- Email: [email protected]
Is geographic education the next financial bubble?
Geoforum 42 (2011) 127–128
Contents lists available at ScienceDirect
Geoforum journal homepage: www.elsevier.com/locate/geoforum
Editorial
Is geographic education the next financial bubble?
Since the first publicly-supported university opened in the United States, more than 200 years ago, public higher education has been viewed as a public good. Until recently, the resulting ethos was to keep tuition as low as possible and so enhance opportunity for all. However, over the past thirty years public higher education has undergone a fundamental change. Given our focus on the enhanced earning power for those possessing a college or university degree, we have now come to view and market higher education as a private benefit. The result is that most state-supported institutions now receive only a small portion of their annual revenue from state coffers, depending instead on tuition, typically paid through student loans. In some cases the proportion of state support for total university budgets has fallen to less than ten percent of the total. Some might say that this transformation from public good to private benefit is, in the long run, in the best interests of institutions, who direct their efforts towards programs for which students are willing to pay, and of students themselves, who receive marketable skills, which they will parlay into incomes to repay the loans that funded their educations. Why should this fundamental change in the financing of public higher education be of concern to geographers? The answer lies in the fates of the heavily-indebted students who face defaults in coming years. Unfortunately for most of them, bankruptcy will not discharge government-guaranteed or financed loans. We have therefore expanded programs on the backs of people in leveraged financial positions, participating in a process that all looks all-too similar to the mortgage situation of recent memory. Perhaps a ‘‘bust’’ lies ahead in graduate education. In January of 2011, the program of one of this article’s authors will roll out a professional master’s degree in Geographic Information Systems Technology. Though we come to this party extremely late (there are dozens of such excellent programs already in existence across the country), there are many reasons to be proud of this achievement and the many members of our faculty who worked hard to make it happen. Working, adult learners will be able to secure training in a skill that provides employment opportunities and other advantages. Our program is, in the process, congratulated by our administration on its entrepreneurial innovation as it becomes financially less dependent on our Dean and other nefarious forces of educational control. Student money is program power. But the success of our program, though it is one of the most affordable ones in existence, will in part be predicated on the availability of cheap student credit. Many people will accrue debt to learn this skill. And though job prospects improve from getting such an education (we focus on placement, of course), there is no 0016-7185/$ - see front matter Ó 2011 Elsevier Ltd. All rights reserved. doi:10.1016/j.geoforum.2010.12.009
reason to assume that holding this degree will get someone a job at a rate of pay that can repay significant student loans. Entrepreneurial programs like this, moreover, are coupled with across-theboard tuition increases, which have become essential in public institutions where the state has retreated, cut, and dismantled its investments and obligations. Nor is any of this unique to Geography, GIS or any other specific program. Since the 1990s the rate and availability of student loans has expanded enormously. At bottom then, our program is increasingly founded upon, and has become a vehicle for, the deferral of a state funding crisis onto the shoulders of former students, who make monthly payments to distant financial institutions, over extremely long periods. To the degree that their education cannot adequately assure employment in a post-industrial environment, moreover, there is a reasonable expectation that a significant number of these loans will default. At least one in five federal loans result in default now, although recent research finds this modest estimate to be a gross undercount.1 Sound familiar? While such defaults could never result in the actual loss of a degree (unlike, say, a house!), they cause a crisis of valuation of degrees more generally and unquestionably portend structural adjustments in higher education. Indeed, the meltdown is already underway. Recent regulatory investigation of the educational and loan industries has turned up consistent conflicts of interest between lenders and educational institutions, including Sallie Mae’s 2007, $2-million settlement with New York State2 (to say nothing of cases of out-and-out on-line fraud, where grifters accumulate student loan funds for fake students3). The loan industry and for-profit educational institutions have long held powerful place in Washington lobbying, moreover, dissuading regulatory control and scrutiny.4 The stars are aligned for a ‘‘market correction.’’ Many things remain unknown. To what degree have student loans been rebundled in financial markets and securitized? Where do student loans rest in the circulation of global credit? What is the default rate? To what degree are foundational program resources dependent on these flows of funds? What communities are made most vulnerable by such crises in credit or degree valuation? Even without clear answers to these questions, there is every reason to
1 Field, Kelly. 2010. ‘‘Government Vastly Undercounts Defaults’’ Chronicle of Higher Education July 11. 2 Basken, Paul and Kelly Field. 2007. ‘‘Student-Loan Investigation Sweeps Up More Colleges’’ Chronicle of Higher Education V53, N33, PA1, April 20 3 Parry, Marc. 2010. ‘‘On-line Classes Enable Looting of Student Aid $539,000 fraud in Arizona highlights wider problems’’ Chronicle of Higher Education, January 17. 4 Burd, Stephen. 2004. ‘‘Selling Out Higher Education Policy?’’ Chronicle of Higher Education, July 30.
128
Editorial / Geoforum 42 (2011) 127–128
critically consider the foundations on which our new programs are constructed. What can we do in Geography? Clearly, the discipline can be proud of providing training in key skills with both economic and social value. The key then is not to halt the expansion of services that Geography can provide to the public, especially to working people and to underfunded and historically disenfranchised populations. Nor can we pragmatically eschew the income that the provision of services might allow; our program cannot. But it would benefit us all if we began to appraise with more scrutiny: (1) the actual value of degrees in our field and the honesty with which we communicate this, especially for programs where hard cash is paid by working people; (2) the degree to which student loans make up a significant proportion of program receipts; (3) the dependency of our program staff and services on the steady flow of loan-based funds, and (4) the options and availability of fair, equitable, and socially-meaningful program pricing. In short, if you are beginning to feel like a construction contractor in 2005, you are not alone. These heady days of entrepreneurial
program building have provided financial solace in a turbulent time, but trouble may lie just ahead. Professor and Director Paul Robbins School of Geography and Development, University of Arizona, Tucson, AZ, USA E-mail address: [email protected] Vice President Martin D. Robbins International Education Corps, Denver, CO, USA
Contents lists available at ScienceDirect
Geoforum journal homepage: www.elsevier.com/locate/geoforum
Editorial
Is geographic education the next financial bubble?
Since the first publicly-supported university opened in the United States, more than 200 years ago, public higher education has been viewed as a public good. Until recently, the resulting ethos was to keep tuition as low as possible and so enhance opportunity for all. However, over the past thirty years public higher education has undergone a fundamental change. Given our focus on the enhanced earning power for those possessing a college or university degree, we have now come to view and market higher education as a private benefit. The result is that most state-supported institutions now receive only a small portion of their annual revenue from state coffers, depending instead on tuition, typically paid through student loans. In some cases the proportion of state support for total university budgets has fallen to less than ten percent of the total. Some might say that this transformation from public good to private benefit is, in the long run, in the best interests of institutions, who direct their efforts towards programs for which students are willing to pay, and of students themselves, who receive marketable skills, which they will parlay into incomes to repay the loans that funded their educations. Why should this fundamental change in the financing of public higher education be of concern to geographers? The answer lies in the fates of the heavily-indebted students who face defaults in coming years. Unfortunately for most of them, bankruptcy will not discharge government-guaranteed or financed loans. We have therefore expanded programs on the backs of people in leveraged financial positions, participating in a process that all looks all-too similar to the mortgage situation of recent memory. Perhaps a ‘‘bust’’ lies ahead in graduate education. In January of 2011, the program of one of this article’s authors will roll out a professional master’s degree in Geographic Information Systems Technology. Though we come to this party extremely late (there are dozens of such excellent programs already in existence across the country), there are many reasons to be proud of this achievement and the many members of our faculty who worked hard to make it happen. Working, adult learners will be able to secure training in a skill that provides employment opportunities and other advantages. Our program is, in the process, congratulated by our administration on its entrepreneurial innovation as it becomes financially less dependent on our Dean and other nefarious forces of educational control. Student money is program power. But the success of our program, though it is one of the most affordable ones in existence, will in part be predicated on the availability of cheap student credit. Many people will accrue debt to learn this skill. And though job prospects improve from getting such an education (we focus on placement, of course), there is no 0016-7185/$ - see front matter Ó 2011 Elsevier Ltd. All rights reserved. doi:10.1016/j.geoforum.2010.12.009
reason to assume that holding this degree will get someone a job at a rate of pay that can repay significant student loans. Entrepreneurial programs like this, moreover, are coupled with across-theboard tuition increases, which have become essential in public institutions where the state has retreated, cut, and dismantled its investments and obligations. Nor is any of this unique to Geography, GIS or any other specific program. Since the 1990s the rate and availability of student loans has expanded enormously. At bottom then, our program is increasingly founded upon, and has become a vehicle for, the deferral of a state funding crisis onto the shoulders of former students, who make monthly payments to distant financial institutions, over extremely long periods. To the degree that their education cannot adequately assure employment in a post-industrial environment, moreover, there is a reasonable expectation that a significant number of these loans will default. At least one in five federal loans result in default now, although recent research finds this modest estimate to be a gross undercount.1 Sound familiar? While such defaults could never result in the actual loss of a degree (unlike, say, a house!), they cause a crisis of valuation of degrees more generally and unquestionably portend structural adjustments in higher education. Indeed, the meltdown is already underway. Recent regulatory investigation of the educational and loan industries has turned up consistent conflicts of interest between lenders and educational institutions, including Sallie Mae’s 2007, $2-million settlement with New York State2 (to say nothing of cases of out-and-out on-line fraud, where grifters accumulate student loan funds for fake students3). The loan industry and for-profit educational institutions have long held powerful place in Washington lobbying, moreover, dissuading regulatory control and scrutiny.4 The stars are aligned for a ‘‘market correction.’’ Many things remain unknown. To what degree have student loans been rebundled in financial markets and securitized? Where do student loans rest in the circulation of global credit? What is the default rate? To what degree are foundational program resources dependent on these flows of funds? What communities are made most vulnerable by such crises in credit or degree valuation? Even without clear answers to these questions, there is every reason to
1 Field, Kelly. 2010. ‘‘Government Vastly Undercounts Defaults’’ Chronicle of Higher Education July 11. 2 Basken, Paul and Kelly Field. 2007. ‘‘Student-Loan Investigation Sweeps Up More Colleges’’ Chronicle of Higher Education V53, N33, PA1, April 20 3 Parry, Marc. 2010. ‘‘On-line Classes Enable Looting of Student Aid $539,000 fraud in Arizona highlights wider problems’’ Chronicle of Higher Education, January 17. 4 Burd, Stephen. 2004. ‘‘Selling Out Higher Education Policy?’’ Chronicle of Higher Education, July 30.
128
Editorial / Geoforum 42 (2011) 127–128
critically consider the foundations on which our new programs are constructed. What can we do in Geography? Clearly, the discipline can be proud of providing training in key skills with both economic and social value. The key then is not to halt the expansion of services that Geography can provide to the public, especially to working people and to underfunded and historically disenfranchised populations. Nor can we pragmatically eschew the income that the provision of services might allow; our program cannot. But it would benefit us all if we began to appraise with more scrutiny: (1) the actual value of degrees in our field and the honesty with which we communicate this, especially for programs where hard cash is paid by working people; (2) the degree to which student loans make up a significant proportion of program receipts; (3) the dependency of our program staff and services on the steady flow of loan-based funds, and (4) the options and availability of fair, equitable, and socially-meaningful program pricing. In short, if you are beginning to feel like a construction contractor in 2005, you are not alone. These heady days of entrepreneurial
program building have provided financial solace in a turbulent time, but trouble may lie just ahead. Professor and Director Paul Robbins School of Geography and Development, University of Arizona, Tucson, AZ, USA E-mail address: [email protected] Vice President Martin D. Robbins International Education Corps, Denver, CO, USA