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Earlier this month, I wrote a piece called "A 50-Year College Subscription Idea." My idea in writing that post was not to offer a fully baked alternative higher ed funding model. Instead, I wanted to stir up some creative thinking about how we finance our college and universities.
David Syphers, a physics professor at Eastern Washington University, took up my challenge to debate and discuss. Below are his thoughts -- first sent by email and published here with his consent -- on why a 50-year subscription model will never work:
- Most students work in fields unrelated to the specific content of their degrees. Getting the degree is signaling to the employer, who is rarely looking for specific degree-related skills (though may be looking for broad skills picked up during earning the degree). So, there’s little value in returning to school.
- I can’t tell you how many job ads say, “prior industry experience required.” So again, there’s little value in returning to school.
- Many graduates move away, often to a different state or even country. They couldn’t actually take most classes at the institution later on.
- $200,000 over 50 years instead of $100,000 up front sounds exactly like … a loan. You’re just trying to make it a loan held by the college instead of a private party -- except the college now needs a loan to float the student’s loan. So, you’ve just made the college the middleman.
- You’re asking students to explicitly commit to a model that will require them to pay the college into retirement. With student loans, the payoff is variable, and people can always believe they’ll pay them off quickly.
- Indeed, it’s even worse. At age 18, the average American man will live another 59 years. At age 22, another 55 years. You’re nearly asking them to pay you for life, and that’s traditional-aged students.
- And that’s the average. Some of them will die earlier. Many without a large estate, and with other creditors (home loans, etc.). Are you going to take this money from their widow(er)s and children?
- For a variety of reasons, the cost of college rises faster than overall inflation (which itself is very hard to predict five decades out -- even the longest-term Treasury bonds or mortgages are 30 years). Fifty years of even just 2 percent inflation nearly triples the nominal price. How easy will it be to advertise that high of a figure up front?
- Good luck getting any alumni contributions in this model.
- Alumni will actually have a perverse incentive to root for the demise of their alma mater since it might clear their debt (subject to loan backing by other institutions).
- When would the student commit to this lifetime series of payments? My institution’s first- to second-year retention rate of full-time, first-time students is around 75 percent. Our six-year graduation rate is in the mid-50s. (My own alma mater has better numbers -- 99 percent and 94 percent, respectively -- but they’re still not 100 percent.) How popular is it going to be to have students paying for services they don’t want for decades? (This is already a problem with loans, but at least they actually got what they signed up for there, strictly speaking -- they’re paying to have borrowed money, and they really did get to borrow the money.)
- One of the problems you’re trying to solve is the high up-front cost of college. But you’re ignoring the most obvious solution, which is that community colleges and four-year publics are already much, much cheaper than private colleges. A student at my four-year university could complete their degree for that $25,000 you’re asking them to pay for a single year.
First, David -- thank you for tearing this apart. This is how we will move forward in thinking about the economics of higher education.
Does anyone want to offer a response to David’s critiques? Maybe some outside-the-box ideas around higher ed financing to get us beyond the usual discussions about demographics, discounting and disinvestment?
