Cost of College ... Customer Focused?

Universities Feel the Heat Amid Cuts is a timely article about the high cost of college today and the necessity to reduce those costs materially without also sacrificing the quality of the educational opportunity offered to students.

At least that's the story being told by university officials. My own view is that the quality of the education received by college students, as well as its cost, hasn't been a priority of universities. Their leadership is instead focused on the inner workings of the institution itself and not paying much, if any, attention to the "customer student."

As with GM and other hidebound inward focused bureaucratic cultures, too many of our U.S. universities tend to look "inward" and focus on themselves rather than concentrate "externally" on what should be the real purpose of the institution --- educating their students.

It's simply the nature of government monopolies in combination with OPM. Customer focus is lacking throughout government, and that includes government schools, K-12 and at the college level, too.

In contrast, in the private sector a lack of customer focus and internal cost control will result in bankruptcy.

Large U.S. Research Universities --- 50%+ of Funding Comes from Government 

Now let's quote from the above referenced article about large public "research" oriented universities:

"U.S. research universities "are in grave danger of not only losing their place of global leadership but of serious erosion in quality," the committee of 22 academic, business and nonprofit leaders warned in a 250-page report issued Thursday. The report, commissioned by Congress, called for a combined effort among the schools, governments and corporations to reverse the decline.


Richard Vedder, director of the Center for College Affordability and Productivity and retired economics professor at Ohio University, reviewed parts of the report Thursday and was skeptical. He said he has found no correlation between extensive university research and a nation's economic prosperity. The Center for College Affordability is a research group that focuses on free-market solutions for rising college costs.


"It read to me like a lobbying effort for the National Research Council," he said, referring to the report and the organization that appointed the panel.

Public research universities—generally defined as those that compete for research funding and offer advanced degrees—typically depend on federal and state appropriations for more than half of their budgets. Private research universities get about a third of their funding from the government. . . .

Many schools have responded (to government cutbacks) by jacking up tuition, which is fueling public anger and inflating student debt levels. Schools are also cutting costs by increasing class sizes and using more adjunct professors.


This comes after many universities have seen huge growth in their budgets in recent decades. At the University of Virginia, state funding has dropped to 5.6% of the total budget this year from 26.2% in 1990. But the university's total budget ballooned during the same period to $2.58 billion from $678 million."

Private Sector Companies ... 100% "Customer and Shareholder" Funded

Now let's look at the private sector and compare the two approaches, public and private.

In the university, it's apparently all about the institution and its "research." But in the private sector, innovation and research are all about better serving the customer.

In other words, one ignores the student and taxpayer, whereas the other makes serving the customer job #1 in the eyes of the shareholder.

Accordingly, Myths of the Big R&D Budget has a different take on the topic of research and innovation. And it's one with which I completely agree. Please consider its essential point:

"In the world of R&D spending, more doesn't necessarily mean better. And R&D may not describe all the innovation that matters.

"I think the numbers are pretty useless," says Michael Schrage, a research fellow at MIT's Sloan School who has studied the subject. "What matters more is the kind of innovator you are. If it were really true that the people who spent the most on R&D were the most successful, we wouldn't be subsidizing General Motors."

"There's no statistically significant relationship between how much a company spends on R&D and how they perform over time," adds Barry Jaruzelski of Booz & Co. "There's a set of people who just consistently seem to skin the cat better." . . .

The big variable, though, is how effectively this money gets spent. . . .Winning at innovation "is all about talent, process, execution and strategy," he says. "That's given the U.S. a pretty strong advantage over time.""

Summing Up

To me a university's research budget (and one which is funded by a government that has no money) doesn't help to better serve the customer --- the student. It only serves the people who do the research, at least with respect to the student paying for his education.

The amount of money that gets spent in no way determines how well the institution runs, nor does it in any way indicate that the money is well spent. And if it's not being spent on the customer student, it's a luxury the taxpayer can ill afford these days.

In the private sector, money spent on research and innovation is either effectively spent to do a better job serving customers or the company will eventually cease to be in business.

Not so in expensive and underperforming "government schools," including K-12 schools and big U.S. universities as well.

Here's my take: We spend way too much taxpayer money on schools.

Meanwhile, the real customers, the students, receive way too little educational benefit for the amount of money spent.

That has to change.

Thanks. Bob.