Presidents come and go, but laments about the high price of higher education are eternal -- and so are calls for ever more federal aid to mitigate it. For 60 years, the federal government has been shoveling money into programs meant to make college more affordable -- yet a college degree today is more unaffordable than ever. Rarely has Washington so comprehensively worsened a problem it was determined to solve.
Beginning with the GI Bill in 1944, federal tuition aid has metastasized into a dizzying array of subsidies, most of which are now encompassed in the Higher Education Act. In addition to Pell grants, there are Federal Supplemental Education Opportunity grants and Federal Work-Study jobs, as well as Perkins Loans, Family Education Loans, Direct Student Loans, and Stafford (or Guaranteed) Student Loans. In 2005, these will account for more than $73 billion in overall federal financial aid to college students.
Then there are the billions of dollars' worth of tuition credits and deductions written into the tax code -- the Hope Tax Credit, the Lifetime Learning Tax Credit, the higher education expense deduction, the student loan interest deduction, and the tax-exempt Qualified Tuition Plans, known as "529s."
And the result of this energetic government campaign to hold down the cost of a college education? The cost of a college education is skyrocketing -- and has been for years.
Tuition and fees were up 10.5 percent at state colleges and universities last year. The year before that, they were up 14 percent. Every year for nearly a quarter-century -- since before most of today's college students were born -- higher education costs have raced ahead of inflation. And far from slowing this runaway train, government aid serves only to stoke the engine.
How could it do otherwise? Every dollar that Washington generates in student aid is another dollar that colleges and universities have an incentive to harvest, either by raising their sticker price or reducing the financial aid they offer from their own funds. Higher Education Act funds "are seen by colleges and universities as money that is there for the taking," observes Peter Wood, an anthropology professor at Boston University. "Tuition is set high enough to capture those funds and whatever else we think can be extracted from parents. Perhaps there are college administrators who don't see federal student aid in quite this way, but I haven't met them." In 10 years of attending committee meetings on the university's annual tuition adjustment, says Wood, "the only real question was, 'How much can
we get away with?'"
Jacoby's article is based on a very important publication by Gary Wolfram of the Cato Institute. Here's a link to the press release. It includes a link where you can download a PDF copy of the monograph [get it here]. Prof. Wolfram makes two important points, only one of which is dealt with in Jacoby's article. Government subsidy, as Jacoby notes, raises the cost of education to consumers, but subsidies at the same time compromise the independence of academic institutions. Read it, and think about the implications of what you have read.
Actually: Wolfram deals only with tuition subsidies. There is a related, and potentially even more disturbing, subject of commercial research subsidies that have compromised research at many of our leading institutions. This was the subject of a cover article, The Kept University, by Eyal Press and Jennifer Washburn, that appeared in the Atlantic Monthly (Boston: Mar 2000.Vol. 285, Iss. 3; pg. 39, 14 pgs) [read it here and here]. Also related see Richard Posner's The University as Business which appeared in the Atlantic Monthly (Boston: Jun 2002.Vol. 289, Iss. 6; pg. 21, 1 pgs) [view here, subscription required].
3 comments:
Sounds to me like they're leaving out state-level spending from the equation. That's been contracting steadily for some time now (at least relative to other costs) leaving the institutions themselves to raise funds through increased grant funding (which is why federal programs keep seeing higher demand) and higher tuition.
My impression has been that levels of state support for education have varied from state to state and from school to school. The overall trend may be down, but not everywhere.
The whole question of funding has been discussed endlessly within academia, but a new debate is beginning to emerge that takes a broader look at the role played by academic institutions in our society, just what we want from those institutions, what we as a society are willing to pay, how the costs should be allocated, what reforms are necessary in academic institutions, etc. This broader debate cannot be conducted solely within the precinct of academe. The overall costs of a college education today are absurd and cuts in overall support will be coming, long overdue I would say.
My parents used to say that a college education was like buying a new car every year and driving it off a cliff. There is a range in university costs, of course, as there is in cars. But the basic equation hasn't changed that much, it seems to me. There was a time when education costs lagged general inflation, and a time when it exceeded it, but the only reason we consider these costs excessive (when they produce real results in terms of long-term personal income and economic productivity) is that state funded higher education is now viewed as "late high school" by too many people.
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