Six Ways to Keep American Universities Alive

Virtually every college in the U.S. is facing large revenue declines this year and next from the impact of COVID-19: lower tuition revenues, smaller subsidies from state governments and private donors, less investment income. Ted Mitchell of the American Council of Education guesses enrollment declines will average 15%; declines will probably range from zero at some elite selective admissions schools to 25% or more at others. I think 500-1000 institutions will be pushed into bankruptcy or face-saving mergers; many were already in trouble—college enrollments have been falling since 2011.

Here are six low-tech things schools can do to survive the pandemic. At most schools, a huge portion of budgets are for workers, and four of my suggestions reduce labor costs; the other two involve physical assets. The goal is to conserve funds through more efficient deployment of generally underutilized resources.

First, furlough faculty and staff. Although typically paid to work year-round (administrators) or nine months (faculty), many in fact are idle on some days when they are paid to work. Faculty, for example, may teach Monday, Wednesday and Friday, but not show up on campus on Tuesday and Thursday. Do what the University of Arizona is doing, furlough them for maybe one day a week for the academic year, implying perhaps a 15% pay reduction. Tell faculty: we have lowered research expectations from you—one less annual article in the Journal of Last Resort is acceptable. But you may have more classes on teaching days.

Second, dismiss staff. There has been a huge increase in administrative bloat on campuses—individuals neither teaching nor doing research. Get rid of a lot of them—permanently. The same applies to a much lesser extent to faculty; the anticipated enrollment dip is probably not permanent, and many faculty have tenured appointments.

Third, cut pay. A lot of employees are collecting what economists call “economic rents—payments beyond those necessary to secure their employment. Tell them, “we can’t afford to pay you X; you can either be dismissed or agree to work for a lesser amount, 80% of X.” Unlike with furloughs, this is a permanent cost reduction.

Fourth, sell assets. Universities own vast physical assets having nothing to do with Job One, creating and disseminating knowledge: dormitories, dining halls, conference centers, athletic facilities, even aircraft. Sell them to private investors, or sell the revenue stream from them. Universities have no expertise or need to be in the food and lodging businesses. For universities with medical schools: should you sell your hospitals and largely get out of administering health care facilities, still allowing students to learn in clinical settings?

Fifth, downsize college athletics. Most schools lose sizable sums supporting ball throwing and other contests—more than $20 million annually ($1,000 per student) at my university. Downsize—go to less expensive forms of competition, like dropping to a lower NCAA division in football. Smaller teams, fewer and less expensive coaches, fewer games, no post-season contests. Kids can still have fun, competition can still be fierce between rivals, alumni can still enjoy themselves.

Sixth, cure the Edifice Complex—stop constructing new buildings. Although colleges typically spend too little on deferred maintenance, they lavish funds on new buildings. Enrollments have been falling while square footage colleges maintain has been rising. At most schools, a building moratorium for multiple years is highly desirable.

There are many other things schools can do, specifics varying between institutions. Those with overseas study programs and facilities: should you outsource them more to others? Schools with branch campus facilities: can you eliminate some of them, relying on online instruction more and consolidating residential experiences to fewer campuses? With ultra-low interest rates, can you refinance campus indebtedness? Should you move to year round teaching to better utilize facilities? Can modestly paid student employees instead of expensive adults mow the grass, serve food, and paint buildings?

Many schools should close—they are losing their appeal and often offer mediocre quality. Creative destruction can be a good thing, as Joseph Schumpeter once told us. But for most schools, this crisis is an opportunity to do the previously politically impossible: reform educational delivery to make it more efficient, cheaper, and hopefully even better.

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Still Believe That a College Degree Is a Great Investment?

Recently, presumptive Democratic nominee Joe Biden announced that he was in favor of a plan to make college education free–for most students at public institutions anyway. Why? Because too many students are supposedly being kept out of college due to its cost. Even though much of the expense of public higher education is already borne by taxpayers, Biden (and many other politicians) want to make sure that almost every student can afford to attend.

The assumption behind Biden’s plan is that college degrees are a great investment that gives the student a huge boost in earnings. Many people believe that, and recruiters bombard youth with promises that college pays. For example, Peter Osborn of Cornerstone University writes: “Ultimately, not going to college is a decision that sabotages you for the rest of your life. Your income and earnings will always be lower, and you will always have to fight harder for a job. If you want to set yourself up to succeed, a college degree is clearly the way to go.”

That has been the conventional wisdom in America for several decades: Unless you get a college degree, you will never do well in the labor market.

The conventional wisdom, however, is being tested by the pay of actual jobs.

I couldn’t help noticing the starting wages offered by Hobby Lobby at their new store in my city, Bozeman, Montana. Store officials said they would be paying full-time employees $15.70 an hour. Many graduates of our land-grant university, Montana State University-Bozeman, with degrees in liberal arts and film/video and photographic arts could find higher pay there than where they’re working.

According to the College Scorecard, our liberal arts graduates’ median earnings were $26,400 the first year after graduation, while film graduates made $21,700. Liberal arts graduates at the state’s other flagship school, the University of Montana in Missoula, might wonder what they did wrong compared to their Bozeman counterparts; they made only $20,600. Comparatively, Hobby Lobby’s $31,400 offer rocks. (College Scorecard presents the median annual earnings of former students one year after graduation. Only data from students who received federal financial aid is included in the calculation.)

And the city of Bozeman outbids Hobby Lobby. Its ad on Craigslist described a grounds-and-maintenance position paying $33,000-$37,000, with full benefits, including pension. Duties included mowing lawns and cleaning buildings, with no college credential required.

So some heavily touted college degrees bear a closer look. For that, let’s focus on the University of Montana. The school is struggling with a sharp enrollment decline—35 percent since 2011—and one likely factor is that its offerings’ attractiveness in the job market is in doubt.

Among the university’s 203 fields of study, College Scorecard has relevant data on 91. Earnings for those in all the largest undergraduate fields of study pale next to starting wages for Bozeman’s city lawnmower:

liberal arts, $20,600;
wildlife management, $23,200;
English, $23,700;
teacher education and professional development, $24,200;
psychology, $24,500;
natural-resources conservation, $24,500;
communications and media, $25,200;
sociology, $27,100; and
general education, $31,200.

MSU-Bozeman grads in certain fields do better financially. Engineering, nursing, computer science, and business degrees rate wages higher than the lawnmower or the Hobby Lobby clerk. For example, mechanical engineers’ median earnings were $58,000; those with general business degrees earned $37,900.

But ag business, animal science, plant science, environmental design, biology, cellular biology, microbiology, teacher education, English, family and consumer sciences, linguistics and languages, history, liberal arts, geological earth science, psychology, economics, political science, sociology, film/video and photographic arts, fine and studio arts, and music all came up short of lawn mowing. (Sufficient data are lacking for some majors, including sustainability studies, philosophy, religious studies, chemistry, physics, and anthropology.)

Students are told that STEM (science, technology, engineering, and math) careers are among the highest in initial compensation for recent graduates. But, looking at the above list, we can see it’s not safe to assume that applies to all science majors.

Colleges obviously should offer history, which I studied and loved, but how do historians fare in the market? History majors aged 25-64 have median earnings of $60,000. Not bad. But with promotions and raises, the person who signs on with the City of Bozeman could also see their wages reach that level. For example, the parks and recreation director in Billings, Montana has a base salary of $128,000.

It’s not just the potential students who are exposed to the hustle about the economic benefits of college; taxpayers are told that their investment in higher education is good for the economy. Promises to both students and voters are painted with a broad brush, ignoring the financial difference between degrees in, for example, engineering versus photography.

For students, the incentives are obvious: They can enjoy the social aspects of college life for five or six years, work a few hours a week, have ample time off, pay a small portion of the cost, and incur a little debt, instead of getting a job with all the rigor that entails.

That seems like a rational decision, but only because many students overestimate the benefits of college. Making it “free” would mean that the taxpayers would shell out even more money to educate or train young people who won’t even earn as much as Hobby Lobby employees.

There’s more to life than money, and more to college than boosting one’s earning potential. I’m glad I attended college and am grateful to the taxpayers and private donors that aided me, though my degree was not applicable to the career that ended up supporting my family.

Maybe some college administrators will begin adding to their financial-benefits pitch the inducement in Cardinal Newman’s The Idea of a University, that college is a place for teaching universal knowledge. That may be prudent in a labor market where graduates often make far less in their first year than retail clerks and lawnmowers.

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The decline of Australian universities, where students are customers and academics itinerant workers

Donna Tartt’s much-loved novel A Secret History paints a classic university life. All white clapboard and ivied brickwork, it’s a world of eccentric talents, intense relationships, lunatic japes, glorious freedoms and scholarship of unparalleled autonomy.

These kids, drawn from Tartt’s own college experience in 1980s America, are the wealthy elite. Here in the antipodes, though, through the mid-century, university was a similarly immersive and life-changing few years. For some it became a lifetime, which was possible because it was free. These were teaching institutions, dedicated to cultivation of the mind. There were hurdles to be leapt, but money wasn’t one of them.

Now, bloated by a 20-year addiction to immense cash flow, glamorous buildings, corporate values, industry partnerships and a teaching model that is threadbare at best, our universities flap about like overstuffed geese on a deflating life raft. No one knows the future. Can these gross creatures even swim? Perhaps now is the moment for revolution.

Last year, UNSW responded to falling enrolments with a proposal to lower entry requirements. With an estimated 80 per cent of teaching now casualised, academics have become itinerant workers. Students have become customers. Teachers report widespread pressure to pass low-grade students but cannot speak of it, fearing reprisal. This too is indicative, since the whole point of tenure was to guarantee free speech.

Now, a leaked email shows that Cambridge University, wholly online since March, proposes to keep all lectures strictly digital for a year. That’s Cambridge, mind, the ultimate in physical branding, whose ancient colleges create their own language and mythology – the stone stairs, the double oak, the cloisters, the sacred lawns. Some “small groups” may be allowed. But imagine this place, this dreaming-spires town, all but empty of undergraduate life, of student pranks, punting on the Cam and of cycling, black-clad dons.

There’s no talk of dropping fees. Anyone who’s been alive these past four months knows that their gut-wisdom is correct: online teaching is no substitute for the real thing. Student attention wanders. Interrogation is difficult. Box-ticking becomes routine. Lectures, live-streamed but also recorded, can be watched by a student in the bath, in the pub, high. The exam is open-book, or open friend, or open adjacent expert. Key learning outcomes? Tick. Content? Pah.

As soon as the stuff goes online, meanwhile, the academics sign their content over to university ownership. Then, because the lectures can be rerun endlessly, for nothing, the creative mind itself becomes dispensable – casualised or dumped.

Casualisation means your law tutor or biomed lecturer, who’s spent perhaps 10 years earning a doctorate, is appointed for 10 or 13 weeks at a time, usually with just a few days’ notice. They get maybe $120 to deliver a lecture that could take three or four days to prepare. They receive half the super payments of proper staff, no holiday or sick pay. And if, for any reason, enrolment falls the course is summarily axed. No new shoes this semester, kiddies.

Yet the vice-chancellor must be paid. True, some of Australia’s vice-chancellors have taken special COVID pay cuts bigger than my total five-year income. Still, last year, the average Australian vice-chancellor salary hit $982,000. Sydney University vice-chancellor Michael Spence, declining the COVID cut, raked in $1.53 million last year (including non-monetary benefits worth $613,000).

Plus there are all those deputy and pro-vice chancellors to pay. And the billions to spend on campus development. No wonder universities can’t afford actual teachers. No wonder they must exert take-one-for-the-team-type pressure on the few academics who remain to accept pay cuts or job losses.

The fees, though, stand. Why might students be prepared to keep paying tens or even hundreds of thousands for an education that, like candy floss, disappears before you swallow it?

Because of the ticket. Because, explains Silicon Valley guru and New York University marketing academic Scott Galloway, content is irrelevant. It’s “not education. It’s credentialing”.

“I’ll have 170 kids in my brand-strategy class in the fall,” says Galloway. “We charge $7000 per student. That’s $1.2 million for 12 nights of me in a classroom – $100,000 a night. The gross margins on that offering are between 92 and 96 [percentage] points. There’s no other product in the world that’s been able to sustain 90-plus points of margin for this long at this high of a price point. Ferrari can’t do it. Hermes can’t do it. Apple can’t do it.”

This is possible because we’ve allowed our conception of higher education to morph from mind cultivation to a tool in the great global race to … what, exactly? I mean, what now?

The world has changed. Futurists such as Umair Haque (The Long Collapse) and Nassim Nicholas Taleb argue that the pandemic is not a blip but a portent of the new fragile. Fragile economies, fragile ecosystems, frequent “fat-tail” ruin events; it’s a world where the apparently unassailable – America, universities, airports – suddenly totter. Why? Too much globalism, too much connectivity. Too much attitude. We’ve been partying too long, too hard. And universities have been partying harder than most.

Yet never have we needed universities more. As Trump’s America shows, a system that restricts genuine education to the wealthy elite must eventually drown in its own ignorance. To think, as our governments clearly do, that education is about individual career trajectories is reductivist nonsense. Educating the educable, especially in the history of ideas, is about the culture we make. It is our best defence against world collapse. Education is survival.

Which is why hard-head countries such as Germany still offer free university education. It’s not altruism. It’s political recognition of the huge economic, cultural and wellbeing benefits from nurturing otherwise undiscovered young minds. Germany’s free universities regularly figure in the world’s top 100, so there’s no sacrifice of standards; entry is competitive, but on intellect not wealth. Still almost a third of Germans attend college, their rektors (or vice-chancellors) are paid about a quarter of our average and their institutions will survive COVID relatively unscarred.

But there’s also this. What’s wrong with a little modesty? Does anyone really need the huge status, the expensive toys, the win-at-all-costs mentality? Maybe a smaller, gentler life and smaller, more real institutions could bring back a world that’s nice to inhabit. Calling to the revolution: will you be long?

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