Is American Education a Fraud?

A few semesters ago, I received an e-mail from my finance student at Illinois State University (ISU) claiming that this is the case. I wondered whether the student tried to educate me—I was interfering with his attempts to get a university degree without doing any useful work.

It is a fraud when students get their degrees for pretending to study and faculty and administrators get paid with tax-payer money for enabling students to do this. This is not only wasting tax-payer money but also training young people that cheating is an acceptable and easy way to live.

Moreover, it is rather scary to think that some of such graduates of universities go to work for government institutions and write laws, rules, and regulations about how the rest of us should live. It is not less scary to think that such professors are called scientists, and we are often told to believe things just because scientists say so.

Americans need to pay more attention to what is happening in universities as the current education system in the U.S. is very un-American. People who had the most influence in creating this country and gave it a chance to be very successful were highly educated but were not burdened by university education and the rest of the current education system that the U.S. adopted from abroad.

University education, especially in state universities, has very little in common with free-market business. State universities are rewarded for increasing the number of students and graduation rates, regardless of the need for those graduates or the ability of the graduates to do any useful work.

More recent changes in the education system just make these problems worse. For example, government supports institutions like AACSB that want universities to measure their performance. That sounds good, but it does not work when good and easy-to-use measures do not exist and those who are rewarded or punished for achieving improvement in the measures are the ones who choose the measures.

University administrators like to talk about higher numbers of students and higher retention rates. Unfortunately, the easiest way to achieve that in a short run (many administrators are focused on a short run) is to let students pass regardless of how they perform in class. During the last ten years, my current department (Finance, Insurance, and Law department of Illinois State University) was repeatedly congratulated for growing student numbers while student quality deteriorated.

While it is professors and instructors who write the grades and fail or pass students, the chairs of university departments have more control over this than most people realize. They have much more control than I have realized until recently, despite getting part of my university education in the U.S. and working at U.S. universities for many years.

Unfortunately, until such abuse of power becomes very extreme and incompetent, it is hard to prove that the problems are not just innocent mistakes by administrators. I learned the most about these issues while working in my current department where such abuse of power was the most extreme. Higher administration interfered with the worst cases when I complained, but they have not solved the problems and the problems continue. Some of those problems are helped by forces outside of the university.

University professors (even the tenured ones) do not have as much independence as some people believe. The chairs of university departments can have a lot of influence in hiring faculty and in pressuring the faculty who work in the department. Moreover, they can choose to offer students asynchronous on-line classes where opportunities for student cheating are almost unlimited.

The most obvious control that the chairs of departments have is over non-tenure track instructors. Many classes are taught by non-tenure track instructors and the chairs choose which instructors to hire and do not have to renew their contracts if they do not want to. Thus, such instructors have to please the chairs if they want to keep their jobs.

Even for hiring tenure-track faculty, department chairs can have a very significant influence if they are not burdened by ethical concerns. In most jobs, there is a problem of some people wanting to hire weaker candidates to reduce the inside competition for themselves, but this problem is much worse at state universities. Some faculty like weaker job candidates. Some chairs want to hire faculty whom they expect to support whatever the chairs want. Weaker candidates for jobs are more likely to do that. The chair can manipulate the hiring procedure and punish the faculty who express different opinions about hiring.

I have expressed opinions both about classes and about our hiring procedures that the current and previous chairs of our department did not like. The most obvious abuse of power I experienced was with my current chair, who did all of the following to cancel the section of the class that I was scheduled to teach:

  1. scheduled too many sections of the same course (by itself this would not have proved anything as it could have been an honest mistake),
  2. scheduled all five sections of the same course on the same weekdays,
  3. scheduled my section at a time less convenient for students,
  4. scheduled another section of the same course at the same time,
  5. provided incorrect information on the ISU website about my section, making it sound that students would have to pay more for my section than for other sections of the same course.

He might have done more, but this is what I could easily see on the ISU website when I checked it. I have never heard of any department chair doing this before, but I have heard of chairs doing one or two more subtle items from the above list when they want to cancel a class without doing it openly.

I assume my department chair expected me not to check the website. Then, he could cancel the class and blame it on me. Once the class was cancelled, I could no longer see that information on the website.

When I emailed the dean (and cc’d the chair) to let him know in a polite way that there are some problems with scheduling this class and asked the dean if there is something he could do to help so my section would not be cancelled, I got an e-mail from the chair saying that I should not be e-mailing the dean. Trying to restrict my communication with the dean was by itself extremely inappropriate. Doing this in writing was an extremely incompetent attempt at abuse of power.

In later semesters, the mis-scheduling was not as obvious, but essentially the same. The chair made other attempts to cause me problems. He definitely succeeded in wasting a lot of my time and making me feel very disgusted about some people. Unfortunately, there is a lot of inappropriate behavior in universities, but usually it is more subtle, making it hard for the victims to complain. In that sense, I am very thankful to my current department chair—he made it much easier for me to make these problems public.

At first, when the dean asked me what I wanted done about this, I did not include the firing of the department chair. Hiring finance department chairs was (and remains) quite desperate, and I hoped that the current chair would be afraid to misbehave after this. My expectations were wrong. Eventually, I did ask him to be punished to the fullest extent of the law (and spelled out that this includes removing him). However, two years after his first mis-scheduling of classes, he is still the chair of the department and still behaving in the same manner. I  have not been informed of any punishment that he received for this.

While most misbehavior at universities is much less obvious, it is not always less harmful. In fact, it can be even more harmful, as it is harder to observe and to stop.

People need to start paying more attention at what is going on in universities and the rest of the education system. The simple “fixes” like creating another bureaucracy or increasing the power of the current bureaucracies to check educational procedures do not work. They create more perverse incentives and speed up the deterioration.

The system will not be fixed in one day, but the direction of changes should be very different than in the past. Government should reduce its interference in education, stop creating wrong incentives, and let universities face the natural consequences of their bad decisions like companies in free markets do.

Dalia Marciukaityte

Dr. Marciukaityte previously she served as Humana/Mike McAlister Endowed Professor at Louisiana Tech University. Her business experience is with Strategic Management Group and Merrill Lynch.

She was born and raised in Lithuania, when it was still part of the Soviet Union. Her B.S. and M.S. degrees in management are from Kaunas University of Technology, Lithuania. She moved to the United States to study at Drexel University and the University of Pennsylvania. Her Ph.D. in finance with a minor in economics is from Drexel University.

Dr. Marciukaityte has published articles in Financial Management, the Journal of Corporate Finance, the Journal of Financial Research, the Financial Analysts Journal, the Financial Review, the Journal of Business Research, the Journal of Behavioral Finance, and other journals. Her research interests are in government regulations, market competition, corporate finance, and behavioral finance. She has taught Financial Management, Financial Markets, International Finance, and Financial Econometrics, working with undergraduate, masters, and doctoral students.