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Fixing Higher Education: Part I

There are many sub-issues related to these such as student debt, post-grad employment, etc. What I would like to do is to offer a few suggestions on how we can quickly reduce some of these problems.

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There is no doubt in my mind that the most pressing problem with education is cost. Some have referred to this as the "education bubble." I don't think we need to name it in order to know what it is and what it is: it's out of sight, unsustainable and unfair to those who can't afford it. Why? I say it's because of competition. Not that competition is bad, but what they're competing over is illogical.

Let me give you an example of where this competition has gone array. When I was at ASU, the recreation center at the Tempe campus came to the student leadership and asked for millions of dollars to build a new complex. My natural reaction was to ask why. Why do you need a new complex when you have an existing and already considerably large complex? The response from university administrators was that ASU's recreation center was not competitive with it's peer institutions in the then-pac-10. They offered to take us to UA, UCLA, and UW as examples of peer institutions. They argued that because UA had a brand new facility, with a rock climbing wall in it's gym and other amenities, that it made it more appealing for students to opt to attend UA rather than ASU. This is a classic example of an augment I saw play out over and over again during my time at ASU. ASU needs an updated football stadium, a new bookstore, a new health center, and on and on and on. Why? Because they needed to compete with peer institutions.

Now, I am most assuredly nuts, but to me, this is insanity. I am quite certain that the purpose of attending a university is to get an education. I appreciate the health center with relaxing water falls as much as the next guy, but not when tuition is doubling every three years. It's a mad dash on the part of these institutions to get more stuff and build bigger empires. Colleges are offering increasingly more diverse courses (see the course on Elvis) and paying for a whole slew of services based not on what students need to get a good education, but based upon what the school needs to do to feel like it can compete for those students. That's the problem right there. The universities have an attitude that everyone ought to go to college and as a result, the universities compete like crazy just to get the most students they can in the door. It's bizarre, it's expensive, it's ultimately bad for students and society.

With that I offer you my solutions for fixing the first problem:

Solution 1: Take the funding decisions away from the institutions and give them to the students.

Here are three substantive policy reforms that should go into effect to make this happen:

  1. Fee out every student service and allow students to choose which fee they pay
  2. Stop subsidizing tuition with tuition from other students
  3. Stop direct state funding to institutions and replace that with a state financial aid system

Solution 2: Establish a dedicated revenue stream to higher education

Solution 3: Establish a perpetual education fund

Some brief explanations:

Solution 1

Almost all universities are starting to move away from a tuition model. In place of traditional tuition, there are fees for everything. Fees for recreation, health services, technology, and increasing academic fees for programs such as business, chemistry, etc. Institutions like Penn State have led the way in developing progressive fee structures. There are many who see this move towards fee funding as a net negative. I do not. The reason I do not is because I don't think students should have to pay for a recreation center they will never use. To me, there should be some mandatory fees that allow the institution to build and maintain the structures, but if we want to empower students and lower costs, we can start by not forcing students to pay for services they will never use.

This principle holds true for academics as well. Today, students who go to school as pre-med students to become dentists pay the same amount in tuition as students who go to school to become history teachers. One will go on to pay off their student loans quickly and make $200k a year and the other will be lucky to make a quarter of that and will struggle for a decade or more with student loan debt. It doesn't make financial sense that the history student should subsidize the pre-med student. This is especially true when you consider how little expense (classroom, book, and teacher) is needed to prepare a history teacher compared to many other professions. Students should pay a flat tuition that covers the courses everyone will take to fulfill their general education requirements, but there is value is having programatic fees to ensure that each major pays their fair share without having to subsidize others. This fee structure means ending indirect and direct subsidies from one student to the next. Students should get what they pay for, nothing more, nothing less. This will also go a long ways towards discouraging the epidemic of eternal students who go to school for 8-10 years changing majors on a consistent basis and costing the institutions massive amounts of money.

This idea of allowing students to choose with their feet will allow empower a free market within the university system. Services and programs will be able to work with the students to see what the fair market is for their product and adjust accordingly. The chemistry students can decide what level of education they want and help promote a programmatic chem fee to fit their desires. If students are all vested in the recreation center, they can vote with their feet and create a thriving recreation center. For the student on a tight budget who just needs to get an education, they can get one without all the bells and whistles, thus keeping their cost low. Empowering the students will bring down costs and the competition within the institution will increase quality.

This competition doesn't just need to take place within the university, it needs to take place between universities. Giving students a check for their portion of the state's contribution to financial aid will empower true competition between the institutions, public and private. This will not only have the effect of lowering costs and increasing quality, but it will also increase transparency. Where today's students are told by the legislature that the problem is increased costs and they are told by the institutions that the problem is lowered state investment, this solution will empower students with the facts. When the state gives you a check as a student to be used at an institution of higher education, you can see what the number is on the check and know instantly whether the issue is increase costs, lowered funding, or both. This will again allow students to vote with their feet and reward those institutions that keep costs low. This will also end much of the funding through lobbying that has been a plague on the system.

Solution 2

The best way to ensure that costs are kept low to students is to keep them from having to pay them. This is part of the governing philosophy of the Arizona constitution, which requires that education be offered to students "as nearly free as possible." So, how do we provide that? We have to do that by establishing a dedicated revenue stream to higher education. Some states, such as Wyoming provide this by taking the tax from natural resources, namely oil, and dedicating those only to higher education. I don't think it much matters what the revenue stream is, as long as it is established. I do not believe that income, sales, or property taxes are a good source of this revenue stream as they are so often competed for. I believe that taxing natural resources makes sense and in Arizona sources such as copper would be a logical step. Other options include sin tax on items such as alcohol, where Arizona has a relatively low tax rate. Whatever the funding stream, it ought to be identified, established, and adequately safeguarded from legislative interference motivated by economic booms and busts.

Solution 3

I believe that the state ought to start a perpetual education fund. Such a fund has been most effectively utilized by the LDS Church in the education of it's membership around the world. The general idea is that a large fund is established for the purpose of providing students with no interest loans. This fund is begun and keeps it initial investment protected while providing it's annual interest to students to take as a no interest loans. When the student receive their education, they simply return the money they borrowed back to the fund, which in turn grows the fund. The idea of this fund would be that eventually the fund continues to grow until the education system can be funded off of the interest on this massive publicly owned account. While it may take a century or more for the fund to become so large that it could fund the entire system, the appeal of providing students with no interest loans is obvious. By only providing loans on interest, the fund is protected from harm by default. This idea of investing into the future makes tremendous sense. I believe that a policy such as this would benefit greatly from an annual portion of the dedicated revenue stream and ought to be the home of all federal financial aid. Other revenue stream such as license plates, student fees, etc ought to be looked at as ways of growing the fund and providing greater access to lower income individuals.

While I readily acknowledge that these solutions are politically difficult because they are so fundamentally different than the system today, I do not think they are impossible to get done. I believe they are the first steps towards getting costs under control. There will need to be other long-term solutions put in place in order to help bring about cost control, but these would have significant impacts on students immediately and would do so at no cost to the state.

So, that's my solutions to the first problem. The other problems will have to wait for another day.

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Posted in Mental Health Post Date 10/27/2016






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