Earlier this summer the U.S. government faced default and had its credit rating downgraded, convincing almost everyone that we have been living beyond our means — everyone, that is, except many educators. Even those who have been furloughed or had programs cut and workload increased typically blame the economy, the legislature or a political party. This article is about none of that. It’s about the system.
It’s time to smell the Starbucks and abandon the status quo that has cost colleagues their jobs, parents their bank accounts and students their future.
A glimpse of the past: Almost every institution embraced the core value of excellence — sometimes deservedly, sometimes not. But the real guiding principle for decades now has been growth, perhaps instilled in us by the federal government that funds so many of our operations, stimulates our budgets and underwrites tuition with grants and loans.
Inside the institution, the concept of growth is elephantine. Course catalogues are going entirely online not because of convenience but because of the cost of printing the ever-expanding content. Sequences aspire to departments, departments to schools, schools to colleges and branch campuses to free-standing universities.
To reform the institution so that it lives within its means, we will need courageous administrators and cooperative professors. They don’t have to reinvent the academic wheel; they just have to steer it in a more fiscally sound direction.
Here are 12 examples of common practices that inflate tuition, bloat payroll and persist during challenging economic times with a dozen proposals to nullify the status quo so that institutions may operate more efficiently and effectively in academic year 2012, trimming budgets, managing workload, and enhancing student retention and graduation rates.
1. Acknowledge curricular glut.
Status Quo: Create new courses and propose new degrees without removing existing ones from catalogues or dealing with duplication, being oblivious to how this growth affects professorial workload, student tuition and graduation rates.
Solution: Remind faculty members that curricular streamlining decreases workload, frees more time for research to meet promotion and tenure requirements, and allows more one-on-one advising to help student retention. After the reminder, mandate a curricular review to discern which units keep adding to the catalogue, creating sequences and tracks, increasing degree requirements or otherwise inflating pedagogies. Those units should cut excess curricula within one year or risk losing positions or having their budgets cut accordingly so as to force streamlining.
2. Stop program duplication.
Status Quo: Approve courses in digital communication, popular culture and multimedia offered by multiple departments so as to attract non-major enrollment and generate credit hours. Endorse degrees with narrow subject matters, such as “environmental chemistry,” believing that every unit should determine its curricula and partake in innovation and specialization.
Solution: Require each academic unit to create a “Program Responsibility Statement,” specifying curricular and pedagogical areas so as to prevent program overlap. Example: “Journalism and communication produces content across media platforms (digital, print, visual, broadcast, advertising, public relations, science communication, etc.) targeting audience and preparing students to produce work for hire.” Such a document should outline what pedagogical areas fall under the umbrella of each unit, thereby informing curriculum committees so that courses already in the catalogue by one unit are not duplicated by another.
3. Demand curricular reform.
Status Quo: Approve new courses based on pedagogical arguments rather than on available resources and allow senior professors to continue teaching outdated topics such as "Darkroom Photography" or "Mechanical Drawing." Permit teaching centers to advocate for the latest technology without assessing effectiveness or cost, encouraging professors to create courses for each new application or device in the untested belief that technology engages students. Propose new or experimental courses for timely topics often based on fads and trends hyping but not delivering innovation.
Solution: Verify that a new course proposal does not duplicate an existing class and that sufficient resources are available to schedule it on a regular basis. Evaluate the cost of technology such as clickers and determine whether it actually enhances learning by assessing outcomes empirically. Introduce new applications and technologies into existing courses, rather than create new or experimental ones that may be outdated in a few years (Second Life) or commonplace (Facebook). Use the rubrics of seminars, workshops and independent studies for timely topics, rather than propose new or experimental courses that need to be scheduled and staffed on a regular basis.
4. Use the teaching budget for teaching.
Status Quo: Request funds from deans when faculty or staff vacancies occur to be deposited in a unit’s supplemental budget and then use part of those funds for travel and professional development rather than for instruction.
Solution: Raise benefactor money for travel and professional development. Don’t use supplemental budget for those purposes because that impedes student degree progress and adds to faculty workload in as much as more courses need to be staffed. Enforcing this is how deans and provosts earn their pay, sanctioning spending policies that foster student degree progress. Ignoring this means administrators have to come up with “bridge money” so that units can still operate from one semester to the next.
5. Revise budget models.
Status Quo: Endorse resource management models that typically overlook streamlined units whose pedagogies ensure timely graduation rates. Overemphasize student credit hours rather than number of majors, providing cover for small departments with few majors that use adjuncts or graduate assistants to teach general education while professors specialize in arcane topics.
Solution: Revise budget models to recognize timely graduation or establish a provost-level mechanism to reward programs with high four-year rates. Invest in units qualifying as destination majors, attracting high school students. Without majors of the largest programs, small departments specializing in general education would have fewer students generating those credit hours.
6. Change hiring, and promotion and tenure policies.
Status Quo: Use adjuncts or teaching assistants in introductory courses such as composition or beginning math so that senior professors can teach specialties within their degrees. Recruit hires on the promise they can develop their own courses based on narrow research topics and reward continuing professors in Promotion and Tenure for new course creation.
Solution: Hire adjuncts only when faculty members lack experience or expertise in a subjectand assign your best professors to teach large introductory classes so they can recruit new majors to your program. Require new hires to teach within the current curriculum and revisit P&T policies, recognizing innovation within existing pedagogies.
7. Restrict non-major enrollment.
Status Quo: Allow students minoring in your discipline to take core or skills classes and other units to require those courses in their own degree programs, effectively creating substandard portfolios or faux expertise in a discipline.
Solution: Funnel non-majors into large introductory and concept classes, preventing them from claiming seats in small required courses so as to safeguard degree progress for your majors and reduce the number of sections being offered each term.
8. Simplify degree requirements.
Status Quo: Keep adding courses to the degree program and increasing the number of hours needed to graduate even though the institution may only require a dozen fewer credits for a diploma. Require pre-requisites for 200- and 300-level courses by adding prefixes and suffixes, such as “Beginning,” “Intermediate” and “Advanced” Economics or Biology “I, II, and III”—often artifacts of an institution that switched in the past from quarters to semesters but also didn’t reduce curricula for the longer academic term.
Solution: Decrease the number of credits needed for the degree and create a curriculum with basic components: cornerstone courses that build a foundation, core courses that expand on that foundation, and capstone courses that prepare students for the workplace or graduate study. Reduce the number of prerequisites for electives and eliminate “intermediate” levels, thereby creating rigor. This ensures that courses have sufficient enrollment and allows for classes to be scheduled in periodic rotation rather than each semester.
9. Eliminate silos.
Status Quo: Create non-official degrees by building curricula around sequences, emphases, options and tracks. This adds to workload in addition to slowing graduation rates because required courses often must be taken in sequence.
Solution: Eliminate the silos of sequences, emphases, options and tracks. If it’s not on the degree, don’t build curricula around it. Revamp courses so as to include components of former silos. For instance, in media classes, require each course to address print, broadcast and Internet rather than build classes around each platform.
10. Require faculty advising.
Status Quo: Hire academic advisers and allow professors to shirk responsibility for knowing the curricula, keeping office hours and meeting with students one-on-one.Allow the institution to handle new student orientation rather than deal with high school students making the transition to college life.
Solution: Require professors to do academic advising, spending more face time rather than Facebook time with students so as to ensure a good retention rate and timely graduation. Professors who resist can teach an additional class.Schedule an orientation workshop for transfer and first-year students, requiring undergraduate plans of study before the sophomore year. This increases four-year graduation rates and gives students a sense of destination.
Status Quo: Allow departments with few majors to hire staff, appoint administrators, use credit cards and add courses to the catalogue to earn a degree for which there is neither need nor demand. Retain professors not by paying them the salary that they deserve but by offering them directorships in institutes and centers that fail to win grants and serve only as pricey showcases for popular causes or scientific trends. Maintain the institution’s archaic organizational structure at all costs.
Solution: Consolidate small programs into departments or schools of humanities, social sciences and natural sciences. Professors can teach general education to other majors with the emphasis on critical thinking and interdisciplinary learning in a multicultural world. Terminate institutes and grants that fail to produce results.
12. Cut administration.
Status Quo: Mandate institutional change only at the professorial level and maintain the same number administrators, especially at the college level.
Solution: New operations cannot run on old administrative engines. Limit associate deanships to three per college: budget, curriculum and research.
The status quo may have worked or even benefitted students in better economic times. But those times have ended and a new era of fiscal responsibility has begun. If budgets improve, methods to streamline should not cease because the new challenge then will be reducing student tuition.
Michael Bugeja is the director of the Greenlee School of Journalism and Communication at Iowa State University of Science and Technology. Although his budget has been cut 24 percent over the past three years, faculty workload has not increased, research productivity reached record levels in 2010, and students graduated in a timely manner with a 95 percent job placement rate within six months. He teaches 180 pre-majors in two journalism orientation classes.
Imagine. No interruption of study and research for all students and faculty in the Middle East shut out in this latest war. Lebanon. Israel. Gaza. Iraq. Everyone.
Why not? Education is cheaper than war.
John Waterbury, president of American University of Beirut, who was stuck in the United States when war broke out, is in Washington seeking federal aid and hopes to soon be on his way back to his campus. I'll bet he and all his Middle East colleagues would welcome help from us.
Never mind U.S. visas for now. We have the Web, satellites, cell phones and air drops. Imagine seeing on CNN: classes and seminars and students studying in the rubble. Now. On all sides of all borders. People from around the world showing life will go on. Saturday, I listened to a friend describe the ballet precision of his evacuation from Lebanon last week. With thousands of others. The U.S. government can do such things. Punch the “Reverse Route” button. Of course, this is difficult.
Hurricane Katrina was an act of God. American higher ed scrambled to help. This Middle East war is of man. (And Yale at that, given higher educations of U.S. leaders Bush, Cheney, Bolton and Bremer, at least.) Are U.S. colleges and universities planning to help there, too? Mustn't we try?
AU-Beirut, a U.S. chartered institution, is closed for classes. I telephoned the New York office, on Dag Hammarskjold Plaza, as it happens. Steve Jeffries, the AUB vice president there, knew of no unified offers of help yet. “Right now, we’re working on humanitarian and medical issues,” he said. Students, faculty and staff in Beirut, calling the situation the Challenges, are helping anyone they can with blood drives and shelter and medicine for the wounded and the refugees.
The American Council on Education's president, David Ward, offered empathy but no call for help in his regular newsletter to presidents last week. The National Association of Independent Colleges and Universities may be too busy howling in self-interest about a proposed national database of student academic records.
Enough. Something must be happening.
I wrote to a few of the higher ed presidents and panjandrums I know. These places claim a tax benefit for producing leaders, not just wealth. Roger Mandle, president of Rhode Island School of Design, has told me several times that the field of design has to move to illumine intractable social issues. What would solutions here look like?
I wrote Rick Levin at Yale and Morty Schapiro at Williams, my schools. Ruth Simmons at Brown, where I pay tuition. Mike McPherson, president of the Spencer Foundation. Roger Mandle. Clayton Spencer at Harvard and John Strassburger, president of Ursinus College. What plans are under way? What is the obligation of U.S. higher education here? AU-Beirut has not heard, so far, from American higher ed.
No reply so far from Levin at Yale, whom I met when I was a student and he a professor at the School of Management. Schapiro, of Williams, says he is trying to come up with some ideas.
“Ursinus could offer free housing, board and tuition for the fall semester for up to five students if not more,” said Strassburger, the Ursinus president. “We probably could come up with salary for a school in residence teaching some Middle East subjects for the fall or the year.”
Strassburger over the weekend e-mailed an Ursinus faculty member and alumnus, the retired Ambassador Joseph Melrose, recalled to the Lebanon desk at the U.S. State Department. Acknowledging the complexity, Melrose, speaking for himself, replied that American colleges and universities should plan for transfers from those able to get a visa. “I would also encourage you all to continue to reflect on what might be done for Lebanese students in the future. It would be refreshing to have at least a skeletal plan in place.”
I keep thinking of the one-time Columbia University President Dwight D. Eisenhower, who said, "I like to believe that people in the long run are going to do more to promote peace than our governments. Indeed, I think that people want peace so much that one of these days governments had better get out of the way and let them have it.”
Even knowing what help might work, for now, is vexing. Looking around, at least two of the Web sites for Lebanese colleges didn’t work at all. The sites that work show the enormous need.
“Due to the present conditions of our dear and bleeding country,” the Web page of Haigazian University, Beirut, announced the end of classes for now. “Offices and other functions of the University will continue with as little interruption as possible, whenever possible. May God keep you all in His Grace.” (The university's name, the site reports, honors Armenag Haigazian, an Armenian educator with a Yale doctorate, who passed up escaping to the United States to continue teaching and then died in the Kharpert prison.)
Lebanese American University has closed classes in Beirut and Byblos. The Web site goes on: “We urgently ask each and every employee to be very conservative in their usage of the utilities, especially electricity and water, so that we can deal with the expected shortages of these very essential resources, in an optimized manner.”
At the Yale Web site? Nothing on the Middle East. But this, ironic, headline: “Yale president says U.S. should adopt more open attitude in attracting int'l students.”
No “Out of the Office” autoreplies to my presidents' and panjandrums' e-mail. So far, only replies from Williams and Ursinus. I just tried Joe White, president of the University of Illinois at Champaign-Urbana, and Jim Duderstadt, emeritus president of the University of Michigan. I’m sure those two will have far better ideas than mine.
In May 1977, I was in the hospital lobby at American University Beirut, visiting with a friend whose husband was a doctor there. The hospital was neutral. Around me were fighters from all sides of the civil war, with submachine guns. The American University Hospital treated everyone. A precedent for U.S. higher education today?
I’d left Jerusalem that morning over the Allenby Bridge, the back door of the Promised Land, to Amman. Then, in service taxis up through Damascus into Lebanon and in Beirut by dinnertime. I’d spent an afternoon in Jerusalem with an American Quaker missionary, who’d been there for decades. Why was the Holy Land always in such trouble?
This has always been a tough place, he reminded me. “You have to remember that God has sent his best people here to this region three times, and the place is still in trouble. All I know is that we can’t give up.”
While I was walking my dog this week, a young friend, Kirsten Nyborg, stopped to talk. Harvard 2006, now an intern for Campus Crusade for Christ. Would she give her Harvard a nudge? “That’s pretty bad,” she said of the silence. “We’ll put this out on our listserv, too. We’ll send everybody -- Junior Year in Beirut for All. Bring a rake. We’ll get things cleaned up.” And she jogged off.
What’s become of Ambassador L. Paul Bremer III, Yale ’63, who evacuated Iraq ahead of the U.S. troops. (“L” for “Let’s disband the Iraqi army and not collect the weapons first.”?) According to the Yale alumni directory, Bremer is managing director, Marsh Crisis Consulting. Perhaps Rick Levin should give Bremer a call?
Wick Sloane is chief operating officer at Generon Consulting in Massachusetts and former chief financial officer of the University of Hawaii system.
It has been a long year for college and university presidents.
Leaders in higher education have been humiliated over a spate of high profile crises which have triggered screaming headlines and fodder for the 24/7 cable news talking heads. Institutional responses have ranged from savvy to shortsighted, deft to dysfunctional and comforting to comical.
And unlike any recent period of time, these crises have caught a larger than normal number of presidents many of them now either ex-presidents or on their way out -- in a spiraling web of controversy, including Harvard's Lawrence Summers; Case Western Reserve's Edward Hundert; William Cooper of the University of Richmond; Indiana University’s Adam Herbert; and American University’s Benjamin Ladner. And of course there is the now infamous Duke lacrosse scandal, which ensnared the Durham, N.C. institution that was previously known primarily for high quality academics and a perennially ranked men’s basketball team.
Readers of Inside Higher Ed watched the Duke lacrosse scandal with rapt attention, we suspect, but few may have realized the impact that still unfolding story had on North Carolina Central University, the home institution of the victim, a 27-year-old mother of two who alleges that she was sexually assaulted by members of the Duke lacrosse team. As the nation watched the Duke story unfold, students at NCCU -- a historically black institution -- asked two simple questions: If our football players were accused of sexually assaulting a white student, wouldn’t they have been arrested, charged, convicted and sentenced by the end of the first day? Isn’t there a double standard here based on race?
You can see the impact those questions, which reverberated through the campus, could have on an institution inflamed with a rising tide of controversy. It demanded an immediate and effective response with the administrative team meeting around the clock with students and student leaders. Most important, the goal in each conversation and town hall campus meeting was to encourage reflection and calm.
Our experience – which includes laboring as a vice president and chief spokesperson during the firing of Bob Knight as Indiana University’s basketball coach and serving as chancellor of NCCU -- shows that higher education controversies and dealing with them have many common threads. These include an ability to see the problems coming – few controversies cannot be anticipated; sometimes the timing is a surprise -- to an inability to plan effectively for a crisis to a less than deft response in times of chaos. From those two instances and many others we have weathered in our careers, there are some lessons learned.
First and foremost is this: If your campus has not undergone a crisis, it will. Do not underestimate the importance of crisis planning. When IU fired Knight in 2000, the president, athletic director and vice president of public affairs and government relations received more than 10,000 e-mails -- 99 percent negative, a sizable number profane and some threatening enough to warrant police attention. Students rampaged throughout the campus and burned the president in effigy -- outside of his home. Small numbers of alumni and donors threatened to slam shut wallets. In the long run, however, public support, private support, alumni participation and student recruitment were largely unaffected by the controversy that drew a torrent of national news coverage. Why no lasting impact? Well before the final Coach Knight controversy, IU had an "issues management team," a written and tested crisis document and the senior staff had planned for a variety of sports-related problems emanating from the fiery basketball coach.
Not surprisingly, in high profile crises, presidents -- willingly or not -- increasingly occupy an extraordinarily prominent public position as the crisis unfolds under bright TV lights. Years back, crises on campus were relegated to the PR office. No more. When a crisis hits campus -- binge drinking, sexual harassment, NCAA violations, administrative scandals and all points in between -- the crosshairs increasingly are aimed squarely at the institutional president or chancellor. And how well you respond may go a long way in preserving your institution’s image and reputation -- and your career.
When the Duke scandal erupted -- in the middle of spring break when institutional leaders were scattered nationwide -- the media deluge was immense. Within days of the Duke story breaking, North Carolina Central, with a two-person media relations staff, was bombarded by media requests from the likes of The New York Times, Washington Post and Los Angeles Times on the print side; "Real Sports with Brian Gumble" and the "Nancy Grace Show" began live interviews from campus. Fox and CNN were constant campus companions, and one Newsweek reporter had the audacity to go table to table in the cafeteria badgering students to provide salacious information for an upcoming cover story. The media attention was unheard of on the NCCU campus and, as a public institution, there was little way of deterring overly aggressive reporters.
Five years earlier, when the Bob Knight story broke -- also in the midst of spring break -- the first press conferences included 229 reporters and 29 TV cameras, and CNN and ESPN ran portions or all live nationwide.
So what are the lessons we have learned to help colleges and universities better weather the campus crisis storm? Many, and they include:
Understand that a campus crisis is defined as any incident that can damage your image and reputation and weaken your financial stability. As a senior administrator, your job is to protect the image and reputation of the institution and its financial well being. You do this through good, constant and strategic crisis planning. We have interviewed dozens of individuals who have weathered a crisis. Every one of them said they would have been much more comfortable and effective with a fully tested crisis plan in hand -- well before the crisis hit. The plan, as NCCU officials learned, sets the guidelines on issues such as who can speak to the media on behalf of the university, who are key audiences -- faculty, staff and students, prospective students, alumni, donors, business leaders and others -- you must reach immediately in times of crisis and how best to accomplish those key goals.
Many of the most volatile crises colleges face involve issues of race and class. Anticipate these problems, and then ensure that the campus works to create a climate where students and faculty understand and embrace a multiplicity of perspectives. When this climate of diversity is a reality, students and faculty members don't feel they need to violently defend their views. They recognize the legitimacy of differing viewpoints and can have open and sensible discussions where they are able to work to resolve issues of race and class. At North Carolina Central, the administration was committed to promoting open discussion on issues of race and gender. When the Ku Klux Klan was implicated for burning three crosses in separate neighborhoods in Durham in 2005, the university hosted a forum to discuss the issue of race and invited the community. Organizations such as COLORS, a lesbian, gay, bisexual and transgender student group at the university, had a “Unity March for Gay Pride” in the spring. The campus continues to work to create a Women’s Center and was the first historically black college or university to sponsor The Vagina Monologues.
If you do not have a full issues management team in place, begin one immediately. We recommend that the chief campus communications staff person lead the team, which should include your senior communicators; the provost; dean of students; chief counsel; head of law enforcement; Webmaster; sports information director; and others as deemed necessary. They meet monthly with two regular agenda items: First, what are the upcoming campus success stories that the institution must publicize widely; second, what are the storm clouds on the horizon that may become public crises. How to control the challenge before it becomes a crisis? The team’s input was critical at NCCU in identifying some of the issues the university needed to address. While the administrations of both institutions had connected, there was little or no interaction between NCCU and Duke students. Students yearned for the administration’s guidance as the crisis unfolded. A level of civility on campus was maintained, in part due to an emergency meeting where administrators and students discussed concerns. It was clear that NCCU and Duke students needed to build closer relationships, that students needed to gain a better understanding of what was happening in the case and the institution needed to develop programs to educate students about sexual assault and violence against women.
Ensure that the Issues Management Team designs, tests and fully implements a communications plan that anticipates every possible crisis and outlines how the institution will respond when the inevitable hits the fan. This was invaluable during the seven-month-long controversy at Indiana University. Key points in the plan should include an outline of the most important audiences you must address in times of crisis, a list of possible crises, and a sense of how to respond in one voice -- since reporters salivate when they find administrators who contradict each other in times of crisis.
Develop key talking points and a formal question and answer document and share with administration, faculty, staff, student leaders and alumni representatives who may be contacted by the media. The goal is to control the message and flow of information. Clearly, you can’t dictate what opinions faculty members are going to enunciate during a crisis. But it is essential that faculty is informed and know the institution’s official positions and relevant policies. Conversely, it is far easier to control the message and flow of information from staff and administrators.
Provide media training for key administrators, faculty and students before, during and after the controversy. Use media trainers with experience in higher education, and ensure they teach the tactics, tips and techniques on how to respond effectively to reporters and practice in mock interviews, ideally on TV.
Review and update campus media guidelines to enhance management and movement of outside media on campus.
As the crisis unfolds and subsequently diminishes, note the “teachable moment” opportunity and how institutions can share the history and excellence of the institution, particularly after the crisis smoke has cleared. Once the intense media attention had waned, NCCU continued to receive some calls from the national media. However, the institution turned down interviews they sensed would sensationalize various allegations. NCCU also shared with the national media that it wanted the general public to know more about the university. The New York Times listened and published a front page, 29-paragraph news story.
Ensure that your long-term response includes talking about the legacy of academic excellence, notable alumni and academic excellence.
Well before a crisis, work to build town-gown relationships that are strong and enduring. Few campus crises will not elicit reactions from city and community business leaders and elected officials. Develop a regularly scheduled town-gown team to address common problems and common concerns. This team can be invaluable in times of crisis.
Value, nurture and support your university communications and media team. Few institutional leaders fully appreciate the hard work of the media relations team -- until they find themselves in a national media feeding frenzy.
Fully debrief when the controversy wanes. At Indiana University, the senior administrative team -- months after the Bob Knight firing -- changed athletics department policies to ensure no single coach in the future can attain power and control that exceeds that of the athletics director -- and in rare past cases, the president.
Bottom line: if your campus has not weathered a crisis, it will. Such controversies can have a dramatic impact on your reputation, image and financial stability. Plan for the problems well in advance. And when the inevitable hits the fan, have a team poised to respond effectively to key audiences, using strategic tactics and tips to ensure your key messages reach your most important audiences. That is how to preserve the institution’s image, reputation and financial stability.
James H. Ammons and Christopher Simpson
James H. Ammons is chancellor of North Carolina Central University. In addition to dealing with the Duke lacrosse incident, he survived a mold crisis on his campus that resulted in a 512-bed dormitory being closed two weeks before classes were scheduled to start. Previously, he was provost of Florida A&M University. Christopher Simpson is the CEO of SimpsonScarborough, a marketing, branding, media and crisis communications firm specializing in higher education. He is the former vice president of public affairs and government relations at Indiana University, and his first book on crisis communications will be published later this year.
Presidents and financial aid directors are the two educational leaders on campus who are directly responsible for the success of the whole student, I used to tell audiences, with more than too much bravado.
I was trying to make a point. Every administrator needs to be involved to achieve institutional success, of course. But presidents and financial aid officers deal with a big picture stakes – success or failure of the student.
If the student fails, the institution fails. The president takes the blame.
If the institution fails the student, the student loan may not be repaid. The financial aid officer is on the line.
The latest public crisis in student loans reignites a question that has always haunted me: Why do college presidents too often leave the field of public debate when it comes to the specifics of student loans?
“Unfathomable”, “administrative nightmare” and a “policy backwater” are descriptions of the lending debate that would have encouraged CEO indifference to the politics of student loans in the past.
Collectively, financial aid officers, banks, student advocates and executives of national higher education organizations have controlled the options and the course of the nation’s college financing scheme -- they were the ones with time to deal with the arcane.
Today, however, loans account for more than 30 percent of all payments for college tuition costs. Loan volume has more than doubled in a decade and is still growing. Private college loans, providing funds beyond the federal program limits, have increased by 734 percent in a decade, to $14 billion in the 2004-5 school year.
Can individual college presidents, with so much else on their plates, ignore the foundation, structure and details of the nation’s publicly financed student loan programs, and a thriving private sector alternative?
At their peril. And, at threat to the complicated, but working, system of higher education finance in America.
The latest blow-up is over lender payments to colleges and administrators who designate loan products on preferred lender lists. This is just a seasonal hurricane compared to the climate change in store for student lending over the next decade.
Essential public policy issues, emerging new private sector loan products and direct-to-the-student marketing techniques are going to change the way Americans afford to pay for college.
It can happen with or without college president resolve to assure that the interests of their students and institutions come first.
Off campus “student advocates” or “higher education policy experts” are gaming the current crisis politics to achieve long sought ideological change in these loan programs, which may or may not match a student and institutional requirements.
Among a host of issues, there are some that will directly redefine the nature and extent of student loan availability:
The future of the bank-based Federal Family Education Loan Program (FFELP) and its sibling the Ford Direct Loan Program (DLP), the latter representing about 25 percent of all federally guaranteed student lending. Advocates for government-as-lender will use the latest crisis to limit the bank program and prefer expanded borrowing from the government, not the market place. Sustainability into all economic futures is the issue here. Will the government assure colleges' access to loan-supported tuition financing under all circumstances? Student loans have become the third largest of the nation’s asset-backed securities markets -- after credit cards and mortgages. The private marketplace has made lending at these levels possible. If not the private market place, can the government swallow the growing need for student loans to pay tuition into the future? At the levels of debt that future costs will require? College presidents might want to assure continued direct access to the market place, not exclusively through policy makers who have various and sometimes conflicting agendas.
The role of state-based student financial aid agencies as the Congress and president impose a continued financial squeeze on FFELP administration costs, default prevention efforts and default collections revenues. It could mean the end to federally contracted, state-based guaranty agencies, the student financial aid agency in 27 states that are often the backbone of information and training to colleges, students and families. They are the sponsors of Internet-based, go-to-college and early career and college awareness programs. Many agencies also administer state grants and often the college savings program -- assuring local policy continuity at the state level.
Direct-to-consumer lending, bypassing the college financial aid office and making direct deals with students and parents, may end the current coordinated and guided match between grants, loans and college work -- all without assuring that low-cost, federally subsidized loans are considered before more expensive private loans.
Consolidation of lenders:Sallie Mae’s recently announced sale to two private financial services companies and two of the largest student loan banks (Bank of America and JPMorganChase) is another signal that market forces -- not public interest -- are driving the federally subsidized student loan business. While Sallie Mae holds 40 percent of total FFELP assets and services 10 million students and parents attending 5,600 colleges, new loan volume at growing value is originating not with banks, but with marketing companies that securitize their loans, selling them to American and foreign financial markets.
Time to payoff: With the boom in student loan consolidations, the time to payoff of student debt has lengthened from the nominal 10 years to 15 and 20 and 30 years, in some cases. The cost of college is exploding exponentially after graduation by extending interest-bearing loan payments so far into the future. With a possible average payback time easily approaching 15 years for most future borrowers, is it not time to look at other alternatives? British and European loan programs delay repayments further into work life. ”Student securities” plans based on percentage of earnings are being pioneered by the Robertson Educational Empowerment Foundation, allowing a match between future income and debt. These and other innovations should be explored that avoid mortgaging student futures -- drawing out loan payments and interest expense so far into their future
College presidents most often represent the aspirations of their institutions, faculty, and their clients, the students. The president may be the only policy actor to assure that student loans -- the essential, largest, and growing educational financial scheme of the 21st century -- meets the needs of both the academy and student
Student and family interests should coincided with institutional success. I think only the CEO sees that conjunction and must speak out to assure that government, lenders and the entire higher education community meets the financial needs of both colleges and students into the future.
The times are changing. And college chief executives need to reenergize the student loan debate, assuring that the outcome serves the whole student and his or her institutions.
Robert Maurer, formerly President of New York’s student aid agency, the Higher Education Services Corporation, is a writer and consultant on college financial aid and instructional technologies.