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James Piereson and Naomi Schaefer Riley

Popping the higher education bubble

Last week, Kenneth Griffin, the founder and CEO of the investment firm Citadel, announced a gift of $150 million to Harvard University to subsidize financial aid. It’s not only Harvard that’s back in the money. A survey earlier this month showed that giving to colleges and universities was back at pre-recession levels, with a record $33.8 billion in charitable contributions during the 2013 fiscal year, almost a 10 percent increase over 2012. Most of this increase was, according to the survey by the Council for Aid to Education, “due to the rebounding in the stock market.”

This is great news for higher education but bad news for higher education reformers who have been hoping that the financial crunch might cause colleges to rethink their operating assumptions. It is no small irony that faculty tend to be anti-capitalist while the financial stability of their institutions depends heavily on the stock market. Alas, no matter how much college faculty bad-mouth the 1 percent, the wealthy seem to have a soft spot for the ivory tower.

But if Harvard really wanted to increase financial aid, it didn’t need Griffin’s money to do so. It would instead rearrange its priorities to use the interest from its vast endowment to reduce tuition instead of, say, building new buildings or hiring new administrators.


For years, universities have managed to sail on, oblivious to the financial burdens of students and parents, thanks to the largesse of the American taxpayer and private donors. College administrators and their government enablers offer all sorts of gimmicks to increase scholarships or otherwise rearrange the price of college. But they are doing little or nothing to combat the costs of it.

Indeed, this news about record giving to colleges coincided with a report from the Delta Cost Project, which found that new administrative positions drove a 28-percent expansion of university employees between 2000 and 2012. Meanwhile, the number of full-time faculty and staff members per professional or managerial administrator has fallen 40 percent.

Talk about losing sight of your mission. If college costs were rising because education was getting better, the people paying tuition might be willing to turn the other cheek. But so far we seem to have bought administrative bloat, luxurious campuses, and a watered-down curriculum. According to a poll out in October sponsored by the textbook company Chegg, “Fewer than two in five hiring managers (39 percent) say the recent college graduates they have interviewed in the past two years were completely or very prepared for a job in their field of study, in general.”


It seems unsustainable. When will the college bubble pop?

At some schools it never will. The wealthiest private schools — Harvard, Stanford, Duke, Amherst, Williams — won’t change. Parents and students are genuinely convinced that these degrees add value to a resume and so these schools will continue to have waiting lists miles long.

In addition to a loyal alumni base, the larger universities will be able to count on research dollars to support themselves. Researchers in the hard sciences, particularly medicine, will continue to convince donors that their dollars will have a genuine impact.

And maybe it’s true that when it comes to curing cancer, universities are truly changing the world. But for the majority of undergraduates hoping to gain the knowledge that will help them get good jobs and even become educated citizens, higher education is failing to change even individual lives significantly.

The institutions that are tasked with educating those students are mostly public ones. More than three-quarters of American undergraduates are enrolled in public colleges and universities. And wealthy philanthropists are not dropping buckets of money on these institutions. Which is why they hold the greatest possibilities for reform.

Rich private universities are simply too rich to think seriously about change; that leaves it to the public institutions where most students are going and where taxpayers can actually exercise some leverage. There are some signs of change at the state legislative level. Texas has started to measure faculty productivity. Utah debated a bill to end offers of tenure to new faculty. Wisconsin has created an online competency-based education program. But no legislature has begun to offer incentives for administrations to reduce the cost of college. It’s time to stop waiting. We must pop the bubble ourselves.


James Piereson is president of the William E. Simon Foundation. Naomi Schaefer Riley is the author of “The Faculty Lounges . . . And Other Reasons Why You Won’t Get the College Education You Paid For.”