Policymakers | Costs

Student debt forgiveness misses the hidden cause of rising college costs

WASHINGTON EXAMINER   |  July 9, 2019 by Erik N. Gross

College costs and student debt have become central issues in the 2020 election as presidential challengers, Sens. Bernie Sanders and Elizabeth Warren, have promised to forgive student debt. It’s unsurprising that this issue has garnered attention, as student debt has hit new heights and many in debt are forced to delay home ownership and marriage. With default rates on the rise, some argue that the student debt burden represents a threat to the American economy writ large.

Debt forgiveness as proposed by Sanders and Warren, however, will simply provide a band aid, while ignoring the long-term root cause of the student debt burden: the burgeoning functions, staff, and financial commitments of our colleges and universities. Someone will have to pay the price for this inefficient administrative bloat, whether it be taxpayers or consumers.

In theory, a university is an institution with one purpose: education. A college degree signals to employers that a graduate is a capable thinker and learner.

In reality, few universities can be described so simplistically. Most major research institutions more closely resemble a corporate conglomerate, whose primary functions are often opaque to the public. Universities conduct billions of dollars of sponsored research, operate massive athletic departments, and run charitable foundations and sustainability centers. Some even maintain local transportation infrastructure. Others have business incubators, overseas campuses, luxury student amenities, and even affiliated think tanks.

For example, Johns Hopkins University, the University of Maryland Medical Center, and the Johns Hopkins Health System are the three largest private sector employers in Baltimore.

Predictably, as the functions of the university have multiplied, administrative staff has burgeoned. From 1987 to 2012, higher education institutions added over half a million administrators, doubling relative to the number of faculty. This trend has coincided with many of academia’s greatest ills; the erosion of academic freedom, the degradation of academic standards, and the weakening of the liberal arts.

Much attention has been paid to the growth of niche, interest-area administrators such as diversity and inclusion officers, sustainability officers, residential life officers, student engagement officers, and study abroad officers, not to mention the growth of compliance and liability professionals as colleges are held under ever increasing legal scrutiny.

The watchdog website HowCollegesSpendMoney.com shows a steady increase of spending on administration relative to spending on instruction. These ratios have been climbing for decades as colleges have allocated more resources toward administration and oversight, rather than to faculty and teaching materials. The trend can be attributed to a shift in governing responsibility away from faculty to professional administrators. College administrators face monetary and personal incentives to expand their function, their staff, and their budget. Like bureaucrats everywhere else, administrators raise their profile — and, in turn, their pay grade — by taking on new projects and thinking big.

So where does this leave student debt forgiveness?

Voters will have to weigh whether the cost of bailing out borrowers justifies the end results. But until colleges choose to get lean, or federal funding mechanisms force them to, the price of tuition will continue to increase for students, taxpayers, or both.

Tuition can be reined in only when institutions make the hard decisions and cuts necessary to refocus on their educational mission. Otherwise, debt forgiveness simply kicks the can down the road.


 Erik N. Gross is a communications associate at the American Council of Trustees and Alumni.


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