Adopting US funding models in higher education will entrench inequality. By Ella Delaney.

Ella Delaney
Pyne’s plan for US-style unis misguided

“We have much to learn about universities competing for students and focusing on our students,” Australia’s education minister said. “Not least, we have much to learn about this from our friends in the United States.”

Are American universities better? Certainly Christopher Pyne seems to think so. Many of his proposed tertiary reforms are copied from the US – real interest rates on student debt, uncapped tuition fees, public funds for private providers and minimal government funding.

At first glance Pyne’s admiration for the US higher education system makes sense. The Ivy League university in New York City where I have just completed two years teaching – Columbia College – boasts pristine grounds and facilities, celebrity academics, regular visits by world leaders, and huge opportunities for its talented undergraduates. They take part in global study programs, intern in prestigious places, and are interviewed by the world’s best banking, law and consulting firms. They have access to pathways into the world’s top medical schools and research labs. They live in pleasant accommodation in one of the most expensive cities in the world.

Columbia epitomises those quintessentially American qualities – ambition and excess. The dirt, poverty and general struggle faced by the majority of New Yorkers is hidden away elsewhere. It exists somewhere outside the bubble of my campus – uptown maybe, in the Bronx, or somewhere in Brooklyn, somewhere in that parallel, poor New York.

And this really is the problem. The tertiary education system in the US contributes to the bifurcation of the country into those who have everything and those who have nothing. And for this reason there seems little to admire in it.

A tertiary education at an elite institution has become a very expensive proposition in the US. Freeing universities to charge their own tuition and slashing government funding will do that. Columbia charges a flat $US46,846 a year for tuition. If you factor in the cost of living, Columbia’s student bulletin estimates that the cost rockets up to $64,144 yearly, and that doesn’t even include travel to and from campus.

This kind of price tag is challenging for even a middle-income family, which might explain the rarity of a student from a minority background in my classes. According to the Harvard University student newspaper, The Crimson, almost 50 per cent of Harvard undergraduates come from families that earn more than $200,000 a year. This isn’t even surprising. According to recent data from the Brookings Institution, a student at one of America’s most selective universities is 14 times more likely to be from a high-income family than a low-income family.

Financial aid packages alone cannot offset this kind of cost. Getting hold of them as a lower-income student is a complicated process. And even if offered a generous financial package to offset tuition, the money often falls short. The average low-income student faces myriad other costs – $200 textbooks, summers trying to survive an unpaid internship or research position, facility fees, high rent, travel. Low-income students both attend college in lower numbers and drop out in much higher numbers. According to a recent White House report, while half of all people from high-income families have a bachelor’s degree by age 25, just one in 10 people from low-income families does.

The cost of an elite college education leaves even privileged students balancing on a financial knife-edge. Recently I spoke with a very bright student who told me she would love to go into teaching, but that she’ll be so far up to her eyeballs in debt upon graduating that the prospect is laughable. She said that maybe if she worked hard enough in corporate law or management consulting eventually, one day, she could go back and work in education – the thing she really wants to do.

These days the lives of many young Americans are shaped by student debt. As of 2012, one out of two college graduates is either underemployed or unemployed, and the country has more than $1 trillion of student debt. According to a report by the Federal Reserve Bank of New York’s Consumer Credit Panel, 40 per cent of people under 30 have outstanding student loans, and the average student debt is $23,300. Ten per cent of borrowers owe more than $54,000, and 3 per cent more than $100,000. More than seven million Americans are in default on their student loans, according to a report by the Consumer Financial Protection Bureau last year.

The for-profit education providers that Christopher Pyne seems to admire are a big part of the problem. These institutions often attract disadvantaged and older students with their promises of quick vocational qualifications. However, they have high dropout rates (their graduation rate is merely 22 per cent according to Professor Suzanne Mettler of Cornell University), they are expensive and they are responsible for 50 per cent of student loan defaults.

If education is reduced to a product, there is no inducement to prioritise the interests of students – just to attract their money. There is no inducement to cap the budget on advertising and amenities, or to drive down fees. The corporatisation of the university also ends up shaping the lives of its workers. Most professors in American universities are now hired on a part-time or adjunct basis, without benefits, on barely liveable wages.

Australian universities need more money to be competitive in a globalised higher education market. The funding has to come from somewhere else if the government refuses to provide it (despite the country benefiting hugely from a free tertiary education). But turning Australia’s higher education system into a massive business is a mistake. Pyne only needs to take an honest look at the US system and what it is doing to both its students and faculty. The view from my Ivy tower – the kind of place Pyne professes to be so enamoured with – is an unfair one.

This article was first published in the print edition of The Saturday Paper on July 18, 2014 as "Degrees of debt".

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Ella Delaney is a Melbourne-based author and journalist.

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