Sunday, July 27, 2014

Back to School Time is Approaching .... Purdue is Tackling the Excessive Costs of College .... Government and College Induced Pervasive, Extremely High and Growing Levels of Indebtedness and Why It All Must Change

On average people who graduate from college earn substantially more money during their lifetimes than those who don't graduate.

But on average the cost of attending college, although always expensive, has become even more so over the years.

Yet college is still perceived as worth all the costs charged, however high they may be, and therefore as an 'automatic and not to be questioned' great investment for individuals and their families to make.

As a result, "blank check" thinking and fatalistic acceptance of the excessive costs to be incurred has become the established norm and the "price to pay to play" for too many soon to be heavily indebted attendees and their already financially stretched families.

But it doesn't have to be that way. College doesn't have to be so expensive and it doesn't need to take so long to graduate. In other words, it can and should be a much better "investment" than it is.

The plain fact is that government actions at all levels cause college to be vastly more expensive than necessary by subsidizing college administrators with direct government grants and student loans.Yes, student loans cause high college costs.

That's simply because the money "freely" granted and loaned by government is then used to pay too high tuition and other non-market based charges by colleges, and backed up by taxpayers.

No cost containment has never been and certainly isn't currently a hot topic in the vast majority of faculty lounges or administrative offices. But that's not the case at Purdue today.

Purdue is attempting to right the many wrongs that continue to be the custom and practice at most institutions of higher learning whose administrators and government accomplices aren't genuinely interested in giving students or taxpayers great values, aka the biggest bang for their bucks, borrowed or otherwise.

At Purdue, a Case Study in Cost Cuts provides We the People with a good lesson, and at no cost, to begin the upcoming school year's learning process:

"WEST LAFAYETTE, Ind.—Three months into his tenure as president of Purdue University, Mitch Daniels leaned over a table covered with financial statements and pointed to items labeled "cash" sprinkled throughout the pages.

"That's part of the endowment, right?" Mr. Daniels asked the school's treasurer. "Nope," the treasurer said, "that's cash."

Mr. Daniels suggested the rainy-day funds, which totaled "somewhere in the mid-nine figures" and were kept by a host of academic departments for operating expenses, be moved out of low-interest-bearing accounts and put to better use.

It was the first of many steps Mr. Daniels has taken as he seeks to reorganize Purdue's sometimes-antiquated systems. A year and a half into his tenure, Mr. Daniels has frozen tuition (for the first time in 36 years), cut the cost of student food by 10% and introduced volume purchasing to take advantage of economies of scale.

In May, he rolled out the first results from a Gallup poll of 30,000 college graduates from hundreds of schools aimed at discerning what value a university education adds to a person's success and well-being.

The results have shed new light on a question that has moved to center stage in higher education: What is the real return on investment for a college degree? . . .

And by freezing tuition, he is forcing his own school to modernize its 19th-century business model with a combination of systemic cuts, organizational realignments and cash incentives. . . .

Jamie Merisotis, president of the Lumina Foundation, a nonprofit focused on increasing postsecondary credentials in the U.S. that teamed with Purdue to produce the Gallup survey, lauded Mr. Daniels's efforts. "He understands that higher education has to evolve to serve the nation's needs," he said. . . .

J. Paul Robinson, a former president of the faculty senate, said Mr. Daniels's worth as a leader will be tied to his ability to prune that administrative bloat. "Let me put it this way," Mr. Robinson said: "A blind man on a galloping horse at midnight with sunglasses on can see the problem. The question is, What can he do about it?"

Mr. Daniels says he is consolidating administrative jobs where prudent and leaving jobs unfilled where the duplication of effort makes that possible. He has jettisoned 10 university cars, consolidated hundreds of thousands of feet of off-campus rental storage and introduced a higher-deductible health-care plan.

He has also created two, half-million-dollar prizes for the first department that devises a three-year degree or a degree based on what a student already knows, not the number of hours he or she sits in a class. This summer, the school offered 200 more classes than last year in an effort to speed time to degree and generate more income for the school. . . .

Meanwhile, the Gallup poll has already begun to reframe the national debate about what gives colleges value at a time when many people, including Mr. Daniels, foresee a shakeout in higher education after years of higher costs."

Summing Up

The revolution in organizing work made possible by advances in information technology has changed the way individuals work in private sector companies and industries in profound and productive ways.

That revolution has yet to come to our 19th century business model of higher education {K-12 as well, but that's another story}.

Butts in the seat and boring sweaty classroom lectures delivered in the same way year after year is still the norm.

The necessary and long overdue customer focused productivity and value enhancing business-model disruption is coming even though it is and will be heavily resisted, as is all progress.

The resistance will be led, as it always is, by those deeply committed to and invested in the status quo.

But change will come as the financial resources to maintain the status quo are drying up quickly and borrowings have become excessive as indebtedness has ballooned for our federal, state and local governments, aka the taxpayers, aka We the People.

And now that debt balloon, in the form of record high student loans, stands at extraordinarily high record levels for individual students and their families.


And the only appropriate proper question to ask ourselves is this: When are We the People going to do something about it?

Has the time finally come for We the People to insist on vouchers (means tested, of course) for everyone?

For both K-12 and beyond?

That's my take.

Thanks. Bob.

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