Challenges to Research Universities

"Though American higher education has experienced periods of financial difficulty, the twentieth century has witnessed remarkable growth, especially since World War II. State governments have poured more and more dollars into public institutions to accommodate the steadily increasing number of young adults who desire higher education. The federal government has likewise supported higher education through grant and loan programs for students from lower-income families, educational benefits programs for veterans, basic research grants (especially in science and engineering), generous policies for reimbursing teaching hospitals for services provided to medicare patients, and income tax deductions for contributions to universities by businesses and individuals. In the 1990s virtually all forms of public support for higher education began to decline. State appropriations for higher education began to shrink, and cost containment programs in health care turned many university medical centers into sources of major financial losses. Basic research grants to universities continued to grow in most fields, but in some major areas—especially engineering—federal support fell with the cutbacks in defense expenditures. Moreover, forecasts for reaching compliance with the agreement to balance the federal budget included significant cutbacks in university research after the year 2000. These trends have led some observers to wonder whether the golden era of the American research university is drawing to a close. To assess the future of the research university, the Brookings Institution, through its Brown Center on Education Research, brought together a group of scholars to study the factors that are most likely to influence research universities in the coming years. The project was designed to assess the state of research universities with respect to their primary customers or client-supporters, including students, state and federal government, private industry, and third-party payers for medical services. The problem facing research universities is not that they are performing poorly in terms of their primary social goals. The economic benefits of higher education are large and growing more rapidly than the increase in the cost of higher education, while an increasing proportion of the population attends college despite rising tuition and fees. In basic research and advanced medical services, U.S. institutions lead the world in new discoveries and useful inventions. Instead, the problem has been that state and federal governments have, until recently, seemed less willing to pay for most of these outputs of research universities. Universities have therefore turned to students (through tuition increases) and industry (through applied research collaborations) for an increasing fraction of their income. These trends probably do not threaten the existence or dominance of elite American research universities, but they are likely to change their character substantially, even if Congress approves administration requests for enhanced federal support of university-based research. Among the conclusions reached by the authors of this study are that universities are likely to place more emphasis on education as they become more reliant on income from students and to withdraw from providing health services. In addition, the growing collaboration with industry may not be sustainable, for the desire for secrecy by industrial partners is incompatible with the broader educational and research missions of the university and may even destroy the value of university research to industry."