Dan Perry
"I don't mind a reasonable amount of trouble"
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The Great American University Crisis, and how Israel can help

With Israeli tuition just $3K a year, every university in the country should have English-language international programs
Author graduates from the once-affordable University of Pennsylvania, 1985 (Marchiz Petreanu photo)

Americans are asked to accept many strange things: that constant mass shootings are unavoidable; that basic healthcare cannot be provided to all as in Britain; that courts should be openly politicized; that extreme gerrymandering to distort election results is fine. But the strangest is that universities should bankrupt the average person.

Yet change may be coming. There are signs of class rebellion, visible in a bizarre way in the election of Donald Trump; people are willing to burn down the house. Ahead of the 2020 election redistribution has momentum, and the university racket may be vulnerable. If change does come, Israel may play a surprising role.

Consider the facts: the average cost in tuition and fees for a four-year U.S. institution is now over $26,000 per year. That figure includes state schools partly subsidized by local governments, and is far lower than the cost of private universities which are generally considered superior and where costs can be double or more.

At the same time, according to the U.S. Bureau for Labor Statistics, the average annual salary in the United States is $46,800. In Pennyslvania, where I grew up, that would translate into about $37,800 in net pay. Over two-thirds of that would be needed to send a kid to the average college.

So Americans are forced to start planning for college from the day their children are born. Savings are drained to cover this stupendous expense, which contributes to the extraordinary fact that household net worth in the US is barely higher than in Israel ($62,000 per adult to $55,000), where wages are much lower. Graduates struggle for years with crushing “student debt,” a concept largely unknown anywhere else

Right now there is no real alternative; in much of the world, non-graduates are not nearly as employable in the modern knowledge economy. Yet the temptation of short-cuts is huge: webinars by the finest of teachers and Internet access to all the world’s knowledge have made autodidacticism far more plausible than in the past. The universities appear to have a wobbly house of cards.

Was university always such a financial drama? No.

I was an undergraduate at the University of Pennsylvania’s Class of 1985. This elite Ivy League institution has always been among the most expensive and in my day the tuition (plus fees, whatever that means) was about $7,000/year. My middle-class immigrant parents struggled a little, came up with some assistance from my mother’s employer, and covered the bill. In today’s dollars, meaning after inflation, that tuition amounts to about $20,000. The cost of a year at Penn today is tenfold, and in real terms it is triple.

Meanwhile, salaries in real terms have most definitely not tripled; they’ve risen from about $50,000 back then (in today’s money) to around $60,000. According to Federal Reserve figures, the average annual growth in wages was only 0.3% between January 1989 and January 2016. Something similar is the case with household net worth.

College costs have shot through the roof for many reasons.

First, the number of elite institutions has not increased and their intake has not significantly grown, yet the general population has. Supply has stagnated while demand has increased. This drives up unit costs and breeds arrogance and complacency on the part of the supplier.

Second, college in America has become a big business, and a successful one. The ShanghaiRanking of top global universities lists 8 of the top 10 as American (the other two being the UK’s Oxford and Cambridge); that’s typical. This success stems mainly from the graduate level. When it comes to research and publications, and Nobel prizes, there has been no equal to the U.S. university system.

The undergraduate zone (bachelor’s degrees) is basically a cash cow attached to and funding this (along with donations by the super-rich, of course). Students learn social skills, perfect the drinking of beer (in my view an important life skill), and ally themselves emotionally with fanatical  sports traditions that are the training grounds for the country’s world-class professional leagues. In some cases they complete their basic education; even mediocrity at the college level is useful to correct the results of an underfunded and often failing U.S. high school system.

As for the undergraduate pedagogy, at large universities often it is teaching assistants who carry the burden; professors are pushed to research and publish. Penn is a fantastic school but I probably learned more in one semester as a visiting student at Tel Aviv University. (My graduate experience at Columbia is when things flipped: professors began paying some attention to me in hopes of computer science research brilliance, though I regret to recall I failed them.)

Because it is such a big business, many of the school officials are largely fundraisers. The Harvard deans and provosts earn nearly a million dollars a year for this reason (and the schools “endowment” – or pool of assets – is close to $40 billion). Even the dean at the Irvine campus of the (public) University of California earns close to $400,000/year. Do these people’s skills merit 10 or 20 times the average US salary? Does the free market really demand this? One is reminded of the “Masters of the Universe,” with their incomprehensible financial “instruments” and galactical bonuses, pre-2008.

US governments of both political parties have been loathe to truly finance this part of life, except in the form of student loans, which with all due respect to low interest rates are more of a banking scheme than a policy for the social good. These student loans are the second highest source of consumer debt in America, exceeded only by mortgages.

Does it have to be this way? Let’s look at the rest of the world:

  • In Britain, the super-elite Oxford and Cambridge universities charge 9,250 pounds/year (about $13,000) – and both are in every list of top world institutions;
  • In France, the hyper-elite Sorbonne charges 6,500 euros (about $10,000);
  • Many of Germany’s universities are basically free;
  • And Israel? The country has an array of universities that rank well globally, including the Hebrew University of Jerusalem, the Weizmann Institute of Science, the Technion in Haifa, Tel Aviv University, and Ben Gurion University in Beersheva. For local students the cost can be as low as $3,000/year. For foreign students in some cases it climbs to $15,000.

Can America really not fix this? Does the decency and strategy gap have to be this preposterous?

Progressive US politicians who call for free college are ridiculed as radicals. We are told the money does not exist, but the country continues to increase the world’s largest military budget. Fully funding the 15 million students at a state school level would cost several hundred billion dollars a year at today’s inflated costs – but those costs can be reduced and it is anyway a blip on the $20 trillion GDP.

Of course, as with all things American this has become political.

US colleges have become hotbeds of leftist radicalism where students succeed in stifling voices of conservative opposition and agitating for “safe spaces” from intellectual challenge, while the right increasingly treats academia as an enemy (and who knows which came first). A Pew study recently found that 59% of right-leaning Americans consider  colleges to have a “negative effect” on society. Among the left-leaning the figure was 18%. Polarization is growing; a few years ago views were not nearly so divergent.

What this means is that when the scam of college costs comes a cropper there will be no one to defend it. The attack will probably be from the socialist left, and the right will not care (or even will look on with glee). So expect Americans to eventually rebel on this issue (as they will on the similarly ridiculous healthcare situation).

Colleges around the world, including in Israel, might be part of the answer to this social breakdown of a market failure. The idea of going abroad, gaining international experience that is valuable in a globalized world, not bankrupting your parents and not mortgaging your future will have appeal to deep-thinking young Americans.

The demand will be there. What is needed is supply.

In the case of Israel there is already the Herzliya Interdisciplinary Center, which has some 2,000 foreign students, about a third from North America. Tel Aviv University also has a modest international program.

The country could do much more, especially considering the tremendous disproportion of Jewish students among the US top colleges (in my day they were almost half the class at Penn). Every university in the country could have English-language international programs. Even non-subsidized foreigners’ tuition would be attractive. Plenty of academics would love to come here to help run them, and be freed of the tenure-track oppression of academic institutions in the United States. For Israel, strengthening ties with U.S. Jews and Americans in general is an obvious boon.

Yes, there is a quality issue. Academia is a delicate flower. American universities have benefited among other things from the influx of much of the world’s excellence — now held at bay by immigration difficulties and xenophobic policies in part caused by post 9/11 trauma. Some places may struggle to compete with the networking value of U.S. schools. Success in partly supplanting them is not guaranteed; partnerships may be required, and indeed some already exist.

But quality institutions around the world certainly have an opening.

America, not so long ago, was a big part of the solution to the world’s ills. What goes around comes around, sometimes faster than we expect. When it comes to higher education, the favor can now be repaid.

About the Author
Dan Perry, a media and tech innovator, was the Cairo-based Middle East Editor of the AP, and chairman of the Foreign Press Association in Israel. Previously he led AP in Europe, Africa and the Caribbean. Follow him at: twitter.com/perry_dan www.linkedin.com/in/danperry1 www.instagram.com/danperry63 https://www.facebook.com/DanPerryWriter/
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