Higher Education Reformation

UPDATE: Close enough.



From June 19, 2010:

After hearing about the NCAA conference shake-up and of how so many universities have become dependent on their athletic programs, I was quite concerned but even more curious as to why an institution meant to develop the foundation of the nation’s future is being forced to allocate resources toward a project which ultimately provides the country with absolutely no competitive edge in the coming global economy. Don’t get me wrong, I enjoy the social solidarity of intercollegiate sports just as much as the next guy (well, maybe a little less), but it seems to me that the proper way for a college to run is to have its academic departments generate a majority of its revenue while the athletic programs are funded by a portion of those proceeds, not the other way around. After all, collegiate sports are just another form of entertainment. They are simply luxuries which provide no long-term benefits for the American workforce. Why is it that so many top universities are more focused on churning out athletic entertainment rather than productive and capable alumni? Doesn’t it seem somewhat backwards for America’s higher-education institutions to be pumping out more consumers than producers? I believe the reason, as in most economic and social phenomena, lies in a distorted system of incentives which do not align with or support the core goals of the institution.

First, we have to look at universities as enterprises, which they are, though with clearly unique qualities that set them slightly apart from traditional businesses. The core objective of a university is to prepare young people for productive lives in the real-world such that they can support and maintain a healthy economy, which in turn supports a healthy society. Therefore, the primary product a university provides is qualification to join the labor force. However, universities also strive to provide as many individuals with those opportunities as possible, since they are after all supporting a cause far greater than their own financial success. Thus, universities often strive to maintain relatively affordable tuition costs for their students (customers). Therein lies the first problem. Universities have conflicting interests. They seek to be sustainable enterprises while simultaneously attempting to be as affordable as possible. In the free market, that may make sense, but in the context of a university, where lower-prices cannot increase the consumer base as the maximum capacity for instruction at any university is a set limit, this leads to a disastrously unprofitable business model. Luckily, universities also have a secondary profit stream in their athletic programs. Universities with outstanding athletic programs draw crowds of onlookers. There is a demand to behold the spectacle of their sporting events and that demand is what generates the revenue. However, in this case, the university has no conflicting interests. There are no protests calling for affordable sports entertainment. We consider college sports to be a commodity to be openly traded on the free market, while we hold education to a far more sacred and higher standard. Thus, athletics can be traded and sold aggressively. It can be made to be profitable, while academics must constantly abide by the virtue of its noble cause. In this way, college sports have become the primary source of revenue for universities.

Now, you might think that the answer is to simply set academics free from the shackles of “noble causes” and “higher callings,” but that is not at all what I’m advocating. Education should maintain its high-ground since that high-ground is exactly what makes the institution more effective at affecting its true goal—training as many qualified workers as possible. Allowing universities to behave as competitive, cut-throat businesses would not serve the fundamental goal of the institution. It would certainly make colleges more profitable, but it would also end up pumping out significantly fewer alumni and ultimately less qualified individuals into the workforce. I believe that a far better idea would be to rethink and reconfigure the incentives of the business of education such that they are more aligned with the goals of the education. As education is meant to support the economy, why not rethink what exactly it is a university sells and to whom it is selling? Instead of being a merchant of knowledge and training to the general American public, why not shift their focus on to the true end-users—that is the real-world and its plethora of wealthy and needy businesses. And instead of selling education, isn’t it more accurate to think of universities as selling educated workers? It is after all the business world that benefits most from academically enriched graduates. The knowledge and skills people receive from universities ultimately help businesses develop more effective, innovative, competitive, and profitable strategies and products. Why should universities charge individuals for tuition when it is ultimately the businesses that benefit from that product? What we need is to tie effective and meaningful academic programs with profitable consumers who are willing to pay for the benefits of those programs.

How do we fix the problem? Consider a radical new educational system in which tuition is extremely low and affordable, and matriculation is based on merit and interest rather than financial capacity. Young people will be afforded opportunities to attend higher-education like never before all thanks to the wonderful contribution of…the world of business. The cost of running a university will be pushed on to the true consumers. For each employee a business hires from a particular university, they must pay a percentage premium on top of that employee’s salary to the employee’s alma mater. They may choose to cut into the salaries of these employees if they wish. Of course this means lower salaries immediately after graduating, but it also means lower post-graduate debt. This way, universities get compensated for providing the education and training that their students receive. Businesses will compete in the free-market of qualified labor and weigh the costs and benefits of hiring new employees from various universities. This system also places an incentive for universities to improve their academic programs and encourage their students to be more accomplished. Universities capable of providing the most highly-trained and most influential employees will earn the reputation of producing superior goods. They will be able to increase their premiums as businesses clamor to hire graduates from their prestigious academic programs. The entire institution will shifts its focus from simply training an aimless mass of young adults to facilitating a transactional transition from academics to business. This method will greatly integrate universities into the overarching economic environment in which they exist. It realigns flow of cash (and thus the placement of incentives) to better reflect the ultimate goal of higher-education. Sure there are probably a great deal of flaws in the details as this is a rant of complete theory and conjecture, but the underlying concept and idea is one that is extremely interesting and at least deserving of some consideration.

Mike LinComment