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Let's Get Down to Business

By Robert Patton
On February 9, 2012

Business majors know that if an enterprise is hemorrhaging cash, if costs exceed revenues, you can easily solve the problem by jacking up prices. Just kidding. That wouldn't work for a lemonade stand, let alone a real grown-up business. But that strategy seems to be the game plan for at least one business, the Vermont State College system.

Try to think of a single innovation in recent years that present or past administrations have implemented to increase the efficiency with which this college fulfills its mission. That mission is to give students the best possible education in exchange for the considerable price they pay for it. For thirteen years, we had a president whose approach to financial problems was to cut things. Cut staff, cut classes, cut services. To return for a moment to our flawed business model, imagine that a business running in the red realized they couldn't just jack up their prices, so they cut the quality of their services instead. If you want to see that strategy in action take a look at the airline industry, which has yet to recover from 9/11.

But colleges have an advantage that airlines do not; the higher education industry has a cash cow to milk. The cash cow is the student body. A student may not have sufficient credit to buy a clunker from a local used car dealer, but that same student has credit that colleges and college approved vendors can tap to pay their prices, however exorbitant. And once a student has completed a semester or two or three, transferring to a different school is not that easy. Not all credits may be transferable and taking some time off may trigger the student loan payment process. So most students will grit their teeth and accept whatever expenses are thrown at them.

And, when it's all over and graduation day arrives, suppose the student cannot find a job that will provide a decent living and enough extra to pay the huge debt incurred over four years. Too bad. Unlike almost all other debts, student loans cannot be discharged through bankruptcy. The same body of law that says that an 18-year-old lacks the judgment to responsibly drink a bottle of beer says that the same 18 year old has sufficient judgment to assume a lifetime of debt.

So where is the incentive for the college to improve service and lower costs through innovation? Instead the business model is based on recruitment and fee increases. Top schools don't need to be concerned with recruitment; they turn most applicants away. What they offer is high quality education delivered by highly qualified professors and a track record of producing highly successful and often famous graduates.

Doesn't it stand to reason that this is the model to follow? Instead we have been focused on attracting students with the idea that they will be having fun. Years ago, the biggest put-down for a college was to accuse it of being a party school. Except for a few spoiled rich kids, few wanted to waste their college years at a party school.

This college's latest strategy is to launch programs for which there is a demand. That sounds good, but suppose the demand is for programs that require little effort and deliver a bachelor's degree while maximizing leisure. Where is the responsibility of the college to exercise judgment as to the type and level of skills that will best serve the needs of its graduates? And shouldn't the success of the college be measured by the ultimate success of its graduates?

The more successful those graduates, the better the reputation of the school and the less it needs to concentrate on recruitment and meeting expenses. Soon Lyndon State College will have a new president. Let's hope that our new leadership takes us on a path that leads to academic excellence and well-deserved institutional pride.

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