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The Folly of Federal Policy

The Folly of Federal Policy
March 28, 2006

Federal policy is a strange bird. Though our representatives in Washington will tell us otherwise, rational problem solving simply has very little to do with it. Log rolling, appeasing special interests, political expediency -- all these things are critical to it. But figuring out the best, most efficient way to solve a problem? Irrelevant.

Case in point: the Academic Competitiveness Grants program. A component of the 2006 budget reconciliation bill, the program will provide $3.75 billion to Pell Grant-qualified students who choose to study science, math, engineering, or high-demand languages in college. It is designed to take on what many believe to be two of the nation’s most pressing challenges: improving access to higher education, and preparing American students to compete in a globalized world.

So what’s the problem? Well, it turns out this program would require students to actually show a modicum of aptitude in math or science to qualify for a grant. To be eligible, students would have to have a minimum grade point average, go to school full-time, and have completed a “rigorous” high school curriculum. Of course, for an initiative intended to fund the training of the next generation of scientists and mathematicians, those do not seem like unreasonable demands – except to people in Washington.

“The small student aid program in the bill will only help a fraction of those needing assistance and abandons the federal commitment to prioritize the neediest students,” complained Senator Edward M. Kennedy (D-Mass.). Similarly, Edward M. Elmendorf, senior vice president for government relations at the American Association of State Colleges and Universities, lamented that the grants are more of a “merit-based program” than one aimed at “bringing people who are have-nots into scientific and other fields in a way that’s meaningful.”

Because to be eligible for a Competitiveness Grant a student would also have to be eligible for a Pell Grant, Elmendorf is wrong that the program would neglect financial “have-nots.” It might bypass students who “have not” the aptitude to succeed in math or science, certainly, but isn’t the main point of the program to help produce good scientists and engineers? Not if you’re a politician or higher education lobbyist.

You see, everyone is driven to maximize his or her happiness, or what economists call “utility.” For politicians, that means holding public office and wielding as much power as possible. For denizens of the ivory tower, it’s getting to conduct ground-breaking research, or maximize the prestige of their departments or schools. (Most probably also wouldn’t turn down a raise.) Finally, for students it means paying as little as possible for college.

Understanding this, it is easy to see why the sensible restrictions in the Competitive Grants program make no sense in the calculus of Washington: Politicians gain power when they make as many voters as possible happy, colleges and their employees are pleased when they have more money to do all the things they want to do, and students are content when someone else is paying their bills. They all maximize their utility through programs that get money to as many people as possible, not through programs that are narrowly tailored to efficiently and effectively address a specific problem.

The animosity toward Competitiveness Grants in Washington is just a small example of the irrational results produced by the greed-fueled federal policy making process. Indeed, the same dynamic that has made a seemingly well-engineered program into political kryptonite has created higher education’s biggest problem: rampant tuition inflation.

Here’s how it works: People who want to go to college complain to their representatives in Washington that higher education is too expensive. Politicians, in turn, boost aid to get the petitioners’ votes. Colleges, because they know students can now pay it, then raise their tuition to get more money to conduct research, pay higher salaries, and build nicer amenities to attract the now better-healed students. But then the people who complained originally are priced out of college again … and the cycle repeats.

The only people involved in this self-perpetuating system who do not get direct benefits from it are taxpayers, the folks stuck paying the bills. Indeed, in just the past 10ten years the amount of inflation-adjusted money taxpayers have had to shell out to finance federal student aid ballooned from $16.0 billion to $28.4 billion, a 78 percent increase.

So why don’t taxpayers put a halt to the spiral? After all, don’t they get to vote just like everyone else?
Unfortunately, it’s almost impossible for them to target a specific use of their money and say “that’s the problem – eliminate it!” After all, in addition to forking out dough for student aid, taxpayers are footing the bill for the war in Iraq, space shuttles, bridges to nowhere, federal highways, expensive Department of Defense wrenches, and so on. In contrast, higher education advocates lobby only for their specific desires, as do all other special interests, rendering the taxpaying public like a lion trying to guard a meal from jackals and buzzards – it might be able to scare a few off, but it can’t stop them all.

While this system gives many universities, students, and politicians what they want, it produces a ton of waste and irrationality, including granting diplomas to hundreds of thousands of people whose skills and abilities aren’t even close to college level. A December report from the National Center for Education Statistics bears bares this out, finding that in 2003 less than a third of college graduates (not including those with advanced degrees) were sufficiently literate to understand complex prose, and only a quarter could analyze complex documents. Data from Jeremy Rifkin, president of the Foundation on Economic Trends, also illustrates the wages of the system’s irrationality. In 2004 he reported that more than 35 percent of recent college graduates took jobs that did not require a college degree.

As troubling as these educational outcomes are, however, the most perverse result of all of higher education’s federal free-riding will likely be visited on the ivory tower itself: Motivated by increasing frustration with skyrocketing tuition, as well as ever-growing federal expenditures on higher education, in September U.S. Secretary of Education Margaret Spellings announced the formation of a commission charged with designing a “national strategy for higher education.” Such a strategy will almost certainly translate into the federal government asserting a lot more control over American higher education than it does now. Indeed, the commission’s chairman, Charles Miller, helped craft the Texas predecessor to the No Child Left Behind Act and is already pushing a national test for college students. But a national strategy that even approximates NCLB will ensure the demise of American higher education.

By imposing a single “standard” on colleges and universities, rather than letting students decide for themselves what they want from their schools, the free market attributes that have made American higher education the envy of the world will be eradicated. It is only when schools compete for students by offering widely varying curricula and programs that they innovate and excel, just as competing for customers drives the success of car manufacturers, computer companies, pharmaceutical corporations, and all the other industries whose progress we benefit from every day. Take the competition out of higher education by standardizing what they must teach, however, and you can kiss innovation and excellence goodbye.

And therein lies the irony. By using the coercive power of the federal government to enrich itself and its students, American higher education has set itself up to lose the freedom that made it great in the first place, sowing the seeds of its own destruction. But, in the end, it seems that’s just how things go in the mad, mad world of federal policymaking.

Bio

Neal McCluskey is an education policy analyst at the Cato Institute’s Center for Educational Freedom.

 

 

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