“In general, students forget almost everything they learn in college and high school, skills and learning are generally compartmentalized and nontransferable, gains in skill are at best modest, and gains to earnings are largely explained by pre-existing abilities.”
– Cracks in the Ivory Tower
In December 2023, Harvard University President Claudine Gay, got herself into a self-induced pickle when she failed to condemn antisemitism on campus while providing testimony to Congressional members on Capitol Hill. Then, following claims of plagiarism that resurfaced in the days that followed, the dam eventually broke, and Gay was forced to step down. As a black woman, Gay’s coerced resignation was immediately deemed “racist” by her supporters, while her appointment to the role of President itself, considering the growing evidence of literary theft, was considered “affirmative action” by her adversaries. But colleges and universities have more than campus wokeness to contend with. As we will learn, the very foundation of higher education is irreparably broken and ripe for change.
In Jason Brennan and Phillip Magness's 2019 book, “Cracks in the Ivory Tower”, the authors, both university insiders, reveal how bad incentives for faculty, administrators, and students are creating longstanding problems for universities and colleges. Run more like a government than a business, colleges have the same perverse outcomes as evidenced by bloated budgets, overstaffing, and waste. With federal, state, and local governments financing up to 40 percent of their revenue in some cases, there is little to no incentive to economize or rein in soaring costs. To find and eliminate the culprits, the authors expose how the self-interest of each party works against one another to hinder academic objectives. As is the rule in economics, bad incentives often explain bad outcomes.
Charged with the mission of imparting youth with knowledge and insight, studies reveal that most schools are far from achieving that obvious objective. Instead, standardized testing following the first two years in the classroom suggests that soft skills like improved writing and general reasoning are only significantly benefiting a mere 10 percent of students. Yet, since the mandatory courses charged with enhancing core competencies tend to fill classroom seats and assist in retention, their wastefulness is ignored in favor of expanding tuition.
Faculty members, too, react to their own bad incentives. With a preference for teaching graduate studies courses over that of undergrads, professors are rewarded with smaller classrooms, less paperwork, and higher salaries. However, on the flip side, graduate programs result in too many PhDs unable to obtain teaching jobs. Then, while working toward tenure, studies show how professor productivity peaks in the years leading up to its attainment, only to decline abruptly once the designation is earned. Worse yet, tenure offers barriers to entry and competition from other potentially better candidates while decreasing output from the newly tenured professor. A college's growing preference for research over teaching has also resulted in the growth of a managerial class necessary to pick up the administrative duties left behind. With their own list of incentives to increase staff and expand the size and scope of their own departments, administrators look to increase budgets to justify their own existence.
For students, the job market has dictated that gaining knowledge is secondary to the goal of receiving the necessary credentials that most employers expect. Therefore, their incentives to simply pass exams have led to chronic cheating, where research shows that half of the students have committed at least one act of academic dishonesty. Since a college degree is not a measurement of knowledge, but a certificate of compliance, credential creep creates the incentive for more jobs to be subject to higher education certifications. Whether any knowledge at all is imparted during their four-year stay is debatable since college students are not a random selection of 18-year-olds, but are, instead, individuals who often have personal qualities that would make them successful with or without a college degree.
Of primary concern to many American students today, is the exploding cost of tuition, with the price for a college degree nearly three times what they were 40 years ago, even after adjusting for inflation. A significant factor in these increases is subsidized government loans and grants that tend to hide the cost of rising tuition. A 2017 study by the Federal Reserve of New York showed that 60 cents of every dollar of college tuition is tied to student loans. Then by increasing the supply of loans through easy money, colleges have more incentive to continue to pad their prices. Since it is the taxpayers themselves who are funding the student loan program, they end up losing again when politicians cancel student loan debt, as the resulting inflation increases costs for all Americans. Putting an end to the federal funding of student loans would send students back to the private loan market, where students' degree choices would be accepted or denied based on their repayment prospects.
A December 2021 study from the Federal Reserve of NY brought further doubt as to whether a stint in college is worth all the trouble. Using data from the US Census Bureau of Labor Statistics, the report revealed that nearly 34 percent of college graduates work in jobs that don’t require a college degree. So, after 4 years of college, students leave with little knowledge, and a lot of debt, and too often get jobs that don’t require a degree, making colleges a 500 billion dollar high-cost endeavor with suboptimal gains.
A college degree is a status symbol of sorts, signaling to the world that one has theoretically achieved superior knowledge. How ironic then, that so few college graduates are able to put two and two together and see that the promises made by their alma maters are failing to deliver as promised. If a mind is a terrible thing to waste, college is increasingly not the answer.
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