Higher education: Who is the customer?

Martyby Martin LaGrow

In Hap Aziz’s recent blog article, Society or Student: What Should Education Serve, Mr. Aziz posed a number of important questions: what is the role of higher education in contributing to and preserving the entrepreneurial spirit? What is the contribution of higher education to developing students who demonstrate creativity and independent thought?  The answer, it would appear, would be one and the same—serving the student, by providing an education that encourages independent thought, serves society. The influx of US government dollars into education, however, means that the American citizen is rightfully interested in the ROI—what is the quantitative, as well as qualitative return on the investment of an estimated $54 billion dollars per year (http://www.forbes.com/sites/realspin/2012/09/17/its-well-past-time-to-slash-higher-education-subsidies/) in federal grants, aid, and tax breaks—aside from money spent at the state level? This amounts to $250 per taxpayer. Granted, these are very rough estimates, and could arguably be swayed either way depending on what you want the numbers to portray, but my point is this: As Mr. Aziz stated, “He who pays the piper calls the tune, after all.” While this is true in most business transactions, is it true in higher education? At the end of the day, who is the customer? Because this determines who higher education is going to be motivated to serve.

One school of thought is that the customer is the government that is putting the dollars on the table. Eighty-five percent of first-time, full-time undergraduates receive financial aid at four-year colleges. Meanwhile, this number soars to 92% (now 96%, according to the Harkin report referenced below) at for-profit colleges (http://chronicle.com/article/Share-of-Students-Receiving/132016/). Whether this is a good use of funds or not is a subject for another day. The question here is, if the government is indeed the consumer (paying the piper), is the government calling the tune, or dictating how and where those the dollars are spent? Current data would suggest not—the government is writing blank checks that any institution meeting very basic requirements can qualify for. Pell grants and loans are available to any college that can win accreditation, and every college can get the same amount. Though it is the US Department of Education that officially recognizes college accreditation, it is outside agencies that review institutions and actually grant accreditation (http://www.ehow.com/how-does_5128294_do-colleges-accredited.html). This means that while government funds higher education through grants and loans, it does not directly evaluate any institutions or programs to where those funds are directed. Is the government calling the tune? Hardly. Any direct governmental oversight of funds spent has been done after the fact. The senate HELP (Health, Education, Labor, & Pensions) committee chairman, Tom Harkin, initiated a two-year investigation to determine exactly what the government is getting for its money from for-profit colleges that receive the highest portion of government funding (http://www.harkin.senate.gov/help/forprofitcolleges.cfm). The conclusions do not paint the outcome of this investment in glowing terms. But nothing was dictated in advance as to what those funds could and could not be used for. If the government is left holding the bag, it is only because it left the door open for opportunists rather than providing a clear picture of the intended expenditures and outcomes.

Another school of thought is that the customer of higher education is the student. After all, although it is the government that writes the check, it is the student that hands it over to the finance department of their chosen institution.  As the student makes the spending decision, it is the student to whom institutions are marketing. One finding of the Harkin report was that 22.7 percent of all for-profit college revenue was spent on marketing, advertising, recruiting, and admissions staff. Traditional colleges and some non-profits are striving to keep pace, spending over 20 percent of their annual revenues on advertising and marketing (http://www.evolllution.com/opinions/ways-higher-education-marketing-change-10-years/).  Colleges and universities are thrust into unfamiliar territory—determining the hot buttons that cause a potential student to chose them over and above increasingly fierce competition, and catering to obtain (and retain) those students. As the student walks through the doors with a government check, it is truly the student who calls the tune. And like the government, the student is typically not doing a great deal of investigation into exactly what those dollars are paying for. After all, it is usually not $20,000 a year they have earned and socked away into their own savings to pay for this education. It’s effectively someone else’s money, money that they will have to pay back at a later date—once they have obtained the high-paying job that their new degree practically guarantees.

And what is it that this customer wants? Though students are incredibly varied, and their expectations for higher education are equally varied, the end result is ultimately, and almost unanimously, the same thing. From the eighteen-year-old student entering a four year MBA program on a traditional campus, to the twenty-eight year old student taking night classes in veterinary technology at a vocational institution, the purpose of pursuing higher education is to get a job. It may be to pursue the American dream of independent wealth, or to just make enough to pay the bills and raise the children, but the outcome is the same. The institution that can convince students it offers the greatest opportunity for success will win the day.

So we have a precarious arrangement. A government provides nearly unlimited and unmonitored funds to institutions to market and provide an education to students, and allows students to determine the allocation of those funds based on the ability of the institution to convince them of its worth. It’s up to the institution to determine, therefore, what is more important…in this arrangement, will it be to use those dollars to provide the best value and quality of education to the student, contribute meaningful research to society, and lead the charge in developing the independent and entrepreneurial spirit, paying to recruit and retain the highest quality instructors? Or will it be more inclined to enhance its image, create dynamic marketing campaigns, and falsely inflate retention and graduation rates to produce enticing statistics for its potential students?

Or to put it anecdotally, if my parents gave me a $100,000, unconditional loan to buy a new car when I turned 18, would the salesman make a sales pitch to them, or to me? And at the end of the day, do you suppose I would end up making the most informed purchase with those funds? Until the unrealistic alignment of funding in higher education is reformed, neither student nor society will be best served by the outcome.

And for the record, I did some searching and found a used 1991 Lamborghini Diablo for $93,500. But don’t worry. I’ll pay it back.

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Filed under Department of Education, education funding, Hap Aziz, higher education, Martin LaGrow, student loans, U.S. government

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