Mitch Daniels took over the presidency of Purdue University in 2013. They have yet to have a tuition increase on his watch. That, quite frankly, is remarkable in the world of higher ed and, perhaps, even unimaginable in a world in which annual tuition increases are a given. For more details, I refer you to this Inside Higher Ed story.
I’m particularly fond of the Daniels story because he’s proving me right. And everyone likes to be proved right.
Since becoming intimately familiar with the world of higher ed, when preparing for and then occupying the presidency of a college, I’ve contended that annual increases in the cost of a college education were not inevitable, as many claim, but were, in part, the product of gross mismanagement, namely, the pathetic inability of college trustees, administrators, and faculty to control their costs. Stated differently, higher ed is smothering in waste, inefficiencies, and extravagant spending.
They get away with it because students and their parents are willing to pay the ever-rising prices, in tuition, fees, and room and board, and are willing to go into debt to finance these purchases. Moreover, thanks in part to the cartel called the accreditation system, the competition isn’t there to constrain price increases, as it is in many other industries. But that doesn’t make it right or without consequences.
One of the consequences is student-loan debt, which is now in the neighborhood of $4 trillion. Not that most college trustees, administrators, and faculty care. They don’t. If they did, Daniels would have more company in his campaign against out-of-control spending. And Purdue wouldn’t be alone in holding the line on tuition increases for seven straight years.
Colleges and universities mismanage resources on so many levels. But, of course, they’re not alone. Their bad habits are shared by other nonprofits and governmental agencies — organizations that are not accountable to investors. But it’s not that all for-profit organizations excel in this regard. They don’t. Many of them do a poor job of controlling expenses, too. But, overall, they do a far superior job than their nonprofit relatives.
It will be harder for other colleges and universities to peddle their excuses now that Daniels and Purdue have shined the spotlight on them. Yet I don’t expect much to change for most institutions. They’ll continue to increase prices every year.
There’s only one thing that will bring about change, and that’s competition and consumer awareness. If and when students stop enrolling because there are better values to be had elsewhere, then and only then will boards of trustees hire administrators with the skills and guts to act in the best interests of the students.
But there’s a bigger lesson to be learned here, Vera, for what we see in the world of higher ed and organizations generally, we also see play out in the world of household finances. Continue reading