Government funding is destroying our colleges.

• Author: Roche, George

IF I HAVE LEARNED anything at all in my career as an educator, it is this: Whom the gods would destroy, they first subsidize.

American higher education is a perfect example. In the 1960s, the total budget for all colleges and universities was about $7,000,000,000; in the early 1990s, largely because of massive state and Federal funding increases, it surpassed $170,000,-000,000. Yet, tens of thousands of college seniors do not know when Columbus sailed to the New World, who wrote the Declaration of Independence, or why the Civil War was fought. Businesses rightly complain that they must re-educate college graduates in such basic academic skills as grammar, spelling, and practical math.

The effect of government subsidy and control has been more profound, more direct, and more damaging than anyone has realized yet. It has led to a situation in which the entire system of American higher education is academically, morally, and literally going bankrupt.

One of the best-kept secrets in higher education today is that many schools are teetering on the brink of financial disaster. Nearly one-half of the college presidents polled by U.S. News & World Report in the early 1990s indicated that their institutions would face continuing deficits, and nearly one-third said they did not expect to balance their budgets anytime in this decade.

Nearly 60% of all colleges and universities have been forced to slash their budgets. Even some schools with huge endowments and hundreds of millions of dollars in revenue in the form of Federal research grants have been starving for operating funds. One reason is that the bigger the institution, the bigger the outlays. Harvard University, Stanford University, Columbia University, MIT, and the University of Michigan are just a few of the institutions that rack up bills of more than $1,000,-000,000 a year. Moreover, little of what they spend can be called discretionary; they are overcommitted to entitlements in exactly the same way as the Federal government is.

There will be no easy way out of this crisis. Private donations to colleges and universities have gone up in the last decade, but, even at best, corporate and private giving accounts for just eight percent of all higher education revenues. Federal and state aid, which had grown by leaps and bounds since World War II, is on the decline.

Defaults on student loans have exploded. The tab taxpayers must pick up for Stafford Loan defaults alone now is about $3,000,-000,000 a year. Defaults, mismanagement, fraud, and abuse due to "internal control weaknesses" within the Stafford Loan system are eating up in excess of 54% of total program costs. This means that less than half the money allocated for Stafford Loans goes to pay for new loans. Record deficits in the Pell Grant program also testify to the failure of the system. By the end of the Bush Administration, this Federal program was in debt to the tune of $2,000,000,000.

What we are seeing today is an S&L-style financial crisis. Although higher education appears thriving and prosperous on the surface, vast instability and corruption lie just below. The question is: How long can the veneer last? What finally broke...