The Crisis of the Neoliberal Model of Higher Education: Part One

Jon Kofas * 

Washington D.C., August 16, 2016 (Alochonaa): 


A nation’s higher education system reflects the ideological and political institutional mainstream as a whole. This has been the case since the founding of universities in the late Middle Ages (University of Bologna, 1088; University of Paris, c.1150;University of Oxford (1167); even earlier for Arab universities (University of al-Qarawiyyin, 859; Al-Azhar University, 970). To this day, universities reflect society’s value capitalist system, prevalent ideological and political trends rooted in neoliberal thinking that dominates the political economy. The question is whether the neo-liberal model of higher education best serves individual students and society collectively or merely large businesses.

Based on the cosmopolitan ideals of the Age of Reason, the Humboldtian Model of Higher Education – named after Prussian philosopher and diplomat Wilhelm von Humboldt, 1767-1835 – endeavored to forge teaching and research in the arts, sciences and humanities for the broader purpose of general knowledge both theoretical and applied. The Industrial Revolution necessitated education at all levels including university level in order to expand. Therefore, the modern university became a necessary instrument to serve industrial capitalism’s needs (drivers of innovation where basic research and development took place).

It stands to reason that the most thriving capitalist country, the United States with the world’s largest economy in nominal value at least, would have the best universities both private and public, especially land-grant colleges that started in 1862 under the Morrill Act. Although such schools started with the purpose of indeed buttressing the economy by creating an educated work force, they reflected an apartheid society considering that it was not until the Higher Education Act of 1965 and the Education Amendment of 1972 that minorities, women and lower income whites had access to these institutions that were mostly for white middle class males.

In the early 21st century the problem is not one of access based on race and gender but rather class because of the commoditization of higher education model prevalent in the US and exported worldwide. Considering the number of US-affiliated colleges and university extensions overseas, but the degree to which non-US universities try to emulate the commoditized model, many around the world accept the commoditized neoliberal model of American higher education as the very best possible.

It is indeed true that the US has some of the world’s best universities, especially graduate schools if not so as much at the undergraduate level. It is just as true that since the end of the Vietnam War American higher education has become increasingly unaffordable and divided into the top tier schools with many at the bottom providing low-quality in-class or online education at a very high cost. This too is a reflection of broader societal trends such as downward socioeconomic mobility and good education as a commodity reserved for wealthy families.

Excluding loans, the federal government provides a mere 2% of the budget for higher education, despite a sharp decrease in spending by states since 2008. If we consider the federal student loan program estimated at $170 billion in the next ten years, the cost is still negligible given that the US has proposed foreign military aid of $40 billion to Israel for that same ten-year period; money devoted to continue the repression against the Palestinian people. Two-thirds of American college students graduate with college debt that currently stands at$1.3 trillion. In an economy of $17.5 trillion GDP, this is an enormous burden that has been rising commensurately with the average household debt over the last three decades.  Approximately 43% the student debt is not paid in regular payments and it is estimated that because of the absence of jobs about 20% will probably never repay the loans. This would then leave the federal government with the burden of the guaranteed bank loans. Because the US economy has been experiencing downward socioeconomic mobilization concurrently with the massive rise in student debt and household debt in the last ten years, the problem was inevitable.

The position of the majority of the politicians is to do nothing, other than have universities raise endowments for scholarship money and force universities to depend even more on tuition and the private sector. However, as Warren Buffett recently noted, the university where he serves as a board member raised its endowment from $8 million to $1 billion but kept tuition at high levels instead of lowering it and it did nothing about improving. As we will see below, doing nothing about the current neoliberal model has many negative consequences for society both domestically and globally.

Another option to fix a broken system is to cut the multi-million dollar costs of the top-heavy administration in universities where presidents, vice presidents, chancellors, vice chancellors, and deans have compensation packages as though they are executives in the private sector. The salary gap between a university president and an adjunct English professor is almost as wide as a worker and a corporate CEO. Clearly, the overhead costs of the bureaucratized universities entails that student tuition is unaffordable for the working class and the weakened middle class.

Another option to fix the costs in higher education is to go tuition free. This is a proposal that Senator Bernie Sanders floated as part of his neo-Keynesian presidential platform that includes free health care for all Americans. This of course means putting an end to the neoliberal model. His reasoning is that students are punished for going to college. They come out with massive debt to start their lives in a job market that is hardly favorable to the majority of them. Considering that a college degree is roughly equivalent today to a High School degree in the 1950s-1960s when the US economy was growing and there was upward socioeconomic mobility, what purpose does the unaffordable tuition serve other than to keep college the domain of the wealthy or those willing to go deep into debt?

This is a question not just about economics and raising taxes of the rich to pay tuition of the poor. The fact is that the system already favors the wealthy and it is stacked against the lower class. This is an issue of social justice considering that the federal government and states have no problem providing billions of dollars in corporate subsidies and tax breaks for the richest Americans and setting aside a massive budget for defense, intelligence and homeland security and very little for human welfare. This is an issue of values, just like the blatantly racist criminal justice system that punishes the petty thief or small time drug dealer in the inner city, but rewards the bank executive whose bank had been laundering drug money, fixing rates, engaged in inside trading, etc.

The Rising Cost of Higher Education

From 1978 until 2012 the increase in tuition and fee was 1,120%. An increase far above the level of inflation that generally ranges in the single digits represents a crisis in the cost structure of colleges and universities. Assuming a rise of just 7% between 2016 and 2030, the average annual cost for a public university will be $58,000, or $232,000 for a four-year degree. For a family with two children, this means the cost will be around the half-a-million dollar mark, and the difference between owning a home or sending the children to college and sinking them into debt when they graduate.

Since the Great Recession of 2008 states have slashed spending on higher education to raise corporate subsidies and provide more tax breaks for upper income groups. The result has been college affordability in 45 out of the 50 states has decreased for the average household which has seen a drop in its income during the same period. This means that households under $30,000 must devote 60% of their income to educate a college age teenager at a two-year college, while those between $40,000 and $100,000 (middle class) need 76% for a four-year college. In short, a very difficult choice for the average American family that must ask whether an undergraduate degree really means much in the workforce of today.

One could argue that a college education is well worth investment not only in terms of securing higher paying jobs in the future but because the quest for knowledge about the world and self discovery are very basic to human nature and society. Moreover, education goes to the core of a society’s claim to maintaining a merit-based system by developing the most creative minds that benefit the totality through the individual.  If higher education is a mirror of society as well as the source for progress, is it time to consider new models other than the existing corporate one that will best serve society and not just a very narrow segment linked to the corporate structure? A few voices including that of Bernie Sanders and his supporters agree the time has come for a new model of higher education. However, the entrenched business, political and media elites are adamantly against change. Interestingly enough, these elites are allies among highly paid administrators who have a vested interest in maintaining the existing system.

Political Resistance to Changing the Neoliberal Model of Higher Education 

The neoliberal ideology that took hold during the Reagan administration in society impacted higher education because government at all levels adopted a policy of transferring income from social programs, mental hospitals and education to corporate welfare through various subsidies and tax reductions. At the state level, governors and legislatures began seeking ways to reduce their allocations to public colleges and universities, forcing them to seek funds from the private sector. This entailed that they would have to emulate the private sector in everything from ideology to structure and at the same time serve its needs rather than carry out work independently.

Not just the governance structure of higher education, but endowed chairs and entire departments or even colleges would be created to reflect the millionaire or billionaire donors’ wishes.  Everything from hiring faculty to reflect the neoliberal ideological orientation to setting priorities that link the institution to local and national businesses changed because of the inexorable relationship between university and the donors. Most college presidents and university top administrators serve on boards of local and national businesses, and they are as themselves business people and politicians rather than academics. In some cases, top administrators are as alien to academia as the local bank executive hobnobbing with the mayor, governor and congressmen.

Higher education has been reduced to a business and the administration views itself as such and students as customers as thought they are shopping for a new cell phone. No candidate of either party has dared to go along with Sanders’ proposal, although there is no shortage of those on the Democrat side promising “something must be done” but within the neoliberal corporate model that exists today. Politicians who raise money from wealthy donors for election and reelection are not interested in facing their benefactors to explain higher taxes to fund higher education. Higher education is a political issue in so far as politicians decide where it fits in as far as a national priority. It is hardly a secret that both political parties have national defense/terrorism/homeland security as a top priority followed by retaining the corporate welfare system.

Between 9/11 and the end of 2015 the US had spent $4.4 trillion on the wars in Iraq and Afghanistan, various interventions in Libya and Syria, the war on terror and homeland security. During that same decade-and-a-half, the corporate tax subsidies from state and local governments cost $80 billion annually, while Export-Import subsidies cost an additional $112 billion. The combined corporate welfare program costs $1.5 trillion annually, but both political parties are committed to it as a national priority whereas higher education is a low priority. Just as the state government in Michigan had as a priority providing a tax break of $1 billion to the richest residents even if that meant cutting costs in the Flint water supply, similarly state and federal government have corporate welfare as a priority over higher education.


*Jon Kofas is a retired Professor . He has published many works including; Independence From America: Global Integration And Inequality, Under the Eagle’s Claw: Exceptionalism in Postwar U.S, Greek Relations and The Sword of Damocles, and The IMF, the World Bank, and U.S. Foreign Policy in Colombia and Chile, 1950-1970.

** is not responsible for any factual mistakes (if any) of this analysis. This analysis further is not necessarily representative of’s view. We’re happy to facilitate further evidence-based submissions on this topic. Please send us your submission at

Categories: Education

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