Honors of Inequality | Epilogue | Free Read

“As will be seen from the above explication of details and circumstances, such practicable measures as have hitherto been offered as a corrective to this sterilization of the universities by business principles, amount to a surrender by these institutions to the enemies of learning, and a proposal to replace them with an imperfect substitute. That it should so be necessary to relinquish the universities, as a means to the pursuit of knowledge, and to replace them with a second-best, is due…to the course of policy (necessarily) pursued by the executive officers placed in control of academic affairs; and the character of policy so pursued follows unavoidably from the dependence of the executive on a businesslike governing board, backed by a businesslike popular clamor, on the one hand, from his being (necessarily) vested, in effect, with arbitrary power of use and abuse within the academic community, on the other hand. It follows, therefore, also that no remedy or corrective can be contrived that will have anything more than a transient palliative effect, so long as these conditions that create the difficulty are allowed to remain in force…All that is required is the abolition of the academic executive and of the governing board. Anything short of this heroic remedy is bound to fail, because the evils sought to be remedied are inherent in these organs, and intrinsic to their functioning.” | Thorstein Veblen, The Higher Learning in America (1917), 201–02

Thorstein Veblen was unequivocal in his denunciation of governing boards of trustees and the academic executives that administer institutions of higher learning like business enterprises. He characterized the boards and executive offices as “organs” with “intrinsic” functions anathema to the host university and its pursuit of knowledge. He cautioned that there was no meaningful way to mollify or remedy the pernicious influence of commonsense business principles on the traditional functions of a university. Veblen therefore asserted that the only solution to the natural antagonisms between business enterprise and higher learning was “the abolition of the academic executive and of the governing board” that constituted the arbitrary power “within the academic community.” Additionally, the extracurricular collegial activities, vocational and professional schools, and the undergraduate colleges had to be excised from the universities (i.e., graduate colleges) to further defend higher learning from practical and popular uses of the university.

By contrast, the foundational texts of contemporary higher education scholarship celebrate boards of trustees as the linchpins of a uniquely American system of higher education rooted in the moral philosophy of institutional autonomy. Against external agencies, the boards and their handpicked executives assume near total responsibility for the college or university to protect the institutions from the deleterious outcomes originating in system coordination and state control. The board of trustees and their administrative executives assume substantive and procedural autonomy for the mission and management of the institutions and, in return, they guarantee that the academic community will demonstrate some level of accountability to external stakeholders in the larger society. Internally, (wise) boards of trustees cede control to the faculty and recognize accountability as a formal performance of meaning-making to meet the popular expectations of a democratic state. The institutional autonomy rooted to the role of the boards thus lends local administration and faculty the opportunity to determine to what degree the elite functions yield to mass and universal functions of higher education at each particular college and university.

A key difference underlying the judgment for or against boards of trustees in American higher education boils down to the concept of the elite functions of universities. For Veblen, the elite functions of universities are higher learning and the pursuit of knowledge. The graduate colleges must be isolated from the practical, professional, and popular functions of higher education in order to maintain the mission of pure research. Institutions of higher learning must then sink or swim based on their native ability to attract funding and students to sustain their research programs. In contrast, for higher education scholars, the elite functions of higher education are the preparation and reproduction of the American ruling class—including the tenured faculty. This concept of elite functions encompasses the cultivation of societal business and political leaders who subsequently make up a majority of seats on college and university boards of trustees. By recruiting the “academically prepared” students who qualify for the “meritocracy,” elite functions hold priority over mass and universal principles at the institutional level. To this end, the trustees, administrative executives and faculty jointly exercise the academic power (i.e., “shared governance”) to designate a small group of applicants for initiation into the elite functions that “shape the mind and character of the ruling class,” while sorting the rest of the applicants into different categories of training for entry into the professional, technical, and pliable workforces serviceable to the ruling class.

Sterilization of the Universities by Business Principles

Much of what Americans and American policymakers think they know about higher education and its administration is rooted in the anti-intellectual tradition in American life. Since the late 1950s, opponents of state-coordinated higher education have adopted the arguments of neoliberal theorists who proposed that public higher education must be administered by the same commonsense principles in private higher education. Funded by corporate and conservative (or anti-New Deal) think tanks, scholars of higher education advanced the partisan arguments of anti-intellectualism and institutional autonomy (“free enterprise”) to undermine the advances made by statewide institutional research and coordination during the 1950s. These early works on the public administration of public colleges and universities became the seminal texts for the institutes of higher education that have defined higher education as a field of study and as a graduate discipline.

The transposed spirit of anti-intellectualism gave birth to the moral philosophy of institutional autonomy—a significant historical marker for the hegemonic culture of business enterprise in higher education. The moral philosophy of institutional autonomy sets down prescriptive tenets that define what is possible for the administration of higher education in American society and, more broadly, democratic societies in general. A featured priority of this ideology is that each and every institution is unique and incommensurable with every other college in the universe of higher education. As such, this branch of neoliberalism became the prevailing paradigm in higher education scholarship that undermined the progressive articulation of a social science of higher education for democratic societies.

As is readily apparent from even a cursory reading of the original texts on the autonomy of public institutions, higher education scholarship has been “an imperfect substitute” for the kind of higher learning that routinely takes place in the traditional disciplines. This line of scholarship became the leading purveyor for the principles embodied by business enterprise, the boards of trustees, and academic administration. Dependent on research funding from the Rockefeller Brothers, Esso Foundation, Ford Foundation, and Carnegie Corporation for Higher Education, the first institutes of higher education at the nation’s public flagship universities produced scholarship rooted in reactionary politics designed to thwart New Deal-style government programs that sought to make higher education more serviceable to American democracy as envisioned by the Truman Commission. This is to say, the “enemies” (to use Veblen’s term) of higher learning enlisted the schoolmasters in the vocational schools—specifically, the education colleges—to chart a course for state and national policies that girded the arbitrary authority of local officials at American colleges and universities against the public interest of the states and nation.

Fundamentally, higher education scholarship offers a paralyzing regard for the immense complexity of higher education. Its “worldly wisdom” states that higher education must be administered by none other than the local executives who best know each college’s history and mission. This emphasis on cybernetic power, or local control, has corrupted the traditional notion of academic freedom as an organizing principle for higher learning into a partisan defense of the corporate privilege of the faculty. Most importantly, college students have suffered the brunt of the consequences arising from the neoliberal intervention into higher education—a neutralization of students’ academic freedom, a rejection of reforms to higher education for American democracy, and ultimately a burden to America’s youth who must accept a lifetime of student loan debt in exchange for a college degree.

As the putative source of expertise and research on national, state, and institutional policies, it is not hyperbole to say that scholars of high education have had a more pernicious influence on the direction of the American system of higher education during the past sixty years than all the boards of trustees at private and public colleges combined. Whereas the boards and academic executives have lasting and irreversible impacts on particular institutions, the “propagandist intrigue” (Veblen) of policy analysis informs (or creates, per Birnbaum) the cultural, political, economic and academic environments in which local executives administer higher education institutions. The institutes of higher education are purveyors of an intellectually bankrupt ideology rooted in the principles of business enterprise operative under the guise of a moral philosophy of institutional autonomy. Moreover, as the foregoing has shown, higher education scholars have violated the public trust and the sanctity of higher learning at publicly-supported colleges and universities in the United States—they have deflected national efforts to transform higher education for American democracy and deferred scientific studies about why colleges work for some students, but not others, in our national system of colleges and universities.

Regrettably, any reform aside from a scientific revolution—that is, the adoption of a scientific paradigm for higher education scholarship—will have a “transient palliative effect” on the course of American higher education. Possibly, as Veblen once said of college boards of trustees, any action short of the “heroic remedy” to disband the institutes of higher education and furlough scholars of higher education at the flagship public institutions—University of California, Berkeley, University of Georgia, Pennsylvania State University, University of Michigan, and Indiana University, to start—will fail to eradicate the propagandist intrigue inherent to these “second-best” enterprises. No industry (or public administration) can be entrusted with the responsibility to study its optimal regulatory environment and dictate its accountability regime to the American people and their democratic governments. This is no less true for higher education than in other industries or for other functions of public administration.

Of course, a romantic call to abolish the institutes of higher education and to furlough tenured faculty rightly will be decried as an affront to academic freedom, by any definition, and resisted with the utmost fervor. It goes without saying, any effort to disband the institutes of higher education is no less fantastical, and no more possible of happening, than the proposal that colleges abolish their boards of trustees and academic executives, as Veblen recommended, or that radical academic faculty and students purge administrators from higher education, as Paul Goodman advocated in the early 1960s. In fact, this kind of nonsensical call to action for transcendence (apropos twentieth-century higher education scholars) deflects from a more pertinent question at hand: how can former, current, and future college-goers hope to redress the gross inequities produced by the American system of higher education and its federal financial aid system?

The Course of Policy Pursued by the Executive Officers Placed in Control of Academic Affairs

My work endeavored to bring to light several key ideological principles of twentieth-century scholarship that has crippled policymaking and fostered social injustice in the American system of the higher education over the past sixty years. The “mixed” system of higher education in America has been distorted in a way that exploits its mass and universal functions to financially subsidize the elite functions that conservative faculty, the academic executives, and the boards of trustees regard as the pith and prestige of their institutions. To wit: The policy analysis and literature produced by the institutes and think tanks of higher education have resulted in a system of public financing for American higher education that is nothing less than a regressive system of taxation on less wealthy citizens to support the selection and preparation of more wealthy citizens for integration into the ruling class of the nation.

In addition to the foregoing historical analysis of higher education scholarship in the late twentieth century, I have reached this conclusion as an institutional researcher who had access to both academic and financial records at public and private colleges in order to compile the quantitative data necessary for academic program reviews. Unlike the vast majority of higher education scholars who base their analyses on aggregate data at the national, state or institutional level, institutional researchers have the opportunity to analyze institutional revenue and expenditures at the student level of an institution. That is, institutional researchers compile data that records how much revenue a student generates for an institution as well as how much the institution directly spends on that student for a semester of higher education. These student-record level data sets are the primary sources for the information submitted to the rankings, state agencies, and federal government. The federal government, publications, and policy analysts typically receive or analyze data aggregated at the institutional level for their annual college profiles, rankings, and scholarship—there is no direct evidence for what works at the student level.

For the most part, the student-record level detail about an institution is a closely held secret that the vast majority of academic leaders and faculty regard as damaging, or damning, information about how colleges work. And they are right. In its series on “Evolving Higher Education Business Models,” the American Council on Education (ACE), an organization representing the nation’s college presidents, describes college expenditures as a “‘black box’ of institution spending decisions.” Although the ACE calls for “greater transparency” on the costs and contributions of institutional activities “toward student success,” the report notes that such a goal runs counter to the presidents’ and colleges’ “traditional view that internal data should be held closely in order to avoid criticism and second-guessing.” Substantively, activity-based costing would advance the fiduciary responsibility of college presidents, but also the ability to link expenditures to student success, transparently, that would invite more rigorous research and knowledge about how colleges work for some and not others by design: the “decision making.”

The operations of most colleges and universities—the private institutions in particular, but more and more so the public institutions—could not withstand public scrutiny or substantive accountability to the individual student who pays college tuition with non-institutional grant aid and student loans. A student-level record of academic and non-academic resource allocations will show substantial inequities for the support and services offered to each student at the institution—that is, the quantifiable discrepancies between what a student pays in tuition and what he or she receives from academic programming and support services. For this reason, and other federal restrictions designed to foster a “higher education market,” institutional researchers are not at liberty to speak directly about the inner workings of any one institution. A description of how colleges work (for some) must proceed by means of generalizations and abstractions to demonstrate that student-level data often exposes the profound inequities produced by the American system of higher education.

As a basic step to an understanding what is happening in the black box of higher education expenditures, consider this thought experiment about the organizational culture and history of a tuition-dependent private, nonprofit institution—Middle Atlantic University—which enrolls only two entering freshmen each year. It costs approximately $10,000 per year to educate a college student and Middle Atlantic University charges $10,000 per year for tuition initially. The university requires students to pay tuition with non-institutional funds—in other words, without institutional or external grant aid. As a nonprofit private institution, the college collects exactly the amount of revenue it needs for expenditures to educate the entire student body attending the college. For the sake of simplicity, assume the cost of higher education does not increase for sophomores, juniors and seniors, so a student body of eight full-time students requires $80,000 of revenue and expenditures each year (i.e., four cohorts of two students at $10,000 tuition each with no attrition).

Of course, no two students are exactly alike and the students have different outcomes in terms of academic excellence (i.e., they are “unique”). Imagine, then, that the faculty comes to the judgment that there are different types of students attending the college with different levels of commitment to the academic curriculum. The college henceforth divides the entering first-year students into two categories of attendees, academic and collegial, to signify which particular students the faculty regards as most academically prepared for higher learning. With only two entering freshmen each year, the college sometimes fails to recruit academic students and instead registers two collegial students. Among the whole student body, only two of every eight students appear to be academically-oriented students. Although faculty deems the academic students most serious about higher learning and most worthy for entry into the ruling class, the majority of faculty are working with collegial students engaged in extra-curricular activities or vocational studies for a professional or technical occupation.

In time, the faculty begin to measure the prestige of private, nonprofit colleges across the nation in terms of the number of academic students graduating from elite programs (or functions). Subsequently, the administration and trustees learn to equate the prestige of the college they oversee in similar terms, either directly through faculty or indirectly through media rankings based on surveyed perceptions. Eventually, a consensus builds among trustees, administration, and faculty at Middle Atlantic University that the college must recruit more academic students in order to improve its prestige in the nation. The rationale for doing so internally is to recruit and retain the best faculty, but trustees in general desire to be associated with one of the “best ranked” colleges in the nation. A strategic goal emerges stating that the college aims to double the number of academic students it recruits and graduates—or, one academic student for every two students enrolled.

Economic research shows that a private, nonprofit college may go about recruiting the students it wants to educate by selectively discounting its tuition for targeted enrollees. For the sake of the argument, assume that the college does not take an incremental approach to competition for academic students; Middle Atlantic University creates an “honors” program that offers a full-tuition grant to the first academic-caliber freshman who commits to the college each year. Rather than having hit-or-miss years, the strategy effectively enables the college to recruit at least one academically-prepared honors student, every year. Within four years, then, one-in-two students at every class level will be an honors student who seeks the kind of higher learning that the faculty regards as the core mission of its elite functions.

Whereas the tuition discounting strategy empowers the institution to recruit the students it desires, the cost of a higher education remains $10,000 per student. As the strategic plan to double the number of academically-prepared honors students comes to fruition, a smaller and smaller percentage of the students are paying tuition. In the first year, one freshman honors student results in a budget shortfall of $10,000. In the second year, one freshman honors student and one sophomore honors student results in a budget shortfall of $20,000. So on and so on, until by the fourth year when four of the eight students attending Middle Atlantic University are in the free-tuition honors program, resulting in a $40,000 shortfall in revenue for an anticipated $80,000 in expenditures for the college.

Again, since no other source of funding exists in this initial model, Middle Atlantic University must make up these shortfalls with tuition revenue to maintain its “quality” (expenditures of $10,000 per student per year) of higher education. This means that the list price of tuition, charged to the collegial (or now nonhonors) students, must be increased if the college hopes to maintain its expenditure levels for all students. In the first year of the free-ride honors program, tuition is increased to almost $11,500, a fifteen percent increase, for the seven tuition-paying students. In the second year, the list price of tuition must be increased to a little more than $13,333 in order to fund two honors students with six tuition-paying students. In the third year of competition for honors students, the list price of tuition jumps to $16,000. By the fourth year, and every year thereafter, the list price of tuition at Middle Atlantic University is $20,000—a 100% increase over the original tuition and the cost of delivering a higher education before tuition discounting became an annual competitive practice. While only nonhonors students pay the list price to attend the private college in the fourth year and thereafter, the tuition revenue generates enough to pay for the higher education of both nonhonors and honors students.

At this point, the model of higher education financing only takes into account an institution’s strategic discounting and the list price of tuition necessary to fund its aspirational goal to become more prestigious by educating more academically-prepared honors students. So-called nonhonors students, however, are now paying twice as much for a higher education than previously paid by all students. Unsurprisingly, the list price of tuition for higher education becomes an economic impediment to degree completion for some nonhonors students. As a result, Middle Atlantic University must now account for retention and attrition in its recruitment and budgeting plans. For example, if one of the four nonhonors students paying full tuition leaves the college before graduation, the university faces the prospect of increasing the list price of its tuition to over $26,666 in order to generate enough revenue from three nonhonors students to pay for a total of seven students’ higher education.

As the more palatable alternative, the college choses to accept two nonhonors students in the next incoming freshman class. In fact, Middle Atlantic University by chance discovers that attrition is a net benefit to the financial conditions of the college. Each year, the college accepts two nonhonors student for every honors student with the expectation that one of the two nonhonors students will drop out within the first two years of attendance. Typically, the college now has five nonhonors students to fund the higher education of nine students on an annual basis and the list price of tuition does not exceed $18,000 per year (or $90,000 split among five full-tuition students). Although the institution’s freshman graduation rate falls to 67%, or two out of three incoming freshmen, Middle Atlantic University has little concern for quantitative metrics because its elite “honors” program is fully funded and fully enrolled year after year. In this respect, attrition among the nonhonors students is a boondoggle since it affords the institution the additional revenue needed to provide a higher education to the students the faculty designates for initiation into the ruling class without pricing the college out of the higher education market.

Over time, then, Middle Atlantic University comes to regard its expenditures on the higher education of nonhonors students as inefficient and wasteful. One-in-two nonhonors students are likely to discontinue their studies within the first year or two of college, resulting in little benefit to the university from the $10,000 spent on a nonhonors student’s freshman year. In addition, the tenured faculty prefer not to waste their time on incoming nonhonors freshmen, half of whom leave the college before reaching upper division coursework. The academic administration then turns to a transient teaching workforce—adjunct faculty—which fortuitously reduces by half (or to $5,000 per year) the expenditures needed to teach English, math and core curriculum courses to the transient nonhonors freshman student body.

A contingent labor force of adjunct faculty thus frees up another $10,000 per year for the financial planning at the institution. The cost reductions may be used to reduce the list price of tuition to $16,000 ($80,000 split among five full-tuition students). The tenured faculty, however, are a fixed cost and many no longer teach a full course load because they do not engage with the incoming nonhonors freshmen. The academic leadership therefore proposes enhancements to the honors program that incorporate high impact educational practices such as team teaching, undergraduate research courses, and study abroad. Thus, after reducing the expenditures for the higher education of nonhonors students, Middle Atlantic University has found additional funds to sweeten the appeal of its elite program by increasing annual expenditures to $12,500 per year per honors student. In this decision-making pattern of organized anarchy, the prestige of the college grows not only due to the number of honors students graduated each year but also by the quality of the education they have received as measured by academic expenditures per student.

At this point, the inequality inherent in a division of students into two groups, honors and nonhonors—or academically prepared and not academically prepared—is fully evident. The honors students pay no tuition to Middle Atlantic University during their college career while receiving $12,500 in higher education every year for four years. In contrast, the nonhonors freshmen dole out $18,000 in tuition for college but receive only $5,000 in higher education in their first year. Although nonhonors students are not directly informed of the discrepancy in the price of tuition and the cost to deliver nonhonors coursework, half struggle to meet their potential given the subpar quality of instruction budgeted for adjunct faculty by the college. Those that persist into their sophomore year subsequently receive $10,000 in higher education instruction, while still paying the full cost of tuition at $18,000 per year. Generally, institutional tuition discounting for honors students has increased the cost of higher education by 60% to 100% for nonhonors students, while also reallocating instructional expenditures from incoming nonhonors freshmen to honors students.

Under these financial terms, more and more students choose not to attend a private college or forego higher education entirely. That is, the equality of choice between the private and public sectors of higher education diminishes for nonhonors students as the tuition discounts to honors students increase. At this point, the availability of state and federal financial aid for “needy” nonhonors students becomes the primary objective of trustees, administrators, and faculty at Middle Atlantic University and similar institutions competing with our hypothetical college. Economists specializing in higher education financing have shown that a system of federal student loans will render the private sector of higher education more attractive to incoming freshmen, especially when private colleges are able to maintain or demonstrate their prestige to nonhonors students—by virtue of the noteworthy accomplishments of honors graduates and as reflected in the above average price of attendance. Despite the absence of a democratic rationale, a political coalition forms among higher education scholars, private college executives, the financial industry, and legislators who abhor “government handouts” to students (but not to private institutions). The coalition moves forward a robust and liberal system of guaranteed student loans from the federal government in order to create a market for higher education that fosters an equality of choice between private and public colleges for high school graduates who apply to both.

While the existence of the federal student loan system is not the cause or driver of tuition inflation at Middle Atlantic University, the business model behind institutional autonomy and the preparation of the ruling class is not sustainable without the revenue collected on behalf of (and directly from) “needy” nonhonors students. Some nonhonors students incur debt before leaving college disillusioned with the experience or unhappy with the quality of higher education delivered at the actual price of tuition paid. Other “resilient” nonhonors students will persist until graduation—perhaps, predominantly, they enrolled for the “collegiate” experience or for the income promised by a vocational or professional degree. Whatever the reason, since tuition is eighty percent higher ($18,000/$10,000) than it was under equitable conditions—that is, before the private sector had the autonomy to decide who attends college for free in America—nonhonors students must now come up with approximately $8,000 more per year to attend, or $32,000 total, for a college degree. With no viable alternatives, more and more students at Middle Atlantic University take advantage of the “generous” federal student loan program “to pay for their education,” without realizing that institutions use their tuition to subsidize “elite” functions to service a small group of students designated for initiation into the ruling class.

The Evils Sought to Be Remedied Are Inherent in These Organs, and Intrinsic to Their Functioning

At first blush, the preceding description of Middle Atlantic University may seem like a gross oversimplification that fails to capture the realities of higher education administration, financing, and instruction. The analysis, however, reflects the historic transformation of higher education finance since 1976. The tuition discount rate for entering freshmen at private nonprofit institutions has incrementally grown to fifty percent over the past forty years. At the same time, the federally-guaranteed student loans have become the single largest source of financial aid for college students. The thought experiment in effect represents how the moral philosophy of institutional autonomy exploits the “mixed” system of higher education finance to create synergies between institutional tuition discounting, honors curriculum, freshman attrition, federally-guaranteed student loans, and academic freedom that favor the provision of a free higher education for future members of America’s ruling class.

On the one hand, none of this is possible without a federal system of grants and student loans for “needy” and nonhonors students who must have the funds to pay the list price of tuition, or a substantial percentage of it, in order to create a “higher education market.” One of the truisms of American higher education is that colleges are recession-proof—meaning that they don’t suffer enrollment downturns during contractions in the national economy as a whole. What is true of college enrollments is equally true of tuition revenue—and the student loan system that makes the higher education market possible. As seen in Figure 18 below, the annual borrowing by college students and their parents (PLUS loans) peaked in the years following the Great Recession from 2007 to 2009. The slow recovery in the economy encouraged students to enroll, and borrow money, for college credits and degree programs. Only recently has the total annual federal loans come down to levels not seen since the middle of the most recent U.S. recession.

Figure 18 | Annual Federal Loans Borrowed by Academic Year (2018 Constant Dollars)

 Consequently, as seen in the data tracked by the Board of Governors of the U.S. Federal Reserve System (Figure 19 below), the Great Recession of 2007 to 2009 (shaded area) does not register as an economic event for the accumulation of college student loan debt by Americans. The trendline for outstanding college student loans increased more or less linearly—recession proof—over the past 13 years. The fact that college attendance is recession proof makes it a lucrative capital market given the federal government’s guarantee and subsidy program. When other capital markets like real estate, stocks, etc., are suffering from an economic downturn, the college student loan market functions as a federal public subsidy to both the financial industry and higher education institutions. And, yet, all of this college student debt—over $1.6 trillion dollars in 2019—does not measure the cost of higher education directly provided to the borrowers during their years of attendance. It measures the tuition subsidies that “needy” college students are required to pay out of their future incomes so that the institutions are able to sustain elite functions that offer full scholarships and free higher education to the “academically prepared” students that the colleges want to enroll each year. In short, it is a system of regressive taxation to make higher education free for those that the autonomous colleges and their faculties deem worthy of the elite functions of higher education designed to shape the mind and character of the American ruling class—as Martin Trow described the purpose of institutional autonomy.

Figure 19 | Outstanding Student Loans Owned and Securitized by Quarter, 2006 to 2019

On the other hand, free education for the elites requires that trustees, administrators and faculty at the individual institutions amicably coexist at least to the extent that federal funds collected on behalf of “needy” students can be reallocated to the instructional expenditures for honors students, on full-tuition scholarships, designated for initiation into the American ruling class. One study recently found that sixty percent of the nonprofit public and private undergraduate institutions in the country offer an honors curriculum through a program or a college: “honors curricula campus-wide is now pervasive in American higher education.”[i] To the extent that these honors programs and colleges are funded without external resources (e.g., endowments), the system plays a shell game with the tuition revenue collected by institutions on behalf of “needy” students in order to invest in the instructional costs for students who “merit” steep tuition discounts to attend elite programs or honors colleges. It is, as Veblen warned, an instrumentalization of higher education for “the breeding of a commercial aristocracy” for the culture of business enterprise in the United States.

Remarkably, the inequity of honors programs is an open secret on the websites and federal data reported by America’s higher education institutions that easily may be uncovered by students and stakeholders. For instance, in our imaginary example, Middle Atlantic University’s own marketing pamphlets and website betray the evident difference in enthusiasm with which the college greets an honors student in comparison to a nonhonors student based on nothing more than the presumption of academic preparedness and eligibility (1300 on the SAT or 25 on the ACT).

Middle Atlantic University promotes its annual full-tuition scholarship for an honors-eligible student who designates Middle Atlantic University as his or her first choice institution on the Free Application for Federal Student Aid. The scholarship recipients are welcomed to the honors and merit fellowship program which offers intimate classes of twenty or fewer students taught by faculty who lead thoughtful discussions to expand students’ academic horizons. The honors student also is afforded a study abroad opportunity and a faculty mentor for undergraduate research for a thesis paper in a major—a significant accomplishment for graduate school consideration. The extra-curricular benefits of the fellowship include visits to local cultural events and destinations, capped with an annual Middle Atlantic University honors conference at which the student may meet notable academics and luminaries. Academically and socially, the honors program immerses its students in a unique intellectual community that promises ample opportunities for personal growth.

In contrast, Middle Atlantic University also educates the nonhonors, or marginal, student whose family earns $0-$30,000 but somehow scrapes together the $24,000 to cover the net price of attendance at Middle Atlantic University.[ii] At that cost, the nonhonors student will likely be greeted by a few of the 400 adjunct or part-time faculty members since many of the 250 full-time professors dedicate time to honors, upper-division and graduate degree courses. In lieu of a full-time professor fostering a unique intellectual community, Middle Atlantic University provides the nonhonors student a success coach assigned to the student for their entire academic career. This versatile success coach provides the nonhonors student whatever is needed—academic counseling, career counseling, the campus calendar of events, or financial aid advising. In addition, if the nonhonors student enrolls in the optional first year seminar, he or she will be mentored by faculty and library personnel who foster student learning—“an imperfect substitute” for a stimulating intellectual community.

Middle Atlantic University’s marketing materials by themselves reveal that its honors students receive coveted annual full-tuition scholarships and pay $0 per credit hour for their college education. At the same time, the federal data reveal that the nonhonors students pay nearly $800 per credit hour ($24,000 divided by 30 credits) to attend college. Whereas Middle Atlantic University provides a complete financial plan and the funds for the honors student to attend college for free, the nonhonors student is met with a success coach to help the student construct a financial plan to fund education—after enrollment. How, then, does Middle Atlantic University pay the per credit hour costs for the honors student’s education? In the most recent finance report to the federal government, Middle Atlantic University also reported that almost 99% of its scholarships are unfunded ($50 million), while only 1% are funded ($500,000). This means that the scholarships provided to honors students are not paid by a college endowment; most likely they come directly out of the annual operating budget. Since Middle Atlantic University, like other tuition-dependent institutions, derives most of its revenue from tuition, the tuition revenue collected from nonhonors students must cover most of the costs for the academic and nonacademic services delivered to both the honors students and the nonhonors students.

One of the more blatant flaws in the economic models for the private benefits from higher education mistakenly presumes that individual students receive a quantity of higher learning that increases future earnings equivalent to the tuition paid to a college or university. Firstly, economic theorists like Michael Tierney naively equated the higher costs associated with the premier private colleges with higher quality education, as if there is a direct relationship between tuition and quality. Secondly, he and his colleagues similarly assumed that each student pays tuition in a market exchange that delivers an equivalent value in higher education. Thirdly, the higher education scholars and economists claim that the private benefits of college are measurable by the average income earned by a college graduate as compared to a high school graduate. As Andre Daniere acknowledged, economists have no means of measuring a quantum of higher learning in order to fully grasp the economic relationship between tuition paid and expected earnings that is supposed to be the basis for a rational calculus about higher education attainment. In fact, there is no direct relationship between the net price of attendance for an individual student and the quality of higher education that a student receives.

Presumably, public colleges and universities will not disband their institutes of higher education any sooner than private institutions will abolish their boards of trustees in order to build a new American system of higher education from the ground up. Therefore, the college students—and their families—who find themselves forced to take out federal student loans or accept federal grants to pay for college tuition, must seek more accountability from the individual institutions they attend as American citizens and taxpayers. As Thomas R. McConnell wrote, the autonomy of colleges and universities “is by no means absolute.” The social injustice inherent to elite programs of higher education, and intrinsic to their autonomous functioning, may be exposed by accountability. To this end, every college student who receives federal grant and student loan aid should receive a verifiable accounting from the institution on how those tuition dollars were spent directly on his or her own higher education—not an aggregate or average summary of instructional expenditures for the institution, but a student-record level accounting of revenue generated per credit hour enrolled from each student and student-record level accounting of academic and non-academic expenditures per credit hour enrolled for each student.

If the institution has an honors program or college, student governments or student officials may request that the institution publicly account for the annual tuition revenue (less discounts) collected from its honors students and the annual institutional expenditures for recruitment and instruction in the honors program. Alternatively, where no honors program exists, every institution may be asked to account for the distribution of institutional aid to students, including the number of students attending on full scholarships and whether those scholarships are funded by endowments or with general funds (or tuition revenue). Academic programs, honors or otherwise, that have a high density of students with substantial tuition discounts may also be asked to account for how they financially cover academic expenditures—from revenue reallocated from the tuition-paying students, research grants, or from auxiliary enterprises.

These and other measures of accountability will bring to light the misconceptions in the neoliberal model of higher education administration and financing in America. It may also subject higher education executives and faculty to greater public scrutiny regarding the decisions they have made to reallocate tuition revenue collected from federal student loans, state grants, and direct payments from students to the subsidization of an institution’s elite functions to shape the mind and character of future members of the ruling class of the United States. Only then, perhaps, it may become possible to hope that state and federal legislators will reconsider the economic injustice done by market principles based on the moral philosophy of institutional autonomy and will restructure the “mixed” system of finance for college-goers to address the social inequality perpetuated by the American system of higher education.

[i] Richard I. Scott, Patricia J. Smith, and Andrew J. Cognard-Black, “Demography of Honors: The Census of U.S. Honors Programs and Colleges,” Journal of the National Collegiate Honors Council (2017), Online Archive, 548, available at htttp://digitalcommons.unl.edu/nchcjournal/548.

[ii] The net price of attendance includes tuition and fees, costs of books and supplies, room and board, and other expenses while attending a college.