Break These “Churches” Up or At Least Unbundle Them


Religion is something we accept without any real analysis or discussion about its foundation or message. That is not altogether wrong because religion mainly addresses the after-life. Since we know nothing about the after-life, it is reasonable to accept the teachings of religion to give us comfort during our lives on earth.

Trouble occurs when pursuits that are purely for this earthly life get a religious connotation in society; when real life pursuits take on the flavor of religion; when activities that are centered on material goals in this life get the hallowed aura of religious dictate. American society has come a long way since the days of religious edicts of “do this & you will go to heaven” coupled with “do this or you will go to hell“. But that is not true of a quasi-religious dictate, a pursuit that touches the lives of every American family, a goal that has caused unprecedented financial damage to many who followed the dictate.

1.’Save your lives’ Dictate from the New “Churches”

What is this dictate? The dictate to get a college degree or simply “go to Yale or go to Hell” as Peter Thiel put it this week. Thiel, the founder or PayPal, put his finger on the nerve of the new American “must have” pursuit by saying “there is a lot of anxiety about the future & we have put more & more money into education as a way of dealing with this anxiety“. The dictate is now “go to the right college & you will be saved“.

What happens when such quasi-religious dictates get deeply ingrained in society? The “churches” that you need to go to for salvation become obscenely rich, arrogant and corrupt. That is why Peter Thiel said today’s “colleges have become as corrupt as the Catholic Church was 500 years ago“. He adds that “this system of charging people more & more” has become “a system of indulgences for a priestly or professorial class that doesn’t do much work“.   

The corruption has been so massive that it has created a financial crisis that may be larger then the housing crisis of 2007-2008. Student loan debt is now a $1.4 trillion problem, larger than credit card debt & auto loans. American students are graduating from college burdened with a debt averaging $35,000. Given the job opportunities of today, most cannot hope to pay off this debt. And, unlike home mortgages, students cannot mail back their degrees to the Universities or wipe this debt off with a personal bankruptcy filing.  

Yet every year students keep joining colleges in the hope of getting a job that will provide income & security. And every year a large number of these students keep accumulating student loan debts that will keep them in relative poverty for years after they leave college. And yet every year colleges keep charging massive and inflated tuition fees to these students to keep their priestly professorial class & their administrators in riches and life long income security.   

2. Wall Street vs. Universities – Is Wall Street Better?

Actually yes. Just as no sector is more respected & cherished than Universities, no sector is more hated today than “Wall Street”. Just as Harvard/Princeton/Stanford/MIT are treated with respect bordering on reverence, Goldman/Merrill/Morgan are treated with unbridled scorn. The U.S. Government keeps demanding billion dollar settlements from these Wall Street firms while providing more & more “aid” to Universities.

Look at the enormous job cuts that are taking place at Wall Street Firms and look at the hiring spree at top tier American Universities. Salaries for professors & administrators are still rising at top tier Universities while salaries are getting brutally slashed at Wall Street firms. Some of what is happening at Wall Street firms is a direct result of the excesses in the 2003-2008 period but a lot of it is due to increased punishment from Government regulators. That may be deemed as penance for past sins.

But where is penance and punishment at American Universities? Why haven’t we seen mass firings and layoffs at top tier American Universities that are directly responsible for the student loan debt crisis? Why haven’t we seen University endowments drained to provide debt relief to the thousands of students who have been financially ruined?

And these students have been ruined because American Universities delivered a defective product to them. They solicited these students by promising higher incomes that would result from their product, their University degree. They did so knowing that their product was not suitable for the needs of the majority of students. Yet they kept forcing this defective product on their semi-captive customers, their students and ruined their financial lives. 

Isn’t this one of the purest applications of the tort concept? Why haven’t we seen damage claims from Federal & State Education Departments against University Endowments & against University Administrations? 

Because of the quasi-religious mystique in our society for higher education. And once a pursuit gets this quasi-religious color, all balance is lost, all discussions of cost-benefit analysis become sacrilege. Unless this notion of semi-divinely ordained degree pursuit is brought down to earth, sensible organizational reforms cannot take place. 

Kudos to Peter Thiel for stating it so bluntly. But what reforms can be simply & quickly undertaken? 

3. Unbundle

Universities are structured into departments. Each department designs its courses and offers them to students. Generally speaking jobs that students get after their degree depend on the courses taken. For example, students with a large number of courses in STEM (Science, Technology, Engineering, Mathematics) tend to get jobs with higher salaries than students with course work in languages, social sciences, music. Yet all these students get charged the same fees & costs.

That is crazy. How can a student with a major that generally delivers a few jobs paying $30,000 pay the same fees as another student with a major that delivers many jobs paying $60,000? This is the crux of the student loan debt problem. A humanities student is simply unable to pay off a massive student loan debt while a computer science major is able to so in a few years. Yet both pay the same fees & accrue the same debts.

A simple & effective reform of the University system would be differential tuition fees for courses based on prospective income generation statistics. In other words, a music, literature & humanities course should cost much less than an engineering or biotech course. A student with a large number of STEM courses should pay more in tuition than a student with a large number of Humanities courses. 

This would be the simplest way to lower tuition costs for the majority of students who pursue Liberal Arts majors. This will also force liberal arts departments to design courses that add value to the students instead of satisfying the idiosyncratic passions of their faculty. This will also force liberal arts departments to undertake severe cost cutting steps including getting rid of unnecessary administrators & expensive “priestly” professors who serve only themselves.

The last is a big problem indeed. Just look at Indian & Middle Eastern Studies at Columbia University as an example. This department has 12-15 professors with high salaries and 3-4 administrators to administer the program. Every student at Columbia pays for the salaries, expenses & retirement pensions of this “priestly” class of professors while only a microscopically tiny minority of students benefits from this department. Eliminating such departments, these expensive professors from University budgets will go a distance in lowering tuition fees of American middle class students.  

But that would not happen without unbundling of tuition fees. Until that happens, the entire University sector will keep on wreaking financial havoc on American middle class students to serve its priestly class of professors.    

4. Break Them up

Not all departments or schools within American Universities are “priestly” or corrupt as Peter Thiel says. The STEM, Economics & Business departments offer tremendous value, value that even exceeds their high tuition fees. If you get a Computer Science degree from MIT or Stanford, you are likely to get a high paying job in a successful company. Your professors are likely to be experts in their fields with extensive business experience. The STEM & Business departments at most schools are closely associated with the business community and are able to deliver a good product to their students.

So why not break up today’s massive fat unwieldy Universities into independent schools and let these independent schools market themselves for their existence and growth. Let students then package their own education from offerings from these various schools, some physical and some online. This will enable students to say study physically at a nearby school while simultaneously studying computer science at MIT online. Then the markeplace can reward or penalize students based on the actual coursework rather than via a stamp of a bundled program.

Such independent schools can then offer different programs for students with different needs – from job training diplomas like the German model to advanced degrees for bright students. 

There are so many ways American education can get back to what it needs to be – a cost effective method for advancement in our earthly material life. But that will not happen until we break up the quasi-religious doctrine spewed by our new corrupt churches & temples that call themselves Universities & reform that priestly professorial class that lives off of the hard earned money of middle class America. 


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