Higher Education As Ponzi Scheme

By Professor Doom
8-20-15

I’ve often written of the plight of the adjunct professor in higher education. I’m most fortunate to not have been in this boat (although it may be my future), one doesn’t have to walk a mile in an adjunct’s shoes to see there’s a problem. Nevertheless, someone who’s actually lived as an adjunct will have a better perspective.

An adjunct writes of his experiences, and tries to explain a Ponzi scheme aspect of higher education in Doing the Math: Student Loan Debt and the Adjunct Equation. Let’s look at what he has to say, and I’ll clarify some points:

One of my friends calls working in higher education a “Ponzi Scheme.”

This is how it works:

You put years of your life on a shelf in the name of higher education. You work hard, delay gratification and play the game to obtain the advanced degree.  Unless you have wealthy parents, you take out student loans which you plan to pay back after landing the dream job as a full time tenured track professor…The university is no different than other corporations: full time, tenured track positions with benefits have been eradicated around the country and chopped up into part time work in the name of profit even if the university professes to be “non-profit.”

For those of you who do not know, part time professors are called “adjunct professors.”  After we receive our low paychecks, many adjuncts then turn the money earned  from the education system to the Department of Education to pay a portion of our whopping student loan debt.

The basic structure of the Ponzi scheme is people on the bottom pay in, but only the people on the top make actual money. The only way people on the bottom make money is if they get people to come in under them. At some point, there are no more people willing to come in, and the scheme collapses. Generally, only the people that were there first actually do well in a Ponzi scheme.

Part of what happened in higher education was accreditation turned into a completely bogus operation, and no longer cared if the institutions it was accrediting actually offered legitimate education. Since accreditation was necessary for an institution to receive Federal student loan/grant money, it just made more sense for accreditors to take checks from the institutions to become accredited.

The proliferation of educational institutions led to the proliferation of degrees, even advanced degrees, especially in online institutions, which were particularly cheap to start up. There are many sites selling “online education degrees,” of very little content. Students enroll, blow their student loan money, and get their degree.

The flood of education degrees means there is a flood of people holding advanced degrees…this depressed the job market to the point that bogus institutions can indeed pay basically nothing to get someone to teach their courses, especially in social science and education fields. There’s just so much money in this that legitimate institutions followed suit. I’ve covered this in more careful detail elsewhere, but that’s the basic idea of what happened.

So, not exactly a Ponzi scheme…but the people at the top make all the money, while everyone else is impoverished.

Like other corporations, the university system makes a killing off part time workers and in turn, we are in debt for life.  We are indentured servants.

In a Ponzi scheme, the suckers can walk away, but the adjunct has debt payments to make, so usually not an option. It’s a hard thing to walk away when you’ve got your shiny degree, even when it’s very clear that degree isn’t worth anything.

“…it is academia’s dirty little secret that approximately 74% of college professors are adjunct professors.   We are exploited and abused.  We have no job security, no retirement, we usually do not have health insurance, we are paid low wages, we have no power individually, and we often have enormous student loan debt because we believed in the myth that obtaining an advanced degree would open up new doors to meaningful work and a good quality of life…”

The author doesn’t cite his statistic, but it’s clear over 50% of college faculty are adjuncts now. It’s also clear that many faculty are being played for suckers. Not just by paying a fortune for a huge degree (that may or may not be legitimate—keep in mind, neither institutions nor accreditation care about legitimacy).

The same is true for the part time professor.  As one recent example, full time faculty at Kalamazoo Community College in Michigan, in solidarity with part timers, had a food drive for the part time faculty as they were running out of food because of an inability to make ends meet during a break.  

I’ve covered the starving college faculty in Colorado, but this really is a country-wide problem.

I totally get “supply and demand” might well justify not paying faculty much, and please understand that I’m not saying adjuncts should necessarily be paid more. The gentle reader needs to understand the real issue here:

The ridiculous expense of a degree is justified because the very highly paid administration claims the degree is valuable.

Administration pays almost nothing for people with degrees to teach their very expensive courses, because administration knows the degrees are worthless.

You can’t have it both ways: either make higher education cheap and pay the faculty very little, or keep higher education expensive and pay the faculty appropriately for their “expensive” product.

Administration is having it both ways, to the detriment of students and faculty. Huge money pours into higher education, but ultimately does nothing for education.

One of the colleges I work for asked me not to tell anyone how much we make as it is “embarrassing” and “unprofessional” to mention, even when I was teaching a course on social class inequality, and the issue fit in with the ideas in the reading materials. 

“Unprofessional” indeed; I’ve been at a college where the lack of professionalism was stellar. Imagine if students learned that their highly educated professor needed to go to the food bank to eat because his pay is so minimal. Would that hammer home the idea into the student’s head that education isn’t a golden ticket?

Even better, imagine if, in addition to this information, students were informed just how much of their tuition is going into administration’s pockets? Again, I’ve been on a campus where the admin accounted for more than the total tuition of all the students put together (a state community college, of course).

Students comparing the money going to faculty, and the money going to admin, are going to ask questions. First question would be “Why is this campus loaded down with all these worthless social science courses?” Easily answered, of course, since admin can hire faculty for those, very cheaply.

The next question doesn’t have an easy answer: “Why can’t I take courses in becoming a higher education administrator?” I invite the reader to check the course offerings, especially at a community college, and see with his own eyes the distribution of coursework seems designed to funnel students into worthless fields of study.

Don’t get me wrong, social fields have value, but students are coming to campus to get jobs. It’s only fair to tell them that advanced degrees in the fields the institutions are pushing only merit jobs that pay $15,000 or less a year (when you factor in the interest on the student loan).

Now we come to my favorite part of the essay:

This same college pays me $2,700 for the entire semester which involves 15 weeks of work.  Yet, students are billed over $3,000 a class in tuition.  So that means one student pays more in tuition than I receive for my total wage.  Since most of the work I do is online, the college does not have to pay much overhead. I buy my own computer equipment; I pay all my own expenses.   And in return, when I tell the truth, I am told that I can no longer speak about this topic as it is “embarrassing.”  Let it be known that I am embarrassed to work for an institution that makes a sickening profit off of me while claiming to care about social justice and equality.

Let’s do a little math. Say I have 30 students in the class, and they each pay $3,000 in tuition.  The total amount of money brought in to the college is $90,000.  Then, take that $90,000 and subtract my salary of $2,700. This equals $87,300.  This is pretty standard per tuition rates and the wages of adjuncts at many colleges and universities across the country.

--realize that this calculation means every single class pulls in this kind of money for the online institution. Does it become a bit more clear how institutions get the money to have a hugely paid administrator for every class on campus, in addition to the faculty that does the actual work?

Time, and time, and time again faculty do the math and realize something is titanically wrong in higher education. The exploitation of adjuncts is just the tip of the huge iceberg of failure in today’s higher education system.

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