The Mess of Federal Funds Is Changing the University

The modern American university has changed almost beyond recognition from the form it had even 100 years ago. It is larger, more “diverse,” more of a business, and more industrialized with relatively fewer teachers and more bureaucrats than ever before. Those changes have led to new problems. Higher education, if not broken, is at least seriously injured. Some critics feel the damage is fatal and the whole system should essentially be abolished.

I want to focus on just one cause and a few of its effects. The cause is the involvement of the federal government via the money which is now directly and indirectly funneled into universities, public as well as private.

Even public universities depend to some degree on external funds: The University of California-Berkeley was only 13 percent state-funded in 2014-2015; North Carolina State University received 26 percent of its 2013-2014 budget from the state and 35 percent from “gifts and contracts.”

The effects of this increased reliance on federal funds are loss of autonomy, altered priorities, tuition fees that increase faster than inflation, and a monstrous growth in employees who are neither teachers nor researchers.

A Brief History of Federal Involvement in Higher Education

Until relatively recently, the federal government had no role even in public (i.e. state) institutions beyond grants of land under the Morrill Act (1862). Students got a boost during the Great Depression when federal outlays rose from $21 million in 1930 to $43 million in 1936—still chump change. Real money began to appear during WWII, reaching $300 million in 1944. And then, of course, came the G.I. Bill, which increased funding to $365 million plus $1.3 billion to veterans for subsistence costs. G.I. Bill money peaked at $1.9 billion in 1949 then declined, not reaching that level again until 1963. Then, in the form of the National Defense Education Act in 1958, came the student loan program (“Perkins Loans”), a little helper which soon morphed into an ugly monster of unsustainable student debt.

The Perkins Loan program was relatively innocuous; the money went not to students directly, but to colleges, which made the loans to the students. Colleges were liable if students defaulted.

Then, in 1965, came the Higher Education Act (HEA), when funding to students and to institutions ballooned. In 2000, for example, graduate and undergraduate students got $47.7 billion. About half this amount, $24.2 billion, went as private loans directly from the government to students. Now the taxpayer was on the hook for defaulting students. But students were in trouble too: Their government debt could not be expunged, even by bankruptcy.

The HEA was re-authorized and complexified in succeeding years. The HEA became the Higher Education Opportunity Act (HEOA) in 2008 and was not just a load of strings-free cash. It intentionally affected institutional priorities. It allocated specific funds in many areas that used to be decided independently by the institutions, such as teacher quality, aid to underrepresented minorities, monitoring of digital media exchange, attempts to limit student costs and make them more transparent, and assistance to libraries.

Title IV designated funds for foreign language centers and other specified activities. The innocuous-sounding anti-sex discrimination Title IX also appears in the Education Amendments of 1972. Title IX also supported an “Ethnic Heritage Program,” which “provide[d] assistance designed to afford to students opportunities to learn about the nature of their own cultural heritage, and to study the contributions of the cultural heritages of the other ethnic groups of the Nation.” The Amendment bill runs to 227 pages. The subsequent HEOA of 2008 runs to 122 pages. And there’s more. Navigating this maze is partly responsible for the huge growth in university bureaucracies in recent decades.

Federal money also supports scientific research in universities. The total was $21 billion by 2000 and is now around $30 billion, the great majority from the National Institutes of Health, which has become almost a monopoly buyer of biomedical research in the U.S. Perhaps a quarter of this is so-called indirect costs to cover administration and other necessary facilities. Federal money supports research that would otherwise not happen. Does it also make a profit?

In my experience, university administrators all agree that externally funded research is a net cost to the university. Yet universities routinely urge their science faculty to bring in research grants. In addition to social pressure, there are serious financial rewards for grant-getting. Federal grants pay university researchers a “summer salary,” a fifth or more of their annual salary (so-called “soft-money” researchers, in medical schools and elsewhere, get 100 percent of their salary from research grants). Faculty who do summer research without an external grant do not get a summer salary from the university. I had one colleague in this position: His inexpensive research did not require a grant. He got no summer salary and was criticized rather than praised for his independence.

Over the years, the contribution of the institution to in-house research has increasingly been displaced by external money. In other words, getting a research grant has morphed from a bonus to a necessity even as administrators insist that it costs the institution money.

All this extra money for institutions of higher ed has been accompanied by entrepreneurial expansion beyond the traditional core. In addition to a Biology Department, there must be a School of Environmental Science; in addition to departments of Economics, Political Economy and Sociology, a Business School and a School of Government; not to mention programs, schools, and institutes of media and communication “science.”

Effects on the Curriculum

Much of this is healthy growth. But the variety of incoming money streams has naturally fostered a more (literally) business-like ethos. Many of the new entities I just described are market-driven—there is a demand for them—not knowledge-driven.

A business credential, for instance, is valuable—and money can be made for the institution. Similar pressures have led to foreign branches of U.S. institutions in places like China, Singapore, South Korea, and the United Arab Emirates.

Those changes have also affected the core of the university: natural and social science and humanities departments.

In a destructive turnabout, undergraduate students are now almost universally regarded as “customers” who, notoriously, are always right. They, in turn, no longer regard the university as a place to be respected with themselves as fortunate guests. Instead, as the hysterical Yale “co-ed of color” screamed at sociology professor Nicholas Christakis a couple of years ago: “This is my home and you came in here.”

Well, actually, no: No university, even Yale, is or aspires to be a student’s “home.” But that’s what happens when a university admits too many students who are, for one reason or another, unsuited to the rigors of a real university education.

What is to be Done?

…Short of abolishing the modern American university. The gusher of federal money has indeed had its desired effect: Many more young people now attend and graduate from college than was the case 20 or 30 years ago. But this very success has created its own set of problems. Americans seem to have difficulty understanding that a thing may be good, but more of it is not necessarily better. Every small town wants to grow. Yet few residents would want to, or be able to, live in Atlanta or New York. There is an optimum size for everything, and it is rarely at infinity.

The increase in federal research grants inevitably led to a change in perception. Getting a grant was at first a nice bonus; but after grant-getting became routine, not getting a grant became a penalty. The same thing has happened to college attendance, once a nice luxury for the few, now a “necessity” for the many.

Because so many people have one, a college degree is now available as a handy filter even for jobs for which a degree is completely unnecessary. College is now seen to be the only path to success in life. Now many young people sign up for cheap loans they probably can’t afford because they think that college is essential, and the future is far away and it will all be better then. Except that it won’t for very many of them and, unlike a mortgage, they can’t discharge their college loan through bankruptcy.

The system is, finally, beginning to crash; college enrollments are beginning to decline. To accelerate the process, pundit Tucker Carlson has suggested a couple of things: First, that colleges should also be on the hook for the loans that their students take out. Second, in the wake of Varsity Blues and growing resentment against “legacy” (children of alumni) and “donor-child” admits, colleges should be more open about their admissions process.

The first idea is surely a great one; it just reverts back to the successful Perkins Loan rules. The second idea, like Title IX and so many other federal intrusions, is an attack on the autonomy of educational institutions. After all, freedom of association and all that, they should surely be able to admit whomever they like, so long as they don’t violate actual anti-discrimination laws. But since a bachelor’s degree has now become essential rather than just one of many avenues to success, and since almost all of higher ed is now “federal,” the power exists to force elite schools to divulge information that used to be private.

Tucker’s solutions might improve the current situation a bit. But neither will get the federal government out of higher education. Neither will reduce the ability of the government to intrude on what used to be private matters. As the Brits might say: The feds have them by the short and curlies! More decorously, we can say that universities have lost their autonomy, their freedom, for a mess of pottage thoughtlessly accepted many decades ago.

John Staddon is James B. Duke Professor of Psychology and Professor of Biology, Emeritus, at Duke University. His most recent books are Scientific Method: How science works, fails to work or pretends to work and The Englishman: Memoirs of a psychobiologist.