ACTA is an independent, non-profit organization committed to academic freedom, excellence, and accountability at America's colleges and universities.

ACTA is an independent, non-profit organization committed to academic freedom, excellence, and accountability at America's colleges and universities.

ACTA is an independent, non-profit organization committed to academic freedom, excellence, and accountability at America's colleges and universities.

Yet Another One for Margaret Spellings

January 2, 2006 by ACTA

Writing for the Washington Post, Miami University president James C. Garland argues that education secretary Margaret Spellings' Commission on the Future of Higher Education would do well to orient its study around a singular but largely overlooked fact: That public higher education as we know it is fast becoming a thing of the past.

According to Garland, rising costs and diminishing subsidies are squeezing public colleges and universities like never before. Tuition is consequently rising rapidly, and public schools are no longer the affordable answer to costly private ones. But, says Garland, this is only a bad thing when schools don't recognize what's happening and take proactive steps to make the most of it. Garland does not see the privatization of public education as the problem; in fact, he sees it as a welcome solution to the problems faced by an economically inefficient and often politically antagonistic higher education system that has in many respects worn out its welcome with legislators and the public.

Here is Garland's reasoning:

When states pay their universities to hold down tuition charges, they are indirectly subsidizing wealthy and poor students alike.

And as state subsidies dwindle, government regulation grows. My own state of Ohio typifies this pattern. This year Ohio will spend about $1.2 billion subsidizing instruction at its 13 public four-year universities, an amount that has declined over the past five years by 15.5 percent per student. Combine this decline with a file cabinet full of ever-expanding regulations, reporting requirements and tuition controls, and a bleak future seems certain for the state's beleaguered public colleges.

But states could break the cycle by investing their higher education dollars strategically.

First, turn all or part of each public four-year university into a private, nonprofit corporation, with legislation to protect research grants and centers and to honor personnel and pension obligations.

Second, phase out each school's subsidy over, say, six years, to enable campuses to grandfather in current students and adjust to the new environment.

Finally, reallocate the freed-up subsidy dollars to scholarships for new undergraduate and graduate students. The scholarships, valid at any accredited four-year college in the state, would go primarily to middle- and low-income students, with some reserved for engineering majors, math teachers and other groups that meet state needs.

Consider the consequences of this change:

Middle- and low-income students' degree costs would significantly decrease; others would pay a larger share of their college costs.

Universities and colleges would scramble to attract scholarship-holding students. Students would choose schools that offered them the highest-quality programs, the most value and a competitive tuition. Colleges that lost market share would either improve their offerings, lower their prices or risk going out of business.

Lacking an automatic pricing advantage, formerly public colleges would raise tuition to make up their revenue shortfall, but no more than the market would allow.

Competition would force campuses to become increasingly lean, efficient and strategic.

Garland's is a neatly libertarian model of how to use market forces both to liberate public institutions and to regulate them. By freeing themselves of dependency on subsidies that are at once grudgingly given and never enough, colleges and universities recover the freedom to use the funds they generate as they see fit. And, by competing openly with one another in the marketplace, colleges and universities will be forced to ensure that they spend their money well and that they offer a reasonably priced product. Meanwhile, privatization becomes, ironically, the means of restoring financial accessibility to a higher education system whose skyrocketing price tags have made it increasingly exclusive and anti-democratic.

According to Garland, the shift toward privatization is simply what must happen--and what is already happening--on campuses across the country. He is not proposing a shift, then, but describing one that is already in progress. As such, he sees Spellings' commission as having an obligation to spend some time thinking through how best to facilitate what amounts to a massive national change in the shape of higher education's economic structure. He's right.

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