How Will The Colleges Cope?

Dr. Macchiarola, chancellor of St. Francis College in Brooklyn, delivered these remarks on February 5th at a one-day conference in New York on “The Future of the University.” The conference was sponsored by the Manhattan Institute’s Center for the American University.

If I were making this presentation a year ago, I would not have some of the deep concerns about the future of the university as I do today. Certainly the changes that are occurring within the university today are due, in large part, to some of the real difficulties the university faces in adapting to forces that are internal to it. The presence of the deep economic recession that we face today – and that will be with us for some time to come – significantly adds to the uncertainties that today’s university has to confront. It puts solutions to a considerable extent beyond the scope of what some universities can actually manage.

The recession – or perhaps depression- has for private universities hurt their financial condition dramatically. Endowments drop and endowment income which is critical to the university’s operations fall as well. In virtually all instances this combination means that universities been tremendously impaired. Endowment income which can provide 5% of market value for operating expenses is less available and this adds to the gap between tuition income and expenses that universities must face. Endowments are affected, especially for the tuition dependant schools which require tuition to fund operations in significant ways. Well endowed universities are the exception, not the rule. Costs also increase, usually by a multiple of the rise in the cost of living. This has been almost the universal rule largely because of factors that have driven universities to give students “more and more.” The usual course of action -increasing tuition – is made more difficult by the hard economic times. Fewer students being able to afford college mean a shift to lesser charging private universities and the public ones. The factors that have operated to allow universities to grow are not present in anything like the same way. The decline in the number of high school students exacerbates the problem even further. While students may choose public institutions as an alternative, things are not going well there either. The depression has hit states hard, and while the stimulus plan may be helpful to them in the short term, they will not be able to absorb more students at the subsidized costs that they have traditionally borne. The taxpayer is being hit hard, and the state economies are as well. The public universities will have to charge more and give less. There is tuition relief by the way of increased Pell Grants and tax credits for college tuition, but there is no way that we will be back to conditions ante recession.

But it is not only the external forces that threaten the university. In fact, they are not the most substantial challenges that universities face. The university is a tremendously inefficient organization which almost by its nature has to be wasteful. Time for research, conversation, and one-on-one instruction are not economically productive. While we may well say these things are necessary the ones most frequently saying these things are the academics themselves. They are, in legal terms, “self-serving declarations.” In time when costs and value are expected to have a direct relationship, it is very hard to justify 6 or 12 hour teaching loads, 26 weeks in the calendar year for instruction, and stipends for research in journal publications that are often not “useful.” Those of us who have grown up in the university are used to seeing it this way, and I don’t think we are ready for the “green eye shades” who measure acceptability in terms of standards that are not intelligible to the university professoriate. Were the opposition only those found in the government, the issue would be far less complicated than it is actually is. The opposition to “business as usual” comes from the consumer – the students and their parents who question why getting a college degree is “so damn expensive,” and why so little useful instruction is taking place.

The real answer is that, higher education need not be so expensive. Profit making universities, which have grown in numbers, are challenging traditional public and private universities and are winning the battle. They are efficient in delivering credits, adjust their teaching schedules to those convenient to students, teach off-site and at odd hours, use technologies that cost less and provide maximum flexibility. In addition, and this is critical, they cost less. And when many students are going to college not to learn, but to obtain skills and certifications necessary for getting a job, these profit making schools are tremendously attractive. They have, in a short period, proved to be strong competitors.

The poor economy will drive many to seek alternatives to their current jobs – and they will seek programs offering certifications. This is what profit making universities and on-line universities are good at. They are, in short, in the marketplace. And they are able to take students away from the traditional classroom learning. Indeed, many traditional universities have joined them, providing similar types of program that they had historically avoided. It is the logical extension of the trend in higher education to giving students better outcomes in ways that are measurable. Whether they are educated, in the way we have traditionally regarded learning, seems to be less important today. In my experience for the past 7 years as a member of the Accreditation Committee of the American Bar Association, I have seen Department of Education mandates drive the process toward measurable outcomes, things like “bar passage” and student attrition. Whether the law students learned aspects of the, law not covered by the bar exam has largely been put to the side. This dilution should have the effect of lowering costs for students, but the process does not seem to have advanced a great deal in that direction. The future will, however, see much more fiscal accountability for the consumer.

There are other factors that are having a role in changing the face of the higher education. One of these is the increasing government support for students attending profit making institutions. More and more of these programs are qualifying for student aid in the states that have these programs. There is a growth in privatization that has invaded virtually all aspects of university business. From data systems, to tuition payment systems, to basic operations of school enterprises, the amount of private company service has grown significantly.

An additional factor has been, what I call the “securitization” of education. Certificates by companies employed is like data processing, as well government agencies regulating professional education has brought many new players into the market, often crowding out universities which are not as facile with change.

Adding to this change has been the growth of coursework off-site through distance learning programs. These are a source of “easy” cash for universities which do not have to provide the learning environment that is so expensive at the college campus. The end result is that unless a university pays great attention to its bottom line, and to efficiencies that are possible, it risks financial ruin.

A further problem for higher education is the antiquated governance structures that they have. I have often said that what takes one year in business to accomplish takes 3 years in academia. It is a place where excessive consultation can lead to virtual paralysis. Faculty governance interferes with efficiency and some privileges like tenure, sabbatical, research related time from teaching inflate costs. Student tuitions are asked to subsidize many extraneous activities – extraneous in terms of what students are paying for – instruction. This makes the traditional university expensive and perhaps obsolete. Pay incentives are also often misplaced with higher salaries going to “notables” in the faculty, who generally obtain the notoriety by being away from the classroom. All of this sounds quite heretical and in a real sense it is. I am not saying it because I do not value the academy. I say it because the consumer, who is paying the freight, is not getting the greatest “bang for the buck.” I know as well that the reason for many students going to college – getting a good job – does not tell the whole story of what higher education is all about. In the end, the future will mean significant change for our universities.

Frank Macchiarola

Frank Macchiarola led New York's public school system from 1978 to 1983.

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