Monday, December 3, 2012

Katie and Kelly McNabb

at Kelly's graduation from 
the University of Minnesota Law School
Spring 2012

Whose Fault Is It That Many Students at 

the University of Minnesota

Are Graduating With Crushing Debts?

My friend Michael McNabb recently wrote concerning the above topic.  This struck a strong chord with me because I believe that bad decisions have been made in the last ten years in allocations of resources. This has exacerbated the problem - for students - by putting unreasonable pressure on tuition, leading to excessive increases.  Of course more state funding is needed, but the blame for tuition increases should be shared by the University of Minnesota administration.

From my fellow alum, Mr. McNabb:

"When Greer graduated in 1953, tuition at the Law School was $200 per year.  When Ann graduated in 1979, it was less than $1,300, and when Jim graduated in 1986, it was less than $2,700.  The reason, of course, is that our legal educations were heavily subsidized by the taxpayers of the State of Minnesota.
Today, it's a different story.  Funding from the state covers less than six percent of the budget and that amount goes exclusively to fund the Law Library, which is available to and shared with the entire University and the greater community including government offices and the Bench and Bar.  In-state tuition now tops $36,000 per year, and students now graduate with six figures of debt from the Law School alone."
November 15, 2012 U of M Law School fund raising letter from the co-chairs of the Partners in Excellence Annual Fund  (emphasis added). 

The increase in tuition is not simply the function of a reduction in state appropriations.  The U of M administration increased spending from $2 billion in fiscal year 2002 to $3 billion in fiscal year 2012.  The fuel for this billion dollar explosion was skyrocketing tuition that soared from $293 million in fiscal year 2002 to $634 million in fiscal year 2011.  This astronomical rise in tuition far exceeded any reduction in state appropriations.  See Ten Year Review of University Inc.

In fiscal year 2012 the University received $484 million in state appropriations for its general fund (the Operations & Maintenance fund).  See p. 103 of the September 9, 2011 report of the Board of Regents.  Senior administrators (with the approval of the Regents) made the decision to allocate less than 1% of the state appropriations to the law school ($3.6 million) and to the business school ($3.3 million).  See p. 81 of the June 20, 2011 report of the Board of Regents.
The senior administrators at the law school and the business school claim that state appropriations pay for less than 10% of the operating budgets of those schools.  The fact is that the central administration makes those allocations, not the state legislature.  See Going To Market Part II.
The prospect of an increase in state appropriations appears remote with the legislature facing a projected deficit of more than $1 billion when the $2.4 billion state IOU to school districts for K-12 education is taken into account.
So what can we do as a practical matter? We should start with substantial reductions in the cost of administration that consumed 28% ($852 million) of the University budget in fiscal year 2012.  See On The Cost of Administration Part III.   The savings should be used to roll back tuition as the most effective and efficient way of providing financial aid.  We need to once again make higher education affordable for all qualified students.
The authors of the fund raising letter are correct that our children are being handed crushing debt with their diplomas. Our oldest son graduated in 2005 with dental school student loan debt of nearly $200,000. Our oldest daughter graduated in 2008 with medical school student loan debt of more than $200,000. One of our twin daughters graduated in 2012 with law school student loan debt of almost $150,000. 
Concordia University (St. Paul) recently demonstrated that tuition can be slashed (by $10,000 per year) when it recognized that the "high tuition high financial aid" experiment has failed.  See the September 12, 2012 front page report in the Pioneer Press on Concordia Slashes Cost.

Michael W. McNabb
University of Minnesota B.A. 1971; J.D. 1974
University of Minnesota Alumni Association life member


Anonymous said...

You may want to see:

Mr. B. said...

Thank you for your comment.

You will notice that this essay has been modified by its author to address the points raised in your citation.

Bill Gleason