Higher education in America is heading towards a financial wreck and the calamity seems unavoidable. To stay afloat, the universities need more students who pay full tuition, which is becoming harder every year. Although conventional colleges and universities, whether non-profit or public, share distinct intellectual principles, they are also commercial endeavours subject to the economic norms of supply and demand.

Higher education in the United States embodies the nation’s principles, driving the American goal of upward mobility. Increasing demographic diversity has decreased financial support, particularly at the public institutions that enrol most students. The present chaos may be explained by the twin storylines of various communities’ access to schools and the government leaders’ withdrawal of support.

The tale of access is astounding, as the student population has changed drastically over the last half a century. African Americans, immigrants and women were legally barred from entering, then allowed but consigned to second-class status until ultimately recognised as equals.

The “college man” — or “college lady”, for that matter — is no longer uncommon. The share of the population with a four-year degree has risen steadily. Around one-third of the people aged 25 and above have a baccalaureate degree.

The gender discrimination persisted until the civil rights movement of the 1960s, despite the polite regard for women’s schools such as the “Seven Sisters” and their links with the male equivalents in the Ivy League. Harvard, founded in 1636 to train clergy, did not begin awarding degrees to Radcliffe co-eds until 1963, combining admissions in 1975 and implementing equality in admissions two years later; Radcliffe eventually merged with the Harvard in 1999. In 1969, Yale and Princeton started accepting female students.

As part of reconstruction, the Congressional chartering of Howard University in Washington, DC, in 1867, was the most fundamental way to make education accessible to the African Americans who had previously been forbidden. It opened its doors to everyone, including a large native American enrolment with white instructors. Almost a century later, on its campus, President Lyndon B Johnson announced the policy of “affirmative action”.

Later, groups of students who had previously struggled to get admission in the institutions came into their own. Higher education was a driving force in the disability rights movement. It accepted the idea that equality required the acceptance of diversity rather than the imposition of sameness.

Gallaudet University was founded in 1864 to teach deaf people American Sign Language. The “Deaf President Now!” (“DPN!”) campaign of 1988 caused worldwide controversy. The successful campaign encouraged the campaigners who went on to enact the Americans with Disabilities Act in 1991. Among the various measures to welcome persons ranging from those with paraplegia to the mentally ill, it ensured the deaf students the interpreters they rely on at other universities. However, the state has abandoned public higher education and the loss of public funding has been severe.

These shifts have been linked to perceptions about the social contract, in general. Since the 1970s, “the taxpayer revolt,” the majority has said that the people should fend for themselves.

The University of California (UC) system exemplifies better and poorer financed stages. The UC system is America’s best public higher education system. The UCs, the California State University (CSU) system and the state’s community colleges were established in 1960 as part of a comprehensive “master plan”, which was an explicit statement of the government’s deal with its voters.

For almost a decade the government promised to invest in its people. The tax revenues financed all levels of education in California, such that most of the operational budget came from the sources other than what the students paid. Those with a greater degree of schooling would do well. Their human capital would allow them to be entrepreneurial, while also giving back.

The wording was sincere and accurate. The residents were permitted to attend at a small ‘fee’. In the 1960s, the sums were low enough that a student might reasonably try to earn her way through school. Only out-of-state students were asked for genuine ‘tuition’ and they might even become the residents and get the same bargain.

The ultimate purpose of the “Great society” during its heyday was to support America in the Cold War with the Soviet Union. The “Sputnik moment” created positive anxiety. The American elite was taken aback when the Soviet Union launched the first artificial satellite, Sputnik, in 1957.

With a beach ball-sized weapon circling the Earth at a low altitude, the adversary had outperformed America and its space programme was unprepared and had to “catch up”. No single event before or after has sparked as much interest in the ‘Stem’ areas of science, technology, engineering and mathematics. Equations were suddenly patriotic. Like the related “arms race”, the “space race” pitted democratic principles against the Communist ideology.

The recommendations put out by Vannevar Bush predicted the mission of “big science”. He lobbied for establishing the National Science Foundation after supervising “the Manhattan project” to build the atomic weapon during the World War II

As a result, federal financing became the dominant paradigm for research and establishing new standards for intellectual efforts. The self-funded gentleman amateur dabbling in “natural philosophy” gave way to the professional, whose qualifications were amassed in a predetermined order from graduate school to post-doctoral fellowship to tenure-track employment.

The Stem subjects become a top priority, resulting in the distribution of massive funding. Besides, the humanities never received equivalent governmental financing.

Even the most prestigious universities were obliged to compete for the funding and awards by the 1980s. Although friendly competition had always existed in higher education, it could only grow as strong with the agreed upon criteria for judging relative rank.

The introduction of rankings and subsequent appraisal of academics and institutions, shifted incentives and affected behaviour in the areas ranging from admission rates to teacher remuneration, the value of broadcast sports and building development.

In the 1970s, the proprietary Gorman Report, which surveyed the reputation of graduate schools, contributed to the public compilation of the US News and World Report yearly ratings, which rose to prominence in the 1980s.

The monthly publication rose to assume a dominant place in the higher education, imposing its will on everybody. The UCs, like other elite public colleges like the University of Michigan and the University of Virginia, were drawn into the competition. They needed to compete for top instructors and talented pupil.

For a while, private liberal arts universities refused. “The Annapolis Group” committed not to engage in what they saw as foolishness. They were named after St John’s College, a “Great Books” institution with a campus in Maryland’s capital. When it became clear that the students and parents were too concerned about their children returning home to work, as baristas with a penchant for philosophy, practically all institutions caved. They become aware of their brand, which is pushed via marketing efforts and shown through “high touch” tours.

The schools that can recruit pupil have increased facilities. A higher rise in the rankings might result in a monetary bonus for a college president and an equivalent increase in the stock price for her private sector counterpart; a move down, a dismissal.

Following the World War II, the ways students and their families pay for higher education became an issue. In the late 1950s, the leaders of elite private institutions met to discuss the issue. They decided to distribute their financial assistance funds depending on the need. These schools would not compete for the students based on their grades and test results.

The eight Ivy League institutions and the Massachusetts Institute of Technology (MIT) that participated in the “overlap group” convening, referring to typically accepted students, went about their business until they were sued for conspiracy in 1991 by the United States Justice Department. Their conversations seemed to be price fixing in violation of the Sherman Anti-Trust Act. Except for MIT, they were all settled.

They later convinced the Congress that their acts were in the public interest. In 1994, the Congress exempted Section 568 statute to allow approximately 57 institutions and universities to restart their chats. These colleges promised to accept students regardless of their financial capacity. The institutions with the financial resources said they would meet all the financial needs of all admitted students.

Belonging to this category of institutions conferred honour since the students’ choices about whether or not to enrol or where to enrol would not be influenced by their or their families’ capacity to pay tuition. Even if they did not fulfil the severe standards of Section 568, the schools presented themselves as “need-blind”.

Meanwhile, the Higher Education Act of 1965 increased the federal government’s involvement in the higher education. The most critical aspects concern financial help. The federal government’s money distribution required bureaucracy and restrictions.

The “Pell award”, named after its originator, US Senator Claiborne Pell of Rhode Island, was distributed based on a formula to the students who proved financial need. Because it standardised the procedure, the free application for the Federal Student Aid (FAFSA) became the entry point for all types of help. The percentage of “Pell award” beneficiaries at a school became a measure of its accessibility.

A large school is doing its share to help pupil who do not come from the wealthy families. Vassar College, for example, has helped ‘strivers’ via its generosity.

Accreditors — non-government actors — served as the gatekeepers under this arrangement and their approval was essential. For the students to be eligible for federal financial help, a school must be accredited. Because debt financing of higher education became the norm, almost all the colleges were required to seek permission.

Loans average $35,000 for the students graduating today. The students who drop out or get post-baccalaureate degrees at for-profit universities owe more than that. The students are just some of the ones who may face crushing financial debt. They may not realise it but their schools, which number in the thousands, are also in jeopardy.

Burlington College’s shutdown and Sweet Briar College’s averted destruction are only two prominent instances of a pervasive problem, as experts warn that the liberal arts are almost useless and provide a poor “return on investment”, to the universities that have prided themselves on delivering a traditional curriculum struggle to make ends meet.

There is much debate over why tuition has become hyper-inflated, rising faster than the total inflation. Among the theories are reduced governmental funding, compliance with the laws and competition for rankings, readily available student loans, chief executive officer and staff bloat and inefficiency, construction sprees and pleasures such as gourmet meals.

The sources of money for a school are evident on the revenue side of ledger. Almost all schools are “tuition reliant”, meaning that most of their operating budget is funded by what the students pay them. The formula is straightforward: the total is equal to enrollment multiplied by tuition minus any financial help received.

The state supports the public schools. The private colleges have endowments, which may be considered, in some instances — enough to cover tuition for all but the most illustrious students. Both public and private schools aspire for continued generosity, such as an “annual fund” to which the alumni give. They often manage auxiliary activities like parking garages that may provide some revenue.

The ultimate concern for the schools is the rise of aggressive “tuition discounting”. The students are increasingly reluctant to “pay retail”. Unlike the past types of return to assistance that focused on financial need, this “tuition discounting” is used to attract attractive students or fill seats that might otherwise remain vacant. However, these monies being moved from one student to another are comparable. They are not the result of scholarship endowments. Although a few people have observed the occurrence, it is likely to defy many assumptions since money flows in a distinctly regressive way from the needier to the richer, on an average.

Whatever the case, the overall outcome for the school is a deficit. If a debt is continually running without enough revenue from an endowment to pay it or any replenishment methods, bankruptcy is an inevitable conclusion.

While some shuttered schools have reached that stage, others have considered it before the point of no return. Burlington was in financial trouble and although Sweet Briar had money in hand, it was spending it in a predictable pattern that would go nowhere.

The universities have grown reliant on offering concessions to meet their enrollment objectives. Because everyone is doing it, they are trapped in a mutual ratcheting of markdowns. Some universities collect just a little more than half of their advertised tuition.

The law schools are a great example of this phenomenon. Legal education is regarded as the pinnacle of the liberal arts. The law schools have been attacked the way liberal arts institutions have in the last half a decade. They have faced the hazards of a low application pool regarding quantity and credentials.

They have resorted to the same tuition-reducing strategies, with a significant discussion about the closures and mergers. The subsequent exposure has eroded the attraction of the law as a path to financial gain.

(The writer is an EdTech expert)