Rising College Costs? Thank The Government
College administrators are paid buttloads of money while professors, those doing the actual teaching of students along with research, are not. And the student loan bajillions provided for students taking feminist basketweaving are also a factor.
But at Chronicle.com, Arthur F. Kirk, Jr., president of Saint Leo University, points out another reason for the high cost of college -- compliance costs for all the meddling the government demands colleges do:
I also cannot argue that increasing the number of administrators doesn't increase the cost of a higher education. It does.In recent years at Saint Leo University, we have added positions in risk management, internal audit (two), legal compliance, financial-aid regulatory compliance, human resources, accounting, security and safety, athletic training, athletic compliance, and university-accreditation compliance. In every one of these instances, we are generally responding directly or indirectly to federal regulatory mandates, legal trends, insurers' expectations, accreditors' requirements, and so on.
Take internal audit. The federal Sarbanes-Oxley legislation was a reaction to the collapse of the energy-trading behemoth Enron Corporation in 2001 and to legitimate concerns about corporate accounting accuracy, integrity, and boards of directors fulfilling their governance-oversight responsibilities. However, it has driven significant changes in our nonprofit board's concerns, oversight, and actions. The resulting increased financial oversight, internal audit, and risk management are all reasonable and responsible activities--and all require administrative staff and add substantial real costs. Students and parents pay.
...Here is our latest one--not driven by law but by federal administrative fiat. It calls for the establishment of a central complaint system for all military and veteran students and requires every institution to identify a single point of contact for all complaints. That person must also document every complaint, record the actions to respond to the complaint and resolve it, as well as the outcome, all subject to federal scrutiny by several agencies. Who will do this work?
I could go on with more examples, but I hope I have made my point. Much, but certainly not all, of the much-maligned "administrative bloat" is driven by external forces, societal demands, and regulations from the federal government, the states, the NCAA, accreditors, and insurers. In addition to state and local laws, higher-education institutions are required to comply with federal laws too numerous to count. The website of the Higher Education Compliance Alliance lists many of them, but there are others.
This is normal now. A local composting operation has to answer to 34 different agencies. It doesn't improve the product, just makes the guy question whether it's worth it.
And it's in every enterprise, public and private, across the country. In your wanderings through the internet have you found an organization successfully combating the problem?
Canvasback at May 22, 2014 8:49 AM
The student loan program is a major contributor to the increases in tuition.
I spent five years working in student loans, on the back-end collecting from students who could not (and a few who would not) repay their loans. The problems are mutlifold - and almost all of them were caused by government interference.
First, the program was designed to help students go to four-year universities, but advocates complained that it discriminated against junior colleges (which later became community colleges and are now calling themselves just colleges) and trade schools for the poor and disadvantaged. So, the government expanded the program to include junior colleges and trade schools. Then, the fun really began.
Proprietary trade schools began springing up. These were privately owned and most were scams. They'd pop up, promise to train applicants in hairdressing, truck driving, and other blue-collar occupations in just one semester. Their tuition was, big surprise, the maximum amount one could get on a student loan for one semester.
The school's application included a loan application and the admissions officer directed the applicant to check the box that dispersed the funds directly to the school instead of the applicant. Since the schools can keep a "processing fee" from every application, even if the student dropped out without taking a single minute of class, the school made money. And the classes were a joke. I've had truck driving school "graduates" tell me they couldn't find a job driving a truck because the "school" didn't include actually driving one in its cirriculum.
When the default rates got so high that Congress was compelled to include the costs of projected defaults in the budget, the government cracked down and cut off schools with high default rates. So, those schools went bankrupt. And then the owners opened another school under a different corporation and ran the scam again ... and again ... and again.
Soon the major universities got in on the act. Seeing the success of the trade school scammers, universities started raising their tuition to the maximum loan amount per semester, despite the fact that a student loan was intended to help not only with tuition, but with room and board, books, etc. The universities wanted to maximize the amount of money they could realize from the program and there were no restrictions on the percent of the loan the school could claim. After all, it was free money. In response to the increase in tuition, the student loan amount was raised. Then, tuitition went up again. So, the student loan amount was raised. Ad infinitum.
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Record keeping errors were legion. Students are terrible about keeping their financial records straight. And student loans go through so many agencies - lenders, private servicing companies, state guarantee agencies, federal guarantee agencies, private guarantee agencies, loan amalgamators, holding companies, etc. - that accurate records are like the Holy Grail, to be fervently sought but never found. With the inevitable paperwork snafus, most students graduate already behind in their payments.
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Student loan servicing companies are tightly squeezed by government agencies on how much they can charge for the services demanded by those agencies. So, they cut corners wherever they can, like staff training. The staff at the servicing company for which I worked was so poorly trained that our most senior folks couldn't tell you the difference between a forebearance and a deferment - and the differences between the two are big in terms of interest accrual and repayment obligations.
The staff at most universities are not very knowledgeable either. I ended up instructing my grad school student loan adviser on how the system works and walking her through the process.
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And we want the government to take over healthcare?
Conan the Grammarian at May 22, 2014 9:49 AM
And we want the government to take over healthcare?
Yeah, they're doing such a bang up job of that over at the VA.
I R A Darth Aggie at May 23, 2014 5:26 AM
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