Lederman's Lament

By Richard Vedder


One of the very best, if not THE best, reporters on higher education today is INSIDE HIGHER ED's editor and part-owner (I think) Doug Lederman. He has written a superb column for today's edition of his electronic newspaper that is must reading for anyone interested in higher education.


Doug points out that the potential conflict of interest problems that have come to the surface with the student loan scandal may only be the tip of the iceberg. Universities interface with vendors and commercial interests all over the campus community. Harvard's former president Derek Bok wrote a good book about it a few years ago with respect to the possible problems associated with corporate sponsorship of research. In selective admissions schools where the quantity of services demanded far outstrips the quantity supplied at the stated price, there are enormous incentives for bribes and kickbacks. Dan Golden has written about institutional kickbacks and preferential policies, but I wonder if there are admissions officials who have attained a good deal of personal enrichment? Are there IT administrators who have been enriched by favoring certain vendors? Whenever money is dropped out of airplanes (or the equivalent) to support something, human nature is such that some of the funds get illegitimately diverted into the pocketbooks of key personnel. Sometimes it is done legally (if not always productively) as well --there is a positive correlation between salary increases over time for professors and the degree of grant funding from the federal government, for example.


Since public funds are heavily involved, it could be argued that theft of university funds is equivalent of theft of public monies, and should be treated the same way. Universities that cover up or bury acts of malfeasance should face criminal sanctions or --more potent --loss of accreditation, the ability to participate in student loan or research grant programs, and/or the loss of tax exempt status. Hit them hard in the pocketbook, and institutional efforts to ferret out dishonesty will grow and might bear some fruit.


Having said all of this, however, we return to the old dilemma. Federal intrusion into university affairs seldom have a happy result. The strength in our system of higher education is its institutional diversity. Each school can seek its own destiny. Yet federal money is corrupting that principle. If schools want dollars from the Feds, they have to be willing to become quasi-public institutions subject to rules and regulations designed to minimize waste, fraud and abuse, and at the same time they have to be transparent and accountable. The solution? The gradual defunding of higher education from taxpayer sources. Have American higher education move towards the Hillsdale College model. Then corruption becomes a private problem, without widespread ramifications for public policy.