How We Pay for Public Higher Education

What's wrong with the high-aid/high tuition model?

The student debt financing of Cal through rising tuition fees corrodes its public character by making higher education a speculative private investment. Why should 40% of the class of 2013 graduate with loans averaging 18k (and this before the full force of the tuition hikes of 2009-11 are apparent)? Their education is in fact a public good that will enrich California economically, politically and culturally. 

Private donors and corporations have given generously and their names are increasingly prevalent across the campus in research programs, endowed Chairs, buildings, and even Departments. We are repeatedly assured that donors do not influence FTE allocation but they can and do influence the direction of research by providing funds and infrastructure in some areas and not others. 

Commercial operations have changed the character of the campus. The persistent and continuing financial drain of Athletics—whose handling itself reflects the influence of a donor-driven outlook—has encouraged a good deal more commercial use of campus spaces as Fox Sports TV recent use of Kroeber Square revealed. Yet even academic units are now actively encouraged to embrace what Breslauer describes as ‘unit level entrepreneurialism’ to generate ‘new revenue streams’ through commercial use of their assets (namely space, academic programs and online technologies). (3) It makes a difference where the money comes from when academics are encouraged to think about revenue generation and campus spaces are commercialized.

(From Meranze and Newfield, Remaking the University.)  

Where does the interest on student debt go?

I continue to encounter student debt horror stories, but there is perhaps no story more horrible than the recent Congressional Budget Office report on how the federal government raked in over $50 billion last year in profits from student loans. It turns out that after the feds took over the destructive private loan industry, the result was not to give students the best deal possible, but to cash in on the fact that the government can borrow money at virtually no interest and lend it to students at a much higher rate (of course the government profits go up much higher when students default or are penalized for late payments). In fact, the average student loan defaulter pays a penalty of over 100% of the principal, and the federal government is very good at collecting these debts.

(From Bob Samuels, Changing Universities.)