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Not From My Wallet

February 29, 2012

Think of it as the latest iteration of the “not in my back yard” argument. Most people want higher education for their children, and most people think it’s a good idea for other people’s children to have higher education, too. Just don’t ask them to pay more for it.

A bill recently approved by a committee of the Arizona House of Representatives, House Bill 2675, would require full-time students at Arizona’s three public universities to pay roughly $2,000 toward their education costs, a price that could not be covered by grants, tuition benefits, or scholarships funded through public money, including federal aid. (Note: The office of the bill's sponsor, Rep. John Kavanagh, alerted Inside Higher Ed Wednesday that Kavanagh intends to withdraw the bill. The legislation had to pass the rules committee before it came to the House floor, and a member of the representative's staff said it would not leave the committee.)

The bill, like several others that have cropped up in recent weeks, is designed to relieve the middle class families of some of the costs they face in sending their children to college by changing the financial aid equation. If everyone pays $2,000 of their own money for tuition, the logic goes, middle- and upper-income students won’t be on the hook for as much aid, states won’t have to chip in more money to support colleges and universities, and colleges can continue to offer the same level of services.

But middle-class relief comes at the expense of low-income students, opponents of such policies argue. At most colleges, in fact, students from the lowest income brackets aren't expected to offer $2,000 to enroll, and many could not pay it if asked to do so. But that is not the concern of those proposing the new policies in Arizona and elsewhere.

“Diverting resources requires making choices, and it seems that they’re making choices that would seem to be harmful to college access and continued enrollment for the most financially needy students,” said Laura Perna, a professor at the University of Pennsylvania's Graduate School of Education who studies financial aid policies and access.

The combination of bills and the underlying idea that policy makers and their constituents are reluctant to subsidize the education of other students calls attention to the fact that the argument that higher education is a public good, rather than a private benefit, doesn’t seem to carry the same weight it used to.

“As a commonwealth, as a civilized society, we collectively do better if more Americans are better prepared to meet the challenges of the future,” said Barmak Nassirian, associate executive director for external relations at the American Association of Collegiate Registrars and Admissions Officers. “But we’ve become a little less focused on what happens to someone else’s child.

“The argument that higher education is a public good has lost its oomph. There was a time when we understood that no matter how well our kids do, they had to live in a society where other people’s kids have to do well also to collectively be better.”

There has always been a tension between whether higher education should be considered a private benefit or a public good. Because individuals with degrees tend to earn more over their lifetimes than those who don’t, most would argue that it is reasonable to expect individuals to contribute to their education.  But because evidence shows that higher education increases economic activity in an region and improves democracy, and that even those who don't go to college benefit from other people going to college, the argument that the public shares a responsibility for funding higher education carries greater weight.

Most states stuck that balance for decades through significant appropriations and low tuition, meaning students paid for some, but not a significant portion, of their education. Families that could not afford even low tuition could turn to state and federal grant programs, as well as some institutional aid. As a result, universities for years have had some number of students who pay no tuition at all.

Striking that balance has become more difficult in recent years as states – facing decreased revenues, increased entitlement costs, and public pressure not to raise taxes – have cut appropriations to public universities. As a result, universities have forced students and families to take on a larger share of the costs of education, sometimes with help from the federal government.  In many states, the amount of revenue public colleges and universities generate through tuition is now greater than the amount they receive from states.

To ensure access that was once provided by low tuition, public colleges have taken a page from the private college playbook, subsidizing low-income students by charging other students more. But opponents of such policies have argued that they are squeezing middle-class students who don’t qualify for aid but don’t make enough to shrug off tuition increases. The Arizona bill, as well as proposed policies in Virginia and North Carolina, has popped up to counter institutional redistribution.

Earlier this month, the governor of Virginia proposed in his budget to cap the amount of in-state tuition revenue that could be used to fund financial aid for other students. The state’s secretary of education, a position appointed by the governor, said the measure was designed to spark conversation about what aid polices should be and whether some students should be footing the bill for others.

A few weeks later, members of the University of North Carolina system’s Board of Governors pushed to adopt a similar policy. When that was rejected by the full board, they began to push for a tax break for families who did not qualify for financial aid. Board members in favor of the tax break said that subsidizing other students' education should be considered a charitable contribution, and therefore such families should be entitled to a tax break.

The UNC proposal is particularly interesting given that the state has a history of requiring institutions to funnel money from tuition hikes back into financial aid budgets.

The State University of New York system recently adopted a similar policy. When Governor Andrew Cuomo approved a $300 yearly tuition hike for the next five years, he required that students who qualified for the state's aid program be held harmless. As a result, about 20 percent of last year's hike became institutional aid for low-income students. The University of California system also required a certain percentage of tuition hikes to be funneled back into financial aid budgets this year.

The pushes against institutional aid have generally coincided with rising tuition prices. At the same meeting where the UNC system board considered capping aid, it also approved tuition hikes that averaged 8.8 percent for in-state undergraduates across the system’s 16 universities.

In Arizona, tuition for Arizona State University, the state’s largest public university, has more than doubled since the 2004-05 school year. That year, the listed tuition price was about $4,000. For the 2011-12 school year, the tuition price was more than $9,000. In the same time period, however, the amount of tuition revenue the university received from each student did not increase as dramatically, meaning aid is tempering the increase.

The Arizona lawmaker behind the bill said he decided to introduce the bill after hearing that nearly half of Arizona State University students paid nothing in tuition as a result of a combination of grants and scholarships. He and other supporters of the bill during a hearing last week argued that students needed "more skin in the game" for their own education and that taxpayers and other students should not be paying so much.

The current version of the bill would allow students to pay the charge through private scholarships, and students on full academic or athletic scholarships would be exempt from the requirement.

The Arizona Board of Regents, which oversees the state’s three public universities, has publicly opposed the bill, arguing that it would make it more difficult for all students, not just the low-income ones, to pay for college. “It just appears to me that it flies in the face of what we’re trying to do,” said board Chairman Bob McLendon, a former state legislator. “Over the next five years, 60 percent of jobs in Arizona are going to require some kind of higher education. It’s crucial for the economic development in this state. If we ever want to become a greater state as far as having a greater standard of living, higher education is something that we need to have for folks out there who qualify for it.”

Student government representatives have also opposed the bill, and about 100 students signed up to testify against it at the hearing last week.

“We have seen periodic outbreaks of focus on middle- and upper-income families, and we may be entering another such period right now,” said David Breneman, an economics professor at the University of Virginia who researches higher education policy. In the 1970s, when tuition was increasing at double-digit rates per year, Congress passed the Middle Income Student Assistance Act, which opened up some federal grant programs to families that made more than traditionally qualified for federal need-based aid. States also created merit aid programs, such as Georgia’s HOPE scholars program, which do not take need into account and therefore benefit more middle- and upper-income families.

Middle- and upper-income families tend to vote more often than low-income families, providing some incentive to craft policies to their benefit. 

Perna said such policies can get in the way of overarching goals that have broad consensus in many states. If the state's goal is greater degree attainment and access to higher education institutions regardless of the ability to pay, then the policies should focus on that outcome. “It’s one of those questions for us as a society,” she said. “What do we want from our higher education systems, how should we pay for it, how should we provide access for people with different levels of resources, who has the opportunity to receive higher education, and who are the folks who get the jobs that require education?”

But at a deeper level, higher education observers say, the lack of public support for higher education has moved the goalposts on the argument about whether education is a public good or private good. Research consistently shows that financial relief has a bigger effect on helping lower-income students gradate than any other demographic.

In many respects a student plan from the University of California, under which students would pay no tuition up front but agree to pay 5 percent of their income for 20 years after graduating and entering the workforce, also seems resigned to the fact that higher education is more of a private benefit than a public one. The plan would shift the burden of funding education almost entirely off both the state and federal government and families and place it entirely onto students.

Nassirian said the country has lost track of the argument, in part because higher education organizations have stopped focusing on it themselves. Many colleges think of their public good in terms of research, instead of their whole mission. Rather than focusing on admitting all qualified students, he said, colleges and universities are too concerned with competing with one another for faculty, research dollars, students, and reputation. “The sense people have that their kid is in competition with other people’s kids means that frankly they dismiss their concerns about the plight of other people’s children,” Nassirian said.

He likened higher education’s status as a public good to that of vaccinations. Individuals have incentive to get vaccinated, but the government, recognizing the huge benefits that come from widespread vaccinations, takes extra steps to make it as easy as possible for individuals to get vaccinated.

McLendon, who said he put his children through college without significant financial aid, said the leaders of Arizona’s higher-education institutions still see the universities as public goods, which is why they are vigorously opposing the bill.

“In Arizona, we need to keep education open for all,” he said. “If that means that we have some people who are getting grants and scholarships and whatever, that’s fine. The more and more people who can go to college and get an education, the better off we’re all going to be.”

 

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