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5 Ways Public Universities Are Swindling Students And Turning Into Private Businesses

By Frugaling 9 Comments

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Public University of Iowa Institution Taxpayer Funded
Sunset over the University of Iowa campus.

From public to private: The budgetary gap in American education

Public universities are generally funded by taxpayer dollars and the federal government. Contributions ultimately lessen the cost education for an individual, and help make a college education attainable for a greater whole. Tax revenues at the state and federal levels fell in recent years, and the share of tuition owed by students significantly increased — all while student loan interest rates skyrocketed.

This recipe has decimated our youth. We afford children the right to a free, public education from kindergarten to 12th grade, but when they graduate high school, the benefits evaporate. The voting public and politicians have argued that college is no longer a right; rather, an earned privilege to a select few (who can afford it).

Public institutions were supposed to be accessible and affordable to the people in state. Heck, there are land-grant institutions that were given vast acreages to educate future educations. Unfortunately, hawkish debt reduction tactics, private-interest groups, and misinformation campaigns created a climate that hated taxes — the consequence was the disintegration of our public universities.

A subtle shift happened over the last few decades, and it’s led to a massive, business-like privatization and profit-motivated aire amidst public universities. Suddenly, administrators are aiming at your wallet, rather than their intended goal: educating the finest group of students for many generations to come. The painful revenue gaps have led to a rise in tricky tactics.

5 business tactics that public universities use to supplement revenue gaps

1. International and out-of-state students are preferred

State schools accept more out-of-state and international students for full-price tuition and limited scholarship availability. This move effectively subsidizes the education of in-state students. Although, by accepting more students outside the state, fewer in-state students are accepted.

If you’re on the cusp of going to an out-of-state school, think about the price differential. Is it really worth the added tuition burden?

2. Degrees are created that offer no career paths

For instance, my alma mater had an oft-ridiculed bachelor’s degree entitled, “Liberal Arts.” This degree is useful as a temporary placeholder for students, while they make final degree decisions, but should not be a formal track. Graduate with a degree in Liberal Arts and you might as well use it for toilet paper.

Similarly, watch out for degrees in “General Studies.” Degrees like this simply milk monies from students and send them on their way without a lifeline. Avoid these at all costs!

3. Watch out for excessive, new construction projects

While these new architectural sights provide a heightened level of excitement to prospective students, they are only afforded through higher student fees and redirected public funds. Brilliantly upholstered and designed residence halls may attract new students, but everything has a price; last time I checked, enrollment and interest in college isn’t the problem, anyway.

If you don’t want to come to a university because hotel-like residence halls are absent, you are likely going to college for the wrong reasons. Much like the cliche regarding books, don’t judge a university by its buildings.

4. Massive interest in distance education programs

At a fraction of the cost to educating students on-campus, many public institutions have a growing body of administrators pushing for online education offerings. Stigma-be-damned, plenty of people are taking up the offer to be educated online. These institutions are frequently charging handsomely for the privilege of being educated online, and offer students little support when compared to their on-campus peers.

Steer clear of most online master’s degrees that purport to give you credentials — all while you are pantsless in a bathrobe at home. While you may be able to say, “Your Name, M.S.,” you’ll be missing out on various networking opportunities and paying some of the most expensive tuition rates available. Most online programs offer little funding, and public universities use these programs to further subsidize in-state students’ educations.

5. Financial aid offices don’t warn you about student loans

This is the scary one for me. It’s quite personal and disheartening that when I requested to get student loans, nobody ever explained to me how they worked. When I met to approve the federal aid a few years ago, I never had a human sit down with me and create a budget, set expectations, and explain how interest would quickly add up. While it’s my fault for not being more critical, I didn’t know what I didn’t know — the questions were not yet clear.

Pay attention to financial aid officers at universities. They usually have no interest in curtailing or slowing your interest in finishing a degree. There goal is to get you federal or private funding and keep you coming back to school — period. If you’re looking for student loan advice, start researching the perils and pitfalls before signing on the dotted line.

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Filed Under: Social Justice Tagged With: bachelors, Budget, college, cuts, distance education, education, funding, masters degree, private, public, Student Loans, taxes, taxpayer, university

Comments

  1. @WilliamLipovsky, First Quarter Finance says

    April 28, 2014 at 12:56 pm

    Fantastic read!!!

    I’m a few years out of college and holy crap the system is a mess.

    One time I went to sign my student loan papers. It took me about a minute and a half while standing in front of an administrator’s desk.

    They don’t give a dang what kind of mess you may be getting into. Yes, this is stereotyping but there’s a reason for it.

    Reply
    • Sam Lustgarten says

      April 28, 2014 at 4:48 pm

      William,

      Thanks for your comment. These kind of stories are far too common. I’m sorry you didn’t get more from someone purporting to be an expert. Students could greatly benefit from credit counseling prior to taking out these hefty loans.

      Sam

      Reply
  2. Syed says

    April 28, 2014 at 2:01 pm

    Very interesting and, unfortunately, accurate read. I’ve noticed the student loan “officers” don’t know much about student loans themselves. Works for the schools since the students are equally as ignorant. The only way colleges, and any other business, will change is if it hits them in the wallet. If they see not as many students are interested in college and the inevitable crush of student loans, they might change their ways. But until then, it will likely get worse.

    Reply
    • Sam Lustgarten says

      April 28, 2014 at 4:48 pm

      Thanks for your comment, Syed. Appreciate you reading and sharing it. 🙂

      Reply
  3. Stefanie @ The Broke and Beautiful Life says

    April 29, 2014 at 7:56 am

    Elizabeth Warren was on the Daily Show the other day and made a great point about the interest rates the government gives big banks vs the interest rate the government gives students. Crazy.

    Reply
    • Sam Lustgarten says

      April 29, 2014 at 10:44 pm

      Stefanie,

      I saw that episode! Warren is a wonderful champion of lowering student loan interest rates. Hopefully she can make some headway on this and help the middle class.

      Sam

      Reply
  4. Jon @ Money Smart Guides says

    April 29, 2014 at 5:39 pm

    I went to a private boarding school for high school. For international students, the price tag was double what I was paying. As such, the headmaster was in Japan, South Korea, India, etc. for a good portion of the year trying to recruit students to come attend.

    Reply
    • Sam Lustgarten says

      April 29, 2014 at 10:45 pm

      Jon,

      Thanks for sharing this perfect example. When money becomes a focal point, you start seeing a shift in priorities. It can really hamper the education of those currently attending.

      Sam

      Reply
  5. Marie @ 724 Credit says

    May 1, 2014 at 7:38 am

    We don’t have student loan here in our country. But for me, the officers of the school about it. It’s great that student there can use of student loan, here, if have no money, really can’t go to college.

    Reply

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