What’s Left After Higher Education Is Dismantled
The two big higher-education stories this month couldn’t be more different. On one hand, you have financier Stephen A. Schwarzman donating $150 million to Yale to build a state-of-the-art campus center. On the other, you have Corinthian Colleges declaring bankruptcy under a flood of allegations of fraud and abuse, leaving 77,000 students demanding student debt relief for the “subprime education” they received.
But they tell a similar story: There’s no set of institutions capable of or interested in providing quality, affordable higher education for a large population outside public schools. We must remember this as state legislatures continue to dismantle, defund and privatize public higher education, because as that project succeeds no one else will step into the void and provide the education that will disappear.
Let’s start with the Yale story: $150 million is a lot of money, and even if it is earmarked for a giant vanity project, it does mean that other funds can be freed up for educating students. But how much will Yale increase its enrollment numbers as a result of this money?
We can make a good guess: zero. Yale’s freshman enrollment this past year was 1,360 students. That’s virtually the same as in 2003. Like many elite private schools, Yale is basically a hedge fund with a university attached for tax status and marketing purposes, and it’s quick to brag about its outsized endowment returns over that time period. However, all that new cash hasn’t brought any new students. And it would have been a great time to expand, as public tuition began increasing, and more students overall went to college.
It’s not clear that Americans’ tax dollars need to be subsidizing the conspicuous consumption Schwarzman is engaged in here. But there’s a more pernicious edge to his donation. As with state-of-the-art gyms, stadiums and other elite facilities, this kind of spending is likely to set off an arms race with other private and public flagship schools. Those places will have to charge higher tuition overall in order to provide these services – services that will be expected by the rich potential students that these institutions will compete for.
Now, Yale is an extreme example of private higher education. But overall private non-profit schools have been increasing their absolute numbers of students over the past 20 years, while their percentage of total students educated has stayed flat. What has been expanding rapidly and picking up a greater and greater share of college students? The for-profit school industry.
For-profit schools have gone from educating 2 percent of total U.S. students to nearly 10 percent – an increase of more than 1.5 million students – in just two decades. This was planned; the George W. Bush administration in particular reduced and relaxed regulations that allowed many for-profit schools to more easily access government funding in the form of federal student loans for their students.
The nature of these schools has changed as well. Before, the institutions were mostly small operations; now they’re massive corporations engineered to make as much money as possible, running with an insane 20 percent profit margin. And they’re expensive – far more so than public schools. But almost all of this money is borrowed by students from the government, or comes in the form of government grants. The government pays for these for-profits to exist, but shovels 20 percent of that money to the schools’ wealthy corporate owners in the process.
What’s Left After Higher Education Is Dismantled, Page 1 of 2