Ray Da Silva Rosa: Trump’s uni dream the academic equivalent of the Segway

US president-elect Donald Trump has already proposed a raft of sweeping educational reforms, including taking money from higher education endowments to create a free public university.

If part of Trump’s strategy was to ruffle the feathers of academia, he has been successful, but this campaign promise is not a financially viable option.

“Under the plan, I’m announcing today, we will take the billions and billions of dollars that we will collect by taxing, fining, and suing excessively large private university endowments, and we will then use that money to endow a new institution called the American Academy,” Trump said.

There is no doubt Trump’s financing plan for a government-run super-university is underwriting nightmares around Harvard Square, home to the world’s largest university endowment — US$53.2 billion ($82.3 billion), which is just under 6 per cent of the total of all US university endowments.

It’s said that Trump supporters take him seriously, but not literally, and vice versa for his detractors. Now he’s president-elect, serious and literal are the forced helpings.

It matters because Trump is a political savant. His acuity in reading the electorate has a halo effect such that his policies get a pass or an even higher grade if they irritate the “elites” and academics in particular.

So, taking the proposal for an American Academy literally and seriously, how viable is it?

Short answer: not at all.

The plan is to “gather an entire universe of the highest quality educational content, covering the full spectrum of human knowledge and skills, and make that material available to every American citizen online for free”.

To be clear, the idea is not bat-crazy. It’s just the academic sector’s equivalent of the Segway, a technological wonder that fuelled dreams of revolutionising transport (and society) but failed the economics test.

Less than 10 years ago, education expert Kevin Carey claimed in The End of College: The University of Everywhere that “higher education stands at the brink of transformation by information technology . . . historic developments will liberate hundreds of millions of people around the world, creating ways of learning that have never existed before”.

The idea was plausible enough that Harvard and MIT developed a joint online education platform, edX, to fulfil the promise. They then relearned a lesson that’s been available since the book was invented. Students go to universities for more than access to information — Harvard and MIT smartly sold edX to 2U, a for-profit entity that subsequently filed for bankruptcy protection.

It’s not known whether the American Academy will set up a campus and hire instructors like a regular university or outsource education to for-profit providers. Hiring people brings the same organisational incentive and coordination problems as a regular non-profit university, except now it will be the government herding the academic cats and maintaining ideological purity.

There are countries with expertise in keeping ideas straight in class; perhaps they could be persuaded to give advice on techniques, if the US isn’t engaged in a trade war with them.

The Trump administration could outsource teaching with the money raised from taxing endowments. The question is, what would be different this time?

In 2012, a Senate committee found while taxpayers forked out US$32 billion a year (US$44 billion in today’s dollars) to for-profit colleges, more than half the students left without a degree or diploma within a median of four months.

Let’s talk financing: the US$44 billion in today’s dollars that was paid in 2012 to support students in need is about 5 per cent of the total of US endowments. If that much was required to fund the American Academy annually by taxing endowments and the endowments were taxed in proportion to wealth, then the 20 colleges with the largest endowments — which own 50 per cent of all endowment wealth — would have to be taxed at US$22 billion per year. Karl Marx would approve.

Speaking of Marxists, Trump called out Harvard, claiming once-respected universities are turning out communists and terrorists. If so, Harvard’s Marxist lecturers are not very persuasive. In 2024, 58 per cent of Harvard seniors plan to go into finance, consulting or technology jobs.

Winthrop Professor Raymond Da Silva Rosa is an expert in finance from The University of Western Australia’s Business School