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                           Imprimis, On Line
                             October, 1994
        
        IMPRIMIS (im-pri-mis), taking its name from the Latin
        term, "in the first place," is the publication of
        Hillsdale College. Executive Editor, Ronald L.
        Trowbridge; Managing Editor, Lissa Roche; Assistant,
        Patricia A. DuBois. Illustrations by Tom Curtis. The
        opinions expressed in IMPRIMIS may be, but are not
        necessarily, the views of Hillsdale College and its
        External Programs division. Copyright 1994. Permission
        to reprint in whole or part is hereby granted, provided
        a version of the following credit line is used:
        "Reprinted by permission from IMPRIMIS, the monthly
        journal of Hillsdale College." Subscription free upon
        request. ISSN 0277-8432. Circulation 550,000 worldwide,
        established 1972. IMPRIMIS trademark registered in U.S.
        Patent and Trade Office #1563325.
        
             ---------------------------------------------
        
                 "How Government Funding Is Destroying
                       American Higher Education"
                            by George Roche
                      President, Hillsdale College
        
             ---------------------------------------------
        
                           Volume 23, No. 10
              Hillsdale College, Hillsdale, Michigan 49242
                              October 1994
        
             ---------------------------------------------
        
        In the spring of 1994, Insight magazine published a
        special cover story report naming George Roche's latest
        volume as the "Book of the Year." Other press mentions
        have appeared in dozens of sources, from Reader's
        Digest to the Wall Street Journal. Presented here is a
        lecture that summarizes the main themes of The Fall of
        the Ivory Tower: Government Funding, Corruption, and
        the Bankrupting of American Higher Education (Regnery,
        1994) and that was presented at a Shavano Institute for
        National Leadership seminar in New York last May.
        
             ---------------------------------------------
        
        
        If I have learned anything at all in my career as an
        educator, it is this: Whom the gods would destroy, they
        first subsidize.
        
             American higher education is a perfect example. In
        the 1960s, the total budget for all U.S. colleges and
        universities was about $7 billion; in the early 1990s,
        largely because of massive state and federal funding
        increases, it surpassed $170 billion. Yet tens of
        thousands of college seniors do not know when Columbus
        sailed to the New World, who wrote the Declaration of
        Independence, or why the Civil War was fought.
        Businesses rightly complain that they must reeducate
        college graduates in such basic academic skills as
        grammar, spelling, and practical math.
        
             The effect of government subsidy and control has
        been more profound, more direct, and more damaging than
        anyone has yet realized. It has led to a situation in
        which the entire system of American higher education is
        academically, morally, and quite literally, going
        bankrupt.
        
        
                          The Financial Crisis
        
        One of the best-kept secrets in American higher
        education today is that many colleges and universities
        are teetering on the brink of disaster. Nearly one-half
        of the college presidents polled by U.S. News & World
        Report in the early 1990s said their institutions would
        face continuing deficits, and nearly one-third said
        they did not expect to balance their budgets anytime in
        this decade.
        
             Nearly 60 percent of all colleges and universities
        have been forced to slash their budgets. Even some
        schools with huge endowments and hundreds of millions
        of dollars in revenue in the form of federal research
        grants have been starving for operating funds. The
        reason? The bigger the institution, the bigger the
        outlays. Harvard University, Stanford University,
        Columbia University, MIT, and the University of
        Michigan are just a few of the institutions that rack
        up bills of more than $1 billion a year. And little of
        what they spend can be called discretionary; they are
        overcommitted to entitlements in exactly the same way
        as is the federal government.
        
             There will be no easy way out of this crisis.
        Private donations to colleges and universities have
        gone up in the last decade, but, even at best,
        corporate and private giving only accounts for 8
        percent of all higher education revenues. And federal
        and state aid, which has grown by leaps and bounds
        since World War II, is on the decline.
        
             Defaults on student loans have exploded. The tab
        taxpayers must pick up for Stafford Loan defaults alone
        is now about $3 billion a year. Moreover, defaults,
        mismanagement, fraud, and abuse due to "internal
        control weaknesses" within the Stafford Loan program
        are eating up in excess of 54 percent of total program
        costs. This means that less than half the money
        allocated for Stafford Loans goes to pay for new loans.
        Record deficits in the Pell Grant program also testify
        to the failure of the system. By the end of the Bush
        administration, this federal program was in debt to the
        tune of $2 billion.
        
             What we are seeing today is an S & L style
        financial crisis: Although higher education appears
        thriving and prosperous on the surface, vast
        instability and corruption lie just below. The question
        is, how long can the veneer last? What finally broke
        the savings and loan institutions was a combination of
        bureaucratic meddling, a credit crunch after years of
        "easy money," and the industry's own chronic
        mismanagement and massive overinvestment. That
        combination is precisely what threatens colleges and
        universities today.
        
             But our nation's politicians will be the last
        people on earth to recognize that they have created
        this crisis. Indeed, they are busy devising ways to
        make it worse. Despite the fact that the Department of
        Education has been a complete failure when it comes to
        managing federal student assistance programs, Congress
        has decided to give it total responsibility not only
        for monitoring but for making some six million loans a
        year. Under this new system, the federal government--
        instead of banks and other private lenders--will lend
        money directly to college students.
        
             Congress has also decided to raise the ceiling on
        individual grants and loans--in some cases by nearly 50
        percent. In addition, it has abandoned financial need
        requirements for Stafford Loans. This means that all
        students who apply are eligible. The Congressional
        Budget Office predicts that under the new rules of
        eligibility, there will be at least 1.1 million new
        borrowers and 1.4 million new grant recipients. From
        where will the money come? Your guess is as good as
        anyone's. Less than two months after it passed this new
        legislation, Congress admitted that it would not have
        the budget to pay for any of it.
        
             President Clinton has said that he plans to spend
        billions more dollars on grants and loans and on new
        educational schemes like "national service." It is
        becoming increasingly clear, however, that he will not
        be able to deliver on his grand promises, since higher
        education's financial troubles are already overshadowed
        by the federal government's four and one-half trillion
        dollar debt.
        
             Meanwhile, the financial condition on campuses
        around the country is steadily worsening. College costs
        are out-of-control: They have grown nearly three times
        as fast as inflation and twice as fast as the general
        economy. At Harvard, the total cost of attending for
        four years is now pushing $100,000.
        
             Why have college costs gone up? One reason is
        because Washington, D.C., is heavily subsidizing
        tuitions through federal grants and loans. This leaves
        colleges and universities free to jack up their prices.
        Who cares, after all, what tuition is at Harvard
        University, when nearly two-thirds of its
        undergraduates receive financial assistance?
        
             It is true that rising tuition also places a huge
        financial burden on students and parents, but what they
        pay doesn't begin to cover the actual costs of a
        college education. At private institutions, tuition and
        fees only cover one-half to two-thirds of actual costs.
        At public institutions, they cover far less--only about
        one-quarter to one-third. The rest of the costs are
        passed along to you and me as taxpayers.
        
             And those costs are going up and up and up.
        Heavily financed by federal and state aid, colleges and
        universities have indulged in a spending spree in the
        last half-century that has no equal in American
        history. As one education consultant notes, in an era
        when quality was defined as "more-is-better," and when
        there seemed to be endless amounts of government
        funding to pay for it, colleges and universities grew
        without a thought for the ordinary laws of supply and
        demand. Budgeting was right at the margin. The only
        important question seemed to be: "How much more can we
        do next year?" How much money had already been spent
        and what results had been achieved, he notes, were only
        secondary concerns.
        
        
                          The Academic Crisis
        
        If that were all to report about the crisis that
        presently afflicts American higher education, it would
        be devastating enough. But there is more--much more.
        The crisis is not just about finances--it is about
        academics and, finally, it is about morality, too.
        
             Concerning the academic crisis: Colleges and
        universities have increasingly adopted a "cattle car
        approach" to education. Classes crammed with 500 to
        1,000 students are now commonplace. And many colleges
        have drastically reduced the number of classes they
        offer. The University of Wisconsin has been known to
        close courses in the first hour of registration-- even
        for seniors in their major field of concentration. At
        the University of Texas, nearly 1,000 students were
        turned away from a required English course.
        
             A recent study tracking the education of over half
        a million students at 300 institutions documented that
        only about half were able to earn a bachelor's degree
        within six years. One educator admits candidly that
        this "is a condemnation of higher education. If we were
        running an automobile plant, we would be out of
        business."
        
             The average professor is in class only six to nine
        hours a week. At the University of Michigan, some
        professors teach so little that it is estimated that
        they make nearly $1,000 an hour for their actual
        contact with students. In the last few years, teaching
        assistants, rather than faculty, have taught 25, 50 or
        even 75 percent of all introductory classes at schools
        such as Princeton University, the University of North
        Carolina, Ohio State University, Stanford University,
        and the University of California-Berkeley.
        
             In his best-selling book, Profscam, education
        critic Charles Sykes also points out that professors
        don't really do as much research as they claim and that
        much of the research that is done actually has little
        merit. Sixty percent of all college faculty members
        have never written or edited a book and one-third have
        never even published a single journal article. The
        faculty books that do make it into print range from the
        sublimely ridiculous to the sublimely obscure. This is
        just a small taste of some of the titles currently in
        print: The Sexual Politics of Meat: Critical Feminist-
        Vegetarian Theory; Mama Lola: A Voodoo Priestess in
        Brooklyn; Boots of Leather, Slippers of Gold: The
        History of a Lesbian Community; Staying Tuned:
        Contemporary Soap Opera Criticism; and Men, Women, and
        Chainsaws: Gender in the Modern Horror Film.
        
             Yet the leaders of higher education are adamant
        that they need more financial support in order to pay
        top dollar for the "best" faculties money can buy. In
        its current campaign, for example, Cornell University
        is asking alumni and other donors for more than $400
        million to endow professorships that in all likelihood
        will have zero effect on the school's undergraduate
        program.
        
             Michigan State University, which receives more
        than $230 million a year from the state treasury, says
        it needs millions more in government aid to "face the
        teaching challenges of the future." This is pretty hard
        to swallow, especially coming from a school that uses a
        video to teach about six thousand students each year in
        a required history course called "The United States and
        the World." Its professors--among the most well paid in
        the nation--are just too busy to perform "live." It is
        no wonder that author Midge Decter concludes that
        undergraduate education is "the biggest consumer fraud
        in America."
        
        
                            The Moral Crisis
        
        But it is the moral crisis in American higher education
        that makes all other crises pale in comparison. There
        has been a concerted effort to destroy colleges and
        universities' in loco parentis role. Ask almost any
        educator, and he will tell you that his students'
        morals and personal conduct are no longer his concern.
        But it is perfectly all right for educators to meddle
        as much as they want when it comes to introducing
        students to the sexual revolution on campus.
        
             There are "Condom Weeks" at a number of colleges,
        including Stanford, Berkeley, San Jose State, Virginia
        Tech, the University of Iowa, and the University of
        North Carolina, complete with free samples and
        something called "taste tests." At Williams College,
        Mills College, Randolph Macon College, and the Florida
        Institute of Technology, to name just a few examples,
        male and female students can now spend the night in
        each other's rooms. At schools like Pennsylvania State
        University, the official policy is that students may
        not be granted a room change on the grounds that their
        roommate is homosexual.
        
             Columbia, Harvard, Middlebury College, MIT,
        Stanford, the University of Minnesota, the University
        of Vermont, and Yale already have "domestic partner"
        provisions that allow gay and lesbian couples to
        receive insurance and other spousal benefits. Not every
        school has volunteered, however. The University of
        Vermont has been ordered by the state labor relations
        board to offer those benefits. The University of
        Massachusetts-Amherst has defined pedophiles (i.e.,
        persons who have sex with children) as a "protected
        minority" within its nondiscrimination code. At Cornell
        University, resident advisor job applicants have been
        forced to watch movies of men engaged in sex in order
        to be evaluated for "homophobic" tendencies.
        
             Another by-product of the abandonment of morality
        on campus is the soaring crime rate. On 580 campuses
        between 1990 and 1992, there were 2,528 assaults,
        15,313 burglaries, 5,081 car thefts, 928 robberies, 493
        rapes, and 16 murders. Plagiarism and other forms of
        cheating are also on the rise. Despite the dumbing down
        of the curriculum, pass/fail courses, grade inflation,
        and all the rest, it is estimated that at least half of
        all college students cheat.
        
        
                              Real Reform
        
        Although today's colleges and universities look much
        like large business corporations with thousands of
        employees (i.e., faculty and staff) and millions of
        customers (i.e., students and parents), they are not
        organized or run like a business. Hoover Institution
        Senior Fellow Martin Anderson calls them "mini-
        socialist states." That's true: Modern higher education
        not only has pursued an intellectual love affair with
        socialism but, along the way, it has adopted its basic
        principles of internal management.
        
             Since the 1960s, much of the control of
        institutional as well as academic affairs has shifted
        from the "bourgeoisie" (i.e., administrators) to the
        "proletariat" (i.e., faculty members). Federal funding
        has financed this shift every step of the way. It has
        also led to the breakdown of effective decision making,
        the tyranny of the majority, and control without
        accountability for both groups.
        
             Now, however, the chickens are coming home to
        roost. Administrators and faculty members alike have to
        face the fact that they cannot count on continually
        expanding sources of state and federal revenue. And
        they have to perform some of their basic missions
        better than in the past if they are to survive. But if
        you ask most educators, they will continue to insist
        that only more government money can save American
        higher education.
        
             It is tempting to reach such a conclusion.
        Government money is such easy money. There are
        literally hundreds of inducements to accept it, and it
        always appears--at first--to be "free money," without
        any strings attached. Heaven knows, there are plenty of
        politicians and bureaucrats who will claim that this is
        so.
        
             Don't believe them. Nothing comes dearer than
        "free money." Hundreds of private colleges and
        universities have learned in recent years that even
        "indirect aid,"--that is, aid that goes to their
        students--makes them "wards of the state" as far as the
        government is concerned. In addition to the way it
        wrongly compromises the independence of private
        institutions, government funding is also destructive
        because it wrongly shields colleges and universities
        from the normal, healthy forces of the marketplace. It
        eliminates competition, which is the only incentive to
        practice good fiscal stewardship and remain responsive
        to issues of quality, affordability, and equal access.
        
             The best news of all may be that colleges and
        universities are in financial trouble. More money
        didn't bail out the failing S & Ls in the 1980s; they
        simply misspent it in the same ways they had been
        misspending for years. Failing businesses only recover
        when they engage in a fundamental restructuring of the
        way they do business.
        
             It's up to us--as parents, as donors, and as
        taxpayers--to convince educators that they must embrace
        real reform. We must lead the fight for the restoration
        of the values of the marketplace as well as the
        academic and moral values that ought to be the
        foundation of all higher education.
        
             ---------------------------------------------
        
        George Roche has served as president of Hillsdale
        College since 1971. Firing Line, the MacNeil-Lehrer
        News Hour, Today, Newsweek, Time, Reader's Digest and
        the Wall Street Journal have chronicled his efforts to
        keep the College free from federal intrusion.
        
             Formerly the presidentially appointed chairman of
        the National Council on Educational Research, the
        director of seminars at the Foundation for Economic
        Education, a professor of history at the Colorado
        School of Mines, and a U.S. Marine, he is the author of
        12 books, including six Conservative Book Club
        selections. Among them are:# America by the Throat: The
        Stranglehold of Federal Bureaucracy; A World Without
        Heroes: The Modern Tragedy; Going Home; A Reason for
        Living; One by One: Preserving Freedom and Values in
        Heartland America; and# The Fall of the Ivory Tower:
        Government Funding, Corruption, and the Bankrupting of
        American Higher Education.
        
                                  ###
        +++++++++++++++++++++++++++++++++++++++++++++++++++++++
          End of this issue of Imprimis, On Line; Information
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                   Inc., is in the file, IMPR_BY.TXT
        +++++++++++++++++++++++++++++++++++++++++++++++++++++++
        
