American faith in its colleges and universities has undergone a sharp decline, manifested in a spectacular fashion at the national level by an apparent war between the Trump administration and universities, especially elite private ones. The feud even ensues at the state level as public officials who used to give generous subsidies to universities and did not much interfere in how they operate are increasingly imposing restrictions on their operations, with, for example, several states outlawing the diversity, equity and inclusion (DEI) bureaucracies that have become pervasive in higher education and are costly, maliciously anti-merit, and insidiously racist.

The 10 Problems With American Colleges

In the first chapter of my newest book, Let Colleges Fail: The Power of Creative Destruction in Higher Education, I list 10 problems with American universities. First, enrollment decline has occurred for the first prolonged period in American history. Second, critically important public support and confidence in higher education is very low, imperiling this sector that cannot financially exist solely from the tuition fees paid by its student consumers, or from research grants or endowments. (RELATED: Higher Education’s 7 Deadly Sins)

Third, unpopular ideas are too often suppressed or ignored. A vibrant university is a learning community filled with civil but vigorous debate, airing alternative perspectives on issues facing the world. Related to that is a fourth problem: intellectual diversity has been declining on campus. On most campuses, far left or progressive perspectives dominate the faculty who instruct the students and advance the research agenda. One study said Yale had no Republican faculty in its history department. I once met an Ivy League Republican sociology professor, and I was so startled that I asked him for his autograph! (RELATED: Another Ivy League University Living in Woke Fairyland)

Fifth, the cost of college is high both for its customers and the broader public. Per student spending in the U.S. is far higher than in other comparable industrial democracies like neighboring Canada, Great Britain, or Japan.

Sixth, although far from conclusive, some reliable evidence suggests that typically students do not learn terribly much over a 4-5 year (usually) period in college. Too often, recent college graduates are embarrassingly similar to some newly minted high school grads in their general knowledge, vital critical reasoning skills, or sometimes even the specialized training needed to excel over a lifetime in the world of work. They are shockingly ignorant of our glorious political, intellectual, artistic, and entrepreneurial heritage dating back to ancient times. (RELATED: Creative Destruction Comes to Universities)

Seventh, colleges are overwhelmed by administrative bloat, persons ostensibly supporting the mainline academic activities, but instead often crowding out emphasis on what should be their primary function, the creation and dissemination of truth and beauty, what Keats two centuries ago so poetically described in his “Ode on a Grecian Urn.” Johns Hopkins political scientist Benjamin Ginsberg accurately says an “all-administrative university” is crowding out emphasis on Job One, teaching and research.

Eighth, even as our competitive market-based free enterprise system has propelled Americans to new levels of affluence, attainment of a first-rate collegiate education has seemingly stagnated, maybe even reversed, for Americans of lower incomes, probably stifling higher education’s role in facilitating the American Dream. This probably reflects general public policy errors, including deficiencies in our secondary education system and disastrous public assistance initiatives, more than collegiate misdeeds, but it is inconsistent with a “college availability for all” attitude widely prevalent in our society.

Ninth, even in a narrow financial sense, the rate of return on investment in higher education has probably declined in modern times. Minimally, going to college today is often a rather risky financial commitment. For example, over one-third of entering freshmen have not earned a bachelor’s degree after six years. Another one-third or more of recent graduates are, for a period, what the Federal Reserve Bank of New York calls “underemployed,” working low-paying unskilled jobs usually held by those with only a high school education.

Tenth, colleges are simply awful at efficiently using the human and physical resources that they possess. Buildings lie empty many months a year, faculty write papers for some Journal of Last Resort that few read or cite, and kids typically take four or even five years to finish a degree that renowned foreign universities like Oxford and Cambridge say routinely should be completed in under three years.

This list is not exhaustive. Some would talk about the millions that schools spend annually on ball-throwing contests that have nothing to do with learning. Others might stress more specific concerns, like why it takes seven years after high school to learn to practice law in America, while you can do it in about half that time in England, or maybe they would even point out Abraham Lincoln did it quite well with no college at all.

Academia vs. Corporate America

While many would say with some justification that America has the best universities on Earth, our economic exceptionalism largely reflects the extraordinary success of competitive free enterprise capitalism. We have gone from a few hundred thousand settlers at the end of the 17th century to becoming the largest economy in the world well before the end of the 19th century, to being the world’s undisputed leading economic power and richest large nation in the world today. Yet this great success has also been accompanied by a lot of what the Austrian-American economist Joseph Schumpeter called “creative destruction.”

I compared the top 25 universities in the U.S according to US News in the year 2000 and again 22 years later, in 2022. Almost no change. NYU replaced the University of Virginia at the bottom of the list. Zero “destruction.” Contrast that with the top 25 companies on the Fortune 500 leading corporations list — over three-quarters of the companies were different in some major way in 2022 compared with 2000. In 2000, Sears and Roebuck, Compaq Computer, and Enron were in the top 25, but are non-existent or shadows of their former selves today, while today’s top 25 companies, like Amazon and Alphabet (Google), were small or nonexistent.

Mistakes in private business often are fatal, forcing companies to make big changes in order to survive and prosper. Yet success in private business is worth millions to top executives, sometimes even billions. Rewards for success are great, but punishment for failure is harsh. By contrast, at a top university, officials might get a $100,000 bonus for success, but even measuring that success is difficult, but breathtakingly easy in private business — just look at earnings reports and stock prices. But did the University of Michigan or Appalachian State have a good year in 2024? How would you know?

Perhaps colleges, facing so many big problems these days, could learn something from our highly successful business sector. Maybe an accelerated growth in the number of college closings would reluctantly force frightened colleges to change in ways that make them more responsive to public needs, do more with less. (RELATED: Harvard’s Sacred Cash Cows)

9 University Reforms

Let me suggest nine areas for reform discussed in my book that would reduce some of the problems just outlined. First, take a lesson from K-12 education and introduce more consumer sovereignty. State governments give many dollars to educational producers, called state universities, instead of to the consumers, the students, in the form of generous scholarships. Why not give the state subsidy money to those students and make the universities compete hard for them? So-called state universities then would largely be semi-privatized, and should be free to behave accordingly, for example, deciding their own rules for institutional governance or curriculum.

Second, take another lesson from European universities and Thomas Jefferson. Jefferson took only two years to get his bachelor’s degree at William and Mary at age 20, and the later writer of our Declaration of Independence certainly was a marvelously educated man. Students getting a bachelor’s degree are in class for maybe 30 months over 4 years — why not make it three?

Third, introduce markets within universities to more rationally allocate resources. Give each budgetary unit an infusion of cash, but then make it rent offices, classrooms, and laboratories. Maybe even give faculty members a budget from which they can rent their office and parking spaces from the school. If three departments want to use a popular lecture hall at 10 am on Monday, Wednesday, and Friday, hold an auction for the space.

Fourth, colleges and universities spend much time and resources on things having absolutely nothing to do with what should only be their ONLY job, disseminating and creating knowledge and artistic expression. Why do they serve food and rent out rooms? At many schools, students must live in dorms and eat food provided by a monopolist provider during their first and second years, and then rejoice after that when they can get food and lodging from fiercely competitive private entrepreneurs, often at a lower price and better quality.

Fifth, with more college closings, creative destruction is increasingly coming to higher education. That creates opportunities for new innovative institutions like North Carolina’s Thales College or the University of Austin, which opened to about 90 students last fall and has plans for significant expansion. New colleges don’t have to fight entrenched interests that think they own or control the school.

Sixth, end accreditation as it now exists. Accrediting agencies restrict competition. They often evaluate schools based on inputs used rather than outcomes achieved. Sometimes, they try to enforce ideological positions that many find offensive and are anti-merit-based. They are typically controlled by existing universities, opposed to competition and unsettling new ideas like three-year degrees. Accrediting agencies are supposed to provide consumers with information about quality, but really, it is a binary system. Like pregnancy, you either are or are not, with no quality distinctions. Harvard has the same accreditation as nearby Bridgewater State University. They are not qualitatively equal.

Seventh, we test kids constantly in school, including colleges. We administer useful college entrance examinations like the ACT and SAT. Nearly every course has even more exams. Why don’t we have, shortly before college graduation, all students take a National College Equivalence Examination, or NCEE, a several-hour-long exam measuring general knowledge as well as that in the student’s major. We could then say, “The average senior at Grove City College got an 81 on the NCEE, but at Harvard it was only 79, and 76 at Iowa State.”

The test results would say more about student learning than any accrediting agency would tell you. Colleges are about creating and disseminating knowledge, but they try mightily to keep the public from knowing much about the knowledge that they convey.

Eighth, college students spend far less time on their academic work than decades ago. Why? Grade inflation is a major culprit. No government money should be given to any school that fraudulently claims that most of its students are exceptional based on mostly “A” grades. (RELATED: America’s Math Collapse: Harvard Institutes Remedial Math)

Ninth, and arguably most important, the federal government should get out of the student loan business. High school grads wanting to open an auto body shop have to go to a bank to finance that investment; why shouldn’t those wanting to go to college do the same? If we persist in federal lending, at least make colleges have some skin in the game, making them partly responsible when their students default on their loans. (RELATED: The Fall of Harvard: How America’s Oldest University Became Its Most Expensive Liability)

I sometimes say that, with the possible exception of prostitution, teaching is the only profession that has had absolutely no productivity advance in the 2400 years since Socrates taught the youth of Athens. I have not discussed the role of technology in achieving cost reduction or qualitative improvement, about big-time college sports, or said much about professional education, or about inadequate spending on routine building upkeep and maintenance. I have not discussed the potentially very important role university governing boards can and should play — a key underutilized group that typically legally “owns” the universities and can bring needed outside perspective, expertise, and adult supervision. For more, buy my book!

Richard Vedder is a distinguished professor emeritus at Ohio University, senior fellow at the Independent Institute, and author of Let Colleges Fail: The Power of Creative Destruction in Higher Education.

READ MORE from Richard K. Vedder:

Another Ivy League University Living in Woke Fairyland

Creative Destruction Comes to Universities

Higher Education’s 7 Deadly Sins