Mr. Boozer said, “I stand by my decision to deny using Alabama taxpayer dollars for a loan to an institution which I believe has been grossly mismanaged for many years.”
We agree but also wonder if states will, nevertheless, play a role in saving higher education from itself.
In the mid-2010s, enrollments started leveling off, and today, we are witnessing actual decreases in enrollments. As the saying goes, “Anything that can’t last forever, won’t.” Declining enrollments and high fixed costs have resulted in many institutions running deficits with many more teetering on the edge.
This latter problem is killing off support from many in the donor class. Given the stubborn mindset among many university leaders, that leaves one avenue open to remain in business: government subsidies. Yet as BSC found out, with plummeting public confidence, tight state budgets, and electorates facing their own uncertain economic futures, propping up failing institutions of higher education is not high on the list of legislative spending priorities.
The industry overbuilt during a long period of demand growth. Now that the growth period is over, consolidation and closures will eliminate the marginal players—just as they always do in such situations. The question is, what will the higher education industry look like once consolidation is done?
Will higher education look a lot like it does today, only smaller and leaner? Or are we witnessing the start of a radical transformation in how education is acquired? Do state governments have any role in shaping the answers to these questions?
We see some clear answers and others that will depend upon local conditions. Clearly, the future holds a much greater variety of educational models. Online education is, in our experience, not as effective as the in-person alternative. Yet it does eliminate a huge component of the fixed-cost problem.
For example, Florida recently passed legislation allowing three state colleges to provide a variety of online associate and bachelor degrees to out-of-state students for tuition of just $7,000 per year.
Another clear imperative is eliminating administrative bloat, especially cost centers that not only do not contribute to a productive learning environment but also actually damage it. Waiting for the market to correct the courses of these behemoths will take a long time—during which resources will continue to be wasted and young people’s educations will continue to be damaged. Moves such as the recent vote by Florida’s State Board of Education to prohibit spending on diversity, equity, and inclusion programs provide a shortcut to financial viability and begin to rebuild bridges to major donors.
Finally, there is the less clear but vitally important question of what we want our universities to be. When the university model really started taking off in the late 19th century, they were seen as places to form great citizens. Since World War II, they have increasingly become viewed through a strictly utilitarian lens: as vocational training institutions. If the goal is vocational training, then the government has no business subsidizing them—a vocational training industry that does not meet the market test should be allowed to wither and die.
However, if the goal of universities is to shape citizens who understand and appreciate their American heritage, its governance structure, history, and free-market orientation, then some subsidies may be warranted. Anyone horrified by the recent behavior of students at elite institutions now realizes what happens when these values are no longer taught. In the gap between pure utilitarianism and social flourishing, the government may have a role, albeit a limited one, to play.
