Business forum: Education customers deserve a positive return

Many years ago, an associate was describing a mutually known businessman to my aged and wise friend, the late Bud Ruvelson, one of the nation's senior venture capitalists. The associate said, "So-and-so must be successful. He has made a lot of money."

"That is not the right question," replied the savvy Ruvelson. "The right question is whether his customers have made any money."

The question of whether our customers are making any money is one that should be asked of education today.

Education is intrinsically valuable, of course, well beyond the mere practicality of preparing students for gainful employment. However, the rapid accelerating costs of higher education merit a serious review of whether our customers are realizing positive returns on their extensive investments in education.

Are our customers making any money?

According to the National Association of Colleges and Employers, starting salaries for college graduates have been increasing over the years, by roughly 2.85 percent per year. College costs, however, have been increasing at rates exceeding 7 percent. Meanwhile, government support for education is constrained because of other expenditures for health care, entitlements, public pensions and other needs. The result has been rapidly accelerating student debt, which now exceeds all U.S. consumer debt.

It would be tempting for those of us involved in education to simply lobby for more money. That unwise approach is based on three questionable assumptions: Education is of universally high quality. That our methods are cost-effective. And that an endgame is reachable by asking for more money. None of these is true.

Many of us do not do enough work. While many people labor 2,000 hours in a single year, the classroom contact hours among high school teachers is around 865 hours while summers and other periods are free.

At the university level, teaching loads range from about 160 to about 400 hours per year. Of course, many other needed tasks are performed — class preparation, student counseling, research, community outreach. The problem is that a relatively small percentage of faculty members perform all of these important functions and do them well.

Many others do very little or do them poorly. Well-credentialed adjunct professors, equipped with extensive relevant experience, are often rated much higher by students than the more insulated full-time staff.

Cost effectiveness is further reduced by expensive early retirements rarely available in other professions.

Education today has too many people. Nationally, only about 10 percent of university real estate is in classrooms. Most of the space is for offices, meeting rooms, lounging areas, sports facilities or entertainment. But to what degree are meetings, lounging, office work, and entertainment integral to the vital task of education with which we have been entrusted?

Education now faces the same situation that much of industry has faced for several decades. We must, in order to survive, improve our quality and reduce our cost simultaneously. The way we are doing things, there will never be enough money. We have a shrinking supply of incoming students while costs are increasing exponentially. The future is bleak unless improvements in quality and efficiency are made.

There is no endgame from asking for more money. Given the way education costs are increasing, there will never be enough money from governments, parents or students.

Ultimately, if we do not get this fixed, the basic educational enterprise is in jeopardy. Students will drift away, or not come. Governments, already throttled by far more demands on shrinking resources, will gradually withdraw support. Parents, buffeted by declining asset values, will lose interest, too. The future of education is bleak unless changes are made from within. And, it is only in making these overdue improvements that we can provide our customers with a positive return on their investment.