12/01/2010 03:30 pm ET | Updated May 25, 2011

If Penn State Goes Private, Will They Have to Change the Name?

Pennsylvania State University dwarfs the commonwealth's other institutions of higher learning, public and private. According to the university's own statistics, one out of every 127 American college-degree holders is a Penn State graduate!

The university has managed to thrive despite a steady decline in state funding. In the 1970s state support accounted for 60 to 70 percent of the total, but even before the recession hit two years ago, contributions from Harrisburg had fallen to only 11 percent of the school's budget. Since then, the amount has been cut to 6 percent. And given the cost-cutting campaign promises made by Gov.-elect Tom Corbett, the number seems destined to continue dropping.

For a world-class, "state-related" institution, as Penn State is known, this raises a question: Does it make sense to be related to the state anymore? Could Penn State choose to go private, or might it happen by default?

In either case, it would be a loss. The university and the state should find a way to stick together through these rough times.

Penn State fills its current market niche so well that it's hard to imagine a better arrangement for the state's residents. Thousands of Penn State undergraduates benefit from a year or two, sometimes more, of course work at one of the 19 undergraduate branch campuses before they move to the main campus to complete their degrees. This arrangement effectively combines the smaller classes and focus on teaching more typical of liberal-arts colleges with the benefits of a major research university. And the system delivers this appealing package for half the price (including room and board) of the most expensive private universities.

The state money must come with strings, though it's difficult to get anyone to say exactly what they are. Legislative control, or at least influence, over in-state tuition levels seems like an obvious possibility.

Penn State could probably afford the freedom it would gain by breaking with the state. Applications are at an all-time high, matriculating students have stronger credentials than ever, and the system continues to add degree programs and expand its facilities across the commonwealth. At a half a million strong, Penn State's alumni network may be the largest in the country, and its members are a well-organized, enthusiastic, and loyal crowd.

On the other hand, privatization doesn't always work to the consumer's advantage. In its present form, Penn State exerts pressure on a fairly wide range of colleges and universities to offer clearly differentiated products of their own. As a private university, it might not be able to resist the temptation to raise prices and compete with a narrower segment of the higher-education market -- specifically, other big private universities.

Penn State's predicament (or opportunity, depending on one's point of view) is not unique. Administrators of public university systems across the country are reassessing their positions as they watch their state subsidies dwindle and wonder what the future will bring.

The prospect of privatization certainly raises some thorny questions. Would legislatures resist public university systems' attempts to go private? Would they be happy to shed public employees and renegotiate pension obligations, assuming they could? If the states own the land on which the campuses sit, would the acreage be leased or sold? Would alumni support going private? Would they be willing to help pay for it?

The only certainty seems to be that the era of reliable state funding for public universities is past. Going private may be the logical step for some. But in Pennsylvania, at least, we should try to keep the "state" in Penn State.

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