The video version of this training runs through to the 18-minute mark.
Higher education in the U.S. is in a state of crisis. We see evidence of this crisis in huge cuts in funding for public schools, skyrocketing costs of attendance at both private and public schools, and increases in student debt burdens. These interrelated trends are connected to the underlying phenomenon of the financialization of our economy generally and of higher education specifically. Mike Konczal, who runs the Financialization Project at the Roosevelt Institute, defines financialization as the “increase in the size, scope, and power of the financial sector—the people and firms that manage money and underwrite stocks, bonds, derivatives, and other securities—relative to the rest of the economy.”
Over the past 40 years, the role of the financial sector has shifted away from channeling productive investments in to the real economy toward short-term profit making. While finance accounts for 25% of all corporate profits in the United States, it contributes a mere 4% of jobs to the economy. Shifting the bulk of our economic activity away from the real economy (Main Street) engaged in the production of goods and services to the financial economy (Wall Street) has serious consequences for economic inequality. The encroachment of the financial sector to local governments and universities is especially dangerous as it draws greater public resources unto itself and builds a culture of short-termism and profiteering over access and equity.
The Roosevelt Networks have been looking at the pernicious effects that Financialization has had on higher education, including increases in overall borrowing by colleges and universities, increases in the cost of interest payments on debt on a per-student basis, and a concentration of endowment assets at a small group of the wealthiest institutions—a form of concentration of wealth. One way that financialization manifests is expensive, risky, complex financial deals that colleges and universities have entered as they have increased their reliance on debt financing, which is why we spent Year One of our Financialization project focusing one particular financial instrument - the Interest Rate Swap - and writing a report about how swaps have cost our schools billions of dollars. Now, in Year Two, we are expanding the focus of our work, and grappling with other ways in which the system of higher education has begun to increase social and economic inequalities instead of serving as the equalizer we have long imagined college to be.
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Broadly, we have taken on this research agenda to identify the ways in which our system of higher education has been increasing social and economic inequalities instead of serving as the equalizer we have long imagined college to be.
With student debt in real danger of choking a generation and with schools across the country falling prey to wall street deals, the time for this work is now.