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Has Higher Education Become a Criminal Enterprise?

By on February 15, 2017

I am not a doomsayer or a survivalist, and I try to stay away from apocalyptic bloggers. But James Howard Kunstler, whose blog site goes by the unfortunate name of Clusterfuck Nation, is making persuasive arguments that our postmodern economy, hopped up on cheap energy and enormous debt levels, is unsustainable. In fact, he predicts an economic meltdown sometime this spring.

Kunstler’s focus is on broader economic issues than student loans, but he made a trenchant observation about higher education in his latest blog essay, which struck a nerve with me. Pervasive accounting fraud in the national economy, Kunstler writes,”bleeds a criminal ethic into formerly legitimate enterprises like medicine and higher education, which become mere rackets, extracting maximum profits while skimping on delivery of the goods.”

And of course Kunstler is right. The Department of Education shovels $150 billion a year in federal student aid to prop up the higher education industry, which is becoming nothing more than a racket. Higher education apologists stress the value of a college education, but 45 percent of recent college graduates are in jobs that do not require a college degree.

No wonder 8 million college borrowers are in default and millions more are not paying down their student loans. DOE knows the score but it continues to deceptively downplay the student-loan default rate, stuffing debtors into economic hardship deferments and income-driven repayment plans that hide the fact that a large percentage of student borrowers will never be free of their loans.

Meanwhile, the for-profit college sector, which might fairly be labeled a criminal culture, rips off poor and minority Americans and gives them educational credentials that are damned near worthless. Now they are beginning to shut down and go bankrupt, leaving their former students with mountains of debt.

The public universities, bloated and lazy, limp along by raising student tuition as state subsidies dry up. Public university leaders are motivated solely by politics, terrified by the possibility they might inadvertently do or say something politically incorrect.

State higher education leaders refuse to reorganize public colleges to be more efficient. In my own state of Louisiana, we have regional public colleges with declining enrollment in every corner of the state, but no one has the political courage to close any of them. Many Southern states support historic black colleges at public expense, although there is absolutely no need for university systems that cater to only one race. Louisiana even has a black law school, which operates in a substandard way just a few miles away from the state’s flagship school of law.

As for the nonprofit public institutions, they now fall into two camps. The ultra elite institutions–Harvard, Yale, Stanford, etc.–have brand names so strong they can charge what ever tuition rate they want. They also have fat endowments that insulate them from economic forces.

On the other hand, small, obscure liberal arts colleges are under severe financial stress, and quite a few will close within the next five years. Parents are refusing to pay $50,000 a year for their offspring to attended a nondescript private school. The little colleges have been forced to offer huge discounts–approaching 50 percent–to lure new students through the door.

In short, every sector of higher education has been living in a fools paradise, but the data are now coming in, and they are alarming.

Nearly half the people who took out student loans to attend for-profit colleges default within five years. Millions of college borrowers whose loans are in repayment are seeing their student-loan balances grow larger, not smaller, due to negative amortization. Their token monthly payments keep borrowers out of default but are so small they don’t cover accruing interest.

Nationwide, more than half of student borrowers owe more than they borrowed just two years into repayment. And, as the Wall Street Journal reported just a few weeks ago, half the students who took out student loans to attend more than 1000 schools and colleges have not paid down even one dollar on their loans seven years after their repayment obligations kicked in.

Kunstler is right. Evasiveness, almost criminal in its proportions, pervades almost every sector of higher education. As a classic country-and western-song might put it, “there’s no use in pretending there’ll be a happy ending.” Colleges and universities are in a cheating situation, refusing to recognize that the golden age of American higher education is coming to an end.

About Richard Fossey

Richard Fossey is a professor at the University of Louisiana in Lafayette, Louisiana. He received his law degree from the University of Texas and his doctorate from Harvard Graduate School of Education. He is editor of Catholic Southwest, A Journal of History and Culture.

2 Comments

  1. Richard Fossey

    February 17, 2017 at 4:49 pm

    I agree there are some good HBCUS: Xavier University in New Orleans, sends more African Americans to medical school than any other university. But many are not doing a good job. Go to the web site titled “Law School Transparency,” for example, and look at the data compiled on Texas Southern University’s law school and Southern University’s law school. Also, take a look at graduation rates at Grambling University.

    And I disagree with your comparison of Catholic colleges and HBCUs. The land-grant HBCUs were started to perpetuate segregated higher education in the Southern states. I’m sure you know that. Catholic universities were formed to provide educational opportunities to Catholic men and women to provide them with an educational atmosphere in harmony with their faith.

    I am sorry you interpreted my remarks as “biased” and “ignorant.” I merely make the observation that people in a diverse society should be educated at unversities that reflect greater diversity than many HBCUs. Moreover, in spite of your heated rhetoric, I will never understand why the state of Texas operates Praire View A &M or the state of Oklahoma operates Langston State University. Langston, located in a small, out-of-the-way town in Oklahoma, is only a few miles from Oklahoma State University. You can hurl reckless rhetoric at me if you wish, but you will never persuade me that an African American will get a better education at Prairie View or Langston than he or she would get at Texas A & M or Oklahoma State University.

  2. Yvonne Chireau

    February 15, 2017 at 9:28 am

    As a graduate of Harvard Ed. school I am surprised that you don’t know that HBCU’s do not “cater to a single race.” The schools are products of the post-civil war and reconstruction era, founded to serve former slaves and other blacks who were excluded from the land grant schools in the south that all whites enjoyed. And even though there are no ex-slaves presently these schools have an historical legacy much like Catholic universities and sectarian colleges. Many have non-black majorities. The rationale for these colleges is quite similar to that of parochial schools, unless you think that there is no need for religious institutions to cater to “one religion” as part of their charter and mission. And they are successful in many respects, irrespective of your low opinion. According to a UNCF study, historically black colleges and universities are responsible for producing approximately 70% of all black doctors and dentists, 50% of black engineers and public school teachers, and 35% of black lawyers. Unfortunately you seem quite ignorant when you make unsupportable and clearly biased statements that are opinions and not facts. It appears that you feel victimized and resentful. Nevertheless, since you single out black colleges and universities in your article I hope that you will vigorously support President Trump’s executive order underscoring the federal government’s commitment to these vital institutions.

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