It’s Time for Faculty to Stop Sitting on Their Tenure

I am always surprised to read that faculty members of a failing college or university were surprised when the institution announced its closure, a large layoff, or major program cuts. How could the faculty have been unaware of the seriousness of the situation? How could they not have spotted any of the red flags? Were they not paying attention?

As a former college president, I am not overly sympathetic to a tenured faculty that has sat on the sidelines when it comes to its employer’s financial condition and future. From a basic risk management and career planning perspective, it is imprudent to blindly trust any board of trustees or administrator; indeed, history has shown clearly that employees do so at their peril. Continue reading

Ranking Colleges

The Wall Street Journal published its annual ranking of U.S. colleges and universities this week. As if you can rank colleges. Seriously, who’s to say which the best college is for you? What’s important to you? What are you looking for in a college? What do you value that perhaps others don’t? The answers are different for everyone. Moreover, who’s to say which college is of higher quality when even the colleges themselves are usually clueless about the job they’re doing of educating their students?

That said, the rankings are a reminder not to be too cavalier about your choice of college for no other reason than it is a gateway into the workforce; in other words, your choice of college will have an impact on the number and type of opportunities that await you upon graduation.

You can pour through all the rankings if you like. You’ll spend considerable time because rankings have bred like rabbits in recent years. But if you’re trying to determine which colleges have the best reputation, are well regarded by employers, and are likely to put you in a good position upon graduation, you can check one simple data point: the percentage of incoming students who graduate in four years (the institution’s four-year graduation rate). The higher, the better. Continue reading

The Higher Ed Scam

As I pointed out Monday, there is a clear correlation between income and college degrees. In particular, certain graduate and professional degrees carry a punch. But, to be fair, certain undergraduate degrees do not. In fact, it’s pretty clear to me that certain degrees from certain colleges are basically a waste of time, or worse if one considers the high cost of attaining the degree, including lost opportunity cost.

Thus far, the high water mark in the U.S. for undergraduate education was 2010, the same year I assumed the presidency of a small liberal arts college. Since then, overall undergraduate enrollment has dropped by 6.6 percent. But just look at what student-loan debt has done since that time:

Continue reading

All the Whining about Colleges Is Getting Old

Mount Ida College is the latest college to close.  It was like throwing gasoline on a fire. The whining has grown in intensity. The articles are flying off the presses (or blogs). Enough already!

You’d think the closure of a college was the end of the world. I recall what it was like when the board of Sweet Briar College voted to close the college. People blew their top. Which is fine. Personally, I don’t care how exercised anyone gets when their beloved alma mater fails, or how much money they want to toss at a failing enterprise. But it’s all the whining and refusal to accept reality that gets old. (Yes, I realize I’m whining about the whining. But there’s a larger point.) Continue reading

Student Debt

I wonder if there will ever be a pause in all the stories about student debt, particularly the antidotes about someone incurring a huge amount of debt that’s now serving as an anchor around their ankles.

It struck me that anyone who has a huge amount of debt from attending a college chose the wrong college. Sometimes (usually), the simplest explanation is the best one.

What Do I Understand Now That I Wish I’d Understood Then?

What do I understand (or at least think I understand) now that I wish I had understood when I had began my journey through adulthood? It’s of no consequence to me, of course: it’s impossible to turn back the clock. But it might be of some help to you, Vera.

In looking back I’m struck by how naïve I was when I came out of high school and, four years later, college. I had little appreciation for what the world was really like. Growing up in a working-class family in homogenous rural south-central Pennsylvania hadn’t exposed me to much. My world was very small.

More than four decades of career experiences in law, business (CEO), government (special agent for DOD and, later, cabinet secretary), and higher ed (college president) changed that. To a degree. There is still much about life I don’t understand or, perhaps more accurately, refuse to accept. I’m still learning and always will be. Nonetheless, life has imparted a few lessons along the way.

Some of the lessons were easy to learn; some were hard. Some were moments of euphoria and left fond memories; some were painful and left scars. Others were learned merely by reading or observing. (It’s always preferable to learn from other people’s wisdom or mistakes.) I decided to compose a list of what I consider to have been some of the most important lessons.

What the list isn’t, however, is a list of rules to live by. I’m not fond of rules and would never suggest life is so easily mastered. Moreover, as I’ve mentioned before, I have absolutely no desire to tell you how to live your life, Vera. Rather, I’m simply sharing some of the things I wish I had better understood when I was young, starting out.

Some of the lessons are practical; some are of the existential variety. The list is neither complete nor final. After all, I’m still learning.

Please don’t infer an order of priority, for none is intended. “You” and “your,” below, refer to me; it is as if life is speaking to me. Occasional personal comments follow parenthetically. Continue reading

Daniels Is Proving Just How Bad Colleges (and People) Are at Controlling Costs

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

Student-Loan Debt Is Following Americans into Retirement

I can’t imagine carrying student-loan debt when I was 40 years old. Or 50. Or, for heavens’ sake, 60 or older. But that’s what happening in America according to the New York Fed.

Of course, some of this debt will never be repaid. The U.S. taxpayer, who holds most of the debt via its federal government, will have to absorb the losses. The winners in such a system are the colleges, who received most of the loan proceeds.

When I was a college president, I was shocked by the willingness of some students to incur ridiculous amounts of debt for a college degree with little economic value. There just didn’t seem to be any concern over the relationship between the debt and that which was being purchased with the proceeds, or about the impact of the debt on their lives in the years ahead. I believed then and believe now that we need:

  • to do a much better job of educating our kids about personal finance; and
  • to revamp a seriously flawed student-loan program.

Unfortunately, none of this seems to be a priority, either with our local school boards or our national government. So nothing has changed. Except the loan balance, that is. The total amount of student debt has grown to about $1.5 trillion. And it’s continuing to rise.

Students Use Your Money to Invest in Cryptocurrencies

I have issues with our federal student loan program. But this wasn’t one of them. Until now that is.

From Investopedia:

According to a study by The Student Loan Report, over one-fifth of current university students with student loan debt indicated that they used their student loan money to invest in digital currency such as bitcoin.

The student loan news and information website found that 21.2% of the 1,000 students they surveyed indicated that they used their borrowed cash to gamble on the highly volatile digital currency market. While school administrators may look down upon the practice of using borrowed funds for non-school expenses, Student Loan Report indicates that there are currently no rules against it. College students are able to use loans for “living expenses,” a flexible category that covers a wide range of potential necessities.

I wonder if any of these risk takers will be unable to complete their studies because of their investment losses. Probably, but we may never know.

All of these student loans are funded by money borrowed by your federal government. In other words, you, the taxpayers, are on the hook to repay those borrowed funds if the student-borrowers fail to repay their student-loans. Not surprisingly, student-loans have a high default rate, meaning the lender (the U.S. Government) has to absorb the losses. It appears those losses may be increasing due, in part, from the risky investments made by the students in cryptocurrencies.

It will be interesting what effect, if any, stories like this one have on the student loan program. The main beneficiary of the program is the colleges, who would be compelled, without the program, to run more efficient operations and keep tuition low. In other words, the student-loan program is an indirect subsidy of the colleges.

There are better ways to assist needy students with a college education. Yet, at this time, I haven’t seen any political support for pursuing any of them. So it looks like taxpayer money will continue to be used for dubious purposes.