taken into account, we’d probably find that nearly half of all the loans that are currently being repaid are also in trouble.
Unsurprisingly, many schools and their advocates are challenging the administration’s efforts to put their feet to the fire on these matters. After all, there’s a lot of money at stake in the form of federally sponsored aid and loans.
Wouldn’t it be more productive, however, if the schools and their supporters instead turned their attention to upgrading and delivering a more affordable product, especially when the funding that would be needed to do that is within reach?
What Would It Take?
Some of the money is “buried” in the land the schools own and the buildings they’ve constructed atop it. Dormitories and cafeterias could be sold and the structures converted into fully functional, self-contained apartments, grocery stores and eateries. As a result, not only would fresh capital flow back into institutional coffers, but doing so would also help students to learn about self-sufficiency, a life skill that colleges and universities need to do a better job of inculcating.
As for the fabulously outfitted sports centers that are used to attract the attention of students (and the parents who long to be in their sneakers) these, too, can be privatized with memberships sold to the community-at-large. Classrooms that are no longer needed because of expanded online and hybrid-course offerings could be rented out to local companies for use as conference and training centers. The space could even be transformed into incubators for fledgling startups that may, in turn, rent a portion of the schools’ administrative and technological capacity, as well.
Speaking of capacity, according to a Goldwater Institute policy report, per-student spending on full-time administrative personnel grew by more than 60% between 1993 and 2007, when adjusted for inflation. That’s nearly twice the rate for instructional spending, which is mind-boggling: the delivery of quality educational content is what distinguishes institutions and hones competitive position.
Consider, for example, a state that has a half dozen private colleges and universities of roughly the same size. Undoubtedly, each has its own area of specialty and other unique attributes. But each also has its own leadership hierarchy (president, provost and chief financial officer), administrative functions (accounting, purchasing and human resources) and technological platforms.
Imagine the savings that might be wrung out of the system if the back ends of these institutions were consolidated. In fact, if these were public companies, they would have already been acquired and restructured because, as anyone who’s lived through a corporate takeover knows, when you don’t do it for yourself someone else will do it for you.
Back to Basics
While we’re at it, let’s not forget the foundational role that high school plays in preparing our children for the next step in their academic pursuits. In particular, rather than shoe-horning students into college—any college, for that matter—just to bolster the numbers, guidance counselors should ensure that students are indeed ready for the academic challenges they’ll face and the costs they should expect to incur along the way.
So when it comes to establishing a set of measurements that’s useful to those who pay the bills—students and parents that struggle to make ends meet, taxpayers who support the government’s educational programs, employers that offer educational assistance, alumnae who contribute to endowment funds and lenders that provide mortgages and other types of financing—it all boils down to three fundamentally important categories of data: completion rates, student-loan payment performance and employment versus underemployment.
Everything else is either secondary—or just plain noise.
This story is an Op/Ed contribution to Credit.com and does not necessarily represent the views of the company or its affiliates.
More on Student Loans:
- How Student Loans Can Impact Your Credit
- How to Pay Off Student Loans With Forgiveness Programs
- A Credit Guide for College Graduates
- How to Pay for College Without Building a Mountain of Debt
- Strategies for Paying Off Student Loan Debt
Image: Peter Spiro