Higher Education Takes the Low Road

In a battle between education and profit-oriented research, guess what wins?

By David Noble
Spring 1993 (1 of 2); pages 24, 20; #3
The Other Texan

The Justice Department's inquiry into price-fixing among the nation's elite universities may suggest some of the likely causes of tuition inflation, but such scrutiny remains too close to the surface.

Over the past five years, the National Coalition for Universities in the Public Interest has filed lawsuits and conducted investigations that indicate the tuition increase is a symptom of the more fundamental transformation of our higher educational institutions - public and private alike - into corporate research, and hence money-making machines. Tuition has been increasing because it is being used to subsidize the unprecedented activities of universities.

Universities Gain Ownership of Patents

A handful of academic entrepreneurs and their industrial partners have benefited at the expense of democratic access to the university and quality education itself. If academic price-fixing is part of the problem, insider trading between universities and corporations on research is even more important.

Noting that tuition increases began to outpace inflation in 1980, some observers have argued that the rise resulted from Reagan administration cutbacks in student aid. That may be true in part, but the observers have overlooked a perhaps far more significant coincidence.

In 1980, after years of intense collaborative lobbying by industrial and academic leaders for reform of the patent law, the universities for the first time gained automatic ownership of patents resulting from federally funded research, and hence the right to sell exclusive licenses on these patents to private corporations.

This prompted a reworking of academic policies regarding intellectual property in the interests of profit-making and paved the way for a massive indirect public subsidy of private industry via the universities.

Since 1980, the commercial priorities of academia have become strikingly evident. The thickening web of interlocking directorates between research universities and industry and the proliferation of collaborative university-industry business ties have given the academic leadership a distinctly commercial orientation.

This commercial orientation has come to dominate academic decision-making about the allocation of university resources: potentially profitable research has become the top priority, whatever its relevance to education and whatever its costs to students, parents and taxpayers.

Princeton University President Harold Shapiro observed recently that "higher education...is becoming much more capital intensive" as universities drive to equip themselves for "front-line research."

A director himself of Dow, Unisys and Kellogg, Shapiro acknowledged the corporate influence on the university's activities, noting that "much of the research agenda is externally driven." As the university has become more like a business - a supplier of scientific and technical knowledge to industry - academic competition has become in essence commercial competition.

In order to maintain their competitive positions, the universities have had to recruit and equip the most commercially promising researchers - the majority of whom do very little undergraduate teaching - in competition with industry as well as other academic institutions.

As the Chronicle of Higher Education reported, the cost of getting research under way is staggering, and it is increasing rapidly. In addition, schools rarely budget for it adequately, if at all.

Thus, despite the fact that federal funding for academic research has continued to grow, the universities have been scrambling to find funds to meet their new commercial priorities.

Universities Cut Unprofitable Departments

Some university officials have argued that the money for their growing research expenses - beyond that provided by federal grants - comes from alumni gifts, private individuals, corporate and foundation grants and special university funds. But most concede that the use of such major gifts and endowment funds for operating budgets is sharply restricted.

Stanford University President Donald Kennedy has been more candid about where the money is really coming from: "Balancing the budget has become a painful process of expenditure reduction, conducted amid agonies over the salaries we are to pay our faculty and over the tuition we must charge."

In other words, universities are cutting courses and programs in curriculum areas that don't generate profits, restricting faculty salaries for those who teach outside the commercial nexus (those salaries have barely kept pace with inflation as it is) and increasing tuition.

Those symptoms of campus commercialization are all too familiar to university students and staff: they signal nothing less than the abandonment of the educational mission of the university in the academic pursuit of profit.

Many university officials openly acknowledge that they are no longer able to sustain both advanced research and an adequate undergraduate liberal arts curriculum - the education for which most people are paying tuition.

"How to continue to finance these two expensive but rival commitments is the great dilemma," Brandeis President Evelyn Hander noted. "Could it be that undergraduate education gets in the way of front-line research?" asks Princeton's Shapiro. "Should we keep the research and education enterprise together?"

So, even as the academic commitment to quality education declines, the charge to students for impoverished offerings has increased. Tuition income typically accounts for nearly half of the annual revenue of a university and, for some institutions, the proportion is much higher.

Tuition Funds Spent On Everything But Students

More important than its proportion, however, is the unrestricted use of tuition funds for operating budgets. Arthur Sussman, administrative vice president of the University of Chicago, noted recently that "tuition represents the largest and, for some institutions, the only source of unrestricted funds."

This allows for tuition funds to be used in the "creative financing" of research sots, which is why such costs "could ultimately result in tuition increases," as Bruce R. Ekstrand, vice chancellor of the University of Colorado explained. "The university's bill gets bigger every year," he observed, "and the money has to come from somewhere."

Stanford's former president Kennedy likewise acknowledged that, as universities scrambled to finance their commercially inspired research activities, "tuition was one of the few items universities could use on the annual basis to help cover expenses."

University officials argue that the corporations are giving the universities millions of dollars. In reality, the companies are getting much more than they are paying for, a massive taxpayer subsidy of their research and development.

Secondly, university officials argue that they must pursue the path of commercial research in order to support their educational activities. In truth they are looting their educational assets to support their commercial ventures, which promise little educational return.

Screwing You to Boost the Economy

Finally, the university officials argue that such commercially minded academic activity is essential to US industrial competitiveness in a world economy. In reality, as recent Congressional hearings (House Subcommittee on Human Resources, June 13, 1989) and an ongoing congressional inquiry have demonstrated, universities have been trading federally funded research to foreign, and especially Japanese, competitors, thereby undermining the competitiveness of American firms in pursuit of their own short-term gain.

The sad truth is that the commercialization of higher education for private profit constitutes a cynical abuse of the public trust by the academic establishment. It is being carried out largely at taxpayer expense, with little or no return to the taxpayer, and at the cost of quality education and tuition inflation. People are being forced to pay more - in taxes and tuition - for less.

Rampant tuition inflation could prove a blessing in disguise, however, if, as an alarming symptom, it shakes that trust and calls attention to the disease that is overtaking the nation's colleges and universities.


David Noble is a board member and co-founder of the National Coalition for Universities in the Public Interest, and a professor at York University, Canada. He recently won a lawsuit against MIT for denying him tenure because of his investigations into that university's entrepreneurial activities. This article originally appeared in Newsday, Oct. 8, 1989.