Ken Blackwell

With skyrocketing tuition, there is no denying that college is too expensive. My friend, Professor Richard Vedder of Ohio University, has produced a lifetime of work showing that colleges' hefty price is directly related to students' easy access to Federal Pell grants and student loans. Those taxpayer subsidized funds allow universities to handsomely compensate tenured professors who rarely teach and ensure administrators at state institutions remain the highest paid public employees in America.

It doesn’t take a genius to figure out this model is unsustainable. With student loans already surpassing $1.2 trillion , this is a financial bubble ready to burst. And the failure will be another burden on taxpayers because these loans are backed up by the government. That is why we must insist that public colleges and universities model their business practices after private industry, such as incentivizing schools to reduce the time it takes to graduate and to reduce budgets by outsourcing services which can be performed better and more economically by the private sector.

Privatized dorm buildings, food services, and busing contracts are some good examples of public colleges and universities contracting services to save taxpayers money. But one important outsourcing idea is under attack by the Obama administration and government bureaucrats.

Smart entrepreneurs have developed a model for providing all the functions of a campus bursar’s office, allowing outside institutions to handle student loans and financial aid refunds while not having to hire their own employees, which saves millions of dollars for most schools. Using the economies of scale, companies such as Higher One, which was founded by three Yale University students in 2000, offer this service to colleges and universities while quickly processing students’ refund in the form of a check, direct deposit, or prepaid debit MasterCard.

The business model for these companies is one that every college would be wise to consider. Even though students receive 100 percent of their refunds, businesses like Higher One make a profit because the schools pay them pennies on the dollar of what it would cost them to manage financial aid for their students. In addition, these companies earn profit through debit cards and checking accounts with large ATM networks and small fees which are lower than other national and regional banks.

Ken Blackwell

Ken Blackwell, a contributing editor at, is a senior fellow at the Family Research Council and the American Civil Rights Union and is on the board of the Becket Fund for Religious Liberty. He is the co-author of the bestseller The Blueprint: Obama’s Plan to Subvert the Constitution and Build an Imperial Presidency, on sale in bookstores everywhere..
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