Universities can sustain the status quo, asking students to absorb higher levels of debt while begging statehouses for more money and turning faculty into day laborers.  It’s a failed strategy though and change must occur.

Bob Dylan, 1979, “Gonna Change My Way of Thinking”

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Universities, except highly selective research institutions, are on the precipice of financial failure.  The crushing weight of student debt is accompanied by campus tendencies to borrow more and build bigger to attract students with subsidized loans to cover cancerously growing costs.

A recent Guardian post examined meritocracy at elite universities. The thrust of the piece was that “… the best schools do not teach kids anything radically different from what the average colleges do.” Clearly, elite institutions provide access to the very best faculty, laboratories, cultural enrichment, networking with strong students, and other co-curricular benefits. But, at what cost to what end?   Good students can get a good education with good faculty in diverse settings.

Cost increases are driven by a cabal of education and media interests, claims Thomas Frank in last week’s Salon, reporting increases of 1200% in 30 years. The Guardian pegs the increase at 300% in inflation adjusted dollars.  “Horse pills both.”

Higher education’s role in social and economic transformation belongs to universities that curtail cost and focus on core mission. A Sterling Partners and Bain & Company report, “The Financially Sustainable University” by Jeff Denneen and Tom Dretler confronts a dozen salient issues. Here’s my take on a few.

– Borrowing to enhance attractiveness or build reputation in response to the “law of more” stinks.   Yeshiva University is $1 billion in the hole according to the New York Post last week.  Trumped-up reliance on hedge funds to increase cash flow and tackle increasing operational costs are sinking a historic institution.  To Yeshiva’s regret, excellence enhancing endowments are evaporating.

Likewise, the technology-dependent, we-are-going-to-save-the-day institutions are choking.  For-profit behemoth Corinthian College, with 2014 revenue projections of $1.6 billion and over 72,000 students on 100 campuses is on the verge of bankruptcy, according to last week’s Wall Street Journal.  Optimism will tortuously twist into pessimism for debt laden students holding transcripts marked “unfinished.”

– Focus on primary purpose is waning at far too many institutions.  The Knoxville News Sentinel reported last week that UT President Joe DiPietro said the model needs to change, just prior to the UT board approval of a 6% tuition increase.  Board of Regents Chair John Morgan recognizes the increases are not sustainable as costs are shifted to the student.  “For what?”  “Is teaching better?”  “Is learning increased?” “Is scholarship improved?”  “Are graduates more employable?”  Classroom excellence and value-added experience in research and service answer these questions.

– Reduce run-amuck administrative costs.  From 1995 to 2010, administrative expenditures escalated by 10%, while instructional spending decreased by more than 10%. Faculty salaries are down; administrative salaries up.  Long term debt and interest expenses climbed 20%.  Think Yeshiva as one cell in a national cancer. Resuscitation of U.S. higher education — formally the envy of the world — is needed.   Increasing loans for students doesn’t work.  More debt equals more headaches, less freedom, diminished quality.

Grasping blindly at new models is misspent energy.  A recent Education Trust report “Tough Love: Bottom-Line Quality Standards for Colleges” identified institutions with the lowest graduation rates of students who matriculated as freshmen.  The tally includes 12 University of Phoenix campuses of the 22 for-profits in the group of the worst performing 41.  Five are back-of-the-matchbook ITT schools.  All but 6 of the 41 basement dwellers score completions rates of 10% or less.  In some cases time may show criminality.  Where is educational leadership while slapdash models based on “Madmen” illusions of opportunity undermine the enterprise?  Too frequently in the backseat.

Here’s a business model.  An automaker builds 100 cars.  Almost 90 won’t run or are incomplete at the end of the assembly line.  Taxpayers subsidize the manufacturer because elected officials and manufacturers believe these cars are essential.

Here’s a business question.  Is this good business and if so, for what or whom?

– Integrative models should seamlessly adopt varied approaches.  Community colleges should be integrated into universities and on-line learning more deeply assimilated into on-site experiences.  Smooth transferability of years of study and one-at-a-time courses is vital.  Universities should mandate courses delivered at 2 year, 4 year, on-site, and on-line providers as a component of every degree program.  Integrative models will drive down costs, increase access, limit the inhibitors to adult students and facilitate life-long learning in diverse settings.   Institutions and diverse providers must work in concert to benefit students, not competitors to increase market and/or profits, while bludgeoning students with debt.

Our universities need insightful, focused leadership.  Engagement benefiting students through responsiveness to a changing educational environment is the necessary future.